<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
COMMISSION FILE NUMBER: 000-24539
ECLIPSYS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 65-0632092
(State of Incorporation) (IRS Employer Identification
Number)
777 East Atlantic Avenue
Suite 200
Delray Beach, Florida
33483
(Address of principal executive offices)
(561)-243-1440
(Telephone number of registrant)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports) and (2) has been
subject to such filing for the past 90 days. Yes X No
--- ----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
<TABLE>
<CAPTION>
Class Shares outstanding as of April 30,1999
----- --------------------------------------
<S> <C>
Common Stock, $.01 par value 31,509,283
Non-voting Common Stock, $.01 par value 597,621
</TABLE>
<PAGE> 2
ECLIPSYS CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1999
INDEX
<TABLE>
<CAPTION>
PART I. Financial Information
<S> <C>
Item 1. Condensed Consolidated Balance Sheets (unaudited) - As of March 31, 1999 and December 31, 1998
Condensed Consolidated Statements of Operations (unaudited) - For the Three Months ended
March 31, 1999 and 1998
Condensed Consolidated Statements of Cash Flows (unaudited) - For the Three Months ended
March 31, 1999 and 1998
Notes to Condensed Consolidated Financial Statements (unaudited) - For the Three Months ended
March 31, 1999 and 1998
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
</TABLE>
<PAGE> 3
PART I.
ITEM 1.
ECLISPSYS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1999 AND DECEMBER 31, 1998
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS MARCH 31, 1999 DECEMBER 31, 1998
---------------- ----------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 50,310 $ 37,983
Investments - 17,003
Accounts receivable, net 63,073 57,924
Inventory 578 517
Other current assets 10,870 10,004
---------------- ----------------
TOTAL CURRENT ASSETS 124,831 123,431
Fixed assets, net 12,633 12,349
Capitalized software development costs, net 6,052 5,248
Acquired technology, net 56,814 43,318
Intangible assets, net 23,765 25,928
Other assets 5,676 6,060
---------------- ----------------
TOTAL ASSETS $ 229,771 $ 216,334
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Deferred revenue $ 53,810 $ 51,366
Current portion of long-term debt 20,000 -
Other current liabilities 44,518 47,700
---------------- ----------------
TOTAL CURRENT LIABILITIES 118,328 99,066
Deferred revenue 10,607 16,700
Other long-term liabilities 3,752 3,756
SHAREHOLDERS' EQUITY
Common stock 318 311
Common stock warrant 395 395
Unearned stock compensation (160) (178)
Additional paid-in capital 243,282 241,929
Accumulated other comprehensive income 203 44
Accumulated deficit (146,954) (145,689)
---------------- ----------------
TOTAL SHAREHOLDERS' EQUITY 97,084 96,812
---------------- ----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 229,771 $ 216,334
================ ================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
<PAGE> 4
ECLIPSYS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------
REVENUES 1999 1998
------ ------
<S> <C> <C>
Systems and services $ 48,435 $ 34,852
Hardware 5,498 2,290
--------------------------
TOTAL REVENUES 53,933 37,142
--------------------------
COSTS AND EXPENSES
Cost of systems and services revenues 27,302 21,006
Cost of hardware revenues 4,670 1,977
Marketing and sales 7,418 6,413
Research and development 9,097 7,753
General and administrative 2,720 2,619
Depreciation and amortization 3,814 2,963
Write off of MSA - 7,193
Pooling costs 614 -
--------------------------
TOTAL COSTS AND EXPENSES 55,635 49,924
--------------------------
--------------------------
LOSS FROM OPERATIONS (1,702) (12,782)
--------------------------
Interest income, net (437) (435)
LOSS BEFORE INCOME TAXES (1,265) (12,347)
PROVISION FOR INCOME TAXES - 1,921
--------------------------
NET LOSS (1,265) (14,268)
--------------------------
DIVIDENDS AND ACCRETION ON MANDATORILY
REDEEMABLE PREFERRED STOCK - (1,335)
--------------------------
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS $ (1,265) $ (15,603)
--------------------------
BASIC AND DILUTED NET LOSS PER COMMON SHARE $ (0.04) $ (1.03)
--------------------------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 31,315,000 15,112,000
--------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
<PAGE> 5
ECLIPSYS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months ended March 31,
----------------------------
1999 1998
-------- --------
<S> <C> <C>
Operating Activities
Net Loss $ (1,265) $(14,268)
Adjustments to reconcile net loss to net cash
provided by operating activities
Depreciation and amortization 9,828 7,466
Provision for bad debts 285 225
Tax benefit of stock option exercises - 15
Write off of MSA - 7,193
Stock compensation expense 18 18
Changes in operating assets and liabilities, net of acquisitions
Accounts receivable 3,165 2,341
Inventory (61) 200
Other current assets (117) 1,958
Other assets 223 (308)
Deferred revenue (6,726) 8,137
Other current liabilities (4,039) 1,970
Other liabilities (4) (13)
-------- --------
Total adjustments to reconcile net loss to net
cash provided by operating activities 2,572 29,202
-------- --------
Net cash provided by operating activities 1,307 14,934
-------- --------
Investing Activities
Purchase of fixed assets, net (1,269) (1,888)
Capitalized software development costs (1,233) (1,071)
Acquisitions, net of cash acquired (25,000) -
Changes in other assets - (16,000)
-------- --------
Net cash used in investing activities (27,502) (18,959)
-------- --------
Financing Activities
Borrowings under line-of-credit 20,000 9,000
Payments on borrowings under line-of-credit - (9,000)
Exercise of stock options 811 959
Sale of preferred stock - 9,000
Employee stock purchase plan 549 -
-------- --------
Net cash provided by financing activities 21,360 9,959
-------- --------
Effect of exchange rate changes on cash and
cash equivalents 159 11
-------- --------
Net (decrease) increase in cash and cash equivalents (4,676) 5,945
Cash and cash equivalents, beginning of period 54,986 63,414
-------- --------
Cash and cash equivalents, end of period $ 50,310 $ 69,359
-------- --------
</TABLE>
The accompanying notes are an integral part to these unaudited condensed
consolidated financial statements
<PAGE> 6
ECLIPSYS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND MARCH 31, 1998
(UNAUDITED)
1. BASIS OF PRESENTATION
The condensed consolidated financial statements include all adjustments
that, in the opinion of management, are necessary for a fair
presentation of the results for the periods presented. All such
adjustments are considered of normal recurring nature. Quarterly results
of operations are not necessarily indicative of annual results.
Effective December 31, 1998, Eclipsys Corporation ("the Company")
completed a merger with Transition Systems, Inc. ("Transition"). The
merger was accounted for as a pooling of interests and, accordingly, the
condensed consolidated financial statements have been retroactively
restated as if the Transition merger had occurred as of the beginning of
the earliest period presented.
Effective February 17, 1999, the Company completed a merger with
PowerCenter Systems, Inc. ("PCS"). The merger was accounted for as a
pooling of interests and, accordingly, the condensed consolidated
financial statements have been retroactively restated as if the PCS
merger had occurred as of the beginning of the earliest period
presented.
Certain financial information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These unaudited
condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and the notes
thereto included in the Company's Annual Report on Form 10-K dated March
26, 1999.
Certain prior year amounts have been reclassified to conform to the
current year presentation in the accompanying condensed consolidated
financial statements.
2. ACQUISITIONS
As discussed in Note 1, effective February 17, 1999, the Company
completed a merger with PCS for total consideration of approximately $35
million. PCS provides enterprise resource planning software throughout
the healthcare industry.
As discussed in Note 1 the Transition and PCS acquisitions were
accounted for as pooling of interests, accordingly, all prior period
amounts have been restated. A reconciliation between revenue and net
loss as previously reported by the Company and as restated (unaudited)
is as follows:
<TABLE>
<CAPTION>
For the three
months ended
Revenue: March 31, 1998
<S> <C>
As previously reported $ 29,295
Transition 7,730
PCS 117
--------
As restated $ 37,142
Net Loss:
As previously reported $(11,610)
Transition (1,964)
PCS (694)
--------
As restated $(14,268)
--------
--------
</TABLE>
<PAGE> 7
ECLIPSYS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND MARCH 31, 1998
(UNAUDITED)
Effective March 31, 1999, the Company acquired the common stock of
Intelus Corporation ("Intelus") and Med Data Systems, Inc. ("Med Data"),
both wholly owned subsidiaries of Sungard Data Systems, Inc. for total
consideration of $25 million in cash. The acquired entities both provide
document imaging technology and workflow solutions to entities
throughout the healthcare industry. The acquisition was accounted for as
a purchase and, accordingly, the purchase price was allocated based on
the fair value of the net assets acquired.
Unaudited pro forma results of operations as if the aforementioned
acquisitions had occurred on January 1, 1998 is as follows (in thousands
except per share data):
<TABLE>
<CAPTION>
Three months ended
March 31,
1999 1998
----------------------------
<S> <C> <C>
Revenues $ 45,401 $ 57,424
Net loss (17,969) (1,704)
Basic and diluted loss per share $ (1.16) $ (0.05)
</TABLE>
3. LONG-TERM DEBT
As discussed in Note 2, on March 31, 1999, the Company acquired the
common stock of Intelus and Med Data for total consideration of $25
million in cash. In connection with the transaction, the Company
borrowed $20 million under its $50 million credit facility.
4. POOLING COSTS
Included in operating activities on the accompanying condensed
consolidated statement of cash flows for the quarter ended March 31,
1999 are $722,000 of costs paid related to the poolings of Transition
and PCS.
<PAGE> 8
PART I.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This report contains forward-looking statements. For this purpose, any
statements contained herein that are not statements of historical fact
may be deemed to be forward-looking statements. Without limiting the
foregoing, the words "believes," "anticipates," "plans," "expects,"
"intends," and similar expressions are intended to identify
forward-looking statements. The important factors discussed under the
caption "Certain Factors that May Affect Future Operating Results/Risk
Factors," presented from time to time in the Company's filings with the
Securities and Exchange Commission, among others, could cause actual
results to differ materially from those indicated by forward-looking
statements made herein. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
OVERVIEW
Eclipsys Corporation ("Eclipsys" or "the Company") is a healthcare
information technology company delivering solutions that enable
healthcare providers to achieve improved clinical, financial and
administrative outcomes. The Company offers an integrated suite of core
products in five critical areas - clinical management, access
management, patient financial management, strategic decision support and
integration. These products can be purchased in combination to provide
an enterprise-wide solution or individually to address specific needs.
Eclipsys' products have been designed specifically to deliver a
measurable impact on outcomes, enabling Eclipsys' customers to quantify
clinical benefits and return on investment in a precise and timely
manner. Eclipsys' products can be integrated with a customer's existing
information systems, which Eclipsys believes reduces overall cost of
ownership and increases the attractiveness of its products. Eclipsys
also provides outsourcing, remote processing and networking services to
assist customers in meeting their healthcare information technology
requirements. Eclipsys markets its products primarily to large
hospitals, academic medical centers and integrated health networks. To
provide direct and sustained customer contact, Eclipsys maintains
decentralized sales, implementation and customer support teams in each
of its eight North American regions.
The Company was formed in December 1995 and has grown primarily through
a series of acquisitions, all completed since January 1997. The first
three acquisitions were accounted for utilizing the purchase method of
accounting and, accordingly, Eclipsys' financial statements reflect the
results of these businesses from the date acquired. These acquisitions
were (1) the acquisition of ALLTEL Healthcare Information Services, Inc.
("Alltel") in January 1997, (2) the acquisition of SDK Medical Computer
Services Corporation ("SDK") in June 1997 and (3) the acquisition of the
North American operations of Emtek Healthcare Systems, a division of
Motorola, Inc. ("Emtek"), in January 1998. The next two acquisitions
were accounted for utilizing the pooling of interests method of
accounting and, accordingly, Eclipsys' financial statements have been
retroactively restated as if the transactions had occurred as of the
earliest period presented. These acquisitions were (1) a merger with
Transition Systems, Inc. ("Transition"), effective December 31, 1998,
and (2) a merger with PowerCenter Systems, Inc. ("PCS"), effective
February 17, 1999. Additionally, Transition had acquired HealthVISION,
Inc. ("HealthVISION") in December 1998, shortly before the closing of
the Eclipsys' acquisition of Transition. The HealthVISION acquisition
was accounted for as a purchase and, accordingly, Eclipsys' financial
statements reflect the results of the business from the date acquired.
Finally, the purchase of Intelus Corporation and Med Data Systems, Inc.,
both wholly owned subsidiaries of Sungard Data Systems, Inc., was
completed on March 31, 1999 and was accounted for as a
<PAGE> 9
purchase and, accordingly, Eclipsys' financial statements will reflect
the results of these businesses from the date acquired.
RESULTS OF OPERATIONS
SUMMARY
Total revenues for the quarter ended March 31, 1999 increased 45% to
$53.9 million compared with $37.1 million for the first quarter 1998.
Total costs and expenses for the quarter ended March 31, 1999 increased
11% compared to the same period in 1998.
These changes in revenues and expenses combined to decrease net loss for
the quarter ended March 31, 1999 by 91% to ($1.3) million compared to
the same period in 1998.
Included in the reported quarterly net losses were acquisition related
amortization of intangible assets and certain non-recurring charges
recorded in connection with the acquisitions of $8.1 million in the
first quarter 1999 and $12.5 million in the first quarter 1998.
REVENUES
System and services revenues increased 39% to $48.4 million for the
first quarter of 1999 compared to the same period in 1998. Contributing
to this increase was the inclusion of the results of operations of Emtek
and HealthVISION during first quarter 1999, as well as new contracted
business during 1998 and 1997. The increase in new contracted business
was a result of increased marketing efforts related to the regional
re-alignment of the Company's operations completed in 1997 and the
successful integration of the acquisitions.
Hardware revenues increased 140% to $5.5 million for the first quarter
of 1999 compared to the same period in 1998. The increase was primarily
due to increased volume as a result of the acquisitions and new
contracted business.
EXPENSES
Total cost of revenues increased 39% for the first quarter of 1999
compared to the same period in 1998. Increased costs of system, services
and hardware associated with the growth in sales were offset by a
reduction of certain expenses and realization of cost savings as a
result of the integration of the acquisitions.
Marketing and sales expenses increased 16% for the first quarter of 1999
compared to the same period in 1998. The increase was primarily due to
the addition of marketing and direct sales personnel following the
acquisitions and the continued hiring of sales people.
Total expenditures for research and development, including both
capitalized and non-capitalized expenses increased 17% to $10.3 million
for the first quarter 1999 compared to the same period in 1998. The
increase was due primarily to the acquisitions and the continued
development of an enterprise-wide, client server platform solution.
Research and development expenses capitalized for the first quarter of
1999 increased $162,000 compared to the same period in 1998. Increased
capitalization was primarily the result of expenditures related to the
development of an enterprise-wide, client server platform solution.
General and administrative expenses increased 4% for the first quarter
of 1999 compared to the same period in 1998. The increase was primarily
due to the addition of administrative and finance personnel following
the acquisitions.
<PAGE> 10
Depreciation and amortization increased 29% for the first quarter of
1999 compared to the same period in 1998. The increase for the quarter
is primarily the result of an increase in goodwill amortization as a
result of the HealthVISION acquisition.
ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT
In connection with the Alltel, SDK and HealthVISION acquisitions, the
Company wrote off acquired in-process research and development totaling
$92.2 million and $7.0 million in 1997 and $2.4 million in 1998,
respectively. These amounts were expensed as non-recurring charges on
the respective acquisition dates. The Company continues to believe that
the acquired in-process research and development will be successfully
developed, but there can be no assurance that commercial viability of
these products will be achieved.
The value of the acquired in-process research and development was
determined by estimating the projected net cash flows related to such
products, including costs to complete the development of the technology
and the future revenues to be earned upon commercialization of the
products. These cash flows were discounted back to their net present
value. The resulting projected net cash flows from such projects were
based on management's estimates of revenues and operating profits
related to such projects.
Through March 31, 1999, revenues and operating profit attributable to
acquired in-process research and development have not materially
differed from the projections used in determining its value, except for,
as previously reported, the timing of one outsourcing contract.
Management continues to believe the projections used reasonably estimate
the future benefits attributable to the acquired in-process research and
development. However, no assurance can be given that deviations from
these projections will not occur.
YEAR 2000 ISSUES
Eclipsys has a Year 2000 Committee whose task is to evaluate the
Company's Year 2000 readiness for both internal and external management
information systems, recommend a plan of action to minimize disruption
and execute the Company's Year 2000 plan. The Committee has developed a
comprehensive Year 2000 Plan. The Year 2000 Plan covers all significant
internal and external management information systems.
Eclipsys believes that all of its internal management information
systems are currently Year 2000 compliant and, accordingly, does not
anticipate any significant expenditures to remediate or replace existing
internal-use systems.
With the exception of the Transition for Quality product (for which the
Company expects to release a fully Year 2000 compliant version in 1999),
all of the products currently offered by Eclipsys are Year 2000
compliant. Some of the products previously sold by Alltel and Emtek and
installed in Eclipsys' customer base are not Year 2000 compliant.
Eclipsys has developed and tested solutions for these non-compliant,
installed products.
In addition, because Eclipsys' products are often interfaced with a
customer's existing third-party applications and certain Eclipsys'
products include software licensed from third-party vendors, Eclipsys'
products may experience difficulties interfacing with third-party,
non-compliant applications. Based on currently available information,
Eclipsys does not expect the cost of compliance related to interactions
with non-compliant, third-party systems to be material.
Unexpected difficulties in implementing Year 2000 solutions for the
installed Alltel or Emtek products or difficulties in interfacing with
third-party products could adversely effect the Company.
<PAGE> 11
Apprehension in the marketplace over Year 2000 compliance issues may
lead businesses, including customers of the Company, to defer
significant capital investments in information technology programs and
software. They could elect to defer those investments either because
they decide to focus their capital budgets on the expenditures necessary
to bring their own existing systems into compliance or because they wish
to purchase only software with a proven ability to process data after
1999. If these deferrals are significant, the Company may not achieve
expected revenue or earnings levels.
BALANCE SHEET
INVESTMENTS
Investments decreased during the three months ended March 31, 1999 due
to the Company's reinvestment of maturities in highly liquid investments
with original maturities of three months or less.
ACQUIRED TECHNOLOGY
Acquired Technology increased during the three months ended March 31,
1999 due to the acquisitions of Intelus and Med Data.
LONG-TERM DEBT
Long-term debt increased during the three months ended March 31, 1999
due to the acquisitions of Intelus and Med Data.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended March 31, 1999, the Company generated $1.3
million in cash flow from operations. Included in operations is
approximately $722,000 of costs paid directly related to the poolings of
Transition and PCS. Additionally the Company paid approximately $5.0
million of annual employee compensation related liabilities during the
first quarter. The Company used $27.5 million for investing activities,
which was primarily the result of the acquisitions of Intelus and Med
Data. Financing activities provided an additional $21.3 million,
primarily due to borrowings on the line of credit for the acquisitions
of Intelus and Med Data.
As of March 31, 1999, the Company had $20.0 million outstanding under
its $50.0 million revolving credit facility.
As of March 31, 1999, the Company had $50.3 million in cash and cash
equivalents.
Management believes that its available cash and cash equivalents,
anticipated cash generated from its future operations and amounts
available under the existing revolving credit facility will be
sufficient to meet the Company's operating requirements for at least the
next twelve months.
<PAGE> 12
PART II.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: See Index to exhibits.
(b) Reports on Form 8-K: Filed with the Securities and Exchange
Commission on January 12, 1999 and March 3, 1999.
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ECLIPSYS CORPORATION
Date: April 13, 1999 /s/ ROBERT J. VANARIA
----------------------
Robert J. Vanaria
Chief Financial Officer
<PAGE> 14
<TABLE>
<CAPTION>
ECLIPSYS CORPORATION
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
2 Stock Purchase and Sale Agreement dated as of March 6. 1999 by
and among Sungard Data Systems Inc., Sungard Investment
Ventures, Inc., Med Data Systems, Inc., Intelus Corporation, and
Eclipsys Corporation and Eclipsys Solutions Corp.
10.1 Amended and Restated 1998 Employee Stock Purchase Plan, as
amended
10.2 1998 Stock Incentive Plan, as amended
10.3 1999 Stock Incentive Plan
27 Financial Data Schedule (for SEC use only).
</TABLE>
<PAGE> 1
STOCK PURCHASE AND SALE AGREEMENT
dated as of March 6, 1999
by and among
SUNGARD DATA SYSTEMS INC.,
SUNGARD INVESTMENT VENTURES, INC.,
MED DATA SYSTEMS, INC.,
INTELUS CORPORATION,
and
ECLIPSYS CORPORATION
ECLIPSYS SOLUTIONS CORP.
<PAGE> 2
STOCK PURCHASE AND SALE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of March 6,
1999, is made and entered into by and among Eclipsys Corporation, a Delaware
corporation (the "Buyer's Parent") Eclipsys Solutions Corp., a Delaware
Corporation ("Buyer"), on the one hand, and SunGard Data Systems Inc., a
Delaware corporation (the "Seller's Parent"), SunGard Investment Ventures, Inc.,
a Delaware corporation and a wholly owned subsidiary of Seller's Parent (the
"Seller"), and Seller's wholly owned subsidiaries, Intelus Corporation, a
Delaware corporation ("I"), and Med Data Systems, Inc., a California corporation
("MD"). I and MD are individually and collectively referred to herein as the
"Acquired Companies."
WHEREAS, Seller owns 1,000 shares (the "I Shares") of common stock, par
value $0.001 per share (the "I Common Stock"), of I, and the I Shares constitute
all of the issued and outstanding shares of capital stock of I;
WHEREAS, Seller owns 1,000 shares (the "MD Shares") of common stock, no
par value per share (the "MD Common Stock"), of MD, and the MD Shares constitute
all of the issued and outstanding shares of capital stock of the MD (the MD
Shares and the I Shares shall be collectively referred to herein as the
"Shares"); and
WHEREAS, Seller desires to sell, and Buyer desires to purchase, the
Shares on the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Buyer, Parent, the
Acquired Companies Seller's Parent and Seller hereby agree as follows:
ARTICLE I
SALE OF SHARES, CLOSING AND DEFINITIONS
1.01 Purchase and Sale. Seller agrees to sell to Buyer, and Buyer
agrees to purchase from Seller, all of the right, title and interest of Seller
in and to the Shares at the Closing (as defined in Section 1.03) on the terms
and subject to the conditions set forth in this Agreement.
1.02 Purchase Price. In consideration of the transfer to Buyer of the
Shares, Buyer's Parent will pay to Seller on the Closing Date (as defined in
Section 7.03) the total amount of Twenty-Five Million Dollars ($25,000,000) (the
"Purchase Price") in cash, less the Earnest Money Payment (as defined in Section
1.05).
1.03 The Closing.
(a) The closing of the transactions contemplated by this Agreement (the
"Closing") will take place at 1285 Drummers Lane, Wayne, Pennsylvania 19087, at
9:00 a.m. on March 29, 1999 (the "Closing Date"), or at such other place and
other date promptly following satisfaction or waiver of the closing conditions
set forth in Article VI mutually agreeable to Buyer and Seller.
1
<PAGE> 3
(b) Subject to the conditions set forth in this Agreement, the parties
agree to consummate the following "Closing Transactions" on the Closing Date:
(i) Seller will assign and transfer to Buyer good and valid title in
and to the Shares, free and clear of all Liens (as defined in Section
1.05), by delivering to Buyer certificates representing the Shares, duly
endorsed for transfer or accompanied by duly executed stock powers;
(ii) Buyer's Parent shall pay the Purchase Price, less the Earnest
Money Payment, to Seller by wire transfer of immediately available federal
funds to an account designated by Seller's Parent to Buyer's Parent prior
to the Closing; and
(iii) Each of the parties shall deliver to the other the documents
required to be delivered pursuant to Article VI and such other documents as
are reasonably requested by the other party or parties to fully consummate
the transactions contemplated by this Agreement.
(c) Buyer's Parent and Seller's Parent agree to make an election under
Section 338(h)(10) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the treasury regulations promulgated thereunder (the "Treasury
Regulations"), in form and substance satisfactory to Buyer's Parent and Seller's
Parent, with respect to the purchase and sale of the Shares, and to file such
election in the manner required by applicable Treasury Regulations. Prior to the
Closing Date, Buyer's Parent and Seller's Parent shall agree on a list of assets
to which the modified "aggregate deemed sale price" (as defined in the Treasury
Regulations) of the assets of the Acquired Companies shall be allocated. Such
allocation shall be determined by the parties, after taking into account the
applicable Treasury Regulations and the fair market value of such assets.
Buyer's Parent shall prepare for filing all of the elections, information
returns and statements (the "Reports") that may be required by Section
338(h)(10) of the Code. At least ten (10) days prior to filing such Reports,
Buyer's Parent shall deliver drafts thereof to Seller's Parent for Seller's
Parent's review and comment thereon. Buyer's Parent and Seller's Parent shall
file all other returns and tax information on a basis that is consistent with
such Reports prepared by Buyer's Parent and to which Seller's Parent has agreed.
Buyer's Parent and Seller's Parent shall jointly comply with the requirements
under any applicable state and local law so that the joint election under
Section 338(h)(10) of the Code is also valid and effective for purposes of such
state and local law.
1.05 Definitions. The terms defined in this Section 1.05 shall have the
meanings herein specified for all purposes of this Agreement.
"Agreement" is defined in the introductory paragraphs.
"Acquired Companies" is defined in the introductory paragraphs.
"Basket Amount" is defined in Section 9.02(b).
"Business" means I's medical records management and process flow
optimization businesses and MD's medical records management business as
currently conducted by I and MD, respectively.
"Buyer" is defined in the introductory paragraphs.
"Buyer Indemnified Parties" is defined in Section 9.02(a).
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"Buyer Losses" is defined in Section 9.02(a).
"Buyer's Parent" is defined in the introductory paragraphs.
"Buying Companies" means Buyer and Buyer's Parent, collectively.
"Cap Amount" is defined in Section 9.02(b).
"Claim" is defined in Section 9.04(a).
"Closing" is defined in Section 1.03.
"Closing Date" is defined in Section 1.03.
"Closing Transactions" is defined in Section 1.03(b).
"Code" is defined in Section 1.04.
"Date of Acquisition" means, with regard to I, August 31, 1995 and, with
regard to MD, July 29, 1997.
"Disclosure Schedule" is defined in Article II.
"Employees" means all of the employees of the Acquired Companies.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Financial Statements" is defined in Section 2.07.
"GAAP" is defined in Section 2.07.
"Governmental Body" means any federal, state or local governmental
authority or regulatory body with rule making authority.
"HSR Act" is defined in Section 2.04.
"I Common Stock" is defined in the introductory paragraphs.
"I Shares" is defined in the introductory paragraphs.
"Indemnified Party" is defined in Section 9.04.
"Intellectual Property Rights" means all rights to any trademark,
trademark application, service mark, service mark application, patent, patent
application, copyright, copyright application, legally protectable design or
formula or invention, logo, trade name, brand name, product name or trade
secret.
"Knowledge of the Acquired Companies" means actual knowledge of Howard
Tischler (President of I), Alan Belkin (President of MD), Scott Crouch (Director
of Finance and Accounting for I and MD) or Jerry Simmons (Vice President of
Sales of I and MD).
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"Latest Balance Sheet" is defined in Section 2.07.
"Leases" is defined in Section 2.11.
"Lien" means any security interest, pledge, mortgage, claim, lien or
encumbrance.
"Material Adverse Effect" means a material adverse effect on (i) the
business, financial condition or results of operations of the Acquired Companies
taken as a whole, or (ii) the ability of the Selling Companies to consummate the
transactions contemplated by this Agreement; provided, however, that there shall
be deemed not to be a Material Adverse Effect to the extent that such effect is
the result of conditions or factors affecting the economy generally or the
industry in which the Acquired Companies operate or the result of the
announcement of the transactions contemplated by this Agreement.
"MD Common Stock" is defined in the introductory paragraphs.
"MD Shares" is defined in the introductory paragraphs.
"Notifying Party" is defined in Section 9.04.
"Plans" is defined in Section 2.16.
"Purchase Price" is defined in Section 1.02.
"Reports" is defined in Section 1.04(c).
"Requirements of Laws" means any laws, statutes, regulations, rules,
codes or ordinances enacted, adopted, issued or promulgated by any Governmental
Body.
"Returns" is defined in Section 2.12(a).
"Seller Indemnified Parties" is defined in Section 9.03(a).
"Seller Losses" is defined in Section 9.03(a).
"Seller's Parent" is defined in the introductory paragraphs.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Seller" is defined in the introductory paragraphs.
"Selling Parties" means the Seller, Seller's Parent and the Acquired
Companies collectively.
"Shares" is defined in the introductory paragraphs.
"Software" means any computer program, operating system, or software of
any nature, including all object code, source code, and documentation therefor,
whether in machine-readable form, programming language or other language or
symbols, and whether
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stored, encoded, recorded or written on disk, tape, film, memory device, paper
or other media of any nature.
"Taxes" is defined in Section 2.12(b).
"Treasury Regulations" is defined in Section 1.04.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER'S PARENT AND THE ACQUIRED COMPANIES
Seller's Parent and the Acquired Companies hereby represent and warrant
to the Buying Companies that, except as set forth in the Disclosure Schedule
delivered to the Buying Companies on the date hereof (the "Disclosure Schedule")
(which Disclosure Schedule (i) sets forth the exceptions to the representations
and warranties contained in this Article II and (ii) identifies by section
number the representations and warranties to which such exceptions principally
apply):
2.01 Incorporation and Corporate Power. I is a corporation duly
incorporated, validly existing and in good standing under the laws of the
Delaware and has the corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. MD is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of California and has the corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder. Seller's Parent and
Seller each is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. Seller is a wholly owned subsidiary of Seller's Parent, and the
Acquired Companies are wholly owned subsidiaries of the Seller. Each of the
Selling Parties has the corporate power and authority to own and operate its
properties and to carry on its business as now conducted. The copies of the
Acquired Companies' articles of incorporation and bylaws which have been made
available to the Buyer prior to the date hereof reflect all amendments made
thereto and are correct and complete as of the date hereof. The Acquired
Companies are qualified to do business as a foreign corporation in all
jurisdictions in which the failure to do so would result in a Material Adverse
Effect. The jurisdictions where either of the Acquired Companies is qualified to
do business as a foreign corporation are listed in the Section 2.01 of the
Disclosure Schedule. Section 2.01 of the Disclosure Schedule sets forth a list
of all corporate, fictitious and other names under which either the Acquired
Companies have conducted business at any time since each entity's respective
Date of the Acquisition.
2.02 Execution and Delivery; Valid and Binding Agreements. The
execution, delivery and performance of this Agreement by each of the Selling
Parties and the consummation of the transactions contemplated thereby to be
performed by each of the Selling Parties hereby have been duly and validly
authorized by all requisite corporate action of each of the Selling Parties.
This Agreement has been duly executed and delivered by each of the Selling
Parties and constitutes a valid and binding obligation of each of the Selling
Parties, enforceable against each in accordance with its terms.
2.03 No Conflict. The execution, delivery and performance of this
Agreement by each of the Selling Parties and the consummation by the Selling
Parties of the transactions contemplated hereby, do not conflict with or result
in any breach of any of the
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provisions of, constitute a default under, result in a violation of, or result
in any Lien upon any of the Shares under the provisions of the articles of
incorporation or bylaws of any of the Selling Parties or any indenture,
mortgage, lease, other loan agreement by which any of the Selling Parties is
bound, or any law, statute, rule or regulation or order, judgment or decree to
which any of the Selling Parties is subject, in each case the result of which
would have a Material Adverse Effect.
2.04 Governmental Authorities; Consents. Except for the applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder (the "HSR Act")
and federal securities laws, none of the Selling Parties is required to submit
any notice, report or other filing to or with any Governmental Body in
connection with the execution or delivery by the Selling Parties of this
Agreement or the consummation of the transactions contemplated hereby, except
where failure to so submit such notice, report or other filing would not result
in a Material Adverse Effect. Except as set forth in Section 2.04 of the
Disclosure Schedule and except with regard to the HSR Act, no consent, approval
or authorization of any Governmental Body or any other person or entity is
required to be obtained by any of the Selling Parties in connection with each of
the Selling Parties' execution, delivery and performance of this Agreement or
the transactions contemplated hereby, except where failure to so obtain such
consent, approval or authorization would not result in a Material Adverse
Effect.
2.05 Subsidiaries. Neither of the Acquired Companies have any
subsidiaries.
2.06 Common Stock and Securities; Corporate Records. The authorized
capital stock of I consists of 1,000 shares of Common Stock, par value $ 0.001
per share, of which 1,000 shares are issued and outstanding. The authorized
capital stock of MD consists of 1,000 shares of Common Stock, no par value per
share, of which 1,000 shares are issued and outstanding. All of such Shares for
each of the Acquired Companies have been duly authorized and validly issued and
are fully paid and non-assessable and none of them was issued in violation of
any preemptive or other right. Seller is not a party to or bound by any contract
to issue, sell or otherwise dispose of or redeem, purchase or otherwise acquire
any capital stock or other security of the Acquired Companies or any other
security exercisable or exchangeable for or convertible into any capital stock
or other security of the Acquired Companies, and there is no outstanding option,
warrant or other right to subscribe for or purchase, or contract with respect to
any capital stock or any other security of the Acquired Companies or any other
security exercisable or convertible into any capital stock or any other security
of the Acquired Companies. Seller owns all of the outstanding shares of the
common stock of I and MD, respectively, free and clear of any and all Liens.
Copies of the contents of the Acquired Companies' minute books and stock books
have been made available to Buyer. The minute books of the Acquired Companies
reflect all material actions taken by Board of Directors and of the shareholders
of each of the Acquired Companies since each entity's respective Date of
Acquisition.
2.07 Financial Statements. Each of the Acquired Companies has delivered
or made available to Buyer copies of the unaudited balance sheets and statements
of income for each of the Acquired Companies as of December 31, 1998 and
December 31, 1997 and for the twelve (12) month periods then ended, and the
unaudited balance sheets as of January 31, 1999 (the "Latest Balance Sheet") and
statements of income for each of the Acquired Companies as of January 31, 1999
and for the one (1) month period then ended (collectively referred to herein as
the "Financial Statements"). The Financial Statements (i) have been prepared
from the books and records of each of the Acquired Companies in accordance with
United States generally accepted accounting principles ("GAAP") consistently
applied and maintained
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throughout the periods indicated, except that the Financial Statements do not
contain footnotes, prior period comparative data, current or deferred income tax
assets or liabilities and are subject to normal year-end adjustments which will
not, in the aggregate, be material in amount, and that I revised its revenue
recognition practice from recognizing revenue on an as billed basis to
recognizing revenue on a percentage of completion basis in January 1998, and
(ii) fairly present, in all material respects, the financial position, assets
and liabilities of each of the Acquired Companies at the dates indicated; and
the statement of income fairly presents the results of operations of each of the
Acquired Companies for the periods indicated. To the Knowledge of the Acquired
Companies and except as set forth on Section 2.07 of the Disclosure Schedules or
the Financial Statements, there exists no material contingent liabilities. All
accounts receivable have been recorded on the books of the Acquired Companies in
accordance with GAAP.
2.08 Acquired Companies' Assets Section 2.08 of the Disclosure Schedule
contains an accurate and complete list of all material assets of each of the
Acquired Companies as reflected on the Latest Balance Sheet, including (i)
accounts receivable, (ii) other current assets, itemized by category, (iii)
tangible property and (iv) capitalized and purchased Software. Section 2.08(b)
of the Disclosure Schedule accurately identifies all material assets that are
being leased or licensed to each of the Acquired Companies.
2.09 Acquired Companies' Obligations The Acquired Companies have no
material obligations that are not reflected or described in the Financial
Statements, except for obligations: (i) under contracts of the type listed or
not required to be listed in Section 2.13 of the Disclosure Schedule, (ii)
arising out of customer and related transactions that have arisen after the date
of the Latest Balance Sheet in the ordinary course of business, or (iii)
described in Section 2.09 of the Disclosure Schedule.
2.10 No Material Adverse Effect. Since the date of the Latest Balance
Sheet, (i) there has been no Material Adverse Effect, and the Acquired Companies
have conducted operations in the ordinary course of business consistent in all
material respects with past practices or (ii) the Acquired Companies have not
taken any actions of the type prohibited in Section 4.01(b) of this Agreement.
2.11 Real Property. Neither of the Acquired Companies own any real
property. Section 2.11 of the Disclosure Schedule lists all of the real property
leased by the Acquired Companies, and the Acquired Companies have made copies of
the leases covering such listed property (the "Leases") available to Buyer. To
the Knowledge of the Acquired Companies, the Leases are in full force and
effect, and the appropriate one of the Acquired Companies holds a valid
leasehold interest under each of the Leases. To the Knowledge of the Acquired
Companies, no party to any of the Leases is in default, and no circumstances
exist which, if unremedied, would, either with or without notice or the passage
of time or both, result in such default under any of the Leases. To the
Knowledge of the Acquired Companies, no occupancy, maintenance or use of the
leased premises is in breach or violation of any applicable contract or
Requirement of Laws, and no notice from any lessor, Governmental Body or other
person or entity has been received by the Acquired Companies claiming any breach
or violation of any applicable contract or Requirement of Laws. To the Knowledge
of the Acquired Companies, there are not any hazardous substances on or under
any such leased premises.
2.12 Tax Matters.
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(a) Seller's Parent or the Acquired Companies have (i) properly prepared
and timely filed all returns, declarations, information returns and statements,
including those filed on a consolidated or unitary basis with Seller's Parent
with respect to the Acquired Companies ("Returns"), required to be filed prior
to the Closing Date in respect of any Taxes payable by Seller's Parent or the
Acquired Companies; and (ii) timely and properly paid prior to the Closing Date
all Taxes shown to be due and payable on such Returns. No deficiency for any
Taxes has been asserted or assessed against Seller's Parent or the Acquired
Companies with respect to the Acquired Companies that has not been resolved and
paid in full. Seller's Parent or each of the Acquired Companies has properly
withheld from payments to its employees, agents, representatives, contractors
and suppliers all amounts required to be withheld for Taxes with respect to the
Acquired Companies and has timely paid prior to the Closing Date such Taxes to
the proper taxing authorities.
(b) For purposes of this Agreement, "Taxes" means any federal, state or
local income, earnings, profits, gross receipts, franchise, capital stock, net
worth, sales, use, occupancy, general property, real property, personal
property, intangible property, transfer, excise, payroll, withholding,
unemployment compensation, social security, value added, retirement or other or
other fee or charge in the nature of a tax, or any interest or penalty thereon.
2.13 Contracts and Commitments.
(a) Section 2.13 of the Disclosure Schedule lists the following
contracts and other agreements to which each of the Acquired Companies is a
party (however, with respect to contracts with customers of the Acquired
Companies, only such contracts pursuant to which revenue has been received
within the last three years have been listed):
(i) customer agreements, including agreements relating to the license of
software, and any other agreements involving the license of Software or
Intellectual Property by either of the Acquired Companies to a third party
so long as such license has generated payments of greater than $50,000 in
the last three years or where the total commitment for payment in the future
exceeds $50,000;
(ii) all reseller or redistribution agreements entered into for the
resale of computer hardware or software; and each lease, license or
agreement under which either of the Acquired Companies holds or operates any
property, real or personal, or any Software or Intellectual Property Rights
owned by any other party, that is material to the operation of the Business;
(iii) agreements under which either of the Acquired Companies has
created, incurred, assumed or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, in excess of $50,000 or under
which it has imposed a Lien on any of its tangible assets, or any leases for
real property;
(iv) any written agreement for the employment of any individual on a
full time, part time, consulting or other basis providing annual
compensation in excess of $50,000 or providing severance benefits;
(v) any agreement under which either of the Acquired Companies has
advanced or loaned any amount to any of its directors, officers and
employees outside the ordinary course of business; and
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(vi) agreements for the sale of any capital or other assets in excess of
$200,000.
(b) To the Knowledge of the Acquired Companies, the Acquired Companies
and the other party or parties thereto have performed all material obligations
required to be performed by it in connection with the contracts disclosed in
Section 2.13 of the Disclosure Schedule, except where the failure to perform
such obligations would not have a Material Adverse Effect, and the Acquired
Companies are not in receipt of any written claim of material default under any
contract or commitment disclosed in Section 2.13 of the Disclosure Schedule.
2.14 Software and Intellectual Property Rights. Section 2.14 of the
Disclosure Schedule describes the trademark and service mark registrations and
applications, unregistered trademarks and service marks, patents, patent
applications, copyright registrations and copyright applications that are used
in the conduct of the Business and are material to the operation of the
Business, and the product name of the Software licensed, maintained or under
development by the Acquired Companies that are material to the Business. The
Acquired Companies own and possess all right, title and interest in, or hold a
valid license (pursuant to license agreements identified in the Disclosure
Schedule or falling below the required thresholds in the Disclosure Schedule)
to, the Intellectual Property Rights and the Software set forth in Section 2.14
of the Disclosure Schedule, except where the failure to own or possess such
right would not result in a Material Adverse Effect. Except as disclosed in
Section 2.14(b) of the Disclosure Schedule, neither of the Acquired Companies
have received any written notice of any infringement, misappropriation or
violation of any Software or Intellectual Property Rights of any other person or
entity, and, to the Knowledge of the Acquired Companies, no such infringement,
misappropriation or violation has occurred. To the Knowledge of the Acquired
Companies, no person or entity has infringed or misappropriated any of either
Acquired Companies' Software or Intellectual Property Rights set forth in
Section 2.14 of the Disclosure Schedule. To the Knowledge of the Acquired
Companies, each has the right, free and clear of any material Liens, to use,
modify, create derivative works for and otherwise exploit all of the Software
and Intellectual Property Rights described in Section 2.14(b) of the Disclosure
Schedule, other than the Software and Intellectual Property Rights identified in
Section 2.14 of the Disclosure Schedule as being licensed or otherwise subject
to third party rights pursuant to an agreement and other than such Software and
Intellectual Property Rights licensed or otherwise subject to third party rights
pursuant to an agreement that falls below the required thresholds in the
Disclosure Schedule. Since its Date of Acquisition, each the of the Acquired
Companies has used reasonable measures to maintain its proprietary Software as a
trade secret and has a general practice of imposing reasonable confidentiality
restrictions on its customers and employees.
2.15 Litigation. To the Knowledge of the Acquired Companies, and except
as described in Section 2.15 of the Disclosure Schedule, there are no actions,
suits, proceedings, injunctions, judgments, orders, decrees or rulings pending
or threatened against either of the Acquired Companies.
2.16 Employee Benefit Plans. Section 2.16 of the Disclosure Schedule
sets forth a list of all of the Employees whose annual compensation exceeds
$50,000, including names, positions and current compensation. Neither of the
Acquired Companies has any union or collective bargaining contract in effect or
being negotiated that relates to or affects the Employees. All employee benefit
plans (as defined in Section 3(3) of ERISA) and any other benefit or welfare
plan, trust agreement or arrangement including, without limitation, any
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bonus, vacation, severance, group insurance, hospitalization, deferred
compensation, pension, profit-sharing, payroll savings, retirement, death
benefit, stock option, equity award or fringe benefit plan, which either of the
Acquired Companies maintains or to which either of the Acquired Companies
contributes for the benefit of the Employees, former employees or retired
employees of the Acquired Companies (collectively, the "Plans") comply in all
material respects with the requirements of ERISA and the Code, except for such
failures to comply which could not reasonably be expected to have a Material
Adverse Effect. The Plans are listed in Section 2.16 of the Disclosure Schedule
and copies or descriptions of the Plans have been made available to Buyer.
Section 2.14 of the Disclosure Schedule identifies all bonus arrangements with
the Employees entered into by either of the Acquired Companies in connection
with the transactions contemplated by this Agreement. Except as set forth in the
Section 2.16 of the Disclosure Schedule, no event has occurred that will result
in material liability to either of the Acquired Companies in connection with any
employee pension benefit plan (as defined in Section 3(2) of ERISA) established,
maintained or contributed to by the either of the Acquired Companies or any
other entity which, together with the one or both of the Acquired Companies,
constitute elements of a controlled group of corporations (within the meaning of
Section 414(b) of the Code), or a group or trades or businesses under common
control (within the meaning of Section 414(c) of the Code or Section 4001 of
ERISA), or an affiliated service group (within the meaning of Section 414(m) of
the Code), or another arrangement covered by Section 414(o) of the Code.
2.17 Compliance with Laws. Neither of the Acquired Companies is in
violation of or default under any Requirements of Laws applicable to it, the
effect of which, individually or in the aggregate with other such violations or
defaults, would or could reasonably be expected to have a Material Adverse
Effect.
2.18 Brokerage. No third party shall be entitled to receive any
brokerage commissions, finder's fees, fees for financial advisory services or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of Seller,
Seller's Parent or the Acquired Companies, other than the fees and expenses of
Broadview International LLC, which will be paid by Seller's Parent.
2.19 Insurance. The insurance policies (excluding group insurance
policies disclosed under Section 2.16) maintained by or for the benefit of the
each of the Acquired Companies are believed by the Acquired Companies to be
reasonably adequate for the Business engaged in by the Acquired Companies, and
neither of the Acquired Companies has received any notice of cancellation with
respect to any such insurance policies.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYING COMPANIES
The Buying Companies hereby represents and warrants to Seller and
Seller's Parent that:
3.01 Incorporation and Corporate Power. Buyer's Parent and Buyer are
corporations duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and each has the requisite corporate power and
authority to execute and deliver this Agreement and perform its obligations
hereunder. Buyer is a wholly owned subsidiary of Buyer's Parent.
3.02 Execution, Delivery; Valid and Binding Agreement. The execution,
delivery and performance of this Agreement by the Buying Companies and the
consummation of the transactions contemplated to be performed by the Buying
Companies hereby have been duly and validly authorized by all requisite
corporate action of the Buying Companies. This Agreement has been duly executed
and delivered by the Buying Companies and constitutes the valid and binding
obligation of the Buying Companies, enforceable against the Buying Companies in
accordance with its terms.
3.03 No Conflict. The execution, delivery and performance of this
Agreement by the Buying Companies and the consummation by the Buying Companies
of the transactions contemplated hereby do not conflict with or result in any
breach of any of the provisions of, constitute a default under or result in a
violation of the provisions of the articles of incorporation or bylaws of the
Buying Companies or any indenture, mortgage, lease, loan agreement (except as
disclosed by the Buying Companies in Schedule 3.03) or other agreement or
instrument by which the Buying Companies are bound or affected, or any law,
statute, rule or regulation or order, judgment or decree to which the Buying
Companies are subject.
3.04 Governmental Bodies; Consents. Except for the applicable
requirements of the HSR Act and federal securities laws, the Buying Companies
are not required to submit any notice, report or other filing with any
Governmental Body in connection with the execution or delivery by it of this
Agreement or the consummation of the transactions contemplated hereby. Except
with regard to the HSR Act, no consent, approval or authorization of any
Governmental Body or any other party or person is required to be obtained by the
Buying Companies in connection with its execution, delivery and performance of
this Agreement or the transactions contemplated hereby.
3.05 Brokerage. No third party shall be entitled to receive any
brokerage commissions, finder's fees, fees for financial advisory services or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of the
Buying Companies.
3.06 Investment Representations. The Shares are being purchased for
Buyer's own account and not with the view to, or for resale in connection with,
any distribution or public offering thereof within the meaning of the Securities
Act.
3.07 Financing. As of the date hereof, Buyer' Parent and/or Buyer has
the ability to and intends to finance the aggregate of the Purchase Price with
cash on hand (meaning those assets designated on Buyer's and/or Buyer's Parent's
balance sheet as cash and
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equivalents) and will not take any action which would impair its ability to
finance the Purchase Price.
ARTICLE IV
COVENANTS OF ACQUIRED COMPANIES
4.01 Conduct of the Business. From the date hereof until the Closing
Date, each of the Acquired Companies agrees that, from the date hereof until the
Closing Date, unless otherwise consented to by Buyer in writing:
(a) The Business shall be conducted in the ordinary course consistent in
all material respects with past practices. The Acquired Companies shall use
commercially reasonable efforts to preserve the Business' organization and
relationships intact;
(b) Neither of the Acquired Companies shall, directly or indirectly, do
or permit to occur any of the following: (i) issue or sell any additional shares
of, or any options, warrants, conversion privileges or rights of any kind to
acquire any shares of, debt or equity securities of the Acquired Companies, (ii)
sell, pledge, dispose of or encumber any assets of the Acquired Companies,
except in the ordinary course of business consistent in all material respects
with past practices; (iii) amend or propose to amend the articles of
incorporation or bylaws of the Acquired Companies; (iv) split, combine or
reclassify any outstanding shares of capital stock of the Acquired Companies, or
declare, set aside or pay any dividend or other distribution payable in cash,
stock, property or otherwise with respect to shares of common stock of the
Acquired Companies; (v) redeem, purchase or acquire or offer to acquire any
shares of common stock or other securities of the Acquired Companies; (vi)
acquire (by merger, exchange, consolidation, acquisition of stock or assets or
otherwise) any corporation, partnership, joint venture or other business
organization or division or material assets thereof; (vii) change or adopt any
employee benefit plan (except in connection with an overall change by Seller's
Parent, in connection with the termination of MD's 401k and profit sharing plan,
or as set forth in the Disclosure Schedule); (viii) incur any obligation, make
any loan, or enter into any contract, commitment or transaction (other than
contracts, commitments or transactions with customers or related transactions
and except as set forth on the Disclosure Schedule) outside the ordinary course
of business; or (ix) enter into or propose to enter into, or modify or propose
to modify, any agreement, arrangement or understanding with respect to any of
the matters set forth in this Section 4.01(b); and
(c) On or before the Closing Date, the Acquired Companies shall satisfy
all obligations for the following liabilities included on the Latest Balance
Sheet, (i) accrued incentive compensation, (ii) accrued President's Club
expenses and (iii) accrued employee stock purchase plan (which shall include all
amounts accrued as of the Closing Date).
4.02 Access to Books and Records. Between the date hereof and the
Closing Date, the Acquired Companies shall afford to Buyer and its authorized
representatives access at reasonable times and upon reasonable notice to the
offices, properties, books, records, selected officers and selected employees of
the Acquired Companies, and shall deliver to Buyer such documents reasonably
requested by Buyer.
4.03 HSR Filing. On March 8, 1999, Seller's Parent shall make or cause
to be made its filings under the HSR Act regarding the transfer of the Shares
requesting early termination of the applicable waiting period and shall provide
a copy thereof to Buyer's
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Parent. Seller's Parent will coordinate and cooperate with Buyer in exchanging
such information, and will provide such reasonable assistance as Buyer's Parent
may request, in connection with the filings by Buyer's Parent and Seller's
Parent under the HSR Act and under federal securities laws.
4.04 Conditions. Seller's Parent and the Acquired Companies shall use
its good faith efforts to cause the conditions set forth in Section 6.01 to be
satisfied and to consummate the transactions contemplated herein as soon as
reasonably possible after the satisfaction thereof. Seller's Parent or the
Acquired Companies shall promptly notify Buyer's Parent if, to the Knowledge of
the Acquired Companies, any such condition becomes impossible to be satisfied.
Seller's Parent shall promptly advise Buyer's Parent of the receipt of any bona
fide proposal received by any of the Selling Parties after the date of this
Agreement from a party other than Buyer's Parent regarding such party's interest
in acquiring one or both of the Acquired Companies or a material part thereof.
ARTICLE V
COVENANTS OF BUYER
The Buying Companies covenant and agree with Seller and Seller's Parent
as follows:
5.01 HSR Filing. On March 8, 1999, Buyer's Parent shall make its filing
under the HSR Act regarding the purchase of the Shares requesting early
termination of the applicable waiting period and shall provide a copy thereof to
Seller's Parent. Buyer's Parent will coordinate and cooperate with Seller's
Parent in exchanging such information, and will provide such reasonable
assistance as Seller's Parent may request, in connection with the filings by
Buyer's Parent and Seller's Parent under the HSR Act and under federal
securities laws.
5.02 Conditions. The Buying Companies shall use their good faith efforts
to cause the conditions set forth in Section 6.02 to be satisfied and to
consummate the transactions contemplated herein as soon as reasonably possible
after the satisfaction thereof. Buyer's Parent shall promptly notify Seller's
Parent if, to the knowledge of the Buying Companies, any such condition becomes
impossible to be satisfied.
ARTICLE VI
CONDITIONS TO CLOSING
6.01 Conditions to the Buying Companies' Obligation. The obligation of
Buying Companies to consummate the transactions contemplated by this Agreement
is subject to the satisfaction of the following conditions:
(a) The representations and warranties made in Article II by the
Seller's Parent and Acquired Companies shall be true and correct as of the
Closing Date (provided that those representations or warranties made as of a
specified date shall only need to have been true on and as of such date) except
to the extent that a breach of such representations does not cause a Material
Adverse Effect;
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(b) The Selling Parties shall have performed in all material respects
all of the material covenants and agreements required to be performed and
complied with by them under this Agreement at or prior to the Closing;
(c) The applicable waiting periods under the HSR Act shall have expired
or been terminated;
(d) No action, suit, or proceeding brought by a Governmental Body or
other person or entity that is not frivolous shall be pending before any court
of any federal, state or local wherein an unfavorable injunction, judgment,
order, decree, ruling, or charge would (i) prevent consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, or (iii)
have a Material Adverse Effect, and no such injunction, judgment, order, decree,
ruling, or charge shall be in effect; and
(e) On the Closing Date, Seller and Seller's Parent shall have delivered
to Buyer all of the following:
(i) certificate of the President or a Vice President of Seller's Parent,
dated the Closing Date, stating that the conditions set forth in subsections
(a) and (b) above have been satisfied
(ii) the stock certificates representing the Shares, duly endorsed for
transfer or accompanied by a duly executed stock power;
(iii) the Acquired Companies' minute books, stock transfer records,
corporate seal and other materials related to the Acquired Companies'
corporate administration;
(iv) Certificates of Good Standing from the Secretaries of State of the
state of Delaware for I and Seller and the state of California for MD
evidencing the good standing of I, Seller and MD, respectively, in the
applicable jurisdiction; and
(v) a copy of the resolutions adopted by the Board of Directors of the
Seller and Seller's Parent, authorizing the execution, delivery and
performance of this Agreement and the consummation of all of the
transactions contemplated by this Agreement, along with certificates
executed on behalf of each of Seller and Seller's Parent, respectively, by
its corporate secretary certifying to Buyer that such copies are true,
correct and complete copies of such resolutions and that such resolutions
and bylaws were duly adopted and have not been amended or rescinded;
6.02 Conditions to the Selling Parties' Obligation. The obligation of
the Selling Parties to consummate the transactions contemplated by this
Agreement is subject to the satisfaction of the following conditions on or
before the Closing Date:
(a) The representations and warranties made in Article III by the Buying
Companies shall be true and correct as of the Closing Date (provided that those
representations or warranties made as of a specified date shall only need to
have been true on and as of such date) in all material respects;
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(b) The Buying Companies shall have performed in all material respects
all of the material covenants and agreements required to be performed and
complied with by them under this Agreement at or prior to the Closing;
(c) The applicable waiting periods under the HSR Act shall have expired
or been terminated;
(d) No action, suit, or proceeding brought by a Governmental Body or
other person or entity that is not frivolous shall be pending before any court
of any federal, state or local wherein an unfavorable injunction, judgment,
order, decree, ruling, or charge would (i) prevent consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, or (iii)
have a Material Adverse Effect, and no such injunction, judgment, order, decree,
ruling, or charge shall be in effect; and
(e) On the Closing Date, the Buying Companies will have delivered to
Seller and Seller's Parent all of the following:
(i) a certificate of the President or a Vice President of the Buying
Companies, dated the Closing Date, stating that the conditions set forth in
subsections (a) and (b) above have been satisfied;
(ii) evidence, to Seller's reasonable satisfaction, that the wire
transfer of the Purchase Price to the account indicated by Seller has
occurred; and
(iii) a copy of the resolutions adopted by the Board of Directors of
each of the Buying Companies authorizing the execution, delivery and
performance of this Agreement and the consummation of all of the
transactions contemplated by this Agreement, along with a certificate
executed on behalf of the Buying Companies by their corporate secretary
certifying to Seller's Parent that such copies are true, correct and
complete copies of such resolutions and that such resolutions were duly
adopted and have not been amended or rescinded.
ARTICLE VII
TERMINATION
7.01 Termination.
(a) This Agreement may be terminated at any time prior to the Closing by
the mutual consent of Buyer's Parent and Seller's Parent;
(b) This Agreement shall automatically terminate without any further
action of any party if, (i) the transactions contemplated hereby have not been
consummated by March 31, 1999 unless, in its sole discretion, Seller's Parent
extends this Agreement by providing written notice to Buyer's Parent of the
terms of the extension, which such terms shall not extend the Agreement beyond
April 12, 1999 (in either case such date being referred to as the "Termination
Date"), (ii) the Board of Directors of Buyer's Parent does not approve this
Agreement and the transactions contemplated in this Agreement by 3:00 p.m.
(Eastern Time) on March 7, 1999, (iii) Buyer's Parent fails to file under the
HSR Act by 5:00 p.m. (Eastern Time) on March 8, 1999, or (iv) Buyer's Parent
fails to wire the Earnest Money Payment to Seller's Parent by 3:00 p.m. (Eastern
Time) on March 8, 1999. In the event
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Seller's Parent chooses to extend this Agreement pursuant to the terms of this
Section 7.01(b), this Agreement shall automatically terminate without any
further action of any party if the transactions contemplated hereby have not
been consummated by April 12, 1999.
7.02 Effect of Termination. In the event of termination of this
Agreement by Buyer's Parent or Seller's Parent as provided in Section 7.01, this
Agreement shall become void and there shall be no liability on the part of the
Buying Companies or the Selling Companies, or their respective shareholders,
officers, or directors, (i) except with respect to willful breaches of this
Agreement prior to the time of such termination and (ii) except that the
Confidentiality Agreement shall survive according to its own terms and
conditions and Sections 10.01, 10.04, 10.06, 10.11 and 10.12 hereof shall
survive indefinitely. Seller's Parent shall be entitled to retain the Earnest
Money Payment in the event of any termination of this Agreement, except as may
be expressly otherwise provided in Section 7.03.
7.03 Earnest Money Payment. By 3:00 p.m. (Eastern Time) on March 8,
1999, Buyer's Parent will pay to Seller by check or wire the amount of Two
Million Dollars ($2,000,000) as an earnest money payment (the "Earnest Money
Payment"). The Earnest Money Payment (including any interest that may accumulate
thereon) is nonrefundable, except in the event of (i) termination pursuant to
Section 7.01(b) resulting from: (X) a willful breach of this Agreement by one of
the Selling Parties, or (Y) the failure of the applicable waiting periods under
the HSR Act to have expired or been terminated by the Termination Date for a
reason other than either of the Buying Companies' failure to comply with any of
the covenants of Article V, or (ii) termination pursuant to Section 7.01(a) and,
in either such case, the Earnest Money Payment (without interest) shall be
promptly paid to Buyer's Parent by Seller.
ARTICLE VIII
ADDITIONAL AGREEMENTS
To the extent any post Closing obligation or covenant involves the
Acquired Companies, the Buying Companies shall cause the Acquired Companies to
take all actions or undertakings or to refrain from taking any action or
undertaking, as the case may be, necessary for the Acquired Companies to fulfill
or comply with each such post Closing obligation or covenant.
8.01 Tax Matters.
(a)(i) Income for Periods through Closing Date. Seller's Parent shall
prepare or cause to be prepared and shall file or cause to be filed on a timely
basis, for taxable periods of the Acquired Companies ending on or prior to the
Closing Date, all Returns with respect to the Acquired Companies which are filed
on a consolidated or unitary basis with Seller's Parent ("Consolidated
Returns"). Seller's Parent shall prepare or cause to be prepared, for taxable
periods of the Acquired Companies ending on or prior to the Closing Date, all
Returns with respect to the Acquired Companies which are not filed on a
consolidated or unitary basis with Seller's Parent ("Separate Company Returns").
Seller's Parent will include the income of the Acquired Companies for all
applicable periods ending on or prior to the Closing Date on all such Returns
and shall pay or cause to be paid all Taxes shown on all such Returns. Buyer's
Parent shall review such Separate Company Returns (but shall not change their
content without Seller's Parent's consent) and shall cause the Acquired
Companies to timely file such Separate Company Returns. The income of the
Acquired Companies through the Closing Date shall be computed as if its taxable
year ended on and included the Closing Date. The Acquired
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Companies shall provide to Seller's Parent such information as may be required
for Seller's Parent to prepare such Returns. The income of the Acquired
Companies to be included on Returns pursuant to this Section 8.01 shall include
any income or gain from the deemed asset sale resulting from the Section
338(h)(10) election provided in Section 1.04.
(ii) Income for Periods Straddling the Closing Date. With respect to
each jurisdiction in which one Return (a "Full Year Return") for the period
beginning on the Closing Date to December 31, 1999 will be required (i.e., no
Consolidated Return or short-period Separate Company Return may be filed),
Seller's Parent shall prepare or cause to be prepared and shall provide to
Buyer's Parent by December 31, 1999 a separate company Return for each of the
Acquired Companies for the short period ending on the Closing Date, on a pro
forma basis as if a short period Separate Company Return were required ("Pro
Forma Return"). Pro Forma Returns shall be prepared on the same basis as short
period Separate Company Returns under Section 8.01(a)(i); provided, however, to
the extent any refund received by Buyer's Parent is attributable to the period
reflected on the Pro Forma Return, Buyer's Parent shall reimburse Seller for
such amount. Pro Forma Returns shall not be filed, but Seller's Parent shall pay
to the Acquired Companies the amount of Taxes shown thereon. Buyer's Parent
shall prepare or cause to be prepared the Full Year Returns, and shall cause the
Acquired Companies to timely file the Full Year Returns and pay the amount of
Taxes shown thereon.
(b) Income for Periods After Closing Date. Buyer's Parent shall prepare
or cause to be prepared and shall file or cause to be filed on a timely basis,
for all taxable periods of the Acquired Companies beginning on or after the
Closing Date, all Returns with respect to the Acquired Companies, whether filed
on a consolidated, unitary or separate company basis, and shall pay or cause to
be paid all Taxes shown on such Returns. Seller's Parent shall provide to
Buyer's Parent such information as may be required for Buyer's Parent to prepare
such Returns.
(c) Control of Audits. Seller's Parent shall have sole control over all
audits and other proceedings which relate to Taxes of the Acquired Companies for
any period that ends on or before the Closing Date, and Seller's Parent shall
have responsibility for any Taxes due and shall receive the benefit of any
refunds resulting from such audits. Buyer's Parent shall have sole control over
all audits and other proceedings which relate to Taxes of the Acquired Companies
for any period that begins on or after the Closing Date, and Buyer's Parent
shall have responsibility for any Taxes due and shall receive the benefit of any
refunds resulting from such audits. Seller's Parent and Buyer's Parent shall
cooperate as to any audits or other proceedings which relate to Taxes of the
Acquired Companies for any period that straddles the Closing Date.
(d) Transfer Taxes. Notwithstanding any other provisions of this
Agreement to the contrary, (i) Buyer shall pay all sales, use, stock transfer,
stamp, recording, real property transfer and similar taxes, if any, required to
be paid in connection with the sale of Shares contemplated by this Agreement,
and (ii) Buyer shall pay all sales, use, stock transfer, stamp, recording, real
property transfer and similar taxes, if any, required to be paid in connection
with the deemed asset sale resulting from the Section 338(h)(10) election
provided in Section 1.04.
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8.02 Employees and Employee Benefit Matters.
(a) Except as set forth in Section 8.02(a) of the Disclosure Schedule,
effective as of the Closing, the Buying Companies will cause the Acquired
Companies to continue to employ the Employees that are not listed in Section
8.02(a) of the Disclosure Schedule on substantially the same terms in effect for
such Employees while they were employees of either of the Acquired Companies
immediately prior to Closing Date; provided that no provision of this Agreement
shall prohibit the Acquired Companies after the Closing Date from terminating
the employment of any Employees.
(b)(i) The Buying Companies shall not adopt, assume, contribute to or
otherwise become a sponsoring employer of any employee pension benefit plan of
Seller's Parent. The appropriate Selling Parties shall take such actions as are
necessary to provide that the Employees that are not listed in Section 8.02(a)
of the Disclosure Schedule shall cease to be eligible to participate in and
accrue benefits under any employee pension benefit plan maintained by the
Seller's Parent. There shall be no transfer of assets or liabilities from any
employee pension benefit plan of the Selling Parties to any plan of the Buying
Companies. Seller's Parent shall authorize lump sum distributions of vested
benefits to the Employees that are not listed in Section 8.02(a) of the
Disclosure Schedule in connection with the transactions under this Agreement
from any of the Selling Parties' employee pension benefit plans pursuant to
Section 401(k)(10) of the Code and Seller's Parent shall permit the Employees
that are not listed in Section 8.02(a) of the Disclosure Schedule who so elect,
to make a "direct rollover" of their accounts with Seller's Parent to any
similar plan of the Buying Companies.
(ii) Subject to the general requirements of this Section 8.02(b), the
Buying Companies shall be free to establish such employee pension benefit plans
as it deems appropriate for the Employees that are not listed in Section 8.02(a)
of the Disclosure Schedule. Buyer shall recognize the applicable Employee's
years of service recognized by the Acquired Companies for the purpose of
determining eligibility, vesting and accrual of benefits under such employee
pension benefit plans.
(c)(i) The Buying Companies shall not adopt, assume, contribute to or
otherwise become a sponsoring employer of any employee welfare benefit plan of
Seller's Parent. Seller's Parent's plans shall be responsible for claims
incurred thereunder on or before the Closing Date but shall not be responsible
for any claims of this nature incurred after the Closing Date. There shall be no
transfer of assets or liabilities from any employee welfare benefit plan of
Seller's Parent to any plan of the Buying Companies.
(ii) Notwithstanding any eligibility provision that may be generally
effective for new employees of Buyer, effective immediately after the Closing
Date, each Employee, spouse or dependent shall be eligible to be covered by a
group health plan (as such term is defined in Sections 601 et. seq. of ERISA)
which exists or which shall be created by the Buying Companies for this purpose
on terms and conditions which are substantially equivalent to the terms and
conditions applicable to other, similarly situated, Employees of Buyer; provided
that to the extent any such Employee is receiving short-term disability benefits
under Seller's Parent's Plan as of the Closing Date and Buyer cannot provide
such benefits to such Employee, Buyer shall reimburse Seller's Parent for the
continuation of such short-term disability benefits. Such group health plan
shall not contain any exclusion or limitation with respect to any preexisting
condition (as that term is used in Section 602(2)(D) of ERISA) of any Employee,
spouse or dependent.
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(iii) Notwithstanding any eligibility provision that may be generally
effective for new employees of Buyer, effective immediately after the Closing
Date, each Employee, spouse or dependent shall be eligible to be covered by a
group life insurance plan which exists or which shall be created by Buyer for
this purpose on terms and conditions which are substantially equivalent to the
terms and conditions applicable to other, similarly situated, employees of
Buyer. Such group life insurance plan shall not contain any exclusion or
limitation with respect to any preexisting condition of any Employee, spouse or
dependent.
(iv) The Buying Companies shall cause the Acquired Companies to
preserve, and provide all Employees that are not listed in Section 8.02(a) of
the Disclosure Schedule with, all accrued vacation and accrued sick time that
each such Employee has earned as an employee of the Acquired Companies as of the
Closing Date.
(v) Subject to the general requirements of this Section 8.02(c) and the
foregoing requirements regarding group health and life plans, Buyer shall be
free to establish such employee welfare benefit plans as it deems appropriate
for the applicable Employees. Buyer shall recognize the applicable Employee's
years of service recognized by the Acquired Companies for the purpose of
determining eligibility, vesting and accrual of benefits under such employee
welfare benefit plans.
(c) For purposes of clarification as between the Selling Companies and
the Buying Companies, Seller's Parent shall maintain all responsibility,
obligations and liability with respect to stock options of SunGard Data Systems
Inc. granted to Employees prior to the Closing Date.
8.03 Insurance. The parties acknowledge that both Seller's Parent and
Buyer's Parent maintain centralized insurance programs for their respective
affiliated groups. Seller's Parent and Buyer's Parent shall cooperate with each
other, taking into account the extent to which their respective policies are
"occurrence" or "claims made" policies, in order to maintain appropriate
insurance coverage for the Acquired Companies without any lapse in coverage
caused by the sale of Shares contemplated hereby. Seller's Parent and Buyer's
Parent shall cooperate with each other in the handling of insurance claims
relating to the Business that straddles the Closing Date.
8.04 Cash Management. The parties acknowledge that the cash generated by
and used by the Acquired Companies is swept out of or funded into the Acquired
Companies, as the case may be, by Seller's Parent on a daily basis. The parties
also acknowledge that both Seller's Parent and Buyer's Parent maintain
centralized cash management programs for their respective affiliated groups.
Because of Seller's Parent's centralized cash management system, the Acquired
Companies may have a negative cash balance on their books, such negative cash
balance is not intended to become a liability of the Buying Companies. To the
fullest extent practicable, Seller's Parent shall cause all intercompany
receivables and payables involving the Acquired Companies to be satisfied by
Closing. Seller's Parent and Buyer's Parent shall cooperate with each other in
order to transfer cash management functions for the Acquired Companies from
Seller's Parent to Buyer's Parent on the Closing Date. To the extent that such
transfer is not completed on the Closing Date, Seller's Parent and Buyer's
Parent shall cooperate with each other in order to maintain appropriate funding
for the Acquired Companies and to fairly allocate the receipts and disbursements
of the Acquired Companies between Seller's Parent and Buyer's Parent during a
reasonable transition period, which shall be no longer than sixty (60) days
after the Closing Date.
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8.05 Names. As soon as is reasonably practicable after the Closing Date,
the Buying Companies shall change its use of and abandon any registered or
pending trademarks, service marks or other names of the Acquired Companies'
Business, and all other names, product designations and the like, which contain
"SunGard" to a mark or name that does not include such letters or words or any
substantially similar letters or words. Notwithstanding any other provision of
this Agreement, after the Closing Date, the Acquired Companies, and the Buying
Companies shall neither use nor have any right to use the name "SunGard" any
logo of SunGard, or any substantially similar letters, word or logo in any
corporate, business or product name (whether or not combined with any other
letters, word or logo) or for any other purpose except to the extent reasonably
necessary to describe the transactions contemplated by this Agreement, to
implement the terms of this Agreement, or, for a period not to exceed ninety
(90) days after the Closing Date, to use up existing quantities of sales and
marketing materials and similar items.
8.06 Other Transition Matters. After the Closing Date, Seller's Parent
and Seller shall fully cooperate to transfer to Buyer the full ownership,
control and enjoyment of the Acquired Companies, and shall promptly deliver to
Buyer all documents and other items received by Seller's Parent or Seller or
found to be in their possession that pertain primarily to the Acquired
Companies.
8.07 Books and Records. After the Closing Date, Seller's Parent and
Seller, on the one hand, and Buyer, Buyer's Parent, the Acquired Companies, on
the other hand, shall retain all accounting, tax, payroll and similar books and
records pertaining to the Acquired Companies for a period of at least seven (7)
years after the annual period to which they relate, and shall provide reasonable
access to such books and records and related information to the other party and
its representatives. Such access shall be provided during normal business hours,
and the requesting party shall in good faith attempt to minimize any disruption
to the other party's business.
8.08 Further Assurances. After the Closing Date, at any party's request
and without further consideration but at the expense of the requesting party,
the other party or parties shall promptly execute and deliver all such further
agreements and documents and perform such further actions as the requesting
party reasonably requests, in order to fully consummate the transactions
contemplated by this Agreement and carry out the purposes and intent of this
Agreement.
ARTICLE IX
SURVIVAL; INDEMNIFICATION
9.01 Survival of Representations and Warranties. Notwithstanding any
investigation made by or on behalf of any of the parties hereto or the results
of any such investigation and notwithstanding the participation of such party in
the Closing, the representations and warranties contained in Article II and
Article III hereof shall survive the Closing for a period of twelve (12) months
following the Closing Date and thereafter shall terminate; provided, however,
that the representations made in Section 2.12 shall survive such twelve month
period and shall be subject to the applicable statute of limitations for such
claim.
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9.02 Indemnification by Seller's Parent.
(a) Subject to the limitations of Section 9.02(b), Seller's Parent
agrees to indemnify in full Buyer, Buyer's Parent and their officers, directors,
employees, agents and shareholders (collectively, the "Buyer Indemnified
Parties") and hold them harmless against any loss, liability, deficiency,
damage, expense or cost (including reasonable legal expenses) (collectively,
"Buyer Losses"), which Buyer Indemnified Parties may suffer, sustain or become
subject to, as a result of (i) any misrepresentation in any of the
representations and warranties of Seller's Parent or Seller contained in this
Agreement, (ii) any breach of, or failure to perform, any agreement of any of
the Selling Parties contained in this Agreement and required to be performed on
or before the Closing Date, or (iii) any deficiency or adjustment for Taxes and
related interest, penalties or expenses assessed against or imposed upon Buyer
or the Acquired Companies (X) with respect to the Acquired Companies during any
period ending on or before the Closing Date or (Y) for or with respect to any
income or gain from the deemed asset sale resulting from the Section 338(h)(10)
election provided in Section 1.04.
(b) Seller's Parent shall be liable to the Buyer Indemnified Parties for
any Buyer Losses (i) only if Buyer or another Buyer Indemnified Party delivers
to Seller's Parent written notice, setting forth in reasonable detail the
identity, nature and amount of Buyer Losses related to such claim or claims
prior to the 12-month anniversary of the Closing Date, provided that any claim
for indemnification involving Taxes shall be subject to the statute of
limitations for such claim rather than the 12-month period following the Closing
Date; (ii) only if the aggregate amount of all Buyer Losses exceeds $2,000,000
(the "Basket Amount"), in which case Seller's Parent shall be obligated to
indemnify the Buyer Indemnified Parties only for the excess of the aggregate
amount of all such Buyer Losses over the Basket Amount; and (iii) provided that
notwithstanding anything herein to the contrary, the maximum aggregate liability
of Seller's Parent under this Article IX shall not exceed an amount equal to
Fifteen Million Dollars ($15,000,000), which represents the tax effected
Purchase Price (the "Cap Amount").
9.03 Indemnification by the Buying Companies.
(a) The Buying Companies agree to indemnify in full Seller's Parent and
Seller, and their officers, directors, employees, agents and shareholders
(collectively, the "Seller Indemnified Parties") and hold them harmless against
any losses ("Seller Losses") which any of the Seller Indemnified Parties may
suffer, sustain or become subject to as a result of (i) any misrepresentation in
any of the representations and warranties of the Buying Companies contained in
this Agreement, or (ii) any breach of, or failure to perform, any agreement of
the Buying Companies contained in this Agreement required to be performed on or
before the Closing Date.
(b) The Buying Companies shall be liable to the Seller Indemnified
Parties for any Seller Losses (i) only if Seller's Parent or another Seller
Indemnified Party delivers to Buyer's Parent written notice, setting forth in
reasonable detail the identity, nature and amount of Seller Losses related to
such claim or claims.
9.04 Method of Asserting Claims. As used herein, an "Indemnified Party"
shall refer to a "Buyer Indemnified Party" or "Seller Indemnified Party," as
applicable, the "Notifying Party" shall refer to the party hereto whose
Indemnified Parties are entitled to indemnification hereunder, and the
"Indemnifying Party" shall refer to the party hereto obligated to indemnify such
Notifying Party's Indemnified Parties.
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(a) In the event that any of the Indemnified Parties is made a defendant
in or party to any action or proceeding, judicial or administrative, instituted
by any third party for the liability or the costs or expenses of which are Buyer
Losses or Seller Losses (any such third party action or proceeding being
referred to as a "Claim"), the Notifying Party shall give the Indemnifying Party
prompt notice thereof. The failure to give such notice shall not affect any
Indemnified Party's ability to seek reimbursement unless such failure has
materially and adversely affected the Indemnifying Party's ability to defend
successfully a Claim. The Indemnifying Party shall be entitled to contest and
defend such Claim. The Notifying Party shall be entitled at any time, at its own
cost and expense (which expense shall not constitute a Buyer Loss or an Seller
Loss unless the Notifying Party reasonably determines, on the written advice of
counsel, that the Indemnifying Party, because of a conflict of interest, may not
adequately represent, any interests of the Indemnified Parties, and only to the
extent that such expenses are reasonable), to participate in such contest and
defense and to be represented by attorneys of its or their own choosing. If the
Notifying Party elects to participate in such defense, the Notifying Party will
cooperate with the Indemnifying Party in the conduct of such defense. Neither
the Notifying Party nor the Indemnifying Party may concede, settle or compromise
any Claim without the consent of the other party, which consents will not be
unreasonably withheld.
(b) After the Closing, the rights set forth in this Article IX shall be
each party's sole and exclusive remedies against the other party hereto for
misrepresentations or breaches of covenants contained in this Agreement.
Notwithstanding the foregoing, nothing herein shall prevent any of the
Indemnified Parties from bringing an action based upon allegations of fraud,
intentional misrepresentation or intentional breach of an obligation by any
party to this Agreement and the limitations set forth in this Article IX shall
not apply thereto. The time limits set forth in Sections 9.01 and 9.02(b), the
Basket Amount and the Cap Amount shall not apply in the case of any
indemnification relating to title to the Shares.
(c) Any indemnification payable under this Article IX shall be, to the
extent permitted by law, an adjustment to the Purchase Price.
ARTICLE X
MISCELLANEOUS
10.01 Press Releases and Announcements. No party hereto shall issue any
press release (or make any other public announcement) related to this Agreement
or the transactions contemplated hereby without prior written approval of
Seller's Parent and Buyer's Parent, except as may be necessary to comply with
applicable Requirements of Laws, including securities laws. If any such press
release or public announcement is so required, the party making such disclosure
shall consult with the other parties prior to making such disclosure, and the
parties shall act in good faith to agree upon a text for such disclosure which
is satisfactory to all parties.
10.02 Market Acceptance; Budgets; Forecasts and Other Prospective
Financial Information. In connection with Buyer's investigation of the Acquired
Companies, Buyer, or Buyer's Parent may have received information from Seller's
Parent or the Acquired Companies relating to (a) the future scope of the market
for or the future market acceptance of the services and products of the Acquired
Companies, or (b) budgets, forecasts or other prospective financial or business
information relating to the Acquired Companies and their Business. Seller's
Parent, Seller and the Acquired Companies make no representations and/or
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warranties with respect to any of the matters referred to in the first sentence
of this Section 10.02.
10.03. Disclaimer. Expect for the express representations and warranties
made by Seller's Parent, Seller and the Acquired Companies in this Agreement,
none of Selling Parties makes any representations or warranties, oral or
written, express or implied (including, but not limited to, any implied
representations of merchantability or fitness for a particular purpose).
10.04 Expenses. Except as otherwise expressly provided for herein,
Seller, Seller's Parent and Buyer's Parent, Buyer will pay all of their own
expenses (including attorneys and accountants fees) in connection with the
negotiation of this Agreement, the performance of their respective obligations
hereunder and the consummation of the transactions contemplated by this
Agreement (whether consummated or not).
10.05 Amendment and Waiver. This Agreement may not be amended or waived
except in a writing executed by the party against which such amendment or waiver
is sought to be enforced. No course of dealing between or among any persons
having any interest in this Agreement will be deemed effective to modify or
amend any part of this Agreement or any rights or obligations of any person
under or by reason of this Agreement.
10.06 Notices. All notices, demands and other communications to be given
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered or
mailed by first class mail, return receipt requested, or when receipt is
acknowledged, if sent by facsimile, telecopy or other electronic transmission
device. Notices, demands and communications to Buyer, Buyer's Parent, Seller's
Parent and Seller will, unless another address is specified in writing, be sent
to the address indicated below:
<TABLE>
<CAPTION>
Notices to Seller and Seller's Parent: with a copy to:
- -------------------------------------- ---------------
<S> <C>
SunGard Data Systems Inc. SunGard Data Systems Inc.
1285 Drummers Lane, Suite 300 1285 Drummers Lane, Suite 300
Wayne, Pennsylvania 19087 Wayne, PA 19087
Attention: General Counsel Attention: Chief Financial Officer
Telephone: (610) 341-8700 Telephone (610) 341-8711
Fax: (610) 341-8115 Fax (610) 341-8851
Notices to Buyer and Buyer's Parent:
- ------------------------------------
Eclipsys Corporation Eclipsys Corporation
777 E. Atlantic Avenue, #200 777 E. Atlantic Avenue, #200
Delray Beach, FL 33483 Delray Beach, FL 33483
Attention: General Counsel Attention: Vice President - Finance
Telephone: (561) 243-1440 Telephone: (561) 243-1440
Fax: (561) 243-3503 Fax: (561) 243-3503
</TABLE>
10.07 Assignment. This Agreement and all of the provisions hereof will
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that neither this Agreement
nor any of the rights, interests or
23
<PAGE> 25
obligations hereunder may be assigned by any party hereto without the prior
written consent of the other parties hereto.
10.08 Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
10.09 Complete Agreement. This Agreement, the Disclosure Schedule and
the Confidentiality Agreement contain the complete agreement among the parties
and supersede any prior understandings, agreements or representations by or
among the parties, written or oral, which may have related to the subject matter
hereof in any way.
10.10 Counterparts. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
instrument.
10.11 Governing Law. THIS AGREEMENT IS MADE UNDER, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED SOLELY THEREIN,
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
10.12 Jurisdiction and Process In any action between or among any of the
parties, whether arising out of this Agreement or otherwise, (a) each of the
parties irrevocably consents to the exclusive jurisdiction and venue of the
federal and state courts located in the Commonwealth of Pennsylvania, (b) if any
such action is commenced in a state court, then, subject to applicable law, no
party shall object to the removal of such action to any federal court located in
the Commonwealth of Pennsylvania, (c) each of the parties irrevocably waives the
right to trial by jury, (d) each of the parties irrevocably consents to service
of process by first class certified mail, return receipt requested, postage
prepaid, to the address at which such party is to receive notice in accordance
with Section 10.08, and (e) the prevailing parties shall be entitled to recover
their reasonable attorneys' fees and court costs from the other parties.
10.13 Effect of Headings. The subject headings of the articles, sections
and paragraphs of this Agreement are included for convenience only and shall not
affect the construction or interpretation of any of their provisions.
24
<PAGE> 26
IN WITNESS WHEREOF, Buyer, Seller's Parent and Seller have executed this
Agreement as of the date set forth in the first paragraph.
<TABLE>
<CAPTION>
BUYER'S PARENT: ECLIPSYS CORPORATION
<S> <C>
By: /s/ T. JACK RISENHOOVER II
--------------------------------------------------
Name: T. Jack Risenhoover II
Title: Vice President and Secretary
BUYER: ECLIPSYS SOLUTIONS CORP.
By: /s/ T. JACK RISENHOOVER II
--------------------------------------------------
Name: T. Jack Risenhoover II
Title: Vice President and Secretary
SELLER'S PARENT: SUNGARD DATA SYSTEMS INC.
By: /s/ LAWRENCE A. GROSS
--------------------------------------------------
Name: Lawrence A. Gross
Title: Vice President and General Counsel, Secretary
SELLER: SUNGARD INVESTMENT VENTURES, INC.
By: /s/ LAWRENCE A. GROSS
--------------------------------------------------
Name: Lawrence A. Gross
Title: Vice President, Secretary
ACQUIRED COMPANIES: INTELUS CORPORATION
By: /s/ LAWRENCE A. GROSS
--------------------------------------------------
Name: Lawrence A. Gross
Title: Assistant Vice President, Secretary
MED DATA SYSTEMS, INC.
By: /s/ LAWRENCE A. GROSS
--------------------------------------------------
Name: Lawrence A. Gross
Title: Assistant Vice President, Secretary
</TABLE>
25
<PAGE> 1
EXHIBIT 10.1
ECLIPSYS CORPORATION
AMENDED AND RESTATED
1998 EMPLOYEE STOCK PURCHASE PLAN
(AS AMENDED)
The purpose of this Plan is to provide eligible employees of Eclipsys
Corporation (the "Company") and certain of its subsidiaries with opportunities
to purchase shares of the Company's common stock, $0.01 par value (the "Common
Stock"). Subject to adjustment pursuant to Section 15, the maximum number of
shares of Common Stock which shall be made available for purchase under this
Plan shall be that number equal to (i) 7,000,000 less (ii) the sum of (X) the
number of shares as to which "Awards" have previously been made or shares issued
under the Company's 1998 Stock Incentive Plan, as amended (the "1998 Plan"), as
such number shall be reduced to the extent shares become reavailable for
issuance under the 1998 Plan pursuant to Section 4(a) thereof, (Y) the number of
shares as to which "Awards" have previously been made or shares issued under the
Company's 1999 Stock Incentive Plan (the "1999 Plan"), as such number shall be
reduced to the extent shares become reavailable for issuance under the 1999 Plan
pursuant to Section 4(a) thereof, and (Z) the number of shares as to which
options are then outstanding under the Company's 1996 Stock Plan, as amended
(the "1996 Plan") and the number of shares previously issued upon the exercise
of options granted under the 1996 Plan and the number of shares of restricted or
unrestricted stock granted under the 1996 Plan then outstanding.
1. Administration. The Plan will be administered by the Company's
Board of Directors (the "Board") or by a Committee appointed by the Board (the
"Committee"). The Board or the Committee has authority to make rules and
regulations for the administration of the Plan and its interpretation and
decisions with regard thereto shall be final and conclusive.
2. Eligibility. Participation in the Plan will neither be permitted
nor denied contrary to the requirements of Section 423 of the Internal Revenue
Code of 1986, as amended (the "Code"), and regulations promulgated thereunder.
All employees of the Company, including Directors who are employees, and all
employees of any subsidiary of the Company (as defined in Section 424(f) of the
Code) designated by the Board or the Committee from time to time (a "Designated
Subsidiary"), are eligible to participate in any one or more of the offerings of
Options (as defined in Section 9) to purchase Common Stock under the Plan
provided that:
<PAGE> 2
(a) they are regularly employed by the Company or a Designated
Subsidiary for more than 20 hours a week and have been employed by the
Company or a Designated Subsidiary for at least 90 days prior to
enrolling in the Plan; and
(b) they are employees of the Company or a Designated
Subsidiary on the first day of the applicable Plan Period (as defined
below).
No employee may be granted an option hereunder if such employee,
immediately after the option is granted, owns 5% or more of the total combined
voting power or value of the stock of the Company or any subsidiary. For
purposes of the preceding sentence, the attribution rules of Section 424(d) of
the Code shall apply in determining the stock ownership of an employee, and all
stock which the employee has a contractual right to purchase shall be treated as
stock owned by the employee.
3. Offerings. The Company will make one or more offerings
("Offerings") to employees to purchase stock under this Plan. The first Offering
will commence on the first day of the first calendar month following the closing
of a firm commitment, underwritten initial public offering by the Company (or
the first business day thereafter if such date is not a business day).
Thereafter, Offerings will begin each January 1, April 1, July 1 or October 1,
as applicable (or the first business day thereafter if such date is not a
business day). The date on which each Offering commences is referred to as an
"Offering Commencement Date." Each Offering Commencement Date will begin a
three-month period (a "Plan Period") during which payroll deductions will be
made and held for the purchase of Common Stock at the end of the Plan Period,
except that the Plan Period for the initial Offering shall end on the first
December 31, March 31, June 30 or September 30 following its commencement. The
Board or the Committee may, at its discretion, choose a different Plan Period of
twelve (12) months or less for subsequent Offerings.
4. Participation. An employee eligible on the Offering Commencement
Date of any Offering may participate in such Offering by completing and
forwarding a payroll deduction authorization form to the employee's appropriate
payroll office at least seven days prior to the applicable Offering Commencement
Date. The form will authorize a regular payroll deduction from the compensation
received by the employee during the Plan Period. Unless an employee files a new
form or withdraws from the Plan, his deductions and purchases will continue at
the same rate for future Offerings under the Plan as long as the Plan remains in
effect.
5. Deductions. The Company will maintain payroll deduction accounts
for all participating employees. With respect to any Offering made under this
Plan, an employee may authorize a payroll deduction in a monthly amount equal to
a whole percentage (up to a maximum percentage of 15%) of his or her
Compensation for the
-2-
<PAGE> 3
Plan Period. The term "Compensation" means, for each Plan Period, monthly base
salary or wages as of the Offering Commencement Date plus, in the case of
commissioned salespersons, the average monthly commissions earned during the
three months preceding the Offering Commencement Date.
No employee may be granted an Option (as defined in Section 9) which
permits his rights to purchase Common Stock under this Plan and any other stock
purchase plan of the Company and its subsidiaries to accrue at a rate which
exceeds $25,000 (based on the fair market value of such Common Stock determined
at the Offering Commencement Date of the Plan Period) for each calendar year in
which the Option is outstanding at any time.
6. Deduction Changes. An employee may decrease or discontinue his
payroll deduction once during any Plan Period, by filing a new payroll deduction
authorization form. However, an employee may not increase his payroll deduction
during a Plan Period. If an employee elects to discontinue his payroll
deductions during a Plan Period, but does not elect to withdraw his funds
pursuant to Section 8 hereof, funds deducted prior to his election to
discontinue will be applied to the purchase of Common Stock on the Exercise Date
(as defined below).
7. Interest. Interest will not be paid on any employee accounts,
except to the extent that the Board or the Committee, in its sole discretion,
elects to credit employee accounts with interest at such per annum rate as it
may from time to time determine.
8. Withdrawal of Funds. An employee may at any time prior to the
close of business on the last business day in a Plan Period and for any reason
permanently draw out the balance accumulated in the employee's account and
thereby withdraw from participation in an Offering. Partial withdrawals are not
permitted. The employee may not begin participation again during the remainder
of the Plan Period. The employee may participate in any subsequent Offering in
accordance with terms and conditions established by the Board or the Committee.
9. Purchase of Shares. On the Offering Commencement Date of each Plan
Period, the Company will grant to each eligible employee who is then a
participant in the Plan an option ("Option") to purchase on the last business
day of such Plan Period (the "Exercise Date"), at the Option Price hereinafter
provided for, such number of whole shares of Common Stock of the Company
reserved for the purposes of the Plan as does not exceed the number of shares
determined by dividing (i) the product of $1,250 multiplied by the number of
months in such Plan Period by (ii) the price determined in accordance with the
formula set forth in the following paragraph but using the closing price on the
Offering Commencement Date of such Plan Period.
-3-
<PAGE> 4
The purchase price for each share purchased will be 85% of the closing
price of the Common Stock on (i) the first business day of such Plan Period or
(ii) the Exercise Date, whichever closing price shall be less. Such closing
price shall be (a) the closing price on any national securities exchange on
which the Common Stock is listed, (b) the closing price of the Common Stock on
the Nasdaq National Market or (c) the average of the closing bid and asked
prices in the over-the-counter-market, whichever is applicable, as published in
The Wall Street Journal. If no sales of Common Stock were made on such a day,
the price of the Common Stock for purposes of clauses (a) and (b) above shall be
the reported price for the next preceding day on which sales were made.
Each employee who continues to be a participant in the Plan on the
Exercise Date shall be deemed to have exercised his Option at the Option Price
on such date and shall be deemed to have purchased from the Company the number
of full shares of Common Stock reserved for the purpose of the Plan that his
accumulated payroll deductions on such date will pay for pursuant to the formula
set forth above (but not in excess of the maximum number determined in the
manner set forth above).
Any balance remaining in an employee's payroll deduction account at the
end of a Plan Period will be automatically refunded to the employee, except that
any balance which is less than the purchase price of one share of Common Stock
will be carried forward into the employee's payroll deduction account for the
following Offering, unless the employee elects not to participate in the
following Offering under the Plan, in which case the balance in the employee's
account shall be refunded.
10. Issuance of Certificates. Certificates representing shares of
Common Stock purchased under the Plan may be issued only in the name of the
employee, in the name of the employee and another person of legal age as joint
tenants with rights of survivorship, or (in the Company's sole discretion) in
the street name of a brokerage firm, bank or other nominee holder designated by
the employee.
11. Rights on Retirement, Death or Termination of Employment. In the
event of a participating employee's termination of employment prior to the last
business day of a Plan Period, no payroll deduction shall be taken from any pay
due and owing to an employee and the balance in the employee's account shall be
paid to the employee or, in the event of the employee's death, (a) to a
beneficiary previously designated in a revocable notice signed by the employee
(with any spousal consent required under state law) or (b) in the absence of
such a designated beneficiary, to the executor or administrator of the
employee's estate or (c) if no such executor or administrator has been appointed
to the knowledge of the Company, to such other person(s) as the Company may, in
its discretion, designate. If, prior to the last business day of the Plan
Period, the Designated Subsidiary by which an employee is employed shall cease
to be a subsidiary of the Company, or if the employee is transferred to a
subsidiary of the Company that is not a Designated Subsidiary, the
-4-
<PAGE> 5
employee shall be deemed to have terminated employment for the purposes of this
Plan.
12. Optionees Not Stockholders. Neither the granting of an Option to
an employee nor the deductions from his pay shall constitute such employee a
stockholder of the shares of Common Stock covered by an Option under this Plan
until such shares have been purchased by and issued to him.
13. Rights Not Transferable. Rights under this Plan are not
transferable by a participating employee other than by will or the laws of
descent and distribution, and are exercisable during the employee's lifetime
only by the employee.
14. Application of Funds. All funds received or held by the Company
under this Plan may be combined with other corporate funds and may be used for
any corporate purpose.
15. Adjustment in Case of Changes Affecting Common Stock. In the event
of a subdivision of outstanding shares of Common Stock, or the payment of a
dividend in Common Stock, the number of shares approved for this Plan, and the
share limitation set forth in Section 9, shall be increased proportionately, and
such other adjustment shall be made as may be deemed equitable by the Board or
the Committee. In the event of any other change affecting the Common Stock, such
adjustment shall be made as may be deemed equitable by the Board or the
Committee to give proper effect to such event.
16. Merger. If the Company shall at any time merge or consolidate with
another corporation and the holders of the capital stock of the Company
immediately prior to such merger or consolidation continue to hold at least 80%
by voting power of the capital stock of the surviving corporation ("Continuity
of Control"), the holder of each Option then outstanding will thereafter be
entitled to receive at the next Exercise Date upon the exercise of such Option
for each share as to which such Option shall be exercised the securities or
property which a holder of one share of the Common Stock was entitled to upon
and at the time of such merger, and the Committee shall take such steps in
connection with such merger as the Committee shall deem necessary to assure that
the provisions of Paragraph 15 shall thereafter be applicable, as nearly as
reasonably may be, in relation to the said securities or property as to which
such holder of such Option might thereafter be entitled to receive thereunder.
In the event of a merger or consolidation of the Company with or into
another corporation which does not involve Continuity of Control, or of a sale
of all or substantially all of the assets of the Company while unexercised
Options remain outstanding under the Plan, (a) subject to the provisions of
clauses (b) and (c), after the effective date of such transaction, each holder
of an outstanding Option shall be
-5-
<PAGE> 6
entitled, upon exercise of such Option, to receive in lieu of shares of Common
Stock, shares of such stock or other securities as the holders of shares of
Common Stock received pursuant to the terms of such transaction; or (b) all
outstanding Options may be cancelled by the Board or the Committee as of a date
prior to the effective date of any such transaction and all payroll deductions
shall be paid out to the participating employees; or (c) all outstanding Options
may be cancelled by the Board or the Committee as of the effective date of any
such transaction, provided that notice of such cancellation shall be given to
each holder of an Option, and each holder of an Option shall have the right to
exercise such Option in full based on payroll deductions then credited to his
account as of a date determined by the Board or the Committee, which date shall
not be less than ten (10) days preceding the effective date of such transaction.
17. Amendment of the Plan. The Board may at any time, and from time to
time, amend this Plan in any respect, except that (a) if the approval of any
such amendment by the shareholders of the Company is required by Section 423 of
the Code, such amendment shall not be effected without such approval, and (b) in
no event may any amendment be made which would cause the Plan to fail to comply
with Section 423 of the Code.
18. Insufficient Shares. In the event that the total number of shares
of Common Stock specified in elections to be purchased under any Offering plus
the number of shares purchased under previous Offerings under this Plan exceeds
the maximum number of shares issuable under this Plan, the Board or the
Committee will allot the shares then available on a pro rata basis.
19. Termination of the Plan. This Plan may be terminated at any time
by the Board. Upon termination of this Plan all amounts in the accounts of
participating employees shall be promptly refunded.
20. Governmental Regulations. The Company's obligation to sell and
deliver Common Stock under this Plan is subject to listing on a national stock
exchange or quotation on the Nasdaq National Market and the approval of all
governmental authorities required in connection with the authorization, issuance
or sale of such stock.
The Plan shall be governed by Delaware law except to the extent that such
law is preempted by federal law.
21. Issuance of Shares. Shares may be issued upon exercise of an
Option from authorized but unissued Common Stock, from shares held in the
treasury of the Company, or from any other proper source.
-6-
<PAGE> 7
22. Notification upon Sale of Shares. Each employee agrees, by
entering the Plan, to promptly give the Company notice of any disposition of
shares purchased under the Plan where such disposition occurs within two years
after the date of grant of the Option pursuant to which such shares were
purchased.
23. Effective Date and Approval of Shareholders. The Plan shall take
effect upon its approval by the Board, subject to approval by the shareholders
of the Company as required by Section 423 of the Code, which approval must occur
within twelve months of the adoption of the Plan by the Board.
Adopted by the Board of Directors
on April 8, 1998
Approved by the Stockholders on
June 5, 1998
Amended and Restated by the Board of
Directors on August 6, 1998
Amended by the Board of Directors on
February 23, 1999
Approved by the Stockholders on
April 21, 1999
-7-
<PAGE> 1
EXHIBIT 10.2
ECLIPSYS CORPORATION
1998 STOCK INCENTIVE PLAN
(AS AMENDED)
1. Purpose
The purpose of this 1998 Stock Incentive Plan (the "Plan") of Eclipsys
Corporation, a Delaware corporation (the "Company"), is to advance the interests
of the Company's stockholders by enhancing the Company's ability to attract,
retain and motivate persons who make (or are expected to make) important
contributions to the Company by providing such persons with equity ownership
opportunities and performance-based incentives and thereby better aligning the
interests of such persons with those of the Company's stockholders. Except where
the context otherwise requires, the term "Company" shall include any present or
future subsidiary corporations of Eclipsys Corporation as defined in Section
424(f) of the Internal Revenue Code of 1986, as amended, and any regulations
promulgated thereunder (the "Code") and any other business venture (including,
without limitation, a joint venture or limited liability company) in which the
Company has a significant interest, as determined by the Board of Directors of
the Company (the "Board").
2. Eligibility
All of the Company's employees, officers, directors, consultants and
advisors are eligible to be granted options, restricted stock, or other
stock-based awards (each, an "Award") under the Plan. Any person who has been
granted an Award under the Plan shall be deemed a "Participant".
3. Administration, Delegation
(a) Administration by Board of Directors. The Plan will be
administered by the Board. The Board shall have authority to grant Awards and to
adopt, amend and repeal such administrative rules, guidelines and practices
relating to the Plan as it shall deem advisable. The Board may correct any
defect, supply any omission or reconcile any inconsistency in the Plan or any
Award in the manner and to the extent it shall deem expedient to carry the Plan
into effect and it shall be the sole and final judge of such expediency. All
decisions by the Board shall be made in the Board's sole discretion and shall be
final and binding on all persons having or claiming any interest in the Plan or
in any Award. No director or person acting pursuant to the
<PAGE> 2
authority delegated by the Board shall be liable for any action or determination
relating to or under the Plan made in good faith.
(b) Delegation to Executive Officers. To the extent permitted by
applicable law, the Board may delegate to one or more executive officers of the
Company the power to make Awards and exercise such other powers under the Plan
as the Board may determine, provided that the Board shall fix the maximum number
of shares subject to Awards and the maximum number of shares for any one
Participant to be made by such executive officers.
(c) Appointment of Committees. To the extent permitted by applicable
law, the Board may delegate any or all of its powers under the Plan to one or
more committees or subcommittees of the Board (a "Committee"). If and when the
common stock, $0.01 par value per share, of the Company (the "Common Stock") is
registered under the Securities Exchange Act of 1934 (the "Exchange Act"), the
Board shall appoint one such Committee of not less than two members, each member
of which shall be an "outside director" within the meaning of Section 162(m) of
the Code and a "non-employee director" as defined in Rule 16b-3 promulgated
under the Exchange Act." All references in the Plan to the "Board" shall mean
the Board or a Committee of the Board or the executive officer referred to in
Section 3(b) to the extent that the Board's powers or authority under the Plan
have been delegated to such Committee or executive officer.
4. Stock Available for Awards
(a) Number of Shares. Subject to adjustment under Section 4(c), Awards
may be made under the Plan for up to an aggregate number of shares of Common
Stock equal to (i) 7,000,000 less (ii) the sum of (X) the number of shares as to
which options are then outstanding under the Company's Amended and Restated 1998
Employee Stock Purchase Plan, as amended (the "Purchase Plan") and the number of
shares previously sold under the Purchase Plan, (Y) the number of shares as to
which options are then outstanding under the Company's 1996 Stock Plan, as
amended (the "1996 Plan") and the number of shares previously issued upon the
exercise of options granted under the 1996 Plan and the number of shares of
restricted or unrestricted stock granted under the 1996 Plan then outstanding
and (Z) the number of shares as to which "Awards" have previously been made or
shares issued under the Company's 1999 Stock Incentive Plan (the "1999 Plan"),
as such number shall be reduced to the extent shares become reavailable for
issuance under the 1999 Plan pursuant to Section 4(a) thereof. If any Award
expires or is terminated, surrendered or canceled without having been fully
exercised or is forfeited in whole or in part or results in any Common Stock not
being issued, the unused Common Stock covered by such Award shall again be
available for the grant of Awards under the Plan, subject, however, in the case
of Incentive Stock Options (as hereinafter defined), to any limitation required
2
<PAGE> 3
under the Code. Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.
(b) Per-Participant Limit. Subject to adjustment under Section 4(c),
for Awards granted after the Common Stock is registered under the Securities
Exchange Act of 1934 (the "Exchange Act"), the maximum number of shares of
Common Stock with respect to which an Award may be granted to any Participant
under the Plan shall be 2,000,000 per calendar year. The per-Participant limit
described in this Section 4(b) shall be construed and applied consistently with
Section 162(m) of the Code.
(c) Adjustment to Common Stock. In the event of any stock split, stock
dividend, recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off or other similar change in
capitalization or event, or any distribution to holders of Common Stock other
than a normal cash dividend, (i) the number and class of securities available
under this Plan, (ii) the per-participant limit set forth in Section 4(b), (iii)
the number and class of security and exercise price per share subject to each
outstanding Option, (iv) the repurchase price per security subject to each
outstanding Restricted Stock Award, and (v) the terms of each other outstanding
stock-based Award shall be appropriately adjusted by the Company (or substituted
Awards may be made, if applicable) to the extent the Board shall determine, in
good faith, that such an adjustment (or substitution) is necessary and
appropriate. If this Section 4(c) applies and Section 8(e)(1) also applies to
any event, Section 8(e)(1) shall be applicable to such event, and this Section
4(c) shall not be applicable.
5. Stock Options
(a) General. The Board may grant options to purchase Common Stock
(each, an "Option") and determine the number of shares of Common Stock to be
covered by each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".
(b) Incentive Stock Options. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereof) which is intended to be an
Incentive Stock Option is not an Incentive Stock Option.
3
<PAGE> 4
(c) Exercise Price. The Board shall establish the exercise price at
the time each Option is granted and specify it in the applicable option
agreement.
(d) Duration of Options. Each Option shall be exercisable at such
times and subject to such terms and conditions as the Board may specify in the
applicable option agreement. No Option will be granted for a term in excess of
10 years.
(e) Exercise of Option. Options may be exercised only by delivery to
the Company of a written notice of exercise signed by the proper person together
with payment in full as specified in Section 5(f) for the number of shares for
which the Option is exercised.
(f) Payment Upon Exercise. Common Stock purchased upon the exercise of
an Option granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the Company;
(2) except as the Board may otherwise provide in an Option
Agreement, delivery of an irrevocable and unconditional undertaking by a
creditworthy broker to deliver promptly to the Company sufficient funds to pay
the exercise price, or delivery by the Participant to the Company of a copy of
irrevocable and unconditional instructions to a creditworthy broker to deliver
promptly to the Company cash or a check sufficient to pay the exercise price;
(3) to the extent permitted by the Board and explicitly
provided in an Option Agreement (i) by delivery of shares of Common Stock owned
by the Participant valued at their fair market value as determined by the Board
in good faith ("Fair Market Value"), which Common Stock was owned by the
Participant at least six months prior to such delivery, (ii) by delivery of a
promissory note of the Participant to the Company on terms determined by the
Board, or (iii) by payment of such other lawful consideration as the Board may
determine; or
(4) any combination of the above permitted forms of payment.
6. Restricted Stock
(a) Grants. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require forfeiture of such shares if issued at no cost) from the recipient in
the event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, "Restricted Stock Award").
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(b) Terms and Conditions. The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any. Any stock certificates
issued in respect of a Restricted Stock Award shall be registered in the name of
the Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company (or
its designee). At the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.
7. Other Stock-Based Awards
The Board shall have the right to grant other Awards based upon the
Common Stock having such terms and conditions as the Board may determine,
including the grant of shares based upon certain conditions, the grant of
securities convertible into Common Stock and the grant of stock appreciation
rights.
8. General Provisions Applicable to Awards
(a) Transferability of Awards. Except as the Board may otherwise
determine or provide in an Award, Awards shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to whom they are
granted, either voluntarily or by operation of law, except by will or the laws
of descent and distribution, and, during the life of the Participant, shall be
exercisable only by the Participant. References to a Participant, to the extent
relevant in the context, shall include references to authorized transferees.
(b) Documentation. Each Award under the Plan shall be evidenced by a
written instrument in such form as the Board shall determine. Each Award may
contain terms and conditions in addition to those set forth in the Plan.
(c) Board Discretion. Except as otherwise provided by the Plan, each
type of Award may be made alone or in addition or in relation to any other type
of Award. The terms of each type of Award need not be identical, and the Board
need not treat Participants uniformly.
(d) Termination of Status. The Board shall determine the effect on an
Award of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative,
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conservator, guardian or Designated Beneficiary may exercise rights under the
Award.
(e) Acquisition Events Acquisition and Change in Control Events
(1) Definitions
a. An "Acquisition Event" shall mean:
(i) any merger or consolidation of the Company
with or into another entity as a result of
which the Common Stock is converted into or
exchanged for the right to receive cash,
securities or other property; or
(ii) any exchange of shares of the Company for
cash, securities or other property pursuant
to a statutory share exchange transaction.
b. A "Change in Control Event" shall mean:
(i) the acquisition by an individual, entity or
group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a
"Person") of beneficial ownership of any
capital stock of the Company if, after such
acquisition, such Person beneficially owns
(within the meaning of Rule 13d-3 promulgated
under the Exchange Act) 30% or more of either
(x) the then-outstanding shares of common
stock of the Company (the "Outstanding
Company Common Stock") or (y) the combined
voting power of the then-outstanding
securities of the Company entitled to vote
generally in the election of directors (the
"Outstanding Company Voting Securities");
provided, however, that for purposes of this
subsection (i), the following acquisitions
shall not constitute a Change in Control
Event: (A) any acquisition directly from the
Company (excluding an acquisition pursuant to
the exercise, conversion or exchange of any
security exercisable for, convertible into or
exchangeable for common stock or voting
securities of the Company, unless the Person
exercising, converting or exchanging such
security
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acquired such security directly from the
Company or an underwriter or agent of the
Company), (B) any acquisition by any employee
benefit plan (or related trust) sponsored or
maintained by the Company or any corporation
controlled by the Company, (C) any
acquisition by any corporation pursuant to a
Business Combination (as defined below) which
complies with clauses (x) and (y) of
subsection (iii) of this definition or (D)
any acquisition by General Atlantic Partners
28, L.P., General Atlantic Partners 38, L.P.,
General Atlantic Partners 47, L.P., GAP
Coinvestment Partners, L.P. and any other
entities controlled by or under common
control with any of the foregoing entities,
within the meaning of the Exchange Act; or
(ii) such time as the Continuing Directors (as
defined below) constitute a minority of the
Board (or, if applicable, the Board of
Directors of a successor corporation to the
Company), where the term "Continuing
Director" means at any date a member of the
Board (x) who was a member of the Board on
the date of the initial adoption of this Plan
by the Board or (y) who was nominated or
elected subsequent to such date by at least a
majority of the directors who were Continuing
Directors at the time of such nomination or
election or whose election to the Board was
recommended or endorsed by at least a
majority of the directors who were Continuing
Directors at the time of such nomination or
election; provided, however, that there shall
be excluded from this clause (y) any
individual whose initial assumption of office
occurred as a result of an actual or
threatened election contest with respect to
the election or removal of directors or other
actual or threatened solicitation of proxies
or consents, by or on behalf of a person
other than the Board; or
(iii) the consummation of a merger, consolidation,
reorganization or statutory share exchange
involving the Company or a sale or other
disposition of all or substantially all of
the assets of the Company (a "Business
Combination"), unless, immediately following
such Business Combination, each of the
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following two conditions is satisfied: (x)
all or substantially all of the individuals
and entities who were the beneficial owners
of the Outstanding Company Common Stock and
Outstanding Company Voting Securities
immediately prior to such Business
Combination beneficially own, directly or
indirectly, more than 50% of the
then-outstanding shares of common stock and
the combined voting power of the
then-outstanding securities entitled to vote
generally in the election of directors,
respectively, of the resulting or acquiring
corporation in such Business Combination
(which shall include, without limitation, a
corporation which as a result of such
transaction owns the Company or substantially
all of the Company's assets either directly
or through one or more subsidiaries) (such
resulting or acquiring corporation is
referred to herein as the "Acquiring
Corporation") in substantially the same
proportions as their ownership of the
Outstanding Company Common Stock and
Outstanding Company Voting Securities,
respectively, immediately prior to such
Business Combination and (y) no Person
(excluding the Acquiring Corporation, any
Exempt Person or any employee benefit plan
(or related trust) maintained or sponsored by
the Company or by the Acquiring Corporation)
beneficially owns, directly or indirectly,
30% or more of the then-outstanding shares of
common stock of the Acquiring Corporation, or
of the combined voting power of the
then-outstanding securities of such
corporation entitled to vote generally in the
election of directors (except to the extent
that such ownership existed prior to the
Business Combination).
(2) Effect on Options
a. Acquisition Event. Upon the occurrence of an
Acquisition Event (regardless of whether such event
also constitutes a Change in Control Event), or the
execution by the Company of any agreement with
respect to an Acquisition Event (regardless of
whether such event will result in a Change in
Control Event), the Board shall provide that all
outstanding Options shall be assumed, or equivalent
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options shall be substituted, by the acquiring or
succeeding corporation (or an affiliate thereof);
provided that if such Acquisition Event also
constitutes a Change in Control Event, except to the
extent specifically provided to the contrary in the
instrument evidencing any Option or any other
agreement between a Participant and the Company,
such assumed or substituted options shall be
immediately exercisable in full upon the occurrence
of such Acquisition Event. For purposes hereof, an
Option shall be considered to be assumed if,
following consummation of the Acquisition Event, the
Option confers the right to purchase, for each share
of Common Stock subject to the Option immediately
prior to the consummation of the Acquisition Event,
the consideration (whether cash, securities or other
property) received as a result of the Acquisition
Event by holders of Common Stock for each share of
Common Stock held immediately prior to the
consummation of the Acquisition Event (and if
holders were offered a choice of consideration, the
type of consideration chosen by the holders of a
majority of the outstanding shares of Common Stock);
provided, however, that if the consideration
received as a result of the Acquisition Event is not
solely common stock of the acquiring or succeeding
corporation (or an affiliate thereof), the Company
may, with the consent of the acquiring or succeeding
corporation, provide for the consideration to be
received upon the exercise of Options to consist
solely of common stock of the acquiring or
succeeding corporation (or an affiliate thereof)
equivalent in fair market value to the per share
consideration received by holders of outstanding
shares of Common Stock as a result of the
Acquisition Event.
Notwithstanding the foregoing, if the
acquiring or succeeding corporation (or an affiliate
thereof) does not agree to assume, or substitute
for, such Options, then the Board shall (x) upon
written notice to the Participants, provide that all
then unexercised Options will become exercisable in
full as of a specified time (the "Acceleration
Time") prior to the Acquisition Event and will
terminate immediately prior to the consummation of
such Acquisition Event, except to the extent
exercised by the Participants before the
consummation of such Acquisition Event, and/or (y)
in the event of an Acquisition Event
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under the terms of which holders of Common Stock
will receive upon consummation thereof a cash
payment for each share of Common Stock surrendered
pursuant to such Acquisition Event (the "Acquisition
Price"), provide that all outstanding Options shall
terminate upon consummation of such Acquisition
Event and each Participant shall receive, in
exchange therefor, a cash payment equal to the
amount (if any) by which (A) the Acquisition Price
multiplied by the number of shares of Common Stock
subject to such outstanding Options (whether or not
then exercisable), exceeds (B) the aggregate
exercise price of such Options.
b. Change in Control Event that is not an Acquisition
Event. Upon the occurrence of a Change in Control
Event that does not also constitute an Acquisition
Event, except to the extent specifically provided to
the contrary in the instrument evidencing any Option
or any other agreement between a Participant and the
Company, all Options then-outstanding shall
automatically become immediately exercisable in
full.
(3) Effect on Restricted Stock Awards
a. Acquisition Event that is not a Change in Control
Event. Upon the occurrence of an Acquisition Event
that is not a Change in Control Event, the
repurchase and other rights of the Company under
each outstanding Restricted Stock Award shall inure
to the benefit of the Company's successor and shall
apply to the cash, securities or other property
which the Common Stock was converted into or
exchanged for pursuant to such Acquisition Event in
the same manner and to the same extent as they
applied to the Common Stock subject to such
Restricted Stock Award.
b. Change in Control Event. Upon the occurrence of a
Change in Control Event (regardless of whether such
event also constitutes an Acquisition Event), except
to the extent specifically provided to the contrary
in the instrument evidencing any Restricted Stock
Award or any other agreement between a Participant
and the Company, all restrictions and conditions on
all Restricted Stock Awards then-outstanding shall
automatically be deemed terminated or satisfied.
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(4) Effect on Other Awards
a. Acquisition Event that is not a Change in Control
Event. The Board shall specify the effect of an
Acquisition Event that is not a Change in Control
Event on any other Award granted under the Plan at
the time of the grant of such Award.
b. Change in Control Event. Upon the occurrence of a
Change in Control Event (regardless of whether such
event also constitutes an Acquisition Event), except
to the extent specifically provided to the contrary
in the instrument evidencing any other Award or any
other agreement between a Participant and the
Company, all other Awards shall become exercisable,
realizable or vested in full, or shall be free of
all conditions or restrictions, as applicable to
each such Award.
(f) Assumption of Options Upon Certain Events. The Board may grant
Awards under the Plan in substitution for stock and stock-based awards held by
employees of another corporation who become employees of the Company as a result
of a merger or consolidation of the employing corporation with the Company or
the acquisition by the Company of property or stock of the employing
corporation. The substitute Awards shall be granted on such terms and conditions
as the Board considers appropriate in the circumstances.
(g) Withholding. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. The Board may allow Participants to
satisfy such tax obligations in whole or in part in shares of Common Stock,
including shares retained from the Award creating the tax obligation, valued at
their Fair Market Value. The Company may, to the extent permitted by law, deduct
any such tax obligations from any payment of any kind otherwise due to a
Participant.
(h) Amendment of Award. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
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(i) Conditions on Delivery of Stock. The Company will not be obligated
to deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.
(j) Acceleration. The Board may at any time provide that any Options
shall become immediately exercisable in full or in part, that any Restricted
Stock Awards shall be free of all restrictions or that any other stock-based
Awards may become exercisable in full or in part or free of some or all
restrictions or conditions, or otherwise realizable in full or in part, as the
case may be.
9. Miscellaneous
(a) No Right To Employment or Other Status. No person shall have any
claim or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.
(b) No Rights As Stockholder. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have any rights
as a stockholder with respect to any shares of Common Stock to be distributed
with respect to an Award until becoming the record holder of such shares.
(c) Effective Date and Term of Plan. The Plan shall become effective
on the date on which it is adopted by the Board, but no Award granted to a
Participant designated by the Board as subject to Section 162(m) of the Code by
the Board shall become exercisable, vested or realizable, as applicable to such
Award, unless and until the Plan has been approved by the Company's stockholders
to the extent stockholder approval is required by Section 162(m) in the manner
required under Section 162(m) (including the vote required under Section
162(m)). No Awards shall be granted under the Plan after the completion of ten
years from the earlier of (i) the date on which the Plan was adopted by the
Board or (ii) the date the Plan was approved by the Company's stockholders, but
Awards previously granted may extend beyond that date.
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(d) Amendment of Plan. The Board may amend, suspend or terminate the
Plan or any portion thereof at any time, provided that to the extent required by
Section 162(m) of the Code, no Award granted to a Participant designated as
subject to Section 162(m) by the Board after the date of such amendment shall
become exercisable, realizable or vested, as applicable to such Award (to the
extent that such amendment to the Plan was required to grant such Award to a
particular Participant), unless and until such amendment shall have been
approved by the Company's stockholders as required by Section 162(m) (including
the vote required under Section 162(m)).
(e) Governing Law. The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.
Adopted by the Board of Directors
on April 8, 1998
Approved by the Stockholders on
June 5, 1998
Amended by the Board of Directors on
February 23, 1999
Approved by the Stockholders on
April 21, 1999
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EXHIBIT 10.3
ECLIPSYS CORPORATION
1999 STOCK INCENTIVE PLAN
1. Purpose
The purpose of this 1999 Stock Incentive Plan (the "Plan") of Eclipsys
Corporation, a Delaware corporation (the "Company"), is to advance the interests
of the Company's stockholders by enhancing the Company's ability to attract,
retain and motivate persons who make (or are expected to make) important
contributions to the Company by providing such persons with equity ownership
opportunities and performance-based incentives and thereby better aligning the
interests of such persons with those of the Company's stockholders. Except where
the context otherwise requires, the term "Company" shall include any present or
future subsidiary corporations of Eclipsys Corporation as defined in Section
424(f) of the Internal Revenue Code of 1986, as amended, and any regulations
promulgated thereunder (the "Code") and any other business venture (including,
without limitation, a joint venture or limited liability company) in which the
Company has a significant interest, as determined by the Board of Directors of
the Company (the "Board").
2. Eligibility
All of the Company's employees, officers, directors, consultants and
advisors are eligible to be granted options, restricted stock, or other
stock-based awards (each, an "Award") under the Plan. Any person who has been
granted an Award under the Plan shall be deemed a "Participant".
3. Administration, Delegation
(a) Administration by Board of Directors. The Plan will be
administered by the Board. The Board shall have authority to grant Awards and to
adopt, amend and repeal such administrative rules, guidelines and practices
relating to the Plan as it shall deem advisable. The Board may correct any
defect, supply any omission or reconcile any inconsistency in the Plan or any
Award in the manner and to the extent it shall deem expedient to carry the Plan
into effect and it shall be the sole and final judge of such expediency. All
decisions by the Board shall be made in the Board's sole discretion and shall be
final and binding on all persons having or claiming any interest in the Plan or
in any Award. No director or person acting pursuant to the
<PAGE> 2
authority delegated by the Board shall be liable for any action or determination
relating to or under the Plan made in good faith.
(b) Delegation to Executive Officers. To the extent permitted by
applicable law, the Board may delegate to one or more executive officers of the
Company the power to make Awards and exercise such other powers under the Plan
as the Board may determine, provided that the Board shall fix the maximum number
of shares subject to Awards and the maximum number of shares for any one
Participant to be made by such executive officers.
(c) Appointment of Committees. To the extent permitted by applicable
law, the Board may delegate any or all of its powers under the Plan to one or
more committees or subcommittees of the Board (a "Committee"). If and when the
common stock, $0.01 par value per share, of the Company (the "Common Stock") is
registered under the Securities Exchange Act of 1934 (the "Exchange Act"), the
Board shall appoint one such Committee of not less than two members, each member
of which shall be an "outside director" within the meaning of Section 162(m) of
the Code and a "non-employee director" as defined in Rule 16b-3 promulgated
under the Exchange Act." All references in the Plan to the "Board" shall mean
the Board or a Committee of the Board or the executive officer referred to in
Section 3(b) to the extent that the Board's powers or authority under the Plan
have been delegated to such Committee or executive officer.
4. Stock Available for Awards
(a) Number of Shares. Subject to adjustment under Section 4(c), Awards
may be made under the Plan for up to an aggregate number of shares of Common
Stock equal to (i) 7,000,000 less (ii) the sum of (X) the number of shares as to
which options are then outstanding under the Company's Amended and Restated 1998
Employee Stock Purchase Plan, as amended (the "Purchase Plan") and the number of
shares previously sold under the Purchase Plan, (Y) the number of shares as to
which options are then outstanding under the Company's 1996 Stock Plan, as
amended (the "1996 Plan") and the number of shares previously issued upon the
exercise of options granted under the 1996 Plan and the number of shares of
restricted or unrestricted stock granted under the 1996 Plan then outstanding
and (Z) the number of shares as to which "Awards" have previously been made or
shares issued under the Company's 1998 Stock Incentive Plan, as amended (the
"1998 Plan"), as such number shall be reduced to the extent shares become
reavailable for issuance under the 1998 Plan pursuant to Section 4(a) thereof.
If any Award expires or is terminated, surrendered or canceled without having
been fully exercised or is forfeited in whole or in part or results in any
Common Stock not being issued, the unused Common Stock covered by such Award
shall again be available for the grant of Awards under the Plan, subject,
however, in the case of Incentive Stock Options (as hereinafter defined), to
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any limitation required under the Code. Shares issued under the Plan may consist
in whole or in part of authorized but unissued shares or treasury shares.
(b) Per-Participant Limit. Subject to adjustment under Section 4(c),
for Awards granted after the Common Stock is registered under the Securities
Exchange Act of 1934 (the "Exchange Act"), the maximum number of shares of
Common Stock with respect to which an Award may be granted to any Participant
under the Plan shall be 2,000,000 per calendar year. The per-Participant limit
described in this Section 4(b) shall be construed and applied consistently with
Section 162(m) of the Code.
(c) Adjustment to Common Stock. In the event of any stock split, stock
dividend, recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off or other similar change in
capitalization or event, or any distribution to holders of Common Stock other
than a normal cash dividend, (i) the number and class of securities available
under this Plan, (ii) the per-participant limit set forth in Section 4(b), (iii)
the number and class of security and exercise price per share subject to each
outstanding Option, (iv) the repurchase price per security subject to each
outstanding Restricted Stock Award, and (v) the terms of each other outstanding
stock-based Award shall be appropriately adjusted by the Company (or substituted
Awards may be made, if applicable) to the extent the Board shall determine, in
good faith, that such an adjustment (or substitution) is necessary and
appropriate. If this Section 4(c) applies and Section 8(e)(1) also applies to
any event, Section 8(e)(1) shall be applicable to such event, and this Section
4(c) shall not be applicable.
5. Stock Options
(a) General. The Board may grant options to purchase Common Stock
(each, an "Option") and determine the number of shares of Common Stock to be
covered by each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".
(b) Incentive Stock Options. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereof) which is intended to be an
Incentive Stock Option is not an Incentive Stock Option.
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(c) Exercise Price. The Board shall establish the exercise price at
the time each Option is granted and specify it in the applicable option
agreement.
(d) Duration of Options. Each Option shall be exercisable at such
times and subject to such terms and conditions as the Board may specify in the
applicable option agreement. No Option will be granted for a term in excess of
10 years.
(e) Exercise of Option. Options may be exercised only by delivery to
the Company of a written notice of exercise signed by the proper person together
with payment in full as specified in Section 5(f) for the number of shares for
which the Option is exercised.
(f) Payment Upon Exercise. Common Stock purchased upon the exercise of
an Option granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the Company;
(2) except as the Board may otherwise provide in an Option
Agreement, delivery of an irrevocable and unconditional undertaking by a
creditworthy broker to deliver promptly to the Company sufficient funds to pay
the exercise price, or delivery by the Participant to the Company of a copy of
irrevocable and unconditional instructions to a creditworthy broker to deliver
promptly to the Company cash or a check sufficient to pay the exercise price;
(3) to the extent permitted by the Board and explicitly
provided in an Option Agreement (i) by delivery of shares of Common Stock owned
by the Participant valued at their fair market value as determined by the Board
in good faith ("Fair Market Value"), which Common Stock was owned by the
Participant at least six months prior to such delivery, (ii) by delivery of a
promissory note of the Participant to the Company on terms determined by the
Board, or (iii) by payment of such other lawful consideration as the Board may
determine; or
(4) any combination of the above permitted forms of payment.
6. Restricted Stock
(a) Grants. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require forfeiture of such shares if issued at no cost) from the recipient in
the event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, "Restricted Stock Award").
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(b) Terms and Conditions. The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any. Any stock certificates
issued in respect of a Restricted Stock Award shall be registered in the name of
the Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company (or
its designee). At the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.
7. Other Stock-Based Awards
The Board shall have the right to grant other Awards based upon the
Common Stock having such terms and conditions as the Board may determine,
including the grant of shares based upon certain conditions, the grant of
securities convertible into Common Stock and the grant of stock appreciation
rights.
8. General Provisions Applicable to Awards
(a) Transferability of Awards. Except as the Board may otherwise
determine or provide in an Award, Awards shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to whom they are
granted, either voluntarily or by operation of law, except by will or the laws
of descent and distribution, and, during the life of the Participant, shall be
exercisable only by the Participant. References to a Participant, to the extent
relevant in the context, shall include references to authorized transferees.
(b) Documentation. Each Award under the Plan shall be evidenced by a
written instrument in such form as the Board shall determine. Each Award may
contain terms and conditions in addition to those set forth in the Plan.
(c) Board Discretion. Except as otherwise provided by the Plan, each
type of Award may be made alone or in addition or in relation to any other type
of Award. The terms of each type of Award need not be identical, and the Board
need not treat Participants uniformly.
(d) Termination of Status. The Board shall determine the effect on an
Award of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative,
5
<PAGE> 6
conservator, guardian or Designated Beneficiary may exercise rights under the
Award.
(e) Acquisition Events Acquisition and Change in Control Events
(1) Definitions
a. An "Acquisition Event" shall mean:
(i) any merger or consolidation of the Company
with or into another entity as a result of
which the Common Stock is converted into or
exchanged for the right to receive cash,
securities or other property; or
(ii) any exchange of shares of the Company for
cash, securities or other property pursuant
to a statutory share exchange transaction.
b. A "Change in Control Event" shall mean:
(i) the acquisition by an individual, entity or
group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a
"Person") of beneficial ownership of any
capital stock of the Company if, after such
acquisition, such Person beneficially owns
(within the meaning of Rule 13d-3 promulgated
under the Exchange Act) 30% or more of either
(x) the then-outstanding shares of common
stock of the Company (the "Outstanding
Company Common Stock") or (y) the combined
voting power of the then-outstanding
securities of the Company entitled to vote
generally in the election of directors (the
"Outstanding Company Voting Securities");
provided, however, that for purposes of this
subsection (i), the following acquisitions
shall not constitute a Change in Control
Event: (A) any acquisition directly from the
Company (excluding an acquisition pursuant to
the exercise, conversion or exchange of any
security exercisable for, convertible into or
exchangeable for common stock or voting
securities of the Company, unless the Person
exercising, converting or exchanging such
security
6
<PAGE> 7
acquired such security directly from the
Company or an underwriter or agent of the
Company), (B) any acquisition by any employee
benefit plan (or related trust) sponsored or
maintained by the Company or any corporation
controlled by the Company, (C) any
acquisition by any corporation pursuant to a
Business Combination (as defined below) which
complies with clauses (x) and (y) of
subsection (iii) of this definition or (D)
any acquisition by General Atlantic Partners
28, L.P., General Atlantic Partners 38, L.P.,
General Atlantic Partners 47, L.P., GAP
Coinvestment Partners, L.P. and any other
entities controlled by or under common
control with any of the foregoing entities,
within the meaning of the Exchange Act; or
(ii) such time as the Continuing Directors (as
defined below) constitute a minority of the
Board (or, if applicable, the Board of
Directors of a successor corporation to the
Company), where the term "Continuing
Director" means at any date a member of the
Board (x) who was a member of the Board on
the date of the initial adoption of this Plan
by the Board or (y) who was nominated or
elected subsequent to such date by at least a
majority of the directors who were Continuing
Directors at the time of such nomination or
election or whose election to the Board was
recommended or endorsed by at least a
majority of the directors who were Continuing
Directors at the time of such nomination or
election; provided, however, that there shall
be excluded from this clause (y) any
individual whose initial assumption of office
occurred as a result of an actual or
threatened election contest with respect to
the election or removal of directors or other
actual or threatened solicitation of proxies
or consents, by or on behalf of a person
other than the Board; or
(iii) the consummation of a merger, consolidation,
reorganization or statutory share exchange
involving the Company or a sale or other
disposition of all or substantially all of
the assets of the Company (a "Business
Combination"), unless, immediately following
such Business Combination, each of the
7
<PAGE> 8
following two conditions is satisfied: (x)
all or substantially all of the individuals
and entities who were the beneficial owners
of the Outstanding Company Common Stock and
Outstanding Company Voting Securities
immediately prior to such Business
Combination beneficially own, directly or
indirectly, more than 50% of the
then-outstanding shares of common stock and
the combined voting power of the
then-outstanding securities entitled to vote
generally in the election of directors,
respectively, of the resulting or acquiring
corporation in such Business Combination
(which shall include, without limitation, a
corporation which as a result of such
transaction owns the Company or substantially
all of the Company's assets either directly
or through one or more subsidiaries) (such
resulting or acquiring corporation is
referred to herein as the "Acquiring
Corporation") in substantially the same
proportions as their ownership of the
Outstanding Company Common Stock and
Outstanding Company Voting Securities,
respectively, immediately prior to such
Business Combination and (y) no Person
(excluding the Acquiring Corporation, any
Exempt Person or any employee benefit plan
(or related trust) maintained or sponsored by
the Company or by the Acquiring Corporation)
beneficially owns, directly or indirectly,
30% or more of the then-outstanding shares of
common stock of the Acquiring Corporation, or
of the combined voting power of the
then-outstanding securities of such
corporation entitled to vote generally in the
election of directors (except to the extent
that such ownership existed prior to the
Business Combination).
(2) Effect on Options
a. Acquisition Event. Upon the occurrence of an
Acquisition Event (regardless of whether such event
also constitutes a Change in Control Event), or the
execution by the Company of any agreement with
respect to an Acquisition Event (regardless of
whether such event will result in a Change in
Control Event), the Board shall provide that all
outstanding Options shall be assumed, or equivalent
8
<PAGE> 9
options shall be substituted, by the acquiring or
succeeding corporation (or an affiliate thereof);
provided that if such Acquisition Event also
constitutes a Change in Control Event, except to the
extent specifically provided to the contrary in the
instrument evidencing any Option or any other
agreement between a Participant and the Company,
such assumed or substituted options shall be
immediately exercisable in full upon the occurrence
of such Acquisition Event. For purposes hereof, an
Option shall be considered to be assumed if,
following consummation of the Acquisition Event, the
Option confers the right to purchase, for each share
of Common Stock subject to the Option immediately
prior to the consummation of the Acquisition Event,
the consideration (whether cash, securities or other
property) received as a result of the Acquisition
Event by holders of Common Stock for each share of
Common Stock held immediately prior to the
consummation of the Acquisition Event (and if
holders were offered a choice of consideration, the
type of consideration chosen by the holders of a
majority of the outstanding shares of Common Stock);
provided, however, that if the consideration
received as a result of the Acquisition Event is not
solely common stock of the acquiring or succeeding
corporation (or an affiliate thereof), the Company
may, with the consent of the acquiring or succeeding
corporation, provide for the consideration to be
received upon the exercise of Options to consist
solely of common stock of the acquiring or
succeeding corporation (or an affiliate thereof)
equivalent in fair market value to the per share
consideration received by holders of outstanding
shares of Common Stock as a result of the
Acquisition Event.
Notwithstanding the foregoing, if the
acquiring or succeeding corporation (or an affiliate
thereof) does not agree to assume, or substitute
for, such Options, then the Board shall (x) upon
written notice to the Participants, provide that all
then unexercised Options will become exercisable in
full as of a specified time (the "Acceleration
Time") prior to the Acquisition Event and will
terminate immediately prior to the consummation of
such Acquisition Event, except to the extent
exercised by the Participants before the
consummation of such Acquisition Event, and/or (y)
in the event of an Acquisition Event
9
<PAGE> 10
under the terms of which holders of Common Stock
will receive upon consummation thereof a cash
payment for each share of Common Stock surrendered
pursuant to such Acquisition Event (the "Acquisition
Price"), provide that all outstanding Options shall
terminate upon consummation of such Acquisition
Event and each Participant shall receive, in
exchange therefor, a cash payment equal to the
amount (if any) by which (A) the Acquisition Price
multiplied by the number of shares of Common Stock
subject to such outstanding Options (whether or not
then exercisable), exceeds (B) the aggregate
exercise price of such Options.
b. Change in Control Event that is not an Acquisition
Event. Upon the occurrence of a Change in Control
Event that does not also constitute an Acquisition
Event, except to the extent specifically provided to
the contrary in the instrument evidencing any Option
or any other agreement between a Participant and the
Company, all Options then-outstanding shall
automatically become immediately exercisable in
full.
(3) Effect on Restricted Stock Awards
a. Acquisition Event that is not a Change in Control
Event. Upon the occurrence of an Acquisition Event
that is not a Change in Control Event, the
repurchase and other rights of the Company under
each outstanding Restricted Stock Award shall inure
to the benefit of the Company's successor and shall
apply to the cash, securities or other property
which the Common Stock was converted into or
exchanged for pursuant to such Acquisition Event in
the same manner and to the same extent as they
applied to the Common Stock subject to such
Restricted Stock Award.
b. Change in Control Event. Upon the occurrence of a
Change in Control Event (regardless of whether such
event also constitutes an Acquisition Event), except
to the extent specifically provided to the contrary
in the instrument evidencing any Restricted Stock
Award or any other agreement between a Participant
and the Company, all restrictions and conditions on
all Restricted Stock Awards then-outstanding shall
automatically be deemed terminated or satisfied.
10
<PAGE> 11
(4) Effect on Other Awards
a. Acquisition Event that is not a Change in Control
Event. The Board shall specify the effect of an
Acquisition Event that is not a Change in Control
Event on any other Award granted under the Plan at
the time of the grant of such Award.
b. Change in Control Event. Upon the occurrence of a
Change in Control Event (regardless of whether such
event also constitutes an Acquisition Event), except
to the extent specifically provided to the contrary
in the instrument evidencing any other Award or any
other agreement between a Participant and the
Company, all other Awards shall become exercisable,
realizable or vested in full, or shall be free of
all conditions or restrictions, as applicable to
each such Award.
(f) Assumption of Options Upon Certain Events. The Board may grant
Awards under the Plan in substitution for stock and stock-based awards held by
employees of another corporation who become employees of the Company as a result
of a merger or consolidation of the employing corporation with the Company or
the acquisition by the Company of property or stock of the employing
corporation. The substitute Awards shall be granted on such terms and conditions
as the Board considers appropriate in the circumstances.
(g) Withholding. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. The Board may allow Participants to
satisfy such tax obligations in whole or in part in shares of Common Stock,
including shares retained from the Award creating the tax obligation, valued at
their Fair Market Value. The Company may, to the extent permitted by law, deduct
any such tax obligations from any payment of any kind otherwise due to a
Participant.
(h) Amendment of Award. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
11
<PAGE> 12
(i) Conditions on Delivery of Stock. The Company will not be obligated
to deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.
(j) Acceleration. The Board may at any time provide that any Options
shall become immediately exercisable in full or in part, that any Restricted
Stock Awards shall be free of all restrictions or that any other stock-based
Awards may become exercisable in full or in part or free of some or all
restrictions or conditions, or otherwise realizable in full or in part, as the
case may be.
9. Miscellaneous
(a) No Right To Employment or Other Status. No person shall have any
claim or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.
(b) No Rights As Stockholder. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have any rights
as a stockholder with respect to any shares of Common Stock to be distributed
with respect to an Award until becoming the record holder of such shares.
(c) Effective Date and Term of Plan. The Plan shall become effective
on the date on which it is adopted by the Board, but no Award granted to a
Participant designated by the Board as subject to Section 162(m) of the Code by
the Board shall become exercisable, vested or realizable, as applicable to such
Award, unless and until the Plan has been approved by the Company's stockholders
to the extent stockholder approval is required by Section 162(m) in the manner
required under Section 162(m) (including the vote required under Section
162(m)). No Awards shall be granted under the Plan after the completion of ten
years from the earlier of (i) the date on which the Plan was adopted by the
Board or (ii) the date the Plan was approved by the Company's stockholders, but
Awards previously granted may extend beyond that date.
12
<PAGE> 13
(d) Amendment of Plan. The Board may amend, suspend or terminate the
Plan or any portion thereof at any time, provided that to the extent required by
Section 162(m) of the Code, no Award granted to a Participant designated as
subject to Section 162(m) by the Board after the date of such amendment shall
become exercisable, realizable or vested, as applicable to such Award (to the
extent that such amendment to the Plan was required to grant such Award to a
particular Participant), unless and until such amendment shall have been
approved by the Company's stockholders as required by Section 162(m) (including
the vote required under Section 162(m)).
(e) Governing Law. The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.
Adopted by the Board of Directors
on February 23, 1999
Approved by the Stockholders on
April 21, 1999
13
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