<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Eclipsys Corporation
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
--------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
ECLIPSYS CORPORATION
777 EAST ATLANTIC AVENUE, SUITE 200
DELRAY BEACH, FLORIDA 33483
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 12, 2000
The Annual Meeting of Stockholders of Eclipsys Corporation (the "Company")
will be held at the Delray Beach Marriott, 10 North Ocean Boulevard, Delray
Beach, Florida 33444, on Wednesday, July 12, at 10:00 a.m., local time, to
consider and act upon the following matters:
1. To elect two Class II directors for the ensuing three years.
2. To approve the Company's 2000 Stock Incentive Plan.
3. To approve related amendments to the Company's 1999 Stock Incentive
Plan, the 1998 Stock Incentive Plan and the Amended and Restated 1998
Employee Stock Purchase Plan to reflect an increase in the number of
shares of Voting Common Stock authorized for issuance under all the
Company's stock plans (the 2000 Stock Incentive Plan, the 1999 Stock
Incentive Plan, the Amended and Restated Employee Stock Purchase Plan,
the 1998 Stock Incentive Plan and the 1996 Stock Plan) from 7,000,000
to 12,000,000.
4. To ratify the selection by the Board of Directors of
PricewaterhouseCoopers LLP as the Company's independent auditors for
the current fiscal year.
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Stockholders of record at the close of business on June 15, 2000 will be
entitled to notice of and to vote at the meeting or any adjournment thereof. The
stock transfer books of the Company will remain open following the record date.
By Order of the Board of Directors,
/s/ T. Jack Risenhover, II
T. Jack Risenhoover, II, Secretary
Delray Beach, Florida
June 19, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO
ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF THE PROXY IS
MAILED IN THE UNITED STATES.
<PAGE> 3
ECLIPSYS CORPORATION
777 EAST ATLANTIC AVENUE, SUITE 200
DELRAY BEACH, FLORIDA 33483
PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, JULY 12, 2000
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Eclipsys Corporation (the "Company") for
use at the Annual Meeting of Stockholders to be held on Wednesday, July 12,
2000, and at any adjournment of that meeting. All executed proxies will be voted
in accordance with the stockholder's instructions, and if no choice is
specified, executed proxies will be voted in favor of the matters set forth in
the accompanying Notice of Meeting. Any proxy may be revoked by a stockholder at
any time before its exercise by delivery of written revocation or a subsequently
dated proxy to the Secretary of the Company or by voting in person at the Annual
Meeting.
On June 15, 2000, the record date for the determination of stockholders
entitled to vote at the Annual Meeting (the "Record Date"), there were
outstanding and entitled to vote an aggregate of 36,719,176 shares of Common
Stock ("Voting Common Stock") of the Company (constituting all of the voting
stock of the Company). Holders of Voting Common Stock are entitled to one vote
per share. Holders of the Company's Non-Voting Common Stock are not entitled to
vote at the Annual Meeting.
The Company's Annual Report for the year ended December 31, 1999 is being
mailed to stockholders, along with these proxy materials, on or about June 20,
2000.
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
1999 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS INCLUDED IN THE
COMPANY'S ANNUAL REPORT.
VOTES REQUIRED
The holders of a majority of the shares of Voting Common Stock outstanding
and entitled to vote at the Annual Meeting will constitute a quorum for the
transaction of business at the Annual Meeting. Shares of Voting Common Stock
represented in person or by proxy (including shares which abstain or do not vote
with respect to one or more of the matters presented for stockholder approval)
will be counted for purposes of determining whether a quorum is present at the
Annual Meeting.
The affirmative vote of a plurality of the votes cast by stockholders
entitled to vote on the matter is required for the election of directors. The
affirmative vote of a majority of the shares of Voting Common Stock voting on
the matter is required to approve the adoption of the 2000 Stock Incentive Plan,
the amendment of the 1999 Stock Incentive Plan, the 1998 Stock Incentive Plan
and the Amended and Restated 1998 Employee Stock Purchase Plan and to ratify the
selection by the Board of Directors of PricewaterhouseCoopers LLP as the
Company's independent auditors for the current year.
Shares which abstain from voting as to a particular matter, and shares held
in "street name" by brokers or nominees who indicate on their proxies that they
do not have discretionary authority to vote such shares as to a particular
matter, will not be counted as votes in favor of such matter, and will also not
be counted as shares voting on such matter. Accordingly, abstentions and "broker
non-
1
<PAGE> 4
votes" will have no effect on the voting on matters (such as the election of
directors, the amendments to the stock plans and the ratification of the
selection of the auditors) that require the affirmative vote of a plurality or a
majority of the votes cast or the shares voting on the matter.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding the beneficial
ownership of the Company's Voting Common Stock as of June 15, 2000 by (i) each
person or entity who is known by the Company to beneficially own more than 5% of
the outstanding shares of Voting Common Stock, (ii) by each director or nominee
for director, (iii) by each of the executive officers named in the Summary
Compensation Table set forth under the caption "Executive Compensation" below,
and (iv) by all directors and executive officers as a group. Unless otherwise
indicated, each person or entity named in the table has sole voting power and
investment power (or shares such power with his or her spouse) with respect to
all shares of capital stock listed as owned by such person or entity.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) PERCENTAGE OWNED
------------------------ --------------------- ----------------
<S> <C> <C>
General Atlantic Partners, LLC(2).................... 6,784,556 18.5%
c/o General Atlantic Service Corporation
Three Pickwick Plaza
Greenwich, CT 06830
Wilfam, L.P.......................................... 2,093,384 5.7%
100 Chetwynd Drive
Rosemont, PA 19010
Harvey J. Wilson(3).................................. 751,407 2.0%
James E. Hall(4)..................................... 113,100 *
Gregory L. Wilson(5)................................. 30,832 *
T. Jack Risenhoover, II(6)........................... 31,142 *
Steven A. Denning(7)................................. 6,792,333 18.5%
G. Fred DiBona(8).................................... 39,443 *
Eugene V. Fife(9).................................... 39,443 *
William E. Ford(10).................................. 6,792,333 18.5%
Patrick T. Hackett................................... 8,005 *
J. Robert Kell(11)................................... 1,000,000 2.7%
Jay B. Pieper(12).................................... 916,067 2.5%
All executive officers and directors as a group (11
persons)(13)....................................... 9,729,549 26.5%
</TABLE>
-------------------------
* Less than 1%
(1) The number of shares beneficially owned by each stockholder is determined
under rules promulgated by the Securities and Exchange Commission, and the
information is not necessarily indicative of beneficial ownership for any
other purpose. Under such rules, beneficial
2
<PAGE> 5
ownership includes any shares as to which the individual or entity has sole
or shared voting power or investment power and any shares as to which the
individual or entity has the right to acquire beneficial ownership within
60 days after June 15, 2000 through the exercise of any stock option,
warrant or other right. The inclusion herein of such shares, however, does
not constitute an admission that the named stockholder is a direct or
indirect beneficial owner of such shares.
(2) Consists of 1,052,661 shares held by General Atlantic Partners 28, L.P.
("GAP 28"), 3,708,594 shares held by General Atlantic Partners 38, L.P.
("GAP 38"), 504,674 shares held by General Atlantic Partners 47, L.P. ("GAP
47"), 403,883 shares held by General Atlantic Partners 48, L.P. ("GAP 48")
and 1,114,744 shares held by GAP Coinvestment, L.P. ("GAP Coinvestment").
The general partner of GAP 28, GAP 38, GAP 47 and GAP 48 is General
Atlantic Partners, LLC, a Delaware limited liability company. The managing
members of General Atlantic Partners, LLC are the general partners of GAP
Coinvestment. Messrs. Denning and Ford are both managing members of General
Atlantic Partners, LLC. Messrs. Denning and Ford disclaim beneficial
ownership of shares owned by GAP 28, GAP 38, GAP 47, GAP 48 and GAP
Coinvestment and their inclusion herein shall not be deemed an admission of
beneficial ownership.
(3) Consists of (i) 250,733 shares issuable upon the exercise of stock options
which are exercisable within 60 days of June 15, 2000 and (ii) 500,674
shares held by an irrevocable grantor trust for the benefit of Mr. Wilson
and members of his family (the "Trust"). The sole trustee of the Trust is
an independent individual not affiliated with Mr. Wilson.
(4) Includes 92,684 shares issuable upon exercise of stock options which are
exercisable within 60 days of June 15, 2000.
(5) Includes 21,944 shares issuable upon exercise of stock options which are
exercisable within 60 days of June 15, 2000.
(6) Includes 15,870 shares issuable upon the exercise of stock options which
are exercisable within 60 days of June 15, 2000.
(7) Includes 7,777 shares issuable upon the exercise of stock options which are
exercisable within 60 days of June 15, 2000. Also includes the shares
described in footnote (2) above.
(8) Includes 7,777 shares issuable upon the exercise of stock options which are
exercisable within 60 days of June 15, 2000.
(9) Includes 24,443 shares issuable upon the exercise of stock options which
are exercisable within 60 days of June 15, 2000.
(10) Includes 7,777 shares issuable upon the exercise of stock options which are
exercisable within 60 days of June 15, 2000. Also includes the shares
described in footnote (2) above.
(11) These shares are held by Motorola, Inc. Mr. Kell is a vice president of
Motorola, Inc. Mr. Kell disclaims beneficial ownership of these shares and
their inclusion herein shall not be deemed an admission of beneficial
ownership.
3
<PAGE> 6
(12) Includes 7,777 shares issuable upon the exercise of stock options which are
exercisable within 60 days of June 15, 2000. The remaining 908,290 shares
are held by Partners HealthCare System, Inc. ("Partners"). Mr. Pieper is a
Vice President of Partners. Mr. Pieper disclaims beneficial ownership of
the shares held by Partners and their inclusion herein shall not be deemed
an admission of beneficial ownership.
(13) See notes (2) through (12) above.
ELECTION OF DIRECTORS
The Company's Amended and Restated Certificate of Incorporation provides
that the Board of Directors is classified into three classes (designated Class I
directors, Class II directors and Class III directors), with members of each
class holding office for staggered three-year terms. There are currently three
Class II directors, whose terms expire at the Annual Meeting, three Class I
directors, whose terms expire at the 2002 Annual Meeting of Stockholders, and
three Class III directors, whose terms expire at the 2001 Annual Meeting of
Stockholders (in all cases subject to the election and qualification of their
successors and to their earlier death, resignation or removal).
The persons named in the enclosed proxy will vote to elect as Class II
directors the two nominees named below, one of whom is presently a Class II
director of the Company, unless authority to vote for the election of any or all
of the nominees is withheld by marking the proxy to that effect. All of the
nominees have indicated their willingness to serve, if elected, but if any
should be unable or unwilling to serve, proxies may be voted for a substitute
nominee designated by the Board of Directors. Each Class II director will be
elected to hold office until the 2003 Annual Meeting of Stockholders (subject to
the election and qualification of his successor and to his earlier death,
resignation or removal).
Robert Raco, a Class I director, resigned from the Board of Directors,
effective June 8, 1999. In addition, Patrick T. Hackett and J. Robert Kell, each
existing Class II directors, are not standing for re-election at the Annual
Meeting. The Board of Directors has nominated Steven A. Denning, an existing
Class III director to stand for election as a Class II director. Mr. Denning has
agreed to stand for election as a Class II director and to resign as a Class III
director upon his election as a Class II director.
NOMINATION OF CLASS II DIRECTORS
Set forth below, for each nominee, are his name and age, his positions with
the Company, his principal occupation and business experience during the past
five years and the year of the commencement of his term as a director of the
Company:
JAY B. PIEPER is 57 years old and has served on the Board of Directors
since May 1996. Since May 1995, Mr. Pieper has served as Vice President of
Corporate Development and Treasury Affairs for Partners HealthCare System, Inc.,
the parent of Brigham and Women's Hospital, Inc. and Massachusetts General
Hospital. From March 1986 to May 1995, Mr. Pieper was Senior Vice President and
Chief Financial Officer for Brigham and Women's Hospital.
STEVEN A. DENNING is 51 years old and has served on the Board of Directors
since March 1997. Mr. Denning is a Managing Member of General Atlantic Partners
LLC, a private equity firm that invests globally in software, services and
related information technology companies, and has been with
4
<PAGE> 7
General Atlantic Partners LLC since 1980. Mr. Denning is also a director of GT
Interactive Software Corp., an interactive entertainment software development
company.
INCUMBENT DIRECTORS
Set forth below, for each incumbent, are his name and age, his positions
with the Company, his principal occupation and business experience during the
past five years and the year of the commencement of his term as a director of
the Company:
CLASS I
EUGENE V. FIFE is 58 years old and has served on the Board of Directors
since May 1997. Since September 1999, Mr. Fife has served as a principal of
Vawter Capital, L.L.C., a venture capital firm. From September 1997 to December
1999, Mr. Fife served as the Co-Chairman and Chief Executive Officer of
Illuminis, Inc. (formerly known as Multimedia Medical Systems, Inc.), a clinical
information systems company. Mr. Fife was formerly a general partner in Goldman
Sachs & Co. where he served as a member of its Management Committee and as
Chairman of Goldman Sachs International. Mr. Fife retired from Goldman Sachs &
Co. in 1995, remained a limited partner of the firm until May 1999, at which
time he became a special director of the firm in which capacity he continues to
serve. Mr. Fife is also a director of Baker, Fentress & Company, an investment
company.
WILLIAM E. FORD is 37 years old and has served on the Board of Directors
since May 1996. Mr. Ford is a Managing Member of General Atlantic Partners LLC,
a private equity firm that invests globally in software, services and related
information technology companies, and has been with General Atlantic since 1991.
Mr. Ford also serves as a director of LHS Group Inc., a billing solutions
company; E*Trade Group, Inc., an on-line discount broker; Priceline.com
Incorporated, an e-commerce company, Tickets.com, Inc., an on-line ticket
seller, and Quintiles Transnational Corp., a healthcare and pharmaceuticals
services company.
CLASS III
HARVEY J. WILSON, the Company's founder, is 61 years old and served as
President, Chief Executive Officer and Chairman of the Board of Directors since
the Company was formed in December 1995 until February 1999, and continues to
serve as Chief Executive Officer and Chairman of the Board of Directors. From
January 1984 to December 1995, Mr. Wilson invested privately in software and
technology companies. Mr. Wilson was a co-founder of Shared Medical Systems
Corporation, a healthcare information systems provider. Mr. Wilson is a director
of Philadelphia Suburban Corporation, a water utility company and Co-Chairman of
HEALTHvision Inc., an e-Health company. Harvey Wilson is the father of Gregory
Wilson, the Company's Chief Financial Officer.
G. FRED DIBONA is 49 years old and has served on the Board of Directors
since May 1996. Since 1990, Mr. DiBona has been the President and Chief
Executive Officer of Independence Blue Cross and its subsidiaries. Mr. DiBona is
also a director of Magellan Health Services, Inc., a specialized managed
healthcare company; PECO Energy Company, a public energy company; Philadelphia
Suburban Corporation, a water utility company; and Tasty Baking Company, a
packaged foods company.
5
<PAGE> 8
BOARD AND COMMITTEE MEETINGS
The Board of Directors has an Executive Development and Compensation
Committee composed of Messrs. Denning (Chairman), DiBona and Fife. This
Committee makes recommendations concerning salaries and incentive compensation
for executive officers and administers and grants stock options and awards
pursuant to the Company's stock option plans. The Executive Development and
Compensation Committee met four times during 1999.
The Board of Directors also has an Audit Committee, currently composed of
Messrs. Pieper (Chairman) and Ford, which reviews the results and scope of the
audit and other services provided by the Company's independent public
accountants. The Audit Committee met four times during 1999.
The Board of Directors met eight times during 1999. Each returning director
attended at least 75% of the aggregate of the number of Board meetings and the
number of meetings held by all committees on which the director then served.
DIRECTOR COMPENSATION
Directors are reimbursed for any expenses incurred in connection with
attendance at meetings of the Board of Directors or any committee of the Board
of Directors, but are not otherwise compensated for such service. On April 8,
1998, the non-employee directors (Messrs. Denning, DiBona, Fife, Ford and
Pieper, as well as Richard Severns, who was then a director) were each granted a
non-qualified stock option to purchase 13,333 shares of Voting Common Stock at a
purchase price of $13.50 per share under the Company's 1998 Stock Incentive
Plan. These options vest annually over a four-year period.
6
<PAGE> 9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table sets forth the total compensation paid or accrued for
the last three years for the Company's Chief Executive Officer and its three
other executive officers (together, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL ------------
COMPENSATION SECURITIES
------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(1) COMPENSATION(2)
--------------------------- ---- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Harvey J. Wilson................... 1997 $150,000 $ -- -- $ --
Chairman of the Board and 1998 200,000 -- 333,332 --
Chief Executive Officer 1999 200,000 -- 100,000 1,485
James E. Hall...................... 1997 177,971 50,000 50,000 96
President and Chief Operating 1998 200,000 125,000 43,333 3,635
Officer 1999 242,308 -- 110,000 3,850
Gregory L. Wilson(3)............... 1997 57,692 -- 20,000 28
Senior Vice President, Chief 1998 142,308 45,000 -- 52
Financial Officer and Treasurer 1999 148,269 -- 140,000 100
T. Jack Risenhoover, II............ 1997 74,039 7,500 26,666 343
Senior Vice President, 1998 103,846 45,000 -- 2,355
General Counsel and Secretary 1999 134,616 -- 53,334 56,385
</TABLE>
-------------------------
(1) Represents the number of shares covered by options to purchase shares of
Voting Common Stock granted during the applicable year.
(2) Represents Company contributions to group term life insurance policies, and
with respect to Mr. Risenhoover, Company contributions on his behalf to the
Company's 401(k) Plan in 1998 and reimbursed relocation expenses in 1999.
(3) Mr. Gregory Wilson joined the Company in May 1997 and was appointed an
executive officer in December 1999.
7
<PAGE> 10
STOCK OPTION GRANTS
The following table sets forth grants of stock options to each of the Named
Executive Officers during the year ended December 31, 1999.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(1)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED FISCAL YEAR PER SHARE DATE 5% 10%
---- ---------- ------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Harvey J. Wilson(2)........ 100,000 3.18% $23.375 3/22/09 $1,470,041 $3,725,373
James E. Hall(3)........... 60,000 1.91 23.375 3/22/09 882,025 2,235,224
50,000 1.59 15.125 10/15/09 475,602 1,205,268
Gregory L. Wilson(4)....... 70,000 2.23 23.375 3/22/09 1,029,029 2,607,761
10,000 0.32 15.125 10/15/09 95,120 241,054
60,000 1.91 23.000 12/23/09 867,875 2,199,365
T. Jack Risenhoover,
II(5).................... 43,334 1.38 23.375 3/22/09 637,028 1,614,353
10,000 0.32 15.125 10/15/09 95,120 241,054
</TABLE>
-------------------------
(1) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compound rates of appreciation (5% and 10%) on
the market value of the Voting Common Stock on the date of option grant over
the term of the options. These numbers are calculated based on rules
promulgated by the Securities and Exchange Commission and do not reflect the
Company's estimate of future stock price growth. Actual gains, if any, on
stock option exercises and Voting Common Stock holdings are dependent on the
timing of such exercise and the future performance of the Voting Common
Stock. There can be no assurance that the rates of appreciation assumed in
this table can be achieved or that the amounts reflected will be received by
the individuals.
(2) Mr. Harvey Wilson's options vest over two years.
(3) Mr. Hall's options vests (1) as to the shares priced at $23.375, over three
years, (2) as to the shares priced at $15.125, over two years.
(4) Mr. Gregory Wilson's options vest over four years.
(5) Mr. Risenhoover's options vest over four years.
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<PAGE> 11
OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth certain information concerning option
exercises by the Named Executive Officers in 1999 and the number and value of
unexercised options held by each of the Named Executive Officers on December 31,
1999.
AGGREGATE OPTION EXERCISES AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
SHARES FISCAL YEAR END AT FISCAL YEAR END(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Harvey J. Wilson.............. -- $ -- 131,469 301,863 $393,508 $ 539,819
James E. Hall................. -- -- 40,646 146,021 619,867 1,214,261
Gregory L. Wilson............. 6,295 124,028 555 150,557 10,614 621,903
T. Jack Risenhoover, II....... 14,572 291,733 444 64,984 8,492 423,271
</TABLE>
-------------------------
(1) Represents the difference between the exercise prices and the fair market
value per share of the Voting Common Stock at the date of exercise. The fair
market value was the last sale price of the Voting Common Stock on the date
of exercise as reported on the Nasdaq National Market.
(2) Represents the difference between the exercise price and the last sale price
of the Voting Common Stock as reported on the Nasdaq National Market on
December 31, 1999 ($25.625).
CERTAIN RELATIONSHIPS AND TRANSACTIONS
The Company has a license agreement with Partners HealthCare System, Inc.
("Partners"). Under the terms of this license, the Company may develop,
commercialize, distribute and support certain technology and license it, as well
as sell related services, to other healthcare providers and hospitals throughout
the world (with the exception of the Boston, Massachusetts metropolitan area).
Prior to the Company's initial public offering, no sales of products
incorporating the licensed technology were made and, consequently, no royalties
were paid by the Company pursuant to the license with Partners. The royalty
arrangement under the license terminated upon the Company's initial public
offering. After the Company's initial public offering, the Company sold products
incorporating the licensed technology. The Company is obligated to offer to
Partners and certain of its affiliates an internal use license, granted on most
favored customer terms, to all new software applications developed by the
Company, whether or not derived from the licensed technology, and major
architectural changes to the licensed technology. Partners and certain of its
affiliates are also entitled to receive internal use licenses, also granted on
most favored customer terms, for any changes to any module or application
included in the licensed technology requiring at least one person-year of
technical effort. The Company has an exclusive right of first offer to
commercialize new information technologies developed in connection with
Partners. If the Company breaches any material term of the license, the license
may become non-exclusive, at Partners' option. If Partners converts the current
license to a non-exclusive license, it must return 370,609 shares of the
Company's Voting
9
<PAGE> 12
Common Stock to the Company. As part of the Partners license, the Company
provided development services to Partners. Partners paid the Company $1.2
million for those services in 1999. Jay Pieper, a director of the Company, is
Vice President of Corporate Development and Treasury Affairs for Partners.
Partners was not affiliated with the Company at the time of the negotiation of
the Partners license.
In January 1998, the Company acquired the Emtek Healthcare Systems division
of Motorola, Inc. for aggregate consideration of $11.7 million (net of a $9.6
million receivable from Motorola), consisting of 1,000,000 shares of Voting
Common Stock issued to Motorola and the assumption of $12.3 million in
liabilities. In connection with this acquisition, the Company entered into a
software and support agreement with Motorola under which the Company agreed to
provide software and support services to Motorola's international customers for
a minimum period of one year in exchange for negotiated annual payments. As of
December 31, 1999, payments from Motorola totaled $1.2 million under the
software and support agreement. Richard Severns, a Senior Vice President of
Motorola, served as a director of the Company during 1998 and Robert Kell, a
Vice President of Motorola, is currently a director of the Company who is not
standing for re-election. None of Mr. Severns, Mr. Kell, or Motorola was
affiliated with the Company at the time of the negotiation of the acquisition of
Emtek.
During 1999, the Company from time to time chartered an airplane for
corporate purposes from an aircraft charter company. The Company paid $530,000
to the charter company during 1999. The aircraft provided for use by the Company
was leased by the charter company from RMSC of West Palm Beach, a company that
is wholly owned by Harvey J. Wilson. In connection with these charters, RMSC
invoiced the charter company $339,000 in 1999. Mr. Wilson has no ownership
interest in the charter company. The Company believes that the terms of the
charters were at least as favorable to it as those that could have been
negotiated with unaffiliated third parties.
During July 1999, the Company invested in HEALTHvision, Inc.
("HEALTHvision"), a Dallas-based privately held Internet healthcare company, in
conjunction with VHA, Inc. and entities affiliated with General Atlantic
Partners, LLC. The Company purchased 3,400,000 shares of HEALTHvision common
stock, $.01 par value per share, for $34,000, which represented approximately
34% of the outstanding capital stock of HEALTHvision. In July 1999, Harvey J.
Wilson, the Company's Chairman and Chief Executive Officer, purchased 45,000
shares of HEALTHvision Series A Convertible Participating Preferred Stock, $.01
par value per share, which represented approximately 0.45% of the outstanding
capital stock of HEALTHvision, and warrants to purchase 22,5000 shares of
HEALTHvision Series B Convertible Preferred Stock, $.01 par value per share, for
$450,000. Since July, 1999, Mr. Wilson has served as the Co-Chairman of the
Board of Directors of HEALTHvision. Also in July 1999, entities affiliated with
General Atlantic Partners, LLC purchased 2,000,000 shares of HEALTHvision Series
A Convertible Participating Preferred Stock, which represented approximately 20%
of the outstanding capital stock of HEALTHvision and warrants to purchase
1,000,000 shares of HEALTHvision Series B Convertible Preferred Stock for
$20,000,000. William E. Ford and Steven A. Denning, each members of the
Company's Board of Directors are affiliated with General Atlantic Partners, LLC.
During 1999, pursuant to licensing, outsourcing and service agreements between
the Company and HEALTHvision, the Company earned revenues of $522,400 and had
accounts receivable due of $287,000 from HEALTHvision.
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<PAGE> 13
Eclipsys has adopted a policy that all transactions between it and its
executive officers, directors and affiliates must (i) be on terms no less
favorable to Eclipsys than could be obtained from unaffiliated third parties and
(ii) be approved by a majority of the members of the Board of Directors and by a
majority of the disinterested members of the Board of Directors.
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<PAGE> 14
EXECUTIVE DEVELOPMENT AND
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
This report addresses the compensation policies of the Company applicable
to its officers during 1999. The Company's executive compensation program is
administered by the Executive Development and Compensation Committee of the
Board of Directors (the "Committee"), which is composed of three non-employee
directors. The Committee is responsible for determining the compensation package
of each executive officer, including the Chief Executive Officer. In 1999, the
Board of Directors did not modify in any material way or reject any action or
recommendation of the Committee with respect to executive officer compensation.
OVERVIEW AND PHILOSOPHY
The Company's executive compensation program is designed to promote the
following objectives:
- To provide competitive compensation that will help attract, retain and
reward highly qualified executives who contribute to the long-term
success of the Company.
- To align management's interests with the success of the Company by
placing a portion of the executive's compensation at risk in relation to
the Company's performance.
- To align management's interests with stockholders by including long-term
equity incentives.
The Committee believes that the Company's executive compensation program
provides an overall level of compensation that is competitive within its
industry and among companies of comparable size and complexity. To ensure that
compensation is competitive, the Company regularly compares its compensation
practices with those of other similar companies and sets its compensation
guidelines based on this review. The Committee also seeks to achieve an
appropriate balance of the compensation paid to a particular individual and the
compensation paid to other executives and attempts to maintain an appropriate
mix of salary and incentive compensation. While compensation data are useful
guides for comparative purposes, the Committee believes that a successful
compensation program also requires the application of judgment and subjective
determinations of individual performance.
EXECUTIVE COMPENSATION PROGRAM
The Company's executive compensation program consists of base salary,
annual incentive compensation in the form of cash bonuses, and long-term equity
incentives in the form of stock options. Executive officers also are eligible to
participate in certain benefit programs which are generally available to all
employees of the Company, such as life insurance benefits and the Company's
Amended and Restated 1998 Employee Stock Purchase Plan and the Company's 401(k)
savings plan.
BASE SALARY
At the beginning of each year, the Committee establishes an annual salary
plan for the Company's senior executive officers based on recommendations made
by the Company's Chief Executive Officer. The Committee attempts to set base
salary compensation within the range of salaries of executive officers with
comparable qualifications, experience and responsibilities at other
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<PAGE> 15
companies in the same or similar businesses, and of comparable size and success.
In setting the annual cash compensation for Company executives, the Committee
reviews compensation for comparable positions by reviewing compensation data
available in a number of publicly available surveys and databases. All of the
companies in the Peer Group (as defined below) are included, along with other
companies, in the compensation data reviewed. In addition to external market
data, salary determinations depend both upon the Company's financial performance
and upon the individual's performance as measured by certain subjective
non-financial objectives. These non-financial objectives include the
individual's contribution to the Company as a whole, including his or her
ability to motivate others, develop the skills necessary to grow as the Company
matures, recognize and pursue new business opportunities and initiate programs
to enhance the Company's growth and success.
ANNUAL INCENTIVE COMPENSATION
The Company's bonus program is designed to provide its key employees with
cash incentives to achieve the Company's financial goals. At the beginning of
each year, the Committee establishes target annual bonuses for each executive
officer, which the executive will receive if the Company achieves its targeted
financial objectives for the year. Cash bonuses are then paid annually based
upon the Company's attainment of these targeted financial objectives for the
year. During 1999, annual cash bonus targets for the Named Executive Officers,
including Mr. Wilson, were between 50% and 200% of base salary. No bonuses were
awarded to the Named Executive Officers on the basis of 1999 performance.
LONG-TERM EQUITY INCENTIVES
The Company's stock option program is designed to promote the identity of
long-term interests between the Company's employees and its stockholders and to
assist in the retention of executives. The size of option grants is generally
intended by the Committee to reflect the executive's position with the Company
and his or her contributions to the Company. Stock options generally vest over a
three- to five-year period in order to encourage key employees to continue in
the employ of the Company. In 1999, all stock options were granted at an option
price equal to the fair market value of the Company's Voting Common Stock on the
date of the grant.
BENEFITS
The Company's executive officers are entitled to receive medical and life
insurance benefits and to participate in the Company's 401(k) retirement savings
plan on the same basis as other full-time employees of the Company. The
Company's Amended and Restated 1998 Employee Stock Purchase Plan, which is
available to virtually all employees, including executive officers, allows
participants to purchase shares at a discount of 15% from the fair market value
at the beginning or end of the applicable purchase period.
The amount of perquisites, as determined in accordance with the rules of
the Securities and Exchange Commission relating to executive compensation, did
not exceed 10% of salary and bonus for 1999 for any of the Named Executive
Officers.
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<PAGE> 16
SUMMARY OF COMPENSATION OF CHIEF EXECUTIVE OFFICER
In 1999, Mr. Wilson, the Company's Chief Executive Officer, received a
salary of $200,000. Mr. Wilson's target bonus was 200% of his base salary, and
was based on targeted growth in earnings, revenue, and market development and
improvement in customer satisfaction and the product development cycle. Based on
these measurements, Mr. Wilson did not receive a bonus related to 1999.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") generally disallows a tax deduction to public companies for compensation
in excess of $1 million paid to the corporation's Chief Executive Officer and
four other most highly paid executive officers. Qualifying performance-based
compensation will not be subject to the deduction limitation if certain
requirements are met. The Committee periodically reviews the potential
consequences of Section 162(m) and may structure the performance-based portion
of its executive compensation to comply with certain exceptions to Section
162(m). However, the Committee reserves the right to use its judgment to
authorize compensation payments that do not comply with the exceptions to
Section 162(m) when the Committee believes that such payments are appropriate
and in the best interests of the Company's stockholders. In any event, there can
be no assurance that compensation paid by the Company will be exempt from
Section 162(m).
EXECUTIVE DEVELOPMENT AND
COMPENSATION COMMITTEE
Steven A. Denning
G. Fred DiBona
Eugene V. Fife
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<PAGE> 17
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Denning, Mr. DiBona and Mr. Fife served during 1999 as members of the
Executive Development and Compensation Committee. Mr. Harvey J. Wilson, an
executive officer of the Company, participated in certain deliberations of the
committee. None of Mr. Denning, Mr. DiBona or Mr. Fife was at any time during
1999, or at any other time, an officer or employee of the Company. See "Certain
Relationships and Transactions" for a description of certain relationships and
transactions between the Company and affiliates of Mr. Wilson.
LEGAL PROCEEDINGS
The Company and the members of its Board of Directors were named as
defendants in three shareholder lawsuits filed in Delaware Chancery Court on or
about April 28, 2000. Each of the lawsuits seeks to enjoin or rescind the
proposed merger with Neoforma.com, Inc. or to collect an unspecified amount of
damages. Each of the lawsuits in general allege that the members of the
Company's Board of Directors have breached their fiduciary duties by approving
the transaction with Neoforma.com, Inc. and that the consideration received by
the Company's shareholders in connection with the transaction would be
inadequate. On May 24, 2000, the Company and Neoforma.com, Inc. agreed to
terminate the proposed merger. The Company believes that the members of its
Board of Directors have properly exercised their fiduciary duties and intends to
defend these claims vigorously.
COMPARATIVE STOCK PERFORMANCE
The following graph compares the cumulative total stockholder return on the
Voting Common Stock of the Company from August 7, 1998 (the first trading date
following the Company's initial public offering) to December 31, 1999 with the
cumulative total return of (i) U.S. companies traded on Nasdaq Stock Market (the
"Nasdaq Index") and (ii) an index of six similar publicly traded companies (the
"Peer Group"). The Peer Group is composed of McKesson HBOC, Cerner Corporation,
Shared Medical Systems Corporation, Quadramed Corporation, Sunquest Information
Systems, Inc., and IDX Systems Corporation. This graph assumes the investment of
$100.00 on August 7, 1998 in the Company's Voting Common Stock, the Nasdaq Index
and the Peer Index, and assumes any dividends are reinvested.
15
<PAGE> 18
COMPARISON OF 17 MONTH CUMULATIVE TOTAL RETURN
AMONG ECLIPSYS CORPORATION,
THE NASDAQ STOCK MARKET (U.S.) INDEX AND PEER GROUP
<TABLE>
<CAPTION>
8/7/98 12/31/98 12/31/99
------ -------- --------
<S> <C> <C> <C>
Eclipsys Corporation 100.00 171.85 151.85
Peer Group 100.00 94.44 43.71
NASDAQ Stock Market (U.S.) 100.00 120.13 217.02
</TABLE>
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<PAGE> 19
APPROVAL OF THE 2000 STOCK INCENTIVE PLAN
On May 22, 2000, the Board of Directors adopted, subject to stockholder
approval, the 2000 Stock Incentive Plan (the "2000 Plan") and reserved
12,000,000 shares of Voting Common Stock for issuance in the aggregate under the
Company's stock plans (including the 2000 Plan, the 1999 Stock Incentive Plan
(the "1999 Plan"), the 1998 Stock Incentive Plan (the "1998 Plan"), the Amended
and Restated 1998 Employee Stock Purchase Plan (the "Purchase Plan") and the
1996 Stock Plan (the "1996 Plan")).
SUMMARY OF THE 2000 PLAN
The following is a brief summary of the material terms of the 2000 Plan.
This summary is qualified in its entirety by reference to the 2000 Plan, a copy
of which is attached hereto as Annex A.
DESCRIPTION OF AWARDS
The 2000 Plan provides for the grant of incentive stock options intended to
qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), nonstatutory stock options, restricted stock awards and other
stock-based awards, including the grant of shares based upon certain conditions,
the grant of securities convertible into Voting Common Stock and the grant of
stock appreciation rights (collectively "Awards").
INCENTIVE STOCK OPTIONS AND NONSTATUTORY STOCK OPTIONS. Optionees receive
the right to purchase a specified number of shares of Voting Common Stock at a
specified option price and subject to such other terms and conditions as are
specified in connection with the option grant. Options may be granted at an
exercise price which may be less than, equal to or greater than the fair market
value of the Voting Common Stock on the date of grant. Under present law,
however, incentive stock options and options intended to qualify as
performance-based compensation under Section 162(m) of the Code may not be
granted at an exercise price less than the fair market value of the Voting
Common Stock on the date of grant (or less than 110% of the fair market value in
the case of incentive stock options granted to optionees holding more than 10%
of the total combined voting power of the Company and its subsidiaries). Options
may not be granted for a term in excess of ten years (five years in the case of
incentive stock options granted to optionees holding more than 10% of the total
combined voting power of the Company and its subsidiaries). The 2000 Plan
permits the Board to determine the manner of payment of the exercise price of
options, including through payment by cash, check or in connection with a
"cashless exercise" through a broker, by surrender to the Company of shares of
Voting Common Stock, or by any other lawful means.
RESTRICTED STOCK AWARDS. Restricted stock Awards entitle recipients to
acquire shares of Voting Common Stock, subject to the right of the Company to
repurchase all or part of such shares from the recipient in the event that the
conditions specified in the applicable Award are not satisfied prior to the end
of the applicable restriction period established for such Award.
OTHER STOCK-BASED AWARDS. Under the 2000 Plan, the Board has the right to
grant other Awards based upon the Voting 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 Voting Common Stock
and the grant of stock appreciation rights.
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<PAGE> 20
ELIGIBILITY TO RECEIVE AWARDS
Officers, employees, directors, consultants and advisors of the Company and
its subsidiaries (and individuals who have accepted an offer of employment) are
eligible to be granted Awards under the 2000 Plan. Under present law, however,
incentive stock options may only be granted to employees. The maximum number of
shares with respect to which an Award may be granted to any participant under
the 2000 Plan may not exceed 2,000,000 shares per calendar year.
As of June 15, 2000, approximately 1,600 persons were eligible to receive
Awards under the 2000 Plan, including the Company's four executive officers and
seven non-employee directors. The granting of Awards under the 2000 Plan is
discretionary, and the Company cannot now determine the number or type of Awards
to be granted in the future to any particular person or group.
ADMINISTRATION
The 2000 Plan is administered by the Board of Directors. The Board has the
authority to adopt, amend and repeal the administrative rules, guidelines and
practices relating to the 2000 Plan and to interpret the provisions of the 2000
Plan. Pursuant to the terms of the 2000 Plan, the Board of Directors may
delegate authority under the 2000 Plan to one or more committees of the Board.
The Board has authorized the Executive Development and Compensation Committee to
administer certain aspects of the 2000 Plan, including the granting of options
to executive officers. Subject to any applicable limitations contained in the
2000 Plan, the Board of Directors, the Committee, or any other committee to whom
the Board delegates authority, as the case may be, selects the recipients of
Awards and determines (i) the number of shares of Voting Common Stock covered by
options and the dates upon which such options become exercisable, (ii) the
exercise price of options, (iii) the duration of options, and (iv) the number of
shares of Voting Common Stock subject to any restricted stock or other
stock-based Awards and the terms and conditions of such Awards, including
conditions for repurchase, issue price and repurchase price.
The Board of Directors is required to make appropriate adjustments in
connection with the 2000 Plan and any outstanding Awards to reflect stock
dividends, stock splits and certain other events. In the event of a merger or
other acquisition event, the Board of Directors shall provide that all
outstanding options or other stock-based Awards under the 2000 Plan be assumed
or substituted for by the acquiror. If any of these events constitutes a Change
in Control Event (as defined in the 2000 Plan), and within one year after the
Change in Control Event, the participant's employment is terminated, then the
assumed or substituted options or other stock-based Awards will be immediately
exercisable in full, or free from restrictions, as the case may be. In the event
of a liquidation or dissolution, all outstanding options will become immediately
exercisable ten days prior to such event and will terminate upon the occurrence
of such event. If any Award expires or is terminated, surrendered, canceled or
forfeited, the unused shares of Voting Common Stock covered by such Award will
again be available for grant under the 2000 Plan subject, however, in the case
of incentive stock options to any limitations under the Code.
AMENDMENT OR TERMINATION
No Award may be made under the 2000 Plan after May 21, 2010, but Awards
previously granted may extend beyond that date. The Board of Directors may at
any time amend, suspend or
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<PAGE> 21
terminate the 2000 Plan, except that no Award designated as subject to Section
162(m) of the Code by the Board of Directors after the date of such amendment
shall become exercisable, realizable or vested (to the extent such amendment was
required to grant such Award) unless and until such amendment shall have been
approved by the Company's stockholders.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the United States federal income tax
consequences that generally will arise with respect to Awards granted under the
2000 Plan and with respect to the sale of Voting Common Stock acquired under the
2000 Plan.
INCENTIVE STOCK OPTIONS
In general, a participant will not recognize taxable income upon the grant
or exercise of an incentive stock option. Instead, a participant will recognize
taxable income with respect to an incentive stock option only upon the sale of
Voting Common Stock acquired through the exercise of the option ("ISO Stock").
The exercise of an incentive stock option, however, may subject the participant
to the alternative minimum tax.
Generally, the tax consequences of selling ISO Stock will vary with the
length of time that the participant has owned the ISO Stock at the time it is
sold. If the participant sells ISO Stock after having owned it for at least two
years from the date the option was granted (the "Grant Date") and one year from
the date the option was exercised (the "Exercise Date"), then the participant
will recognize long-term capital gain in an amount equal to the excess of the
sale price of the ISO Stock over the exercise price.
If the participant sells ISO Stock for more than the exercise price prior
to having owned it for at least two years from the Grant Date and one year from
the Exercise Date (a "Disqualifying Disposition"), then all or a portion of the
gain recognized by the participant will be ordinary compensation income and the
remaining gain, if any, will be a capital gain. This capital gain will be a
long-term capital gain if the participant has held the ISO Stock for more than
one year prior to the date of sale.
If a participant sells ISO Stock for less than the exercise price, then the
participant will recognize capital loss equal to the excess of the exercise
price over the sale price of the ISO Stock. This capital loss will be a
long-term capital loss if the participant has held the ISO Stock for more than
one year prior to the date of sale.
NONSTATUTORY STOCK OPTIONS
As in the case of an incentive stock option, a participant will not
recognize taxable income upon the grant of a nonstatutory stock option. Unlike
the case of an incentive stock option, however, a participant who exercises a
nonstatutory stock option generally will recognize ordinary compensation income
in an amount equal to the excess of the fair market value of the Voting Common
Stock acquired through the exercise of the option ("NSO Stock") on the Exercise
Date over the exercise price.
With respect to any NSO Stock, a participant will have a tax basis equal to
the exercise price plus any income recognized upon the exercise of the option.
Upon selling NSO Stock, a participant
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<PAGE> 22
generally will recognize capital gain or loss in an amount equal to the
difference between the sale price of the NSO Stock and the participant's tax
basis in the NSO Stock. This capital gain or loss will be a long-term gain or
loss if the participant has held the NSO Stock for more than one year prior to
the date of the sale.
RESTRICTED STOCK AWARDS
A participant will not recognize taxable income upon the grant of a
restricted stock award, unless the participant makes an election under Section
83(b) of the Code (a "Section 83(b) Election"). If the participant makes a
Section 83(b) Election within 30 days of the date of the grant, then the
participant will recognize ordinary income, for the year in which the Award is
granted, in an amount equal to the difference between the fair market value of
the Voting Common Stock at the time the Award is granted and the purchase price
paid for the Voting Common Stock. If a Section 83(b) Election is not made, the
participant will recognize ordinary income, at the time that the forfeiture
provisions or restrictions on transfer lapse, in an amount equal to the
difference between the fair market value of the Voting Common Stock at the time
of such lapse and the original purchase price paid for the Voting Common Stock.
The participant will have a basis in the Voting Common Stock acquired equal to
the sum of the price paid and the amount of ordinary compensation income
recognized.
Upon the disposition of the Voting Common Stock acquired pursuant to a
restricted stock Award, the participant will recognize a capital gain or loss
equal to the difference between the sale price of the Voting Common Stock and
the participant's basis in the Voting Common Stock. The gain or loss will be a
long-term gain or loss if the shares are held for more than one year.
OTHER STOCK-BASED AWARDS
The tax consequences associated with any other stock-based award granted
under the 2000 Plan will vary depending on the specific terms of such Award.
Among the relevant factors are whether or not the Award has a readily
ascertainable fair market value, whether or not the Award is subject to
forfeiture provisions or restrictions on transfer, the nature of the property to
be received by the participant under the Award and the participant's holding
period and tax basis for the Award or underlying Voting Common Stock.
TAX CONSEQUENCES TO THE COMPANY
The grant of an Award under the 2000 Plan will have no tax consequences to
the Company. Moreover, in general, neither the exercise of an incentive stock
option nor the sale of any Voting Common Stock acquired under the 2000 Plan will
have any tax consequences to the Company. The Company generally will be entitled
to a business-expense deduction, however, with respect to any ordinary
compensation income recognized by a participant under the 2000 Plan, including
in connection with a restricted stock award or as a result of the exercise of a
nonstatutory stock option or a Disqualifying Disposition. Any such deduction
will be subject to the limitations of Section 162(m) of the Code.
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<PAGE> 23
BOARD RECOMMENDATION
The Board of Directors believes that the approval of the 2000 Plan is in
the best interests of the Company and its stockholders and therefore recommends
that the stockholders vote FOR this proposal.
APPROVAL OF THE AMENDMENTS OF THE
1999 STOCK INCENTIVE PLAN,
THE 1998 STOCK INCENTIVE PLAN AND THE
AMENDED AND RESTATED 1998 EMPLOYEE STOCK PURCHASE PLAN
On May 22, 2000, the Board of Directors adopted, subject to stockholder
approval, amendments to the 1999 Plan, the 1998 Plan and the Purchase Plan to
reflect the increase from 7,000,000 to 12,000,000 of the total number of shares
of Voting Common Stock available for issuance in the aggregate under the
Company's stock plans (including the 1999 Plan, the Purchase Plan, the 1998
Plan, the 1996 Plan and the 2000 Plan). The Board of Directors has previously
determined that no further options or awards may be granted under the 1996 Plan,
the 1998 Plan or the 1999 Plan. The proposed amendments of the 1999 Plan and the
1998 Plan are intended to ensure that existing options under the 1999 Plan and
the 1998 Plan remain valid.
SUMMARY OF THE 1999 PLAN
The terms of the 1999 Plan are substantially identical to the terms of the
2000 Plan as described above, except that under the 1999 Plan, upon the
occurrence of an Acquisition Event (as defined in the 1999 Plan) which
constitutes a Change in Control Event (as defined in the 1999 Plan), all assumed
or substituted options will be immediately exercisable in full, regardless of
whether the optionee is terminated following the Change in Control Event. The
tax consequences of the Awards under the 1999 Plan are similar to those of the
2000 Plan. This summary is qualified in its entirety by reference to the 1999
Plan, a copy of which may be obtained from the Secretary of the Company.
SUMMARY OF THE 1998 PLAN
The terms of the 1998 Plan are substantially identical to the terms of the
2000 Plan as described above, except that (i) under the 1998 Plan, upon the
occurrence of an Acquisition Event (as defined in the 1998 Plan) which
constitutes a Change in Control Event (as defined in the 1998 Plan), all assumed
or substituted options will be immediately exercisable in full, regardless of
whether the optionee is terminated following the Change in Control Event, and
(ii) the 1998 Plan does not have a limitation on the maximum number of shares
with respect to which an award may be granted to any participant per calendar
year. The tax consequences of the Awards under the 1998 Plan are similar to
those of the 2000 Plan. This summary is qualified in its entirety by reference
to the 1998 Plan, a copy of which may be obtained from the Secretary of the
Company.
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<PAGE> 24
SUMMARY OF THE PURCHASE PLAN
The following is a brief summary of the material terms of the Purchase
Plan. This summary is qualified in its entirety by reference to the Purchase
Plan, a copy of which may be obtained from the Secretary of the Company.
GENERAL. The Purchase Plan provides eligible employees with the
opportunity to purchase shares of the Company's Voting Common Stock at a
discounted price.
ELIGIBILITY. Each employee of the Company and its eligible subsidiaries,
including any director who is also an employee, is eligible to participate in
the Purchase Plan, provided he or she (i) is employed by the Company or any
eligible subsidiary on the applicable offering commencement date, (ii) is
regularly employed by the Company or any eligible subsidiary for more than 20
hours per week and (iii) has been employed by the Company or any eligible
subsidiary for at least three months prior to enrolling in the Purchase Plan.
OFFERINGS. The Purchase Plan is implemented through a series of offerings,
each of which is three months in length. Participants in an offering purchase
shares with funds set aside through payroll withholding. An employee may elect
to have a percentage from 1% to up to 15% withheld from his or her pay for
purposes of purchasing shares under the Purchase Plan, subject to certain
limitations on the maximum number of shares that may be purchased.
PURCHASE PRICE. The price at which shares may be purchased during each
offering is the lower of (i) 85% of the closing price of the Voting Common Stock
as reported on the Nasdaq National Market on the date that the offering
commences or (ii) 85% of the closing price of the Voting Common Stock as
reported on the Nasdaq National Market on the date that the offering terminates.
NUMBER OF SHARES; ADJUSTMENTS. Currently, an aggregate of 7,000,000 shares
of Voting Common Stock may be issued pursuant to the Purchase Plan, less shares
issued or subject to outstanding options under the 1999 Plan, the 1998 Plan and
the 1996 Plan. If the 2000 Plan is approved at the Annual Meeting and the
proposed amendment is approved at the Annual Meeting, the maximum number of
shares issuable under the Purchase Plan will increase to 12,000,000 shares, less
shares issued or subject to outstanding options under the 2000 Plan, the 1999
Plan, the 1998 Plan and the 1996 Plan. The Purchase Plan contains provisions
relating to adjustments to be made under the Purchase Plan in the event of stock
splits and other similar events and certain mergers, acquisitions and other
extraordinary corporate transactions involving the Company.
ADMINISTRATION. The Purchase Plan is administered by the Board of
Directors of the Company, which has the authority to make rules and regulations
for the administration of the Purchase Plan. Pursuant to the terms of the
Purchase Plan, the Board of Directors may delegate authority under the Purchase
Plan to a committee of the Board.
AMENDMENT OR TERMINATION. The Board of Directors may at any time terminate
or amend the Purchase Plan, provided that no amendment may be made without prior
approval of the stockholders of the Company if such approval is required by
Section 423 of the Code, and in no event may any amendment be made which would
cause the Purchase Plan to fail to comply with Section 423 of the Code.
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FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the United States federal income tax
consequences that generally will arise with respect to participation in the
Purchase Plan and with respect to the sale of Voting Common Stock acquired under
the Purchase Plan.
TAX CONSEQUENCES TO PARTICIPANTS. In general, a participant will not
recognize taxable income upon enrolling in the Purchase Plan or upon purchasing
shares of Voting Common Stock at the end of an offering. Instead, if a
participant sells Voting Common Stock acquired under the Purchase Plan at a sale
price that exceeds the price of which the participant purchased the Voting
Common Stock, then the participant will recognize taxable income in an amount
equal to the excess of the sale price of the Voting Common Stock over the price
at which the participant purchased the Voting Common Stock. A portion of that
taxable income will be ordinary income, and a portion may be capital gain.
If the participant sells the Voting Common Stock more than one year after
acquiring it and more than two years after the date on which the offering
commenced (the "Grant Date"), then the participant will be taxed as follows. If
the sale price of the Voting Common Stock is higher than the price at which the
participant purchased the Voting Common Stock, then the participant will
recognize ordinary compensation income in an amount equal to the lesser of:
(i) fifteen percent of the fair market value of the Voting Common
Stock on the Grant Date; and
(ii) the excess of the sale price of the Voting Common Stock over the
price at which the participant purchased the Voting Common Stock.
Any further income will be long-term capital gain. If the participant sells the
Voting Common Stock within one year after acquiring it or within two years after
the Grant Date (a "Disqualifying Disposition"), then the participant will
recognize ordinary compensation income in an amount equal to the excess of the
fair market value of the Voting Common Stock on the date that it was purchased
over the price at which the participant purchased the Voting Common Stock. The
participant will also recognize capital gain or loss in an amount equal to the
difference between the sale price of the Voting Common Stock over the fair
market value of the Voting Common Stock on the date that it was purchased. This
capital gain or loss will be a long-term capital gain or loss if the participant
has held the Common Stock for more than one year prior to the date of the sale.
TAX CONSEQUENCES TO THE COMPANY. The offering of Voting Common Stock under
the Purchase Plan will have no tax consequences to the Company. Moreover, in
general, neither the purchase nor the sale of Voting Common Stock acquired under
the Plan will have any tax consequences to the Company except that the Company
will be entitled to a business-expense deduction with respect to any ordinary
compensation income recognized by a participant upon making a Disqualifying
Disposition. Any such deduction will be subject to the limitations of Section
162(m) of the Code.
BOARD RECOMMENDATION
The Board of Directors believes that the approval of the amendments of the
1999 Plan, the 1998 Plan and the Purchase Plan is in the best interests of the
Company and its stockholders and therefore recommends that the stockholders vote
FOR this proposal.
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RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected the firm of PricewaterhouseCoopers LLP
as the Company's independent auditors for the current fiscal year.
PricewaterhouseCoopers LLP has served as the Company's independent auditors
since the Company's inception. Although stockholder approval of the Board of
Directors' selection of PricewaterhouseCoopers LLP is not required by law, the
Board of Directors believes that it is advisable to give stockholders an
opportunity to ratify this selection. If this proposal is not approved at the
Annual Meeting, the Board of Directors may reconsider its selection of
PricewaterhouseCoopers LLP.
Representatives of PricewaterhouseCoopers LLP are expected to be present at
the Annual Meeting and will have the opportunity to make a statement if they
desire to do so and will also be available to respond to appropriate questions
from stockholders.
OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the Annual Meeting. However, if any other matters are properly presented
to the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote, or otherwise act, in accordance with their judgment
on such matters.
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and
employees, without additional remuneration, may solicit proxies by telephone,
telegraph and personal interviews, and the Company reserves the right to retain
outside agencies for the purpose of soliciting proxies. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the owners
of stock held in their names, and, as required by law, the Company will
reimburse them for their out-of-pocket expenses in this regard.
Pursuant to Securities Exchange Act Rule 14a-8(e), proposals of
stockholders intended to be presented at the 2001 Annual Meeting of Stockholders
must be received by the Company at its principal office at 777 East Atlantic
Avenue, Suite 200, Delray Beach, Florida 33483, not later than November 25, 2000
for inclusion in the proxy statement for that meeting. Under the Company's By-
laws, proposals of stockholders intended to be presented at the 2001 Annual
Meeting of Stockholders that do not comply with Rule 14a-8(e) must be received
by the Company at its principal office in Delray Beach, Florida no less than 60
days nor more than 90 days prior to the date of that meeting. If public notice
of the annual meeting of stockholders of the Company is not given at least 70
days before the meeting date, any stockholder proposal must be received by the
Company within 10 days after such public notice. A copy of the Company's By-laws
may be obtained from the Secretary of the Company.
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BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Form 5 filed by Mr. Hall, necessary to report a stock option grant Mr.
Hall received in October 1999, was not filed in a timely manner. The Company is
not aware of any other failure by its officers, directors and holders of 10% of
the Company's Voting Common Stock to comply in a timely manner during 1999 with
Section 16(a) filing requirements.
By Order of the Board of Directors,
/s/ T. Jack Risenhover, II
T. Jack Risenhoover, II, Secretary
June 19, 2000
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. STOCKHOLDERS WHO ATTEND
THE MEETING MAY VOTE THEIR STOCK PERSONALLY EVEN IF THEY HAVE SENT IN THEIR
PROXIES.
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ANNEX A
ECLIPSYS CORPORATION
2000 STOCK INCENTIVE PLAN
1. PURPOSE
The purpose of this 2000 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 of the
Company's present or future subsidiary corporations 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 (and any individuals who have accepted an offer for employment) 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 authority delegated by the Board shall
be liable for any action or determination relating to or under the Plan made in
good faith.
(b) 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"). All references in the
Plan to the "Board" shall mean the Board or a Committee of the Board to the
extent that the Board's powers or authority under the Plan have been delegated
to such Committee.
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) 12,000,000 less
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(ii) the sum of (W) the number of shares as to which "Awards" have previously
been made or shares issued under the Company's 1999 Stock Incentive Plan, as
amended (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, (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 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.
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.
(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;
provided, however, that the exercise price of Incentive Stock Options shall not
be less than 100% of the fair market value of the Common Stock, as determined by
the Board, at the time the Option is granted.
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(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; provided, however, that 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 or by any
other form of notice (including electronic notice) approved by the Board
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, in its sole discretion, otherwise provide
in an option agreement, by (i) 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 (ii) 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 (or in a
manner approved by) the Board in good faith ("Fair Market Value"), provided
(i) such method of payment is then permitted under applicable law and (ii)
such Common Stock was owned by the Participant at least six months prior to
such delivery, or (iii) by payment of such other lawful consideration as
the Board may determine; or
(4) by 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, a "Restricted Stock Award").
(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
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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. ADJUSTMENTS FOR CHANGES IN COMMON STOCK AND CERTAIN OTHER EVENTS
(a) CHANGES IN CAPITALIZATION. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, 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 8(a) applies and Section 8(c) also applies to any event, Section 8(c)
shall be applicable to such event, and this Section 8(a) shall not be
applicable.
(b) LIQUIDATION OR DISSOLUTION. In the event of a proposed liquidation or
dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then unexercised Options will (i) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised
before such effective date. The Board may specify the effect of a liquidation or
dissolution on any Restricted Stock Award or other Award granted under the Plan
at the time of the grant of such Award.
(c) 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
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beneficially owns (within the meaning of Rule 13d-3
promulgated under the Exchange Act) more than 30% 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 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 (each such party is referred to herein as an
"Exempt Person");
(ii) such time as the Continuing Directors (as defined below) do
not constitute a majority 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, recapitalization 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 following two conditions
is satisfied: (x) all or substantially all of the
individuals and entities who were the beneficial owners
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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 Exempt
Persons, the Acquiring Corporation 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).
(c) "Good Reason" shall mean any significant diminution in the
Participant's title, authority, or responsibilities from and after such
Acquisition Event or Change in Control Event, as the case may be, or any
reduction in the annual cash compensation payable to the Participant
from and after such Acquisition Event or Change in Control Event, as the
case may be, or the relocation of the place of business at which the
Participant is principally located to a location that is greater than 50
miles from the current site.
(d) "Cause" shall mean any (i) willful failure by the Participant,
which failure is not cured within 30 days of written notice to the
Participant from the Company, to perform his or her material
responsibilities to the Company or (ii) willful misconduct by the
Participant which affects the business reputation of the Company. The
Participant shall be considered to have been discharged for "Cause" if
the Company determines, within 30 days after the Participant's
resignation, that discharge for Cause was warranted.
(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 options shall be substituted
for, 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
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agreement between a Participant and the Company, such assumed or
substituted options shall become immediately exercisable in full if, on
or prior to the first anniversary of the date of the consummation of the
Acquisition Event, the Participant's employment with the Company or the
acquiring or succeeding corporation is terminated for Good Reason by the
Participant or is terminated without Cause by the Company or the
acquiring or succeeding corporation. 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, upon written notice
to the Participants, provide that all then unexercised Options will
become exercisable in full as of a specified 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;
provided, however, that in the event of an Acquisition Event 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"), then the
Board may instead provide that all outstanding Options shall terminate
upon consummation of such Acquisition Event and that 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. Following 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,
each such Option shall be immediately exercisable in full if, on or
prior to the first anniversary of the date of the consummation of the
Change in Control Event, the Participant's employment with the Company
or the acquiring or succeeding corporation is terminated for Good Reason
by the
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Participant or is terminated without Cause by the Company or the
acquiring or succeeding corporation.
(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. Following 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, each such
Restricted Stock Award shall immediately become free from all conditions
or restrictions if, on or prior to the first anniversary of the date of
the consummation of the Change in Control Event, the Participant's
employment with the Company or the acquiring or succeeding corporation
is terminated for Good Reason by the Participant or is terminated
without Cause by the Company or the acquiring or succeeding corporation.
(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. Following 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 Award or any other agreement
between a Participant and the Company, each such Award shall immediately
become fully exercisable, realizable, vested or free from conditions or
restrictions if, on or prior to the first anniversary of the date of the
consummation of the Change in Control Event, the Participant's
employment with the Company or the acquiring or succeeding corporation
is terminated for Good Reason by the Participant or is terminated
without Cause by the Company or the acquiring or succeeding corporation.
(5) LIMITATIONS. Notwithstanding the foregoing provisions of this
Section 8(c), if the Change in Control Event is intended to be accounted
for as a "pooling of interests" for financial accounting purposes, and if
the acceleration to be effected by the foregoing provisions of this Section
8(c) would preclude accounting for the Change in Control Event as a
"pooling of interests" for financial accounting purposes, then no such
acceleration shall occur upon the Change in Control Event.
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9. 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 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 Award
may be made alone or in addition to or in relation to any other Award. The terms
of each 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, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.
(e) 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. Except as the Board may otherwise
provide in an Award, when the Common Stock is registered under the Exchange Act,
Participants may, to the extent then permitted under applicable law, satisfy
such tax obligations in whole or in part by delivery of 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.
(f) 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.
(g) 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.
A-9
<PAGE> 37
(h) 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 restrictions in full or in part or that any other 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.
10. 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.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.
(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.
(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)).
A-10
<PAGE> 38
(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 May 22, 2000
A-11
<PAGE> 39
SKU # 1759-PS-00
<PAGE> 40
DETACH HERE
PROXY
ECLIPSYS CORPORATION
Proxy for the Annual Meeting of Stockholders to be held July 12, 2000
This Proxy is Solicited on Behalf of the Board of Directors of the Company
The undersigned, having received notice of the meeting and management's
proxy statement therefor, and revoking all prior proxies, hereby appoint(s)
Harvey J. Wilson, Gregory L. Wilson and T. Jack Risenhoover, II, and each of
them, with full power of substitution, as proxies to represent and vote, as
designated herein, all shares of stock of Eclipsys Corporation (the "Company")
which the undersigned would be entitled to vote if personally present at the
Annual Meeting of Stockholders of the Company to be held at the Delray Beach
Marriott, 10 North Ocean Boulevard, Delray Beach, Florida 33444 on Wednesday,
July 12, 2000, at 10:00 a.m., local time, and at any adjournment thereof (the
"Meeting").
In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the Meeting or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is given, this proxy
will be voted FOR all proposals. Attendance of the undersigned at the meeting
or at any adjournment thereof will not be deemed to revoke this proxy unless
the undersigned shall revoke this proxy in writing or shall deliver a
subsequently dated proxy to the Secretary of the Company or shall vote in
person at the Meeting.
------------- -------------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
------------- -------------
<PAGE> 41
[X] Please mark votes as in this example.
PLEASE FILL IN, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED POSTAGE-PAID
RETURN ENVELOPE.
<TABLE>
<S> <C> <C> <C> <C> <C>
1. To elect the following two (2) Class II 2. To approve the Company's 2000 FOR AGAINST ABSTAIN
directors (except as marked below) for Stock Incentive Plan (the "2000 [ ] [ ] [ ]
a three (3) year term. Plan").
Nominees: Jay B. Pieper, Steven A.
Denning
FOR [ ] WITHHELD [ ] 3. To approve the related FOR AGAINST ABSTAIN
ALL FROM ALL amendments to the Company's [ ] [ ] [ ]
NOM- NOMINEES 1999 Stock Incentive Plan (the
INEES "1999 Plan") the 1998 Stock
Incentive Plan (the "1998
Incentive Plan") and the
Company's Amended and
Restated 1998 Employee Stock
Purchase Plan (the "Purchase
Plan") to reflect an increase in
the number of shares of Voting
Common Stock authorized for
issuance under all the
Company's stock plans (the
Purchase Plan, the 1996 Stock
Plan, the 1998 Incentive Plan,
the 1999 Plan and the 2000 Plan
from 7,000,000 to 12,000,000.
MARK HERE 4. To ratify the selection by the FOR AGAINST ABSTAIN
FOR ADDRESS Board of Directors of [ ] [ ] [ ]
CHANGE AND PricewaterhouseCoopers LLP
NOTE BELOW [ ] as the Company's independent
[ ] ________________________ auditors for the current fiscal
For all nominees except year.
as noted above
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Please sign exactly as name appears hereon. If the stock is registered in
the name of two or more persons, each should sign. Executors,
administrators, trustees, guardians, attorneys and corporate officers should
add their titles.
Signature:___________ Date: ____________ Signature ___________ Date: ____________
</TABLE>
