1
AGREEMENT AND PLAN OF MERGER
For valuable and adequate consideration, Eclipsys Corporation, a Delaware
corporation ("Eclipsys"), ECLP Merger Corp., a Delaware corporation and a wholly
owned subsidiary of Eclipsys ("Merger Sub"), MSI Solutions, Inc., a Georgia
corporation ("MSI Solutions"), MSI Integrated Services, Inc., a Georgia
corporation ("MSI Services" and together with MSI Solutions, "MSI"), ▇▇▇▇ ▇.
▇▇▇▇, an individual resident of the State of Georgia and a shareholder of MSI
Solutions and MSI Services ("Bean"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, an individual resident of
the State of Georgia and a shareholder of MSI Solutions and MSI Services
("Cote"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an individual resident of the Commonwealth of
Virginia and a shareholder of MSI Solutions and MSI Services ("▇▇▇▇▇▇▇") and The
1997 ▇▇▇▇▇▇▇ Family Trust, established under that certain agreement dated August
15, 1997 ("▇▇▇▇▇▇▇ Trust" and together with Bean, Cote and ▇▇▇▇▇▇▇, "MSI
Shareholders" and individually an "MSI Shareholder") hereby agree this 11th day
of June, 1999, as follows:
Eclipsys, the Merger Sub, MSI and the MSI Shareholders are referred to
collectively as the "Parties".
THE MERGER
1. The Merger. Upon and subject to the terms and conditions of this
Agreement and Plan of Merger (this "Agreement"), the Merger Sub shall merge with
and into MSI Solutions and immediately thereafter MSI Services shall merge with
and into MSI Solutions. The merger of MSI Services with and into MSI Solutions
shall occur at such point in time as MSI Solutions shall be a subsidiary of
Eclipsys and shall be effective as of the Effective Time (as hereinafter
defined). From and after the Effective Time, the separate corporate existence of
the Merger Sub and MSI Services shall cease and MSI Solutions shall continue as
the surviving corporation (the "Surviving Corp.") in the Mergers (as hereinafter
defined). The "Effective Time" shall mean the time at which MSI Solutions, MSI
Services and Merger Sub shall have filed proper certificates or articles of
merger or other appropriate documentation (the "Certificates of Merger") with
the Secretaries of State of the States of Delaware and Georgia. The "Mergers"
shall mean the merger of Merger Sub with and into MSI Solutions and immediately
thereafter the merger of MSI Services with and into MSI Solutions in accordance
with the terms of this Agreement. The Mergers shall have the effect set forth in
Section 259 of the Delaware General Corporation Law (the "DGCL") and Section
14-2-1106 of the Georgia Business Corporation Code (the "GBCC").
2. The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at Eclipsys' offices in Delray Beach,
Florida, on the closing date (the "Closing Date") which shall be the earlier of:
2
2.1. June 21, 1999 at 10:00 a.m. local time, provided all the
conditions to Closing set forth in Sections 33, 34 and 35 (the "Closing
Conditions") have been satisfied or waived, or
2.2. on such other mutually agreeable date as soon as practicable
after all Closing Conditions have been satisfied or waived.
3. Actions at the Closing. At the Closing,
3.1. MSI shall deliver to Eclipsys and the Merger Sub the various
certificates, instruments and documents as specified under Section 34,
3.2. Eclipsys and the Merger Sub shall deliver to MSI the various
certificates, instruments and documents as specified under Section 35,
3.3. MSI Solutions, MSI Services and the Merger Sub shall file with
the Secretaries of State of the States of Delaware and Georgia the
Certificates of Merger,
3.4. each MSI Shareholder, other than holders of Dissenting Shares
(as hereinafter defined), shall deliver to Eclipsys for cancellation
("Surrender") each certificate representing MSI Stock (as hereinafter
defined), and
3.5. Eclipsys shall authorize BankBoston, N.A. (the "Exchange
Agent") to issue the Merger Shares (as hereinafter defined) to each
holder of MSI Stock who shall have Surrendered certificates
representing their MSI Stock.
4. Additional Action. After the Effective Time, the Surviving Corp., on
behalf of MSI Solutions, MSI Services and/or the Merger Sub, may execute and
deliver documents or take any other action needed to consummate each of the
Mergers in accordance with the terms and conditions hereof.
5. Common Stock.
5.1. "MSI Solutions Stock" shall mean the common stock, par value
$.10 per share, of MSI Solutions that is issued and outstanding
immediately prior to the Effective Time.
5.2. "MSI Services Stock" shall mean the common stock, par value
$.10 per share, of MSI Services that is issued and outstanding
immediately prior to the Effective Time.
5.3. "MSI Stock" shall mean collectively the MSI Solutions Stock
and the MSI Services Stock.
5.4. "Eclipsys Stock" shall mean one share of common stock, par
value of $.01 per share, of Eclipsys.
2
3
5.5. "Merger Sub Stock" shall mean one share of common stock, par
value of $.01 per share, of Merger Sub.
5.6. "Surviving Corp. Stock" shall mean one share of common stock,
par value of $0.10 per share, of the Surviving Corp.
6. Conversion of Shares. At the Effective Time, by virtue of the Mergers
and without any action on the part of any Party or the holder of any of the
following securities:
6.1. Each share of MSI Solutions Stock will be converted into the
right to receive, and for each share of MSI Solutions Stock that is
Surrendered, MSI Shareholders shall receive the quantity of Eclipsys
Stock equal to the MSI Solutions Conversion Ratio (as hereinafter
defined) (the "MSI Solutions Merger Shares"),
6.2. Each share of MSI Services Stock will be converted into the
right to receive, and for each share of MSI Services Stock that is
Surrendered, MSI Shareholders shall receive the quantity of Eclipsys
Stock equal to the MSI Services Conversion Ratio (as hereinafter
defined) (the "MSI Services Merger Shares" and together with the MSI
Solutions Merger Shares, the "Merger Shares"),
6.3. The "MSI Solutions Conversion Ratio" shall be equal to .30614
which equals a fraction (i) the numerator of which is 2,374,000 and
(ii) the denominator of which is the sum of MSI Solutions Stock and the
MSI Solutions Stock subject to Options (as hereinafter defined) and
Warrants (as hereinafter defined) outstanding at the time of the merger
of Merger Sub with and into MSI Solutions. The "MSI Services Conversion
Ratio" shall be equal to .54259 which equals a fraction (i) the
numerator of which is 1,000 and (ii) the denominator of which is the
number of shares of MSI Services Stock outstanding at the time of the
merger of MSI Services with and into MSI Solutions. The MSI Solutions
Conversion Ratio and the MSI Services Conversion Ratio shall be subject
to equitable adjustment in the event of any stock split, stock
dividend, reverse stock split or similar event affecting Eclipsys
Stock, MSI Services Stock and/or MSI Solutions Stock between the date
of this Agreement and the Effective Time.
6.4. Each share of Merger Sub Stock will be converted into the
right to receive, and for each share of Merger Sub Stock that is
tendered to the Surviving Corp., Eclipsys shall receive one share of
the Surviving Corp. Stock, and
6.5. MSI Stock owned beneficially by Eclipsys or the Merger Sub
shall be canceled without any payment.
3
4
7. Dissenting Shares.
7.1. "Dissenting Share" shall mean each share of MSI Stock held as
of the Effective Time by an MSI Shareholder who:
1. has not voted such MSI Stock in favor of the adoption
of this Agreement and the Mergers,
2. has exercised the MSI Shareholder's Appraisal Right
(as hereinafter defined), and
3. such Appraisal Right has not been effectively
withdrawn or forfeited prior to the Effective Time.
7.2. "Appraisal Right" shall mean the right to an appraisal of the
related stock that has been duly demanded and perfected in accordance
with Sections 14-2-1321 and 14-2-1323 of the GBCC. Dissenting Shares
shall not be converted into Merger Shares until such MSI Shareholder
forfeits or withdraws all Appraisal Rights. Upon the forfeiture or
withdrawal of any Appraisal Right, such Dissenting Shares shall be
converted into Merger Shares.
7.3. MSI promptly shall notify Eclipsys of any Dissenting Shares.
Eclipsys shall direct all settlement or other negotiating activities
related to such Dissenting Shares. Except with Eclipsys' prior written
consent, MSI shall not make any payment or offer to settle any matter
related to any Dissenting Shares.
8. Fractional Shares. No certificates or scrip representing fractional
Merger Shares shall be issued to former MSI Shareholders upon the surrender for
exchange of stock certificates evidencing MSI Stock ("Certificates") and such
former MSI Shareholders shall not be entitled to any voting rights, rights to
receive any dividends or distributions or other rights as a stockholder of
Eclipsys with respect to any fractional Merger Shares that would otherwise be
issued to such former MSI Shareholders. In lieu of any fractional Merger Shares
that would otherwise be issued, each former MSI Shareholder that would have been
entitled to receive a fractional Merger Share shall, upon proper surrender of
such person's Certificates, receive such whole number of Merger Shares as is
equal to the precise number of Merger Shares to which such person would be
entitled, rounded up or down to the nearest whole number (with a fractional
interest equal to .5 rounded to the nearest odd number); provided that each such
holder shall receive at least one Merger Share.
9. Dividends. No dividends or other distributions that are payable to the
holders of record of Eclipsys Stock as of a date on or after the Closing Date
shall be paid to former MSI Shareholders entitled by reason of the Mergers to
receive Merger Shares until such holders Surrender their Certificates. Upon such
Surrender, Eclipsys shall pay or deliver to the persons in
4
5
whose name the Certificates representing such Merger Shares are issued any
dividends or other distributions that are payable to the holders of record of
Eclipsys Stock as of a date on or after the Closing Date and which were paid or
delivered between the Effective Time and the time of such Surrender; provided
that no such person shall be entitled to receive any interest on such dividends
or other distributions.
10. Options and Warrants.
10.1. As of the Effective Time, all outstanding options to purchase
MSI Solutions Stock issued by MSI Solutions pursuant to its stock
option plans or otherwise ("Options") and outstanding warrants to
purchase MSI Solutions Stock ("Warrants"), whether vested or unvested,
shall be assumed by Eclipsys. Immediately after the Effective Time,
each Option or Warrant outstanding immediately prior to the Effective
Time shall be deemed to constitute an option or warrant to acquire, on
the same terms and conditions as were applicable under such Option or
Warrant at the Effective Time, such number of shares of Eclipsys Stock
as is equal to the number of shares of MSI Solutions Stock subject to
the unexercised portion of such Option or Warrant multiplied by the MSI
Solutions Conversion Ratio (with any fraction resulting from such
multiplication to be rounded up or down to the nearest whole number or,
in the case of .5, to the nearest odd number). The exercise price per
share of each such assumed Option or Warrant shall be equal to the
exercise price of such Option or Warrant immediately prior to the
Effective Time divided by the MSI Solutions Conversion Ratio. The term,
exercisability, vesting schedule, status as an incentive stock option
under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), if applicable, and all of the other terms of the Options shall
otherwise remain unchanged.
10.2. As soon as practicable after the Effective Time, Eclipsys or
the Surviving Corp. shall deliver to the holders of Options and
Warrants appropriate notices setting forth such holders' rights
pursuant to such Options and Warrants, as amended by this Section 10,
and the agreements evidencing such Options and Warrants shall continue
in effect on the same terms and conditions (subject to the amendments
provided for in this Section).
10.3. Eclipsys shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Eclipsys Common Stock for
delivery upon exercise of the Options and Warrants assumed in
accordance with this Section 10. As soon as practicable after the
Effective Time, Eclipsys shall file a Registration Statement on Form
S-8 (or any successor form) under the Securities Act of 1933, as
amended (the "Securities Act") with respect to all shares of Eclipsys
Stock subject to Options that may be registered on a Form S-8, and
shall use its reasonable best efforts to maintain the effectiveness of
such Registration Statement for so long as such Options remain
outstanding.
5
6
11. Certificate of Incorporation. The Certificate of Incorporation of the
Surviving Corp. shall be the same as the Certificate of Incorporation of MSI
Solutions immediately prior to the Effective Time.
12. By-laws. The By-laws of the Surviving Corp. shall be the same as the
By-laws of MSI Solutions immediately prior to the Effective Time.
13. Directors and Officers. The directors of the Merger Sub shall become
the directors of the Surviving Corp. as of the Effective Time. The officers of
MSI shall remain as officers of the Surviving Corp. after the Effective Time,
retaining their respective positions, except as specified by Eclipsys pursuant
to Section 34.8.
14. No Further Rights. After the Effective Time, no MSI Stock shall be
deemed to be outstanding, and holders of Certificates shall cease to have any
related rights, except as provided in this Agreement or pursuant to applicable
law.
15. Closing of Transfer Books. At the Effective Time, the stock transfer
books of MSI Solutions and MSI Services shall be closed and no transfer of MSI
Solutions Stock or MSI Services Stock shall thereafter be made. If, after the
Effective Time, Certificates are presented to the Surviving Corp. or the
Exchange Agent, they shall be canceled and exchanged for Merger Shares in
accordance with this Agreement and subject to applicable law in the case of
Dissenting Shares.
MSI REPRESENTATIONS AND WARRANTIES
16. MSI Representations and Warranties. With such exceptions as are set
forth in a letter (the "MSI Disclosure Letter") delivered by MSI Solutions and
MSI Services to Eclipsys prior to the execution hereof, MSI Solutions and MSI
Services hereby represent and warrant to Eclipsys and the Merger Sub as follows:
16.1. Organization, Qualification and Corporate Power. Each of MSI
Solutions and MSI Services is a corporation duly organized, validly
existing and in good standing under the laws of the State of Georgia.
Each of MSI Solutions and MSI Services is duly qualified to conduct
business and is in good standing under the laws of each jurisdiction in
which the nature of its business or the ownership or leasing of its
properties requires such qualification, except where the failure to be
so qualified would not have an MSI Material Adverse Effect (as
hereinafter defined). Each of MSI Solutions and MSI Services has all
requisite corporate power and authority to carry on the business in
which it is engaged and to own and use the properties owned and used by
it. Each of MSI Solutions and MSI Services has furnished to Eclipsys
true and complete copies of its Articles of Incorporation and By-laws,
each as amended and as in effect on the date of this Agreement. Neither
MSI Solutions nor MSI Services is in default under or in violation of
any provision of its Articles of Incorporation or By-laws. An "MSI
Material Adverse Effect" shall mean any event, change, circumstance or
effect, or combination
6
7
thereof, which, individually or in the aggregate, has a material
adverse effect upon the assets, business, financial condition or
results of operations of MSI Solutions and MSI Services taken as a
whole; provided, however, that an MSI Material Adverse Effect shall not
include any event, change, circumstance or effect arising out of : (i)
overall market conditions in the healthcare information technology
sector or the economy generally; (ii) the public announcement of the
Mergers or the transactions contemplated hereby; or (iii) proposed or
pending legislation, regulation or administrative action of any
governmental authority.
16.2. MSI Capitalization.
1. The authorized capital stock of MSI Solutions
consists of 50,000,000 shares of common stock, par value $.10
per share, of which 7,372,000 shares are issued and
outstanding, and no shares are held in the treasury of MSI
Solutions. The authorized capital stock of MSI Services
consists of 2,100 shares of common stock, par value $.10 per
share, of which 1,843 shares are issued and outstanding, and
no shares are held in the treasury of MSI Services. The MSI
Disclosure Letter sets forth a complete and accurate list of
(i) all shareholders of record of MSI Solutions, indicating
the number of shares of MSI Solutions Stock held of record by
each such shareholder, (ii) all shareholders of record of MSI
Services, indicating the number of shares of MSI Services
Stock held of record by each such shareholder and (iii) all
holders of Options and Warrants, indicating the number of
shares as of MSI Solutions Stock and MSI Services Stock
subject to each such Option and Warrant. Except as set forth
in the MSI Disclosure Letter, all of the issued and
outstanding MSI Stock is, and all MSI Stock that may be issued
upon exercise of Options and Warrants will be, duly
authorized, validly issued, fully paid, nonassessable and free
of all preemptive rights. There are no outstanding or
authorized options, warrants, rights, agreements or
commitments to which either MSI Solutions or MSI Services is a
party or which are binding upon either of them providing for
the issuance, disposition or acquisition of any of the capital
stock of MSI Solutions or MSI Services, other than the Options
and Warrants listed in the MSI Disclosure Letter. There are no
outstanding or authorized stock appreciation, phantom stock or
similar rights with respect to MSI Solutions or MSI Services
capital stock. Except as set forth in the MSI Disclosure
Letter, there are no agreements, voting trusts, proxies, or
understandings with respect to the voting, or registration
under the Securities Act, of any MSI Stock or any other shares
of capital stock of MSI Solutions or MSI Services. All of the
issued and outstanding MSI Stock was issued in compliance with
applicable federal and state securities laws except such
noncompliance as would not have an MSI Material Adverse
Effect.
2. Except as set forth in the MSI Disclosure Letter,
there are no equity securities of any class of MSI Solutions
or MSI Services or any security exchangeable into or
exercisable for such equity securities, issued, reserved for
7
8
issuance or outstanding. Except as set forth in the MSI
Disclosure Letter, there are no options, warrants, equity
securities, calls, rights, commitments or agreements of any
character to which MSI Solutions or MSI Services is a party or
by which either of them is bound obligating MSI Solutions or
MSI Services to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of MSI
Solutions or MSI Services or obligating either of them to
grant, extend, accelerate the vesting of or enter into any
such option, warrant, equity security, call, right, commitment
or agreement, including as a result of the transactions
contemplated by this Agreement.
16.3. Authorization of Transactions. Each of MSI Solutions and MSI
Services has all requisite power and authority to execute and deliver
this Agreement and to perform its obligations under this Agreement. The
execution and delivery of this Agreement and the performance by MSI
Solutions and MSI Services of this Agreement and the consummation by
MSI Solutions and MSI Services of the contemplated transactions have
been duly and validly authorized by all necessary corporate action on
the part of MSI Solutions and MSI Services, including the requisite
approval of shareholders. This Agreement has been duly and validly
executed and delivered by MSI Solutions and MSI Services and, assuming
the due authorization, execution and delivery by Eclipsys and Merger
Sub, constitutes a valid and binding obligation of MSI Solutions and
MSI Services, enforceable against MSI Solutions and MSI Services in
accordance with its terms, subject to applicable bankruptcy, insolvency
and other similar laws affecting the enforceability of creditors'
rights generally, general equitable principles and the discretion of
courts in granting equitable remedies. This Agreement has been duly and
validly executed and delivered by each of the MSI Shareholders and,
assuming the due authorization, execution and delivery by Eclipsys and
the Merger Sub, constitutes a valid and binding obligation of each of
the MSI Shareholders, enforceable against each of the MSI Shareholders
in accordance with its terms, subject to applicable bankruptcy,
insolvency and other similar laws affecting the enforceability of
creditors' rights generally, general equitable principles and the
discretion of courts in granting equitable remedies.
16.4. Noncontravention. Neither the execution and delivery of this
Agreement by MSI Solutions, MSI Services or the MSI Shareholders, nor,
subject to (i) compliance with the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act") and (ii) the
filing of the Certificates of Merger in accordance with the DGCL and
the GBCC, the consummation by MSI Solutions, MSI Services and the MSI
Shareholders of the contemplated transactions, will:
1. conflict with or violate any provision of the
Articles of Incorporation or By-laws of MSI Solutions and MSI
Services,
2. to the knowledge of MSI, require on the part of MSI
Solutions, MSI Services or any of the MSI Shareholders any
filing with, or any permit,
8
9
authorization, consent or approval of, any court,
arbitrational tribunal, administrative agency or commission or
other governmental or regulatory authority or agency (a
"Governmental Entity"),
3. except as set forth in the MSI Disclosure Letter,
conflict with, result in a breach of, constitute (with or
without due notice or lapse of time or both) a default under,
result in the acceleration of, create in any party the right
to accelerate, terminate, modify or cancel, or require any
notice, consent or waiver under, any contract, lease,
sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest (as hereinafter defined) or
other arrangement to which MSI Solutions or MSI Services is a
party or by which either of them is bound or to which any of
their assets is subject, other than such conflicts, breaches,
defaults, accelerations, terminations, modifications,
cancellations and such failures to comply with applicable
notice, consent and waiver requirements as would not have an
MSI Material Adverse Effect,
4. result in the imposition of any Security Interest
upon any material assets of MSI Solutions or MSI Services, or
5. violate any order, writ, injunction, decree, statute,
rule or regulation applicable to MSI Solutions or MSI Services
or any of their respective properties or assets except such
violations as would not have an MSI Material Adverse Effect.
"Security Interest" shall mean any mortgage, pledge, security interest,
encumbrance, charge, or other lien (whether arising by contract or by
operation of law), other than
1. mechanic's, materialmen's, and similar
liens,
2. liens arising under worker's compensation,
unemployment insurance, social security, retirement,
and similar legislation, and
3. liens on goods in transit incurred pursuant
to documentary letters of credit, in each case
arising in the ordinary course of business consistent
with past custom and practice (including with respect
to frequency and amount) ("Ordinary Course of
Business") of MSI Solutions and MSI Services.
16.5. Subsidiaries. Neither MSI Solutions nor MSI Services has any
direct or indirect equity participation in any corporation, limited
liability company, partnership, trust, or other business association.
16.6. Financial Statements.
9
10
1. MSI has provided to Eclipsys:
1. the unaudited balance sheets and statements
of income, changes in shareholder's equity of MSI
Solutions and MSI Services as of and for each of the
fiscal years ended December 31, 1997 and 1998; and
2. the unaudited balance sheet (the "Most
Recent Balance Sheet") and statements of income and
changes in shareholders' equity of MSI Solutions and
MSI Services as of and for the four (4) months ended
April 30, 1999.
2. Such financial statements (collectively, the "MSI
Financial Statements") have been prepared on a consistent
basis throughout the periods covered thereby, fairly present
in all material respects the financial condition, results of
operations and cash flows of MSI Solutions and MSI Services as
of the respective dates and for the periods referred to and
are consistent with the books and records of MSI Solutions and
MSI Services; provided, however, that the MSI Financial
Statements referred to in subsection 1.2 above are subject to
normal recurring year end adjustments.
16.7. Absence of Material Adverse Changes. Since the date of the
Most Recent Balance Sheet,
1. there has not been any MSI Material Adverse Effect,
nor has there occurred any event or development which could
reasonably be foreseen to result in such an MSI Material
Adverse Effect in the future, and
2. except as disclosed in the MSI Disclosure Letter or
consented to in writing by Eclipsys, neither MSI Solutions nor
MSI Services has taken any of the actions prohibited under
Section 21 of this Agreement.
16.8. Undisclosed Liabilities. Neither MSI Solutions nor MSI
Services has any material liability (whether known or unknown, whether
absolute or contingent, whether liquidated or unliquidated and whether
due or to become due), except for
1. liabilities shown on or otherwise reflected in the
Most Recent Balance Sheet,
2. liabilities which have arisen since the date of the
Most Recent Balance Sheet in the Ordinary Course of Business,
and
3. contractual and other liabilities arising under or
pursuant to matters, documents or disclosures set forth in the
MSI Disclosure Letter.
10
11
16.9. Tax Matters.
1. Each of MSI Solutions and MSI Services has filed all
Tax Returns (as hereinafter defined) that it was required to
file prior to the date of this Agreement, subject to any
allowable extension, and all such Tax Returns were correct and
complete in all material respects. Each of MSI Solutions and
MSI Services has paid all Taxes (as hereinafter defined) that
are shown to be due on any such Tax Returns. Neither MSI
Solutions nor MSI Services has any actual or potential
liability for any Tax obligation of any taxpayer (including
without limitation any affiliated group of corporations or
other entities that included MSI Solutions or MSI Services
during a prior period) other than MSI Solutions and MSI
Services. There is no federal tax liability for MSI Solutions
as of the Closing Date or for periods prior thereto. All Taxes
that MSI Solutions or MSI Services is or was required by law
to withhold or collect have been duly withheld or collected
and, to the extent required, have been paid to the proper
Governmental Entity. "Taxes" shall mean all taxes, charges,
fees, levies or other similar assessments or liabilities,
including without limitation income, gross receipts, ad
valorem, premium, value-added, excise, real property, personal
property, sales, use, transfer, withholding, employment,
payroll and franchise taxes imposed by the United States of
America or any state, local or foreign government, or any
agency, or other political subdivision of the United States or
any such government, and any interest, fines, penalties,
assessments or additions to tax resulting from, attributable
to or incurred in connection with any tax or any contest or
dispute. "Tax Returns" shall mean all reports, returns,
declarations, statements or other information required to be
supplied to a taxing authority in connection with Taxes.
2. MSI has delivered to Eclipsys correct and complete
copies of all federal income Tax Returns, examination reports
and statements of deficiencies assessed against or agreed to
by MSI Solutions or MSI Services for its taxable years ended
after December 31, 1995. No examination or audit of any Tax
Returns of MSI by any Governmental Entity is currently in
progress or, to the knowledge of MSI, threatened or
contemplated. MSI has not waived any statute of limitations
with respect to Taxes or agreed to an extension of time with
respect to a Tax assessment or deficiency.
3. Neither MSI Solutions nor MSI Services is a
"consenting corporation" within the meaning of Section 341(f)
of the Code and none of the assets of MSI Solutions or MSI
Services is subject to an election under Section 341(f) of the
Code. Neither MSI Solutions nor MSI Services has been a United
States "real property holding corporation" within the meaning
of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(l)(A)(ii) of the
11
12
Code. Neither MSI Solutions nor MSI Services is a party to any
Tax allocation or sharing agreement.
4. Neither MSI Solutions nor MSI Services has ever been
a member of an "affiliated group" of corporations within the
meaning of Section 1504 of the Code.
5. MSI Solutions is a "small business corporation" and
has maintained a valid election to be an "S" corporation under
Subchapter S of the Code, and the equivalent provisions of all
applicable state income tax statutes for all taxable years
since the taxable year ended December 31, 1996.
16.10. Assets. Each of MSI Solutions and MSI Services owns or leases
all tangible assets necessary for the conduct of its respective
businesses as presently conducted and as presently proposed to be
conducted. Each such tangible asset is free from material defects, has
been maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to normal wear and tear) and is
suitable for the purposes for which it presently is used.
16.11. Real Property. Neither MSI Solutions nor MSI Services owns any
real property.
16.12. Intellectual Property. Each of MSI Solutions and MSI Services
owns or has the right to use all Intellectual Property (as hereinafter
defined) incorporated in its products or necessary for, or used in, the
operation of its business as presently conducted (the "MSI Intellectual
Property"). Each item of MSI Intellectual Property will be owned or
available for use by the Surviving Corp. on substantially identical
terms and conditions immediately following the Closing.
1. "Intellectual Property" shall mean all
1. patents and patent applications,
2. copyrights and registrations,
3. mask works and registrations and
applications for registration,
4. computer software, data and documentation,
5. trade secrets, and
6. trademarks, service marks, trade names and
applications and registrations therefor.
2. To MSI's knowledge:
12
13
1. no other person or entity has any rights to
any of the MSI Intellectual Property (except pursuant
to agreements or licenses);
2. no other person or entity is infringing,
violating or misappropriating any of the MSI
Intellectual Property; and
3. none of the activities or business presently
conducted by MSI Solutions and MSI Services infringes
or violates, or constitutes a misappropriation of,
any Intellectual Property rights of any person or
entity.
3. Neither MSI Solutions nor MSI Services has received
any written complaint, written claim or written notice
alleging any such infringement, violation or misappropriation
of any third party's Intellectual Property rights and, to the
knowledge of MSI, no such claim has been threatened by any
third party. Each of MSI Solutions and MSI Services has made
available to Eclipsys complete and accurate copies of all
written documentation in their possession relating to claims
or disputes known to MSI concerning any item of the MSI
Intellectual Property.
4. The MSI Disclosure Letter sets forth an accurate and
complete list of each patent, patent application, copyright
registration, mask work registration or application therefor,
and trademark or service ▇▇▇▇ registration or application
therefor of MSI Solutions and MSI Services.
5. The MSI Disclosure Letter sets forth an accurate and
complete list of each license or other agreement (or type of
license or other agreement) pursuant to which either MSI
Solutions or MSI Services has licensed, distributed or
otherwise granted any rights to any third party with respect
to, any of the MSI Intellectual Property.
6. The MSI Disclosure Letter sets forth an accurate and
complete list of each item of MSI Intellectual Property that
is owned by a party other than MSI, and the license or
agreement pursuant to which MSI uses it (excluding
off-the-shelf software programs licensed by MSI Solutions or
MSI Services pursuant to shrink wrap licenses).
7. Neither MSI Solution nor MSI Services has disclosed
the source code for any of the software owned by MSI Solutions
or MSI Services and incorporated in its products or necessary
for the operation of its business as presently conducted (the
"Software") other than to parties owing a duty of
confidentiality to MSI Solutions and/or MSI Services, by
contract or otherwise.
13
14
8. All of the Software has been created by employees of
MSI Solutions or MSI Services within the scope of their
employment by MSI or by independent contractors of MSI
Solutions or MSI Services who have executed agreements
expressly assigning all right, title and interest in the
Software to either MSI Solutions or MSI Services. No portion
of the Software was jointly developed with any third party.
16.13. Real Property Leases. The MSI Disclosure Letter sets forth an
accurate and complete list of all real property leased or subleased to
MSI and lists the term of such lease, any extension and expansion
options, and the rent payable for the lease. MSI has delivered to
Eclipsys correct and complete copies of the leases and subleases (as
amended to date) listed in the MSI Disclosure Letter. With respect to
each lease and sublease listed in the MSI Disclosure Letter:
1. the lease or sublease is legal, valid, binding,
enforceable against MSI Solutions or MSI Services, as the case
may be, to the extent material to the business and operations
of MSI Solutions and MSI Services taken as a whole and such
lease or sublease will continue to be legal, valid, binding
and enforceable against MSI Solutions following the Closing in
accordance with the terms as in effect prior to the Closing,
to the extent material to the business and operations of MSI
Solutions following the Closing;
2. to the knowledge of MSI, no party to any such lease
or sublease is in breach or default, and no event has occurred
which, with notice or lapse of time or both, would constitute
a breach or default or permit termination, modification, or
acceleration under any such agreement;
3. to the knowledge of MSI, there are no disputes, oral
agreements or forbearance programs in effect as to any such
lease or sublease;
4. Neither MSI Solutions nor MSI Services has assigned,
transferred, conveyed, mortgaged, deeded in trust or
encumbered any interest in the leasehold or subleasehold
created pursuant to any such lease or sublease; and
5. all facilities leased or subleased are supplied with
utilities and other services necessary for the operation of
said facilities in the Ordinary Course of Business.
16.14. Contracts. The MSI Disclosure Letter sets forth an accurate
and complete list of the following written arrangements (including
without limitation written agreements) to which MSI Solutions or MSI
Services is a party:
14
15
1. any written arrangement (or group of related written
arrangements) for the lease of personal property from or to
third parties providing for lease payments in excess of
$50,000 per annum;
2. any written arrangement (or group of related written
arrangements) for the provision of products or services to
customers of MSI Services or MSI Solutions since 1991;
3. any written arrangement (or group of related written
arrangements) in which MSI Solutions or MSI Services has
granted manufacturing rights, most favored nation pricing
provisions or exclusive marketing or distribution rights
relating to any products or territory or has agreed to
purchase a minimum quantity of goods or services or has agreed
to purchase goods or services exclusively from a certain
party;
4. any written arrangement establishing a partnership or
joint venture;
5. any written arrangement (or group of related written
arrangements) under which it has created, incurred, assumed,
or guaranteed (or may create, incur, assume, or guarantee)
indebtedness (including capitalized lease obligations)
involving more than $50,000 or under which it has imposed (or
may impose) a Security Interest on any of its assets, tangible
or intangible;
6. any written arrangement concerning confidentiality or
noncompetition;
7. any written arrangement involving any of the MSI
Shareholders or their "affiliates", as that term is defined in
Rule 12b-2 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")(the "MSI Affiliates");
8. any written arrangement under which the consequences
of a default or termination could have an MSI Material Adverse
Effect; and
9. any other written arrangement (or group of related
written arrangements) (i) involving more than $50,000 annually
and (ii) not entered into in the Ordinary Course of Business.
With the exception of those written arrangements listed in the MSI
Disclosure Letter pursuant to Section 16.14.6, MSI has delivered or
made available to Eclipsys a correct and complete copy of each written
arrangement (as amended to date) listed in the MSI Disclosure Letter
pursuant to this Section 16.14. With respect to each such written
arrangement so listed:
15
16
1. the written arrangement is legal, valid, binding and
enforceable against MSI Solutions or MSI Services, as the case
may be, to the extent material to the business and operations
of MSI Solutions and MSI Services taken as a whole;
2. the written arrangement will continue to be legal,
valid, binding and enforceable against MSI Solutions and MSI
Services, as the case may be, following the Closing in
accordance with the terms in effect prior to the Closing, but
only to the extent material to the business and operations of
MSI Solutions and MSI Services taken as a whole following the
Closing;
3. neither MSI Solutions nor MSI Services is, and to
MSI's knowledge, no other party is, in breach or default, and
no event has occurred which with notice or lapse of time would
constitute a breach or default or permit termination,
modification, or acceleration, under any such written
agreement, other than such breaches, defaults, terminations,
modifications or accelerations as would not have an MSI
Material Adverse Effect; and
4. neither MSI Solutions nor MSI Services is a party to
any oral contract, agreement or other arrangement which, if
reduced to written form, would be required to be listed in the
MSI Disclosure Letter pursuant to the provisions of this
Section 16.14.
16.15. Accounts Receivable. All accounts receivable of MSI Solutions
and MSI Services reflected on the Most Recent Balance Sheet are valid
receivables (net of the applicable reserve for bad debts reflected
thereon).
16.16. Performance Bonds and Powers of Attorney. There are no
outstanding performance bonds or powers of attorney executed on behalf
of MSI Solutions or MSI Services.
16.17. Insurance. The MSI Disclosure Letter sets forth the name of
the insurer, the name of the policyholder, the name of each covered
insured, the policy number and the period of coverage with respect to
each insurance policy (including fire, theft, casualty, general
liability, workers compensation, business interruption, environmental,
product liability and automobile insurance policies and bond and surety
arrangements) to which MSI Solutions or MSI Services is a party, a
named insured or otherwise a beneficiary of coverage as of the date
hereof.
16.18. Litigation. There are no suits, actions, claims, proceedings
or investigations pending, or, to the knowledge of MSI, threatened
against, relating to or involving MSI Solutions or MSI Services before
any court, arbitrator or administrative or governmental body, which
could reasonably be expected to have an MSI Material Adverse Effect.
Neither MSI Solutions nor MSI
16
17
Services is subject to any judgment, decree, injunction, rule or order
of any court, and to the knowledge of MSI, neither MSI Solutions nor
MSI Services is subject to any governmental restriction applicable to
MSI Solutions or MSI Services which is reasonably likely to have an MSI
Material Adverse Effect or to cause a material limitation on Eclipsys
ability to operate the business of MSI Solutions and MSI Services after
the Closing.
16.19. Product Warranty. No product manufactured, sold, leased,
licensed or delivered by MSI Solutions or MSI Services is subject to
any guaranty, warranty, right of return or other indemnity beyond the
applicable standard terms and conditions of sale or lease, which are
listed in the MSI Disclosure Letter. The MSI Disclosure Letter sets
forth the aggregate expenses incurred by MSI in fulfilling their
obligations under their guaranty, warranty, right of return and
indemnity provisions during each of the fiscal years and the interim
period covered by the MSI Financial Statements.
16.20. Employees. The MSI Disclosure Letter sets forth an accurate
and complete list of all employees on MSI Solutions and MSI Services
payrolls as of June 5, 1999, along with the position and the annual
rate of compensation of each such person. Each such employee (other
than purely clerical or administrative personnel who do not have access
to confidential information) has entered into a
confidentiality/assignment of inventions agreement with MSI Solutions
or MSI Services, as the case may be, a copy of which has previously
been delivered to or made available to Eclipsys. To the knowledge of
MSI, no key employee or group of employees has any plans to terminate
employment with MSI Solutions or MSI Services. Neither MSI Solutions
nor MSI Services is a party to or bound by any collective bargaining
agreement, nor has it experienced any strikes, grievances, claims of
unfair labor practices or other collective bargaining disputes other
than such strikes, grievances, claims or disputes which would not have
an MSI Material Adverse Effect. To the knowledge of MSI, neither MSI
Solutions nor MSI Services is the subject of any organizational effect
made or threatened, either currently or within the past two years, by
or on behalf of any labor union with respect to employees of MSI
Solutions or MSI Services.
16.21. Employee Benefits. The MSI Disclosure Letter sets forth an
accurate and complete list of all Employee Benefit Plans (as
hereinafter defined) maintained, or contributed to, by MSI Solutions or
MSI Services or any ERISA Affiliate (as hereinafter defined).
1. "Employee Benefit Plan" means any employee pension
benefit plan (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")),
any employee welfare benefit plan (as defined in Section 3(1)
of ERISA), and any other written or oral plan, agreement or
arrangement involving direct or indirect compensation,
including without limitation insurance coverage, severance
benefits, disability benefits, deferred compensation, bonuses,
stock options, stock purchase, phantom stock, stock
appreciation or other forms of incentive compensation or
post-retirement compensation.
17
18
2. "ERISA Affiliate" means any entity which is a member
of:
1. a controlled group of corporations (as
defined in Section 414(b) of the Code),
2. a group of trades or businesses under common
control (as defined in Section 414(c) of the Code),
or
3. an affiliated service group (as defined
under Section 414(m) of the Code or the regulations
under Section 414(o) of the Code), any of which
includes MSI Solutions or MSI Services.
3. Complete and accurate copies of the following items
have been provided to Eclipsys or made available for
inspection by Eclipsys:
1. all Employee Benefit Plans which have been
reduced to writing;
2. all related trust agreements, insurance
contracts and summary plan descriptions;
3. all annual reports filed on IRS Form 5500,
5500C, or 5500R for the last two plan years for each
Employee Benefit Plan, have been delivered or made
available to Eclipsys; and
4. a written summary of each unwritten Employee
Benefit Plan which is material.
4. Each Employee Benefit Plan has been administered in
all material respects in accordance with its terms and each of
MSI Solutions, MSI Services and any ERISA Affiliates has in
all material respects met its obligations with respect to such
Employee Benefit Plan and has made all required contributions
thereto. All Employee Benefit Plans are in compliance in all
material respects with the currently applicable provisions of
ERISA and the Code and the related regulations.
5. To MSI's knowledge, there are no investigations by
any Governmental Entity, termination proceedings or other
claims (except claims for benefits payable in the normal
operation of the Employee Benefit Plans and proceedings with
respect to qualified domestic relations orders), suits or
proceedings against or involving any Employee Benefit Plan or
asserting any rights or claims to benefits under any Employee
Benefit Plan that could give rise to any material liability.
6. All the Employee Benefit Plans that are intended to
be qualified under Section 401(a) of the Code have received
determination letters from the Internal
18
19
Revenue Service to the effect that such Employee Benefit Plans
are qualified and the plans and the trusts related are exempt
from federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code, no such determination letter has
been revoked and revocation has not been threatened, and no
such Employee Benefit Plan has been amended since the date of
its most recent determination letter or application therefor
in any material respect, and no act or omission has occurred,
that would adversely affect its qualification.
7. Neither MSI Solutions, MSI Services nor any ERISA
Affiliate has ever maintained an Employee Benefit Plan subject
to Section 412 of the Code or Title IV of ERISA.
8. At no time has MSI Solutions, MSI Services or any
ERISA Affiliate been obligated to contribute to any
"multi-employer plan" (as defined in Section 4001(a)(3) of
ERISA).
9. There are no unfunded obligations under any Employee
Benefit Plan providing benefits after termination of
employment to any employee of MSI Solutions or MSI Services
(or to any beneficiary of any such employee) which are not
reported in the MSI Financial Statements, including but not
limited to retiree health coverage and deferred compensation,
but excluding continuation of health coverage required to be
continued under Section 4980B of the Code and insurance
conversion privileges under state law.
10. No act or omission has occurred and no condition
exists with respect to any Employee Benefit Plan maintained by
MSI Solutions, MSI Services or any ERISA Affiliate that would
subject MSI Solutions or MSI Services to any material fine,
penalty, tax or liability of any kind imposed under ERISA or
the Code.
11. No Employee Benefit Plan is funded by, associated
with, or related to a voluntary employee's beneficiary
association within the meaning of Section 501(c)(9) of the
Code.
12. No Employee Benefit Plan or related plan document or
agreement, summary plan description or other written
communication distributed generally to employees by its terms
prohibits MSI Solutions or MSI Services from amending or
terminating any such Employee Benefit Plan.
13. The MSI Disclosure Letter sets forth an accurate and
complete list of each:
1. agreement with any director or executive
officer of MSI Solutions or MSI Services (A) the
benefits of which are contingent, or the terms of
which are materially altered, upon the occurrence of
a transaction
19
20
involving MSI of the nature of any of the
transactions contemplated by this Agreement, (B)
providing any term of employment or compensation
guarantee or (C) providing severance benefits or
other benefits after the termination of employment of
such director or executive officer;
2. agreement, plan or arrangement under which
any person may receive payments from MSI Solutions or
MSI Services that may be subject to the tax imposed
by Section 4999 of the Code or included in the
determination of such person's parachute payment
under Section 280G of the Code; and
3. agreement or plan binding upon MSI Solutions
or MSI Services, including without limitation any
stock option plan, stock appreciation right plan,
restricted stock plan, stock purchase plan, severance
benefit plan, or any Employee Benefit Plan, any of
the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated,
by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of
the benefits of which will be calculated on the basis
of any of the transactions contemplated by this
Agreement.
16.22. Legal Compliance. MSI Solutions and MSI Services, and the
conduct and operations of their business, are in compliance with each
law (including rules and related regulations) of any federal, state,
local or foreign government, or any Governmental Entity, which (a)
affects or relates to this Agreement or the contemplated transactions
or (b) is applicable to MSI Solutions, MSI Services or their respective
businesses, except for such failure to comply under a law referred to
in clause (b) above which do not have an MSI Material Adverse Effect.
16.23. Permits. The MSI Disclosure Letter sets forth a list of all
permits, licenses, registrations, certificates, orders or approvals
from any Governmental Entity (including without limitation those issued
or required under environmental laws and those relating to the
occupancy or use of owned or leased real property) ("Permits") issued
to or held by MSI and material to the business and operations of MSI
Solutions and MSI Services taken as a whole. Such listed Permits are
the only Permits that are required for MSI to conduct its business as
presently conducted, except for those the absence of which would not
have an MSI Material Adverse Effect. Each such Permit is in full force
and effect and, to the knowledge of MSI, no suspension or cancellation
of such Permit is threatened.
16.24. Certain Business Relationships With Affiliates. The MSI
Disclosure Letter sets forth an accurate and complete list of all
transactions and relationships between MSI Solutions and/or MSI
Services and any Affiliate which are reflected in the statements of
operations of MSI included in the MSI Financial Statements. To the
knowledge of MSI, no Affiliate of MSI Solutions or MSI Services
20
21
1. owns any property or right, tangible or intangible,
which is material and used in the business of MSI Solutions
and MSI Services,
2. has any claim or cause of action against MSI
Solutions or MSI Services, or
3. owes any money to MSI Solutions or MSI Services.
16.25. Brokers' Fees. MSI has no liability or obligation to pay any
fees or commissions to any broker or finder with respect to the
transactions contemplated by this Agreement other than fees and
commission payable to ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC ("H&Q") pursued to that
certain engagement letter dated January 6, 1999 by and between MSI
Solutions and H&Q.
16.26. Books and Records. The minute books and other similar records
of MSI Solutions and MSI Services contain true and complete records of
all actions taken at any meetings of the shareholders, Board of
Directors or any committee and of all written consents executed in lieu
of the holding of any such meeting. The books and records of MSI
Solutions and MSI Services have been maintained in accordance with good
business and bookkeeping practices.
16.27. Customers and Suppliers. To the knowledge of MSI, no unfilled
customer order or commitment obligating MSI Solutions or MSI Services
to process, manufacture or deliver products or perform services is
expected to result in a loss to MSI Solutions or MSI Services upon
completion of performance. The MSI Disclosure Letter sets forth a list
of (a) each customer that accounted for more than 5% of the
consolidated revenues of MSI Solutions and MSI Services during the last
full fiscal year or the interim period through the date of the Most
Recent Balance Sheet and the approximate amount of revenues accounted
for by such customer during each such period and (b) each supplier that
is the sole supplier of any significant product or component to MSI
Solutions or MSI Services.
16.28. MSI Action. The Boards of Directors of MSI Solutions and MSI
Services, pursuant to unanimous written consent, have (i) determined
that each of the Mergers is fair and in the best interests of their
respective shareholders and (ii) adopted this Agreement in accordance
with the provisions of the GBCC. The MSI Solutions shareholders have
approved the merger of Merger Sub with and into MSI Solutions pursuant
to unanimous written consent and the MSI Services shareholders have
approved the merger of MSI Services with and into MSI Solutions
pursuant to unanimous written consent.
16.29. Disclosure. No representation or warranty by MSI Solutions or
MSI Services contained in this Agreement, and no statement contained in
the MSI Disclosure Letter or any certificate or other instrument
delivered to or to be delivered by or on behalf of MSI
21
22
Solutions or MSI Services pursuant to this Agreement, contains or will
contain any untrue statement of a material fact or omits or will omit
to state any material fact necessary, in light of the circumstances
under which it was or will be made, in order to make the statements
herein or therein not misleading.
16.30. Year 2000. The MSI Disclosure Letter sets forth an accurate
and complete list of each written year 2000 audit, report or
investigation that has been performed by or on behalf of MSI Solutions
or MSI Services with respect to their business and operations, and MSI
Solutions and MSI Services have provided to Eclipsys true and correct
copies of all such written audits, reports or investigations. Except as
set forth in the MSI Disclosure Letter, neither MSI Solutions nor MSI
Services has provided any express guarantee or express warranty for any
product sold or licensed, or services provided, by MSI Solutions or MSI
Services to the effect that any such product or service is year 2000
compliant.
REPRESENTATIONS AND WARRANTIES OF ECLIPSYS AND THE MERGER SUB.
17. Eclipsys' Representations and Warranties. With such exceptions as are
set forth in a letter (the "Eclipsys Disclosure Letter") delivered by Eclipsys
and the Merger Sub to MSI Solutions and MSI Services prior to the execution
hereof, Eclipsys and the Merger Sub hereby represent and warrant to MSI
Solutions and MSI Services as follows:
17.1. Organization. Each of Eclipsys and the Merger Sub is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware. Each of Eclipsys and the Merger Sub
is duly qualified to conduct business and is in good standing under the
laws of each jurisdiction in which the nature of its business or the
ownership or leasing of its properties requires such qualification,
except where the failure to be so qualified would not have a material
adverse effect upon the assets, business, financial condition or
results of operations of Eclipsys and its subsidiaries taken as a whole
(an "Eclipsys Material Adverse Effect"). Each of Eclipsys and the
Merger Sub has all requisite corporate power and authority to carry on
the business in which it is engaged and to own and use the properties
owned and used by it. Eclipsys owns all of the issued and outstanding
shares of capital stock of the Merger Sub.
17.2. Capitalization. All of the issued and outstanding shares of
capital stock of Eclipsys are duly authorized, validly issued, fully
paid, nonassessable and free of all preemptive rights. All of the
Merger Shares will be, when issued in accordance with this Agreement,
duly authorized, validly issued, fully paid, nonassessable and free of
all preemptive rights. All of the outstanding shares of capital stock
of the Merger Sub are owned by Eclipsys. As of the date hereof:
1. the authorized, issued and outstanding capital stock
of Eclipsys as of June 9, 1999, is as follows:
22
23
1. 200,000,000 shares of Eclipsys Stock are
authorized and 32,098,114 of such shares are issued
and outstanding;
2. 5,000,000 shares of Non-Voting Common Stock,
$.01 par value per share, of Eclipsys (the
"Non-Voting Common Stock") are authorized and 597,621
of such shares are issued and outstanding;
3. 5,000,000 shares of Preferred Stock of
Eclipsys, $.01 par value per share (the "Preferred
Stock"), are authorized, none of which are issued and
outstanding; and
4. Except as set forth in Eclipsys Disclosure
Letter, there are no options, warrants, equity
securities, calls, rights, commitments or agreements
of any character to which Eclipsys or any of its
subsidiaries is a party or by which Eclipsys or any
of its subsidiaries is bound obligating Eclipsys or
any of its subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional
shares of capital stock of Eclipsys or any of its
subsidiaries or obligating Eclipsys or any of its
subsidiaries to grant, extend, accelerate the vesting
of or enter into any such option, warrant, equity
security, call, right, commitment or agreement,
including as a result of the transactions
contemplated by this Agreement.
2. no shares of capital stock of Eclipsys are held in
the treasury of Eclipsys.
17.3. Authorization of Transactions. Each of Eclipsys and the Merger
Sub has all requisite power and authority to execute and deliver this
Agreement and to perform its obligations under this Agreement. The
execution and delivery of this Agreement by Eclipsys and the Merger
Sub, the performance of this Agreement and the consummation of the
contemplated transactions have been duly and validly authorized by all
necessary corporate action on the part of Eclipsys and the Merger Sub.
This Agreement has been duly and validly executed and delivered by
Eclipsys and the Merger Sub and, assuming due authorization, execution
and delivery by MSI Solutions, MSI Services and the MSI Shareholders,
constitutes a valid and binding obligation of Eclipsys and the Merger
Sub, enforceable against them in accordance with its terms, subject to
applicable bankruptcy, insolvency and other similar laws affecting the
enforceability of creditors' rights generally, general equitable
principles and the discretion of courts in granting equitable remedies.
17.4. Noncontravention. Subject to (i) compliance with the HSR Act
and (ii) the filing of the Certificates of Merger as required by the
DGCL and the GBCC, neither the execution and delivery of this Agreement
by Eclipsys or the Merger Sub, nor the consummation by Eclipsys or the
Merger Sub of the contemplated transactions, will:
23
24
1. conflict with or violate any provision of the charter
or By-laws of Eclipsys or any of its subsidiaries,
2. to the knowledge of Eclipsys, require on the part of
Eclipsys or the Merger Sub any filing with, or permit,
authorization, consent or approval of, any Governmental
Entity,
3. except as set forth in the Eclipsys Disclosure
Letter, conflict with, result in breach of, constitute (with
or without due notice or lapse of time or both) a default
under, result in the acceleration of, create in any party any
right to accelerate, terminate, modify or cancel, or require
any notice, consent or waiver under, any contract, lease,
sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest or other arrangement to which
Eclipsys or any of its subsidiaries is a party or by which
Eclipsys or any of its subsidiary is bound or to which any of
their assets are subject, other than such conflicts, breach,
defaults, accelerations, terminations, modifications or
cancellations which individually or in the aggregate would not
have an Eclipsys Material Adverse Effect,
4. result in the imposition of any Security Interest
upon any material assets of Eclipsys or any of its
subsidiaries, or
5. violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Eclipsys or any of its
subsidiaries or any of their respective properties or assets
except such violations as would not in the aggregate have an
Eclipsys Material Adverse Effect.
17.5. Financial Statements. Eclipsys has heretofore delivered to MSI
Solutions and MSI Services (i) the audited consolidated balance sheets
of Eclipsys and its subsidiaries as of December 31, 1996, 1997 and 1998
and its audited consolidated statements of operations, stockholders
equity and cash flows for the fiscal years then ended, including the
notes thereto, examined by and accompanied by the report of
PricewaterhouseCoopers, LLP, independent public accountants and (ii)
the unaudited consolidated balance sheet of Eclipsys and its
subsidiaries as of March 31, 1999 (the "Eclipsys Balance Sheet") and
its unaudited consolidated statements of operations, stockholders
equity and cash flows for the three month period then ended (all of the
financial statements referred to in this Section 17.5. are hereinafter
collectively referred to as the "Eclipsys Financial Statements"). The
Eclipsys Financial Statements have been prepared from, and are in
accordance with, the books and records of Eclipsys and its consolidated
subsidiaries and present fairly the consolidated financial position and
consolidated results of operations, stockholders equity and cash flows
of Eclipsys and its consolidated subsidiaries as of the dates and for
the periods indicated, in each case in conformity with generally
accepted accounting principles ("GAAP"), consistently applied, except
as otherwise stated in the Eclipsys Disclosure Letter.
24
25
17.6. SEC Reports. Eclipsys has heretofore made available to MSI
Solutions and MSI Services (i) Eclipsys' Annual Report on Form 10-K for
the year ended December 31, 1998 including all exhibits thereto and
items incorporated therein by reference, (ii) Eclipsys' Quarterly
Report on Form 10-Q for the quarter ended March 31, 1999 including all
exhibits thereto and items incorporated therein by reference, (iii) the
Proxy Statement relating to Eclipsys' Annual Meeting of Stockholders
held on April 21, 1999, and (iv) all Current Reports on Form 8-K filed
by Eclipsys with the Securities and Exchange Commission since December
31, 1998, including all exhibits thereto and items incorporated therein
by reference (Items (i) through (iv) in this sentence being referred to
collectively as the "Eclipsys SEC Reports"). As of their respective
dates, the Eclipsys SEC Reports did not contain any untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. Since
August 6, 1998, Eclipsys has timely filed all forms, reports and
documents with the Securities and Exchange Commission (the "SEC")
required to be filed by it pursuant to the Securities Act and the
Exchange Act, and the applicable rules and regulations promulgated
thereunder each of which complied as to form, at the time such form,
document or report was filed, in all material respects with the
applicable requirements of the Securities Act and the Exchange Act and
the applicable rules and regulations promulgated thereunder. Neither
Eclipsys nor any of its subsidiaries has since December 31, 1998, (i)
failed to pay any dividend or sinking fund installment on preferred
stock, or (ii) defaulted (a) on any installment or installments of
indebtedness for borrowed money, or (b) on any rental on one or more
long term leases, which defaults in the aggregate are material to the
financial position of Eclipsys and its subsidiaries taken as a whole.
17.7. Absence of Material Adverse Changes. Since March 31, 1999,
1. there has not been any Eclipsys Material Adverse
Effect, nor has there occurred any event or development which
could reasonably be foreseen to result in an Eclipsys Material
Adverse Effect in the future, and
2. except as disclosed in the Eclipsys Disclosure Letter
or as consented to in writing by MSI Solutions or MSI
Services, neither Eclipsys nor any of its subsidiaries has
taken any of the actions prohibited under Section 22 of this
Agreement.
17.8. Intellectual Property. Eclipsys and each of its subsidiaries
owns or has the right to use all Intellectual Property incorporated in
its products and necessary for, or used in, the operation of its
business as presently conducted (the "Eclipsys Intellectual Property").
To Eclipsys' knowledge, no other person or entity has any rights to any
of the Eclipsys Intellectual Property (except pursuant to agreements or
licenses specified in the Eclipsys Disclosure Letter). No other person
or entity is infringing, violating or misappropriating any of the
Eclipsys Intellectual Property. None of the activities or businesses
presently
25
26
conducted by Eclipsys and its subsidiaries infringes or violates, or
constitutes a misappropriation of any Intellectual Property rights of
any other person or entity. Neither Eclipsys nor any of its
subsidiaries has received any written complaint, written claim or
written notice alleging any infringement, violation or misappropriation
of any third parties' Intellectual Property rights and, to the
knowledge of Eclipsys, no such claim has been threatened by any third
party. Each of Eclipsys and its subsidiaries has made available to MSI
Solutions and MSI Services complete and accurate copies of all written
documentation in their possession relating to claims or disputes known
to Eclipsys concerning any item of the Eclipsys Intellectual Property.
The Eclipsys Disclosure Letter sets forth an accurate and complete list
of each item of Eclipsys Intellectual Property that is owned by a party
other than Eclipsys or any of its subsidiaries, and the license or
agreement pursuant to which Eclipsys or its subsidiaries uses it
(excluding off-the-shelf software programs licensed by Eclipsys or any
of its subsidiaries pursuant to shrink wrap licenses).
17.9. Contracts. Accurate and complete copies of all: (i) agreements
which obligate Eclipsys or any of its subsidiaries to register
securities of Eclipsys under the Securities Act; and (ii) agreements
between Eclipsys and its subsidiaries and stockholders of Eclipsys and
its subsidiaries relating to the voting or transfer of any securities
of Eclipsys or any of its subsidiaries have been made available by
Eclipsys to MSI Solutions and MSI Services.
17.10. Employee Benefits. Each of Eclipsys and its subsidiaries has
made available to MSI Solutions and MSI Services complete and accurate
copies of all Employee Benefit Plans maintained, or contributed to, by
Eclipsys or any of its subsidiaries or any ERISA Affiliate ("Eclipsys
Employee Benefit Plans"). Eclipsys has delivered to MSI Solutions and
MSI Services complete and accurate copies of: (i) all Eclipsys Employee
Benefit Plans which have been reduced to writing; (ii) all related
trust agreements, insurance contracts and summary plan descriptions;
and (iii) all annual reports filed on IRS Form 5500, 5500C or 5500R for
the last two Plan years for each Eclipsys Employee Benefit Plan.
Eclipsys has also has delivered to MSI Solutions and MSI Services a
written summary of each unwritten Eclipsys Employee Benefit Plan which
is material to the business and operations of Eclipsys and its
subsidiaries taken as a whole. Each Eclipsys Employee Benefit Plan has
been administered in all material respects in accordance with its terms
and each of Eclipsys and its subsidiaries and any ERISA Affiliate has
in all material respects met its obligations with respect to such
Eclipsys Employee Benefit Plans and has made all required contributions
thereto. All such Eclipsys Employee Benefit Plans are in compliance in
all material respects with the currently applicable provisions of ERISA
and the Code and the related regulations. At no time has Eclipsys or
any subsidiary thereof or any ERISA Affiliate been obligated to
contribute to any multi-employer plan (as defined in Section 4001(a)(3)
of ERISA). There are no unfunded obligations under any Eclipsys
Employee Benefit Plan providing benefits after termination of
employment to any employee of Eclipsys or any subsidiary thereof (or to
any beneficiary of any such employee) which requires reporting under
GAAP which are
26
27
not reported in the Eclipsys Financial Statements, including but not
limited to retiree health coverage and deferred compensation, but
excluding continuation of health coverage required to be continued
under Section 4980B of the Code and insurance conversion privileges
under State law. No act or omission has occurred and no condition
exists with respect to any Eclipsys Employee Benefit Plan maintained by
Eclipsys any of its subsidiaries or any ERISA Affiliate that would
subject Eclipsys or any of its subsidiaries to any material fine,
penalty, tax or liability of any kind imposed under ERISA or the Code.
17.11. Brokers' Fees. Neither Eclipsys nor the Merger Sub has any
liability or obligation to pay any fees or commissions to any broker or
finder with respect to the transactions contemplated by this Agreement.
17.12. Eclipsys Action. The Board of Directors of Eclipsys has
determined that each of the Mergers is fair and in the best interests
of Eclipsys and its stockholders and has approved this Agreement and
the transactions contemplated hereby. The Board of Directors of Merger
Sub has determined that the merger of Merger Sub with and into MSI
Solutions is fair and in the best interests of Merger Sub and its
stockholders and has approved this Agreement and the transactions
contemplated hereby and has directed that this Agreement and such
merger be submitted to the sole stockholder of Merger Sub for its
adoption and approval. Eclipsys, as the sole stockholder of Merger Sub,
has adopted and approved this Agreement. The stockholders of Eclipsys
are not required to approve this Agreement under the Certificate of
Incorporation or By-Laws of Eclipsys, the DGCL, the applicable rules of
the NASDAQ National Market or pursuant to any other applicable
instrument, document, law, rule or regulation.
17.13. Disclosure. No representation or warranty by Eclipsys or the
Merger Sub contained in this Agreement, and no statement contained in
the Eclipsys Disclosure Letter or any certificate or other instrument
delivered to or to be delivered by or on behalf of Eclipsys or the
Merger Sub pursuant this Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit to state any
material fact necessary, in light of the circumstances under which it
was or will be made, in order to make the statements made or to be made
not misleading.
17.14. Year 2000. Each of Eclipsys and its subsidiaries has provided
to MSI Solutions and MSI Services true and correct copies of all
written Y2K audits, reports and investigations that have been performed
by or on behalf of Eclipsys or any of its subsidiaries with respect to
its business and operations.
COVENANTS
18. Reasonable Best Efforts. Each of the Parties shall cooperate, and use
its reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate the
27
28
transactions contemplated by this Agreement; provided, however, that
notwithstanding anything in this Agreement to the contrary, Eclipsys shall not
be required to sell or dispose of or hold separately (through a trust or
otherwise) any assets or businesses of Eclipsys or its affiliates.
19. Notices and Consents. Each of the Parties shall cooperate and use its
reasonable best efforts to obtain, at its expense, all such waivers, licenses,
permits, consents, approvals, qualifications, orders or other authorizations
from third parties and Governmental Entities, and to effect all such
registrations, filings and notices with or to third parties and Governmental
Entities, as each such party may be required to obtain in order to complete the
transactions contemplated by this Agreement. Without limiting the foregoing,
each of the Parties shall promptly file any notification and report forms and
related material that it may be required to file with the Federal Trade
Commission and the Antitrust Division of the United States Department of Justice
under the HSR Act, shall use its reasonable best efforts to obtain an early
termination of the applicable waiting period, and shall make any further filings
or information submissions pursuant thereto that may be necessary, proper or
advisable.
20. Stockholder Agreements. Each MSI Shareholder shall be an accredited
investor within the definition set forth in Rule 501(a) of the Securities Act
and Eclipsys shall receive from each of the shareholders an investment
representation letter substantially in the form attached as Exhibit A.
21. Operation of the Business by MSI. Except as contemplated by this
Agreement, during the period from the date of this Agreement to the Effective
Time (or the termination of this Agreement), MSI Solutions and MSI Services
shall use their reasonable best efforts to conduct their operations in the
Ordinary Course of Business and in compliance with all applicable laws and
regulations and, to the extent consistent therewith, use all reasonable efforts
to preserve intact their current business organization, keep their physical
assets in good working condition (normal wear and tear excepted), keep available
the services of their current officers and key employees and preserve their
relationships with customers, suppliers and others having business dealings with
them to the end that their goodwill and ongoing business shall not be impaired
in any material respect. Without limiting the generality of the foregoing, prior
to the Effective Time or the termination of this Agreement, neither MSI
Solutions nor MSI Services shall, without the written consent of Eclipsys:
21.1. issue, sell, deliver or agree or commit to issue, sell or
deliver (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) or
authorize the issuance, sale or delivery of, or redeem or repurchase,
any stock of any class or any other securities or any rights, warrants
or options to acquire any such stock or other securities (except
pursuant to the conversion or exercise of convertible securities,
Options or Warrants outstanding on the date ), or amend any of the
terms of any such convertible securities or Options or Warrants;
28
29
21.2. split, combine or reclassify any shares of its capital stock;
declare, set aside or pay any dividend or other distribution (whether
in cash, stock or property or any combination) in respect of its
capital stock;
21.3. create, incur or assume any debt not currently outstanding
(including obligations in respect of capital leases), except in the
Ordinary Course of Business; assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently, or
otherwise) for the obligations of any other person or entity; or make
any loans, advances or capital contributions to, or investments in, any
other person or entity except for a loan or advance to an employee that
would not jeopardize the treatment of the Mergers as a pooling of
interests for accounting purposes;
21.4. enter into, adopt or amend any Employee Benefit Plan or any
employment or severance agreement or arrangement (except as required
under applicable law), (except for normal performance reviews or
increases in the Ordinary Course of Business) increase in any manner
the compensation or fringe benefits of, or materially modify the
employment terms of, its directors, officers or employees, generally or
individually, or pay any benefit not required by the terms in effect on
the date of any existing Employee Benefit Plan;
21.5. acquire, sell, lease, encumber or dispose of any assets or
property (including without limitation any shares or other equity
interests in or securities of any corporation, partnership, association
or other business organization or division ), other than purchases and
sales of assets in the Ordinary Course of Business;
21.6. amend its Articles of Incorporation or By-laws;
21.7. change in any material respect its accounting methods,
principles or practices;
21.8. discharge or satisfy any Security Interest or pay any
obligation or liability other than in the Ordinary Course of Business;
21.9. mortgage or pledge any of its property or assets or subject
any such assets to any Security Interest;
21.10. sell, assign, transfer or license any Intellectual Property,
other than in the Ordinary Course of Business;
21.11. enter into, amend, terminate, take or omit to take any action
that would constitute a violation of or default under, or waive any
material rights under, any material contract or agreement;
21.12. make or commit to make any capital expenditure in excess of
$50,000 per item;
29
30
21.13. take any action or fail to take any action permitted by this
Agreement with the knowledge that such action or failure to take action
would result in (i) any of the representations and warranties of MSI
Solutions or MSI Services set forth in this Agreement becoming untrue
or (ii) any of the conditions to the Mergers in Sections 33, 34 and 35
not being satisfied;
21.14. to the knowledge of MSI, take any action that would jeopardize
the treatment of each of the Mergers as a pooling of interests for
accounting purposes; or
21.15. agree in writing or otherwise to take any of the foregoing
actions.
22. Operation of the Business by Eclipsys. During the period from the date
of this Agreement to the Effective Time (or the termination of this Agreement),
Eclipsys shall use its reasonable best efforts to conduct its operations in the
Ordinary Course of Business and in compliance with all applicable laws and
regulations and, to the extent consistent therewith, use all reasonable efforts
to preserve intact its current business organization and preserve its
relationship with customers, suppliers and others having business dealings with
it to the end that its goodwill and ongoing business shall not be impaired in
any material respect. Without limiting the generality of the foregoing, prior to
the Effective Time or the termination of this Agreement, Eclipsys shall not,
without the written consent of MSI Solutions:
22.1. change nor amend its Certificate of Incorporation or Bylaws;
22.2. issue, sell or grant options, warrants or rights to purchase
or subscribe to, or enter into any arrangement or contract with respect
to the issuance or sale of any of the capital stock of Eclipsys or any
of its subsidiaries or rights or obligations convertible into or
exchangeable for any shares of the capital stock of Eclipsys or any of
its subsidiaries and not alter the terms of any presently outstanding
options or make any changes (by split-up, combination, reorganization
or otherwise) in the capital structures of Eclipsys or any of its
subsidiaries; provided, however, that Eclipsys shall be permitted
hereunder, in the Ordinary Course of Business, to issue capital stock
pursuant to the exercise of employee stock options, warrants and other
convertible securities outstanding on the date hereof or grant options
to purchase capital stock pursuant to employee stock option plans
existing on the date hereof;
22.3. to the knowledge of Eclipsys, take any action the effect of
which would be to cause either of the Mergers to be treated as a
taxable transaction; or
22.4. to the knowledge of Eclipsys, take any action that would
jeopardize the treatment of either of the Mergers as a pooling of
interests for accounting purposes.
23. Interim Financials. Eclipsys shall issue a thirty (30) day interim
financial statement (that includes the combined operations of Eclipsys and MSI)
as soon as is reasonably practicable following the Mergers and in any event no
later than the 25th calendar day following the
30
31
completion of the first full calendar month of post-closing operations of the
combined businesses.
24. S-3 Eligibility. Following the Closing Date, Eclipsys shall use its
reasonable best efforts and take all actions reasonably necessary to obtain and
maintain eligibility to register its securities under the Securities Act on Form
S-3.
25. Full Access. Each of the Parties shall permit representatives of the
other Party to have full access (at all reasonable times, and in a manner so as
not to interfere with the normal business operations of such Party) to all
premises, properties, financial and accounting records, contracts, other records
and documents, and personnel, of or pertaining to such Party.
25.1. MSI Tax Returns. After the Closing, Eclipsys shall cause
federal and all applicable state income Tax Returns for MSI Solutions
and MSI Services for the taxable year beginning January 1, 1999 and
ending on the Closing Date (the "1999 Short Year Returns") to be
prepared at Eclipsys' expense by the accountant or accounting firm
mutually acceptable to Eclipsys and the MSI Shareholders. The 1999
Short Year Returns shall be prepared using the same accounting methods
as, and otherwise in a manner consistent with, the federal and state
income Tax Returns previously filed by MSI Solutions and MSI Services.
Eclipsys shall cause the 1999 Short Year Returns to be filed not later
than the due dates thereof, taking into account any valid extensions.
The Parties shall cooperate with one another and provide access to all
information, books and records as may be reasonably required for the
preparation of the 1999 Short Year Returns and any other Tax Returns of
MSI Solutions and MSI Services, and in connection with any amendments,
audits or examinations thereof.
25.2. Each of the Parties:
1. shall treat and hold as confidential any Confidential
Information (as hereinafter defined);
2. shall not use any of the Confidential Information
except in connection with this Agreement; and
3. if this Agreement is terminated for any reason
whatsoever, shall return to the other Party all tangible
embodiments (and all copies) which are in its possession.
25.3. "Confidential Information" means any confidential or
proprietary information of a Party that is furnished in writing to
another Party in connection with this Agreement; provided, however,
that it shall not include any information which:
1. at the time of disclosure, is available publicly,
31
32
2. after disclosure, becomes available publicly through
no fault of the other Party, or
3. the other Party knew or to which the other Party had
access prior to disclosure.
26. Notice of Breaches.
26.1. MSI Solutions or MSI Services shall promptly deliver to
Eclipsys written notice of any event or development that would
1. render any statement, representation or warranty of
MSI Solutions or MSI Services in this Agreement (including the
MSI Disclosure Letter) inaccurate or incomplete in any
material respect, or
2. constitute or result in a breach by MSI Solutions or
MSI Services of, or a failure by MSI Solutions or MSI Services
to comply with, any agreement or covenant in this Agreement
applicable to such party.
26.2. Eclipsys or the Merger Sub shall promptly deliver to MSI
Solutions written notice of any event or development that would
1. render any statement, representation or warranty of
Eclipsys or the Merger Sub in this Agreement (including the
Eclipsys Disclosure Letter) inaccurate or incomplete in any
material respect, or
2. constitute or result in a breach by Eclipsys or the
Merger Sub of, or a failure by Eclipsys or the Merger Sub to
comply with, any agreement or covenant in this Agreement
applicable to such party.
26.3. No such disclosure by either Party shall be deemed to avoid or
cure any such misrepresentation or breach unless and until such
disclosure is accepted by the other Party.
26.4. In the event Eclipsys fails to inform MSI Solutions of any
material fact which causes Eclipsys to reasonably believe that any of
the representations, warranties, covenants or agreements of MSI
Solutions or MSI Services contained herein are untrue or inaccurate in
any respect as provided herein, such failure will constitute a waiver
and release by Eclipsys and the Merger Sub of any rights they may have
under this Agreement to delay the consummation of the transactions
contemplated hereby, to terminate this Agreement, to make an
indemnification claim against the MSI Shareholders or otherwise as a
result of such representation, warranty, covenant or agreement being
untrue or inaccurate because of such material fact. MSI Solutions and
MSI Services shall have the right from time to time prior to the
Effective Time to
32
33
supplement or amend the MSI Disclosure Letter with respect to any
matter required to be set forth or described in such MSI Disclosure
Letter; provided that if the matter giving rise to such supplement or
amendment to the MSI Disclosure Letter has an MSI Material Adverse
Effect, Eclipsys shall have the right within ten days of receipt by
Eclipsys of such supplemental or amended disclosure, to terminate the
Agreement pursuant to Section 46 by written notice to MSI Solutions.
27. Exclusivity. MSI Solutions and MSI Services shall not, and MSI
Solutions and MSI Services shall use their reasonable best efforts to cause
their officers, directors, employees, representatives and agents not to,
directly or indirectly:
27.1. encourage, solicit, initiate, engage or participate in
discussions or negotiations with any person or entity (other than
Eclipsys) concerning any merger, consolidation, sale of material
assets, tender offer, recapitalization, accumulation of MSI Stock,
proxy solicitation or other business combination involving MSI
Solutions or MSI Services, or any division of them ("Acquisition
Proposal") or
27.2. provide any non-public information concerning the business,
properties or assets of MSI Solutions or MSI Services to any person or
entity (other than Eclipsys) in connection with an Acquisition
Proposal. MSI Solutions or MSI Services shall immediately notify
Eclipsys of any inquiries either of them receives with respect to an
Acquisition Proposal.
28. Agreements from Certain Affiliates of MSI. Concurrently with the
execution of this Agreement, MSI Solutions shall deliver to Eclipsys a list of
all persons or entities who are at such time MSI Affiliates. In order to help
ensure that each of the Mergers will be accounted for as a pooling of interests
and that the issuance of Merger Shares will comply with the Securities Act, MSI
Solutions and MSI Services shall cause each MSI Affiliate and MSI Shareholder to
execute and deliver to Eclipsys, as soon as practicable following the execution
of this Agreement, a written agreement substantially in the form attached as
Exhibit B (the "Affiliate Letter").
29. No Solicitation. The Parties each agree that, in the event of a
termination of this Agreement prior to the completion of the transactions
contemplated, such Party shall not, directly or indirectly, through any entity,
officer, director, employee, financial advisor, representative or agent of such
Party, for a period of twelve (12) months after the termination of this
Agreement, recruit or solicit any employee of another Party or induce any
employee of another Party to terminate his or her employment with, or otherwise
terminate his or her relationship with, the other Party.
30. Tax-Free Reorganization/Pooling of Interests Accounting. Except for
other actions specifically permitted to be taken hereunder and from and after
the date of this Agreement and until the Effective Time, neither Eclipsys, MSI
Solutions nor MSI Services nor any of their respective subsidiaries or other
affiliates shall take, or fail to take, any action that would
33
34
jeopardize the treatment of either of the Mergers as a "tax-free reorganization"
under Section 368(a) of the Code or as a pooling of interests for accounting
purposes. Following the Effective Time, Eclipsys shall use its reasonable best
efforts to conduct the business of Eclipsys in a manner that would not
jeopardize the characterization of either of the Mergers as a "tax-free
reorganization" under Section 368(a) of the Code or as a pooling of interests
for accounting purposes.
31. Indemnification of MSI Directors and Officers.
31.1. Eclipsys and the Surviving Corp. agree that the
indemnification obligations set forth in MSI Solutions' Articles of
Incorporation and Bylaws, in each case as of the Effective Time, shall
survive the Mergers and shall not be amended, repealed or otherwise
modified for a period of seven (7) years after the Effective Time in
any manner that would adversely affect the rights thereunder of the
individuals who on or prior to the Effective Time, were directors or
officers of MSI Solutions or MSI Services or any of their subsidiaries.
31.2. After the Effective Time, Eclipsys and the Surviving Corp.
shall, to the fullest extent permitted under applicable law, indemnify
and hold harmless, each present and former director or officer of MSI
Solutions and MSI Services and each of their subsidiaries and each such
person who served at the request of MSI Solutions or MSI Services or
any of their subsidiaries as a director, officer, trustee, partner or
fiduciary of another corporation, partnership, joint venture, trust,
pension or other employee benefit plan or enterprise (collectively, the
"Indemnified Parties") against all costs and expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and settlement amounts paid in connection with any claim,
action, suit, proceeding or investigation (whether arising before or
after the Effective Time), whether civil, administrative or
investigative, arising out of or pertaining to any action or omission
in their capacity as an officer, director or other person to whom this
Section 31 applies, in each case occurring before the Effective Time
(including the transactions contemplated by this Agreement).
31.3. In the event Eclipsys or the Surviving Corp. or any of their
respective successors or assigns (i) consolidates with or merges into
any other person and shall not be the continuing or surviving
corporation or entity in such consolidation or merger, or (ii)
transfers all or substantially all of its properties to any person,
then, and in each case, proper provision shall be made so that the
successors and assigns of Eclipsys or the Surviving Corp., as the case
may be, honor the indemnification obligations set forth in this Section
31.
31.4. The obligations of Eclipsys and the Surviving Corp. under this
Section 31 shall not be terminated or modified in such a manner as to
adversely affect any director, officer or other person to whom this
Section 31 applies without the consent of such affected director,
officer or other person (it being expressly agreed that each such
director, officer
34
35
or other person to whom this Section 31 applies shall be a
third-party beneficiary of this Section 31).
31.5. Prior to the Effective Time, MSI Solutions and MSI Services
shall purchase an extended reporting period endorsement under their
existing directors' and officers' liability insurance coverages for
respective directors and officers in a form reasonably acceptable to
Eclipsys which shall provide such directors and officers with coverage
for seven (7) years following the Effective Time of not less than the
existing coverage under, and have other terms not materially less
favorable to, the insured persons that the directors' and officers'
liability insurance coverages presently maintained by MSI Solutions and
MSI Services.
32. Employees. As of the Closing Date, Eclipsys shall provide all employees
of MSI Solutions and MSI Services and each ERISA Affiliate and their dependents,
and all qualified beneficiaries (as defined in Section 4980B(g)(1) of the Code)
entitled to continuation coverage under COBRA (the "Qualified Beneficiaries")
with coverage under one or more Eclipsys Employee Benefit Plans (the "Successor
Welfare Plans"), including, without limitation, health care coverage
("Coverage"), which meets the following requirements: (i) service with MSI
Solutions and MSI Services and each ERISA Affiliate prior to the Closing Date
shall be credited against all service and waiting period requirements under the
Successor Welfare Plans for those employees of MSI Solutions and MSI Services
and each ERISA Affiliate (and their eligible dependents) that received coverage
from MSI Solutions or MSI Services or an ERISA Affiliate as of the Closing Date,
(ii) the Successor Welfare Plans shall not provide for any pre-existing
condition exclusion for those employees of MSI Solutions and MSI Services and
each ERISA Affiliate (and their eligible dependents) and Qualified Beneficiaries
that were entitled to coverage from MSI Solutions or MSI Services or an ERISA
Affiliate as of the Closing Date, and (iii) the deductibles in effect under the
Successor Welfare Plans for the plan year in which the Closing Date occurs shall
be reduced by any amounts applied towards the deductibles under the MSI Employee
Benefit Plans for the plan year in which the Closing Date occurs provided such
individuals submit evidence to Eclipsys sufficient to demonstrate the amount so
applied against any applicable deductibles in effect under any MSI Employee
Benefit Plan. Eclipsys covenants that the service of each employee of MSI
Solutions and MSI Services and each ERISA Affiliate prior to the Closing Date
shall be credited as service under the Eclipsys 401(k) Plan for all purposes
(including without limitation, eligibility and vesting) for those employees of
MSI Solutions and MSI Services and each ERISA Affiliate that were participants
in any 40l(k) plan maintained by MSI Solutions or MSI Services or an ERISA
Affiliate as of the Closing Date.
CONDITIONS TO CONSUMMATION OF MERGER
33. Conditions to Each Party's Obligations. The respective obligations of
each Party to consummate the Mergers are subject to the satisfaction of the
following conditions:
33.1. no action, suit, investigation, inquiry or other proceeding
shall be pending or
35
36
threatened by or before any Governmental Entity in which an unfavorable
judgment, order, decree, stipulation or injunction would:
1. prevent or constrict consummation of any of the
transactions contemplated by this Agreement;
2. cause any of the transactions contemplated by this
Agreement to be rescinded following consummation; or
3. affect adversely the right of Eclipsys to own,
operate or control any of the assets and operations of the
Surviving Corp. following the Mergers, and no such judgment,
order, decree, stipulation or injunction shall be in effect;
33.2. there shall not be in effect any judgment, order, injunction
or decree of any court of competent jurisdiction enjoining the
consummation of the transactions contemplated hereby;
33.3. no statute, rule or regulation shall have been enacted,
promulgated or enforced by any court or governmental authority which
prohibits or restricts the consummation of the transactions
contemplated hereby;
33.4. the applicable waiting period under the HSR Act shall have
expired or been terminated; and
33.5. PricewaterhouseCoopers LLP ("PWC") shall have issued and
delivered to Eclipsys a letter setting forth PWC's concurrence with
management's conclusions as to the appropriateness of pooling of
interests accounting under Accounting Board Opinion No. 16 for each of
the Mergers.
34. Conditions to Obligations of Eclipsys and the Merger Sub. The
obligation of each of Eclipsys and the Merger Sub to consummate the Mergers is
subject to the satisfaction of the following additional conditions, any of which
may be waived in whole or in part by Eclipsys:
34.1. the number of Dissenting Shares be none;
34.2. the representations and warranties of MSI Solutions and MSI
Services in this Agreement which are qualified as to materiality shall
be true and correct, and those not so qualified shall be true and
correct in all material respects, in each case when made on the date
and as of the Effective Time as if made as of the Effective Time,
except for representations and warranties made as of a specific date,
which shall be true and correct in all material respects as of such
date;
34.3. MSI Solutions and MSI Services shall have performed or
complied in all material respects with their agreements and covenants
required to be performed or complied with
36
37
under this Agreement as of or prior to the Effective Time;
34.4. MSI Solutions and MSI Services shall have delivered to
Eclipsys and the Merger Sub a certificate to the effect that each of
the conditions specified in Sections 34.2 and 34.3 have been satisfied
in all respects;
34.5. Eclipsys and the Merger Sub shall have received from King &
Spalding, counsel to MSI Solutions and MSI Services, an opinion with
respect to the matters set forth in Exhibit C attached, addressed to
Eclipsys and the Merger Sub and dated as of the Closing Date;
34.6. Eclipsys and the Merger Sub shall have received the
resignations, effective as of the Effective Time, of each director and
officer of MSI Solutions and MSI Services specified by Eclipsys in
writing at least five business days prior to the Closing;
34.7. each of the MSI Affiliates shall have entered into Affiliate
Letters as described in Section 28;
34.8. Eclipsys shall have received from each of the MSI Shareholders
an investment representation letter pursuant to Section 20,
substantially in the form attached as Exhibit A; and
34.9. Eclipsys shall have received from Bean, Cote and ▇▇▇▇▇▇▇ an
executed Noncompetition and Nonsolicitation Agreement substantially in
the form attached as Exhibit D.
35. Conditions to Obligations of MSI. The obligation of MSI Solutions and
MSI Services to consummate the Mergers is subject to the satisfaction of the
following additional conditions:
35.1. the representations and warranties of Eclipsys and the Merger
Sub in this Agreement which are qualified as to materiality shall be
true and correct, and those not so qualified shall be true and correct
in all material respects, in each case when made on the date and as of
the Effective Time as if made as of the Effective Time, except for
representations and warranties made as of a specific date, which shall
be true and correct in all material respects as of such date;
35.2. each of Eclipsys and the Merger Sub shall have performed or
complied in all material respects with its agreements and covenants
required to be performed or complied with under this Agreement as of or
prior to the Effective Time;
35.3. each of Eclipsys and the Merger Sub shall have delivered to
MSI Solutions and MSI Services a certificate to the effect that each of
the conditions specified in Sections 35.1 and 35.2 have been satisfied
in all respects;
37
38
35.4. MSI Solutions and MSI Services shall have received an opinion
from their counsel, King & Spalding, to the effect that each of the
Mergers will qualify as a tax-free "reorganization" within the meaning
of Section 368(a) of the Code; and
35.5. MSI Solutions and MSI Services shall have received from ▇▇▇▇
and ▇▇▇▇ LLP, counsel to Eclipsys and the Merger Sub, an opinion with
respect to the matters set forth in Exhibit E attached, addressed to
MSI Solutions and MSI Services and dated as of the Closing Date.
INDEMNIFICATION
36. Indemnification.
36.1. Subject to the limitations set forth elsewhere in this
Agreement, each of the MSI Shareholders shall severally indemnify the
Surviving Corp., Eclipsys and their affiliates (the "Indemnified
Purchasers") in respect of, and hold the Indemnified Purchasers
harmless against, any and all debts, obligations and other liabilities
(whether absolute, accrued, contingent, fixed or otherwise, or whether
known or unknown, or due or to become due or otherwise), monetary
damages, fines, fees, penalties, interest obligations, deficiencies,
losses and expenses (including without limitation amounts paid in
settlement, interest, court costs, costs of investigators, reasonable
fees and expenses of attorneys, accountants, financial advisors and
other experts, and other expenses of litigation) ("Damages") incurred
or suffered by the Indemnified Purchasers resulting from, relating to
or constituting any breach of any representation or warranty of MSI
Solutions or MSI Services contained in this Agreement or in the
certificate delivered pursuant to Section 34.5 or the failure by MSI
Solutions or MSI Services to perform any covenant or agreement of MSI
Solutions or MSI Services contained in this Agreement.
36.2. Subject to the limitations set forth elsewhere in this
Agreement, Eclipsys shall indemnify the MSI Shareholders (the
"Indemnified Shareholders") in respect of, and hold the Indemnified
Shareholders harmless against, any Damages incurred or suffered by the
Indemnified Shareholders resulting from, relating to or constituting
any breach of any representation or warranty of Eclipsys or the Merger
Sub contained in this Agreement or in the certificate delivered
pursuant to Section 35.3 or the failure by Eclipsys, the Merger Sub or
the Surviving Corp. to perform any covenant or agreement of Eclipsys,
the Merger Sub or the Surviving Corp. contained in this Agreement.
37. Method of Asserting Claims.
37.1. The Indemnified Purchaser or Indemnified Shareholder, as the
case may be (each an "Indemnified Person"), shall give prompt written
notification to the MSI Shareholders or Eclipsys, as the case may be,
of the commencement of any action, suit or proceeding relating to a
third party claim for which indemnification pursuant to this provision
may be sought; provided, however, that no delay on the part of the
Indemnified Person in
38
39
notifying the MSI Shareholders or Eclipsys, as the case may be,
shall relieve the indemnifying parties of any liability or obligation
under this Agreement except to the extent of any damage or liability
caused by or arising out of such failure. Within 20 days after delivery
of such notification, the MSI Shareholders or Eclipsys, as the case may
be, may, upon written notice to the Indemnified Person, assume control
of the defense of such action, suit or proceeding with counsel
reasonably satisfactory to the Indemnified Person, provided the MSI
Shareholders or Eclipsys, as the case may be, acknowledge in writing to
the Indemnified Person that any damages, fines, costs or other
liabilities that may be assessed against the Indemnified Person in
connection with such action, suit or proceeding constitute Damages for
which the Indemnified Person shall be entitled to indemnification
pursuant to this provision. If the indemnifying parties do not so
assume control of such defense, then the Indemnified Person shall
control such defense. The party not controlling such defense may
participate at its own expense; provided, that if the indemnifying
parties have not assumed such control and the Indemnified Person
reasonably concludes that the indemnifying parties and the Indemnified
Person have conflicting interests or different defenses available with
respect to such action, suit or proceeding, the reasonable fees and
expenses of counsel to the Indemnified Person shall be considered
Damages for purposes of this Agreement. The party controlling such
defense shall keep the other party advised of the status of such
action, suit or proceeding and the defense and in good faith shall
consider recommendations made by the other party. Neither the
indemnifying parties nor the Indemnified Person shall agree to any
settlement of such action, suit or proceeding without the prior written
consent of the other parties, which shall not be unreasonably withheld.
37.2. In the event that an Indemnified Shareholder does claim a
right to payment pursuant to this Agreement, such Indemnified
Shareholder shall send written notice of such claim to Eclipsys. Such
notice shall specify the basis for such claim. As promptly as possible
after the Indemnified Shareholder has given such notice, such
Indemnified Shareholder and Eclipsys shall establish the merits and
amount of such claim (by mutual agreement, litigation, arbitration,
mediation or otherwise) and, within five (5) business days of the final
determination of the merits and amount of such claim, Eclipsys shall
deliver to the Indemnified Shareholder an amount of cash in immediately
available funds, or at the sole option of the Indemnified Shareholder,
an amount of Eclipsys Stock, valued as of the Closing Date, in either
case, in an amount sufficient to satisfy and discharge in full such
claim as determined under this Agreement.
37.3. In the event that an Indemnified Purchaser does claim a right
to payment pursuant to this Agreement, such Indemnified Purchaser shall
send written notice of such claim to the MSI Shareholders. Such notice
shall specify the basis for such claim. As promptly as possible after
the Indemnified Purchaser has given such notice, such Indemnified
Purchaser and the MSI Shareholders shall establish the merits and
amount of such claim (by mutual agreement, litigation, arbitration,
mediation or otherwise) and, within five (5) business days of the final
determination of the merits and amount of the claim, the MSI
Shareholders shall deliver to the Indemnified Purchaser an amount of
Eclipsys Stock,
39
40
valued as of the Closing Date, in an amount sufficient to satisfy and
discharge in full such claim as determined under this Agreement.
38. Survival. No claim for indemnification under this Agreement may be
asserted by an Indemnified Purchaser or Indemnified Shareholder after the end of
the claims period (the "Claims Period") which shall be one (1) year following
the Closing Date.
39. Limitations.
39.1. The aggregate liability of MSI Shareholders for Damages under
the indemnification provisions of this Agreement:
1. shall not exceed in the aggregate $6,000,000, and
2. shall be unrecoverable until such aggregate Damages
exceed $600,000.
39.2. Subject to the provisions of Section 39.4 hereof, each MSI
Shareholder's indemnification obligations hereunder shall be several in
accordance with the percentage interest set forth opposite such MSI
Shareholder's name on Exhibit F hereto and shall not exceed the amount
set forth opposite such MSI Shareholder's name on such Exhibit F.
39.3. Subject to the provisions of Section 39.4 hereof, the
aggregate liability of Eclipsys for Damages under the indemnification
provisions of this Agreement:
1. shall not exceed in the aggregate $6,000,000; and
2. shall be unrecoverable until such aggregate Damages
exceed $600,000.
39.4. Except with respect to claims based on fraud, the rights of
the Indemnified Persons under the indemnification provisions of this
Agreement shall be the exclusive remedy of the Indemnified Purchasers
and Indemnified Shareholders with respect to claims resulting from or
relating to any misrepresentation, breach of warranty or failure to
perform any covenant or agreement of the other party contained in this
Agreement. No MSI Shareholder shall have any right of contribution
against MSI Solutions or MSI Services with respect to any breach by MSI
Solutions or MSI Services of any of its representations, warranties,
covenants or agreements.
REGISTRATION RIGHTS
40. Registration of Shares. As promptly as practicable following the
expiration of the pooling of interests period required for accounting purposes
(and in any event no later than September 30, 1999), Eclipsys shall file with
the SEC, a registration statement on Form S-3 covering the resale to the public
by MSI Shareholders of the Merger Shares (the "Stockholder Registration
Statement"). Notwithstanding the foregoing, Eclipsys shall take such actions as
are
40
41
reasonably necessary to allow it to file the Stockholder Registration Statement
from and after September 1, 1999. Eclipsys shall use its reasonable best efforts
to cause the Stockholder Registration Statement to be declared effective by the
SEC as soon as practicable. Eclipsys shall cause the Stockholder Registration
Statement to remain effective until the date 24 months after the Closing Date
(such date to be extended by the aggregate number of days in which such
registration statement is delayed or suspended pursuant to Section 41.1 below)
or such earlier time as all of the Merger Shares covered by the Stockholder
Registration Statement have been sold pursuant to or are eligible to be sold
under Rule 144(k) under the Securities Act.
41. Limitations on Registration Rights.
41.1. Eclipsys may, by written notice to MSI Shareholders, (i) delay
the filing or effectiveness of the Stockholder Registration Statement
or (ii) suspend the Stockholder Registration Statement after
effectiveness and require that MSI Shareholders immediately cease sales
of shares pursuant to the Stockholder Registration Statement, in the
event that:
1. Eclipsys is engaged in any activity or transaction or
preparations or negotiations for any activity or transaction
that Eclipsys desires to keep confidential for business
reasons, if the Board of Directors of Eclipsys determines in
good faith, after consultation with legal counsel, that the
public disclosure requirements imposed on Eclipsys under the
Securities Act in connection with the Stockholder Registration
Statement would require disclosure of such activity,
transaction, preparations or negotiations and provides the MSI
Shareholders with a written opinion of legal counsel to that
effect; or
2. Eclipsys is ineligible for use of a Form S-3.
41.2. Eclipsys may utilize subsection 41.1.1 only once during any
twelve (12) month period and any such delay or suspension shall not
exceed 45 calendar days.
41.3. If Eclipsys delays or suspends the Stockholder Registration
Statement or requires MSI Shareholders to cease sales of shares
pursuant to Section 41.1 above, Eclipsys shall, as promptly as
practicable following the termination of the circumstance which
entitled Eclipsys to do so, take such actions as may be necessary to
file or reinstate the effectiveness of the Stockholder Registration
Statement and/or give written notice to all MSI Shareholders
authorizing them to resume sales pursuant to the Stockholder
Registration Statement. If as a result, the prospectus included in the
Stockholder Registration Statement has been amended to comply with the
requirements of the Securities Act, Eclipsys shall enclose such revised
prospectus with the notice to MSI Shareholders given pursuant to this
Section 41.3, and MSI Shareholders shall make no offers or sales of
shares pursuant to the Stockholder Registration Statement other than by
means of such revised prospectus.
41
42
42. Registration Procedures.
42.1. In connection with the filing by Eclipsys of the Stockholder
Registration Statement, Eclipsys shall furnish to each MSI Shareholder
a copy of the prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and an opinion
of counsel and independent auditor's comfort letter, both similar to
such as would be provided in an underwritten offering.
42.2. Eclipsys shall use its reasonable best efforts to register or
qualify the Merger Shares covered by the Stockholder Registration
Statement under the securities laws of such states as MSI Shareholders
shall reasonably request; provided, however, that Eclipsys shall not be
required in connection with this paragraph to qualify as a foreign
corporation or execute a general consent to service of process in any
jurisdiction.
42.3. If Eclipsys has delivered preliminary or final prospectuses to
MSI Shareholders and, after having done so, the prospectus is amended
to comply with the requirements of the Securities Act, Eclipsys shall
promptly notify MSI Shareholders and, if requested by Eclipsys, MSI
Shareholders shall immediately cease making offers or sales of shares
under the Stockholder Registration Statement and return to Eclipsys all
such preliminary or final prospectuses. Eclipsys shall promptly provide
MSI Shareholders with revised prospectuses and, following receipt of
the revised prospectuses, MSI Shareholders shall be free to resume
making offers and sales under the Stockholder Registration Statement.
42.4. Eclipsys shall pay the expenses incurred by it in complying
with its obligations under the registration rights provisions of this
Agreement, including all registration and filing fees, exchange listing
fees, fees and expenses of counsel for Eclipsys, and fees and expenses
of accountants for Eclipsys, but excluding:
1. any brokerage fees, selling commissions or
underwriting discounts incurred by MSI Shareholders in
connection with sales under the Stockholder Registration
Statement; and
2. the fees and expenses of any counsel retained by MSI
Shareholders.
43. Requirements of MSI Shareholders. Eclipsys shall not be required to
include any Merger Shares in the Stockholder Registration Statement unless:
43.1. the MSI Shareholder owning such shares furnishes to Eclipsys
in writing such information regarding such MSI Shareholder and the
proposed sale of Merger Shares by such MSI Shareholder as Eclipsys may
reasonably request in writing in connection with the Stockholder
Registration Statement or as shall be required in connection therewith
by the SEC or any state securities law authorities; and
43.2. such MSI Shareholder shall have provided to Eclipsys its
written agreement:
42
43
1. to indemnify Eclipsys and each of its directors and
officers against, and hold Eclipsys and each of its directors
and officers harmless from, any losses, claims, damages,
expenses or liabilities (including reasonable attorneys fees)
to which Eclipsys or such directors and officers may become
subject by reason of any material statement or omission in the
Stockholder Registration Statement made in reliance upon and
in conformity with a written statement by such MSI Shareholder
furnished pursuant to this Section 43.2; and
2. to report to Eclipsys sales made pursuant to the
Stockholder Registration Statement.
44. Securities Indemnification. Eclipsys agrees to indemnify and hold
harmless each MSI Shareholder whose shares are included in the Stockholder
Registration Statement against any losses, claims, damages, expenses or
liabilities to which such MSI Shareholder may become subject by reason of any
untrue statement of a material fact contained in the Stockholder Registration
Statement or any omission to state a fact required to be stated or necessary to
make the statements not misleading, except insofar as such losses, claims,
damages, expenses or liabilities arise out of or are based upon information
furnished in writing to Eclipsys by or on behalf of an MSI Shareholder for use
in the Stockholder Registration Statement. Eclipsys shall have the right to
assume the defense and settlement of any claim or suit for which Eclipsys may be
responsible for indemnification under this Section 44.
45. Assignment of Rights. An MSI Shareholder may not assign any of its
registration rights under this Agreement except in connection with the transfer
of some or all of his or her Merger Shares to a child, spouse or other member of
his or her immediate family or a trust for the benefit of any such person,
provided each such transferee agrees in a written instrument delivered to
Eclipsys to be bound by this Agreement.
46. Piggyback Registration Rights. Eclipsys shall utilize its reasonable
best efforts to add the MSI Shareholders to Eclipsys' existing registration
rights agreements which provide for "piggyback" registration rights. If Eclipsys
is unable to obtain the consents necessary to add the MSI Shareholders to the
existing registration rights agreements, then Eclipsys shall enter into separate
piggyback agreements with the MSI Shareholders on terms that are substantially
similar to, but not superior to, those in the existing registration rights
agreements.
TERMINATION
47. Termination of Agreement. The Parties may terminate this Agreement
prior to the Effective Time as provided below:
47.1. the Parties may terminate this Agreement by mutual written
consent;
47.2. Eclipsys may terminate this Agreement by giving written notice
to MSI Solutions
43
44
in the event MSI Solutions or MSI Services is in material breach of any
representation, warranty or covenant contained in this Agreement and
such breach is not remedied within 10 days of delivery of written
notice;
47.3. MSI Solutions and MSI Services may terminate this Agreement by
giving written notice to Eclipsys in the event Eclipsys or the Merger
Sub is in material breach of any representation, warranty or covenant
in this Agreement and such breach is not remedied within 10 days of
delivery of written notice;
47.4. Eclipsys may terminate this Agreement by giving written notice
to MSI Solutions and MSI Services if the Closing shall not have
occurred on or before the 90th day following the date of this Agreement
by reason of the failure of any condition precedent (unless the failure
results primarily from a breach by Eclipsys or the Merger Sub of any
representation, warranty or covenant in this Agreement);
47.5. MSI Solutions and MSI Services may terminate this Agreement by
giving written notice to Eclipsys if the Closing shall not have
occurred on or before the 90th day following the date of this Agreement
by reason of the failure of any condition precedent (unless the failure
results primarily from a breach by MSI Solutions or MSI Services of any
representation, warranty or covenant in this Agreement); or
47.6. MSI Solutions and MSI Services may terminate this Agreement by
giving written notice to Eclipsys in the event that the average closing
price on the NASDAQ National Market for Eclipsys Stock for any three
(3) consecutive trading days falls below $20.00 per share.
47.7. Eclipsys may terminate this Agreement by giving written notice
to MSI Solutions in the event that the average closing price on the
NASDAQ National Market for Eclipsys stock for any three (3) consecutive
trading days rises above $30.00 per share.
48. Effect of Termination. If any Party terminates this Agreement pursuant
to Section 47, all obligations of the Parties under this Agreement shall
terminate without any liability of any Party to any other Party (except for any
liability of any Party for breaches of this Agreement); provided, however, that
the confidentiality and non-solicitation provisions in this Agreement shall
survive any such termination.
MISCELLANEOUS
49. Press Releases and Announcements. No Party shall issue any press
release or public disclosure relating to the subject matter of this Agreement
without the prior written approval of the other Parties; provided, however, that
any Party may make any public disclosure it believes in good faith is required
by law or regulation (in which case the disclosing Party shall advise the other
Parties and provide them with a copy of the proposed disclosure prior to making
the disclosure).
44
45
50. No Third Party Beneficiaries. Except third-party beneficiaries created
under Section 31 from those persons to whom Section 31 applies, this Agreement
shall not confer any rights or remedies upon any person other than the Parties
and their respective successors and permitted assigns.
51. Entire Agreement. This Agreement (including the exhibits, disclosure
letters and other referenced documents) constitutes the entire agreement among
the Parties and supersedes any prior understandings, agreements, or
representations by or among the Parties, written or oral, with respect to the
subject matter of this Agreement.
52. Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named and their respective successors and
permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations under this Agreement without the prior written
approval of the other Parties; provided that (i) the Merger Sub may assign its
rights, interests and obligations under this Agreement to an affiliate of
Eclipsys and (ii) an MSI Shareholder may assign its registration rights under
this Agreement pursuant to Section 45 hereof.
53. Notices. All notices, requests, demands, claims, and other
communications under this Agreement shall be in writing. Any notice, request,
demand, claim, or other communication under this Agreement shall be deemed duly
delivered two business days after it is sent by registered or certified mail,
return receipt requested, postage prepaid, or one business day after it is sent
via a reputable nationwide overnight courier service, in each case to the
intended recipient as set forth below:
45
46
53.1. If to MSI Solutions or MSI Services: Copy to:
[c/o] MSI Solutions, Inc. King & Spalding
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
53.2. If to Bean: Copy to:
▇▇▇▇ ▇. ▇▇▇▇ King & ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
53.3. If to Cote: Copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ King & Spalding
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
53.4. If to ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ Trust: Copy to:
[c/o] ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ King & Spalding
1909 ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
53.5. If to Eclipsys or the Merger Sub: Copy to:
[c/o] Eclipsys Corporation Eclipsys Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer Attention: General Counsel
53.6. Any Party may give any notice, request, demand, claim, or
other communication under this Agreement using any other means
(including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed
to have been duly given unless and until it actually is received by the
party for whom it is intended. Any Party may change the address to
which notices, requests, demands, claims, and other communications
under this Agreement are to be delivered by giving the other Parties
notice in the manner set forth in this Section 53.
46
47
54. Amendments and Waivers. The Parties may mutually amend any provision of
this Agreement at any time prior to the Effective Time. No amendment of any
provision of this Agreement shall be valid unless the same shall be in writing
and signed by all of the Parties. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant under this Agreement,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant under this
Agreement or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
55. Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction. If the final judgment of a court of competent
jurisdiction declares that any term or provision is invalid or unenforceable,
the Parties agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope, duration, or area of
the term or provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.
56. Expenses. Each of the Parties shall bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the contemplated transactions.
57. Specific Performance. Each of the Parties acknowledges and agrees that
one or more of the other Parties would be damaged irreparably in the event any
of the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions in any action
instituted in any court of the United States or any state having jurisdiction
over the Parties and the matter as provided in this Agreement, in addition to
any other remedy to which it may be entitled, at law or in equity.
58. Governing Law and Jurisdiction. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the law of conflicts) of
the State of Delaware. Each of the Parties:
58.1. submits to the jurisdiction of any state or federal court
sitting in the State of Delaware in any action or proceeding arising
out of or relating to this Agreement,
58.2. agrees that all claims in respect of the action or proceeding
may be heard and determined in any such court, and
58.3. agrees not to bring any action or proceeding arising out of or
relating to this
47
48
Agreement in any other court. Each of the Parties waives any defense of
inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety or other security that might be
required of any other Party. Any Party may make service on another
Party by sending or delivering a copy of the process to the Party to be
served at the address and in the manner provided in this Agreement for
the giving of notices. Nothing in this Section 58, however, shall
affect the right of any Party to serve legal process in any other
manner permitted by law.
59. Construction; Definitions. The language used in this Agreement shall be
deemed to be the language chosen by the Parties to express their mutual intent,
and no rule of strict construction shall be applied against any Party. The
section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this Agreement.
Terms with initial capitalization are defined contextually or specifically for
purposes of this Agreement. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. Any reference to any
federal, state, local, or foreign statute or law shall be deemed also to refer
to all related rules and regulations, unless the context requires otherwise.
60. Knowledge. "To the knowledge of MSI" or any similar phrase contained in
this Agreement shall mean the actual knowledge, after due and appropriate
inquiry, of the MSI Executives. For purposes hereof, the "MSI Executives" shall
consist of Bean, Cote, and ▇▇▇▇▇▇▇. "To the knowledge of Eclipsys" or any
similar phrase contained in this Agreement shall mean the actual knowledge,
after due and appropriate inquiry, of the Eclipsys Executives. For purposes
hereof, the "Eclipsys Executives" shall consist of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
61. Pooling of Interests. If any provision of this Agreement (including the
exhibits, disclosure letters and other referenced documents) or the application
of any such provision to any person or circumstance shall preclude the use of
"pooling of interests" accounting treatment in connection with the Mergers, then
such provision shall be of no force and effect to the extent, and solely to the
extent, necessary to preserve such accounting treatment for each of the Mergers,
and in that event, the remainder of this Agreement shall not be affected, and in
lieu of such provision there shall be added as part of this Agreement a
provision as similar in terms as may be possible for each of the Mergers to be
treated as a pooling of interests for accounting purposes.
48
49
The Parties have executed this Agreement as of the date first above written.
ECLIPSYS CORPORATION
By:
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
ECLP MERGER CORP.
By:
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
MSI SOLUTIONS, INC.
By:
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇
Chief Executive Officer
MSI INTEGRATED SERVICES, INC.
By:
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇
Chief Executive Officer
49
50
▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
50
51
THE 1997 ▇▇▇▇▇▇▇ FAMILY TRUST
By:
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Trustee
By:
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇
Trustee
51
52
EXHIBIT A
FORM OF INVESTMENT REPRESENTATION LETTER
Eclipsys Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Agreement and Plan of Merger, dated June __,
1999 (the "Agreement"), by and among Eclipsys Corporation, a Delaware
corporation ("Eclipsys"), ECLP Merger Corp., a Delaware corporation ("Merger
Sub"), MSI Solutions, Inc., a Georgia corporation ("MSI Solutions), MSI
Integrated Services, Inc., a Georgia corporation ("MSI Services" and together
with MSI Solutions, "MSI") and the MSI Shareholders (as defined in the
Agreement), pursuant to which Merger Sub will merge into MSI Solutions and MSI
Services will merge into MSI Solutions and MSI Solutions will survive the
mergers as a wholly-owned subsidiary of Eclipsys (the "Mergers"). The
undersigned acknowledges that, upon the terms and subject to the conditions set
forth in the Agreement, in exchange for the shares of capital stock of MSI owned
by the undersigned, the undersigned is being issued the number of shares of
common stock, par value $.01 per share, of Eclipsys set forth opposite the
undersigned's signature on the last page of this letter (the "Shares").
The undersigned certifies as follows:
(a) The undersigned has been given the opportunity to ask
questions of, and receive answers from, Eclipsys and MSI concerning the Mergers
and matters pertaining to the Mergers and the investment in the Shares and has
been given the opportunity to obtain such additional information necessary to
verify the accuracy of the information that was provided in order for the
undersigned to evaluate the Mergers and the merits and risks of the Shares, to
the extent Eclipsys or MSI, as the case may be, possesses such information or
can acquire it without unreasonable efforts or expense, and has not been
furnished any material relating to the Mergers or the investment in the Shares
except as mentioned herein.
(b) the undersigned is acquiring the Shares for the undersigned's
own account, for investment purposes only, and not with a view to the resale or
distribution thereof, except pursuant to effective registrations or
qualifications relating thereto under the Securities Act of 1933, as amended
(the "Act"), and applicable state securities or blue sky laws or pursuant to an
exemption therefrom.
53
(c) The offer and sale of the Shares is intended to be exempt from
registration under the Act by virtue of the provisions of Regulation D
promulgated under the Act, and:
(i) the undersigned, either alone or with the
undersigned's purchaser representative, has such knowledge and
experience in financial and business matters that the undersigned is
capable of evaluating the merits and risks of the investment in the
Shares; and
(ii) the undersigned is either (A) a natural person and
either (x) the undersigned's individual net worth, or joint net worth
with the undersigned's spouse, will, at the time of the investment in
the Shares, exceed $1,000,000 or (y) the undersigned had an individual
income in excess of $200,000 in each of the two most recent years or
joint income with the undersigned's spouse in excess of $300,000 in
each of those years and has a reasonable expectation of reaching the
same income level in the current year, (B) a trust with total assets in
excess of $5,000,000, not formed for the specific purpose of acquiring
the Shares, whose purchase is directed by a person who, either alone or
with such person's purchaser representative, has such knowledge and
experience in financial and business matters that such person is
capable of evaluating the merits and risks of the investment in the
Shares, or (C) an entity all of the equity owners of which are as
specified in (A) or (B).
(d) The undersigned is not relying on Eclipsys with respect to
advice as to tax, business or legal or other economic considerations involved
in this investment.
(e) The undersigned will not sell, pledge, convey or otherwise
transfer the Shares without registration or qualification under the Act and
applicable state securities laws or pursuant to an exemption therefrom.
(f) The undersigned understands that the Shares have not been
registered under the Act or any state's laws in reliance upon exemptions
therefrom for non-public offerings. The undersigned also understands that,
except as provided in the Agreement, it is not contemplated that any
registration will be made under the Act.
Very truly yours,
Date: June , 1999 ----------------------------------
-- Signature
----------------------
(number of Shares) ----------------------------------
Name of Investor
Address:
-------------------------
-------------------------
54
EXHIBIT B
FORM OF AFFILIATE LETTER
June , 1999
--
Eclipsys Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
It is anticipated that the undersigned, as a shareholder of either MSI
Solutions, Inc., a Georgia corporation ("MSI Solutions"), or MSI Integrated
Services, Inc., a Georgia corporation ("MSI Services" and together with MSI
Solutions, "MSI"), or as an "affiliate", as that term is defined in Rule 12b-2
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), of
MSI, will receive certain shares (the "Shares") of common stock, par value of
$.01 per share of Eclipsys Corporation, a Delaware corporation ("Eclipsys"),
upon the consummation of the mergers (the "Mergers") of ECLP Merger Corp., a
Delaware corporation and a wholly owned subsidiary of Eclipsys ("Merger Sub"),
with and into MSI Solutions and of MSI Services with and into MSI Solutions,
whereupon MSI Solutions shall be the surviving corporation and shall continue
its corporate existence under the laws of the State of Georgia and the separate
corporate existence of Merger Sub and MSI Services shall cease, pursuant to the
Agreement and Plan of Merger, dated June __, 1999 (the "Merger Agreement"), by
and among Eclipsys, Merger Sub, MSI and the MSI Shareholders (as defined in the
Merger Agreement).
In connection with the receipt of the Shares by such shareholder in the
Mergers, the undersigned hereby represents to and agrees with Eclipsys that the
undersigned will not make any offer to sell, transfer or otherwise dispose of
any of the Shares in any transaction, public or private, except in accordance
with the applicable provisions of the Securities Act of 1933, as amended (the
"Act"), as such Act may be hereafter from time to time amended. Moreover, the
undersigned will not sell, transfer or otherwise dispose of any of the Shares,
nor in any other way reduce the undersigned's risk with respect to the Shares,
as contemplated by APB Opinion No. 16, until such time as financial results
covering at least thirty (30) days of combined operations of Eclipsys and MSI
Solutions and MSI Services have been published within the meaning of Section
201.01 of the Securities and Exchange Commission's Codification of Financial
Reporting Policies; provided, however, that the undersigned shall be permitted
to make de minimis sales prior to the publication of such combined financial
results to the extent permitted by applicable provisions of APB Opinion No. 16
and SEC Accounting Series Releases 130 and 135 of the Act.
55
The undersigned further agrees that Eclipsys shall not be required to
transfer any of the Shares unless (i) the transfer results from a sale of such
Shares pursuant to an effective registration statement under the Act, or (ii) it
shall have received an opinion of counsel, which opinion of counsel should be
reasonably satisfactory to Eclipsys, to the effect that such transfer would not
violate, or make the issuance of the Shares to the undersigned a violation of,
the provisions of the Act. The certificate(s) representing the Shares will bear
a legend to the foregoing effects.
The undersigned represents that the undersigned does not currently have
any arrangement, agreement, or understanding regarding the sale of the Shares.
Very truly yours,
--------------------------
Name:
The foregoing is accepted
and agreed to as of the
date first above written:
ECLIPSYS CORPORATION
By:
--------------------------
Name:
56
EXHIBIT C
FORM OF KING & SPALDING OPINION
(1) Each of MSI Solutions and MSI Services is a corporation incorporated,
validly existing and in good standing under the laws of the State of Georgia.
(2) Each of MSI Solutions and MSI Services has all requisite power and
authority to execute and deliver the Agreement and to perform its obligations
thereunder. The execution and delivery of the Agreement by MSI Solutions and MSI
Services and the consummation by MIS Solutions and MSI Services of the
transactions contemplated thereby have been duly and validly authorized by all
necessary corporate action on the part of MSI Solutions and MSI Services. The
Agreement constitutes the valid and binding obligation of MSI Solutions and MSI
Services, enforceable against each in accordance with its terms, except (a) as
rights to indemnity and contribution under the Agreement may be limited by
applicable federal or state securities laws or announced public policy, (b) as
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally, (c) as the enforceability thereof may be limited by
general principles of equity (regardless of whether such enforceability is
considered in an action at law or a suit in equity) including the availability
of equitable remedies, and (d) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to certain
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. Each of the MSI Shareholders has duly
executed and delivered the Agreement, and the Agreement constitutes the valid
and binding obligation of each MSI Shareholder, enforceable against such MSI
Shareholder in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
(3) Except as set forth in the Agreement, the execution and delivery of the
Agreement by MSI Solutions and MSI Services and the consummation by MIS
Solutions and MSI Services of the transactions contemplated by the Agreement do
not and will not, with the passing of time or the giving of notice, violate or
conflict with, constitute a breach of or default under, result in the loss of
any material benefit under, or permit the acceleration of any obligation under
any term or provision of the Articles of Incorporation or Bylaws of MSI
Solutions or MSI Services.
57
EXHIBIT D
FORM OF NONCOMPETITION AND NONSOLICITATION AGREEMENT
THIS NONCOMPETITION AND NONSOLICITATION AGREEMENT, dated as of June __,
1999 (this "Agreement"), by and among (i) ECLIPSYS CORPORATION, a Delaware
corporation ("Eclipsys" or the "Company"); (ii) ECLP MERGER CORP., a Delaware
corporation and a wholly owned subsidiary of ECLIPSYS ("Merger Sub"); and (iii)
▇▇▇▇ ▇. ▇▇▇▇, a resident of the State of Georgia ("Bean"); ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, a
resident of the State of Georgia ("Cote"); and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, a resident of
the Commonwealth of Virginia ("▇▇▇▇▇▇▇" and together with Bean and Cote
hereinafter collectively referred to as the "Covenantors" and separately as a
"Covenantor").
W I T N E S S E T H:
WHEREAS, Eclipsys, Merger Sub, Covenantors, The 1997 ▇▇▇▇▇▇▇ Family
Trust, MSI Solutions, Inc., a Georgia corporation ("MSI Solutions"), and MSI
Integrated Services, Inc., a Georgia corporation ("MSI Services" and together
with MSI Solutions, "MSI"), have entered into that certain Agreement and Plan of
Merger, dated June __, 1999 (the "Merger Agreement"), pursuant to which Eclipsys
will acquire MSI Solutions and MSI Services in the merger transactions more
particularly described in the Merger Agreement;
WHEREAS, Covenantors are shareholders of MSI Solutions and MSI
Services, and each stands to benefit from the consummation of the transactions
contemplated under the Merger Agreement;
WHEREAS, each Covenantor acknowledges that such Covenantor is executing
this Agreement in order to materially induce Eclipsys and Merger Sub to
consummate the transactions contemplated under the Merger Agreement; and
WHEREAS, each Covenantor's execution and delivery of this Agreement is
a condition precedent to Eclipsys' and Merger Sub's obligations to consummate
the transactions contemplated under the Merger Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
promises, covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
Section 1. Definitions. The following terms shall have the meanings
set forth opposite each such term below:
(a) "Covenantor Activities" shall mean the (i) development of web
and application integration software tools used to support the development and
deployment of
58
application-to-application interfaces and to web-enable applications (the
"Software Tools"); and (ii) the provision of implementation and consulting
services to support the deployment of the Software Tools.
(b) "Proprietary Information" shall mean, collectively, any "Trade
Secrets" (as defined below) and "Confidential Information" (as defined below) of
MSI and all physical embodiments of same, as may exist from time to time. For
purposes of this Agreement, the term "Trade Secrets" means the whole or any
portion of any scientific or technical or other information, design, process,
procedure, formula, computer software product, documentation or improvement
relating to the business of MSI which (1) derives independent economic value,
actual or potential, from not being generally known to the public or other
persons who can obtain economic value from its disclosure or use; and (2) is the
subject of efforts that are reasonable under the circumstances to maintain its
secrecy or confidentiality. The term "Confidential Information" means any and
all data and information relating to the business of MSI, other than Trade
Secrets, which (1) has value to MSI; (2) is not generally known by its
competitors or the public; and (3) is treated as confidential by MSI or its
affiliates. To the fullest extent consistent with the foregoing and permitted by
law, Proprietary Information shall include, without limitation, (i) any
technical or non-technical data, design, process, procedure, formula, pattern,
compilation, program, device, method, technique, drawing, financial data,
financial plan and product plan; (ii) computer software programs including
application, operating system, data base communication and other computer
software; (iii) all modifications, enhancements and all options available with
respect thereto; (iv) source and object codes, flow charts, coding sheets,
routines, subroutines, compilers, assemblers, designs and related documentation
and manuals; (v) production or service processes, marketing techniques and
arrangements, mailing lists, purchasing information, pricing policies, quoting
procedures, financial information, customer and prospect names and requirements,
employee, customer, supplier and distributor data and other materials or
information; and (vi) results of research and development activities, including
new processes, formulae, inventions, computer related equipment or technology
and design drawings and specifications. Proprietary Information does not include
any data or information which, before being divulged by the Covenantor, has
entered the public domain, provided that the Covenantor was not responsible
directly or indirectly, for such information or data entering the public domain
without the written consent of Eclipsys.
(c) "Noncompete and Nonsolicitation Period" shall mean the period
commencing on the Closing Date (as defined in Section 2 of the Merger Agreement)
and ending on the second (2nd) anniversary of such date.
(d) "Territory" shall mean the geographic areas which are within a
quarter mile radius of each current client of the MSI business as set forth on
Exhibit A hereto and each prospective client of the MSI business.
Capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to such terms in the Merger Agreement.
2
59
Section 2. Restrictive Covenants.
2.1 Proprietary Information. Each Covenantor hereby agrees that,
during the Noncompete and Nonsolicitation Period, that such Covenantor (i) shall
hold in confidence all Proprietary Information and shall not disclose or publish
such Proprietary Information without the prior written consent of Eclipsys,
which consent shall be granted or withheld in Eclipsys' sole discretion and (ii)
shall not use any such Proprietary Information for any purpose other than in
connection with their employment with MSI Solutions without the prior written
consent of Eclipsys, which consent shall be granted or withheld in Eclipsys'
sole discretion. Restrictions in this paragraph are in addition to and not in
lieu of protections afforded to Trade Secrets and Confidential Information under
applicable law. Nothing in this Agreement is intended to or shall be interpreted
as diminishing or otherwise limiting the rights of Eclipsys under applicable law
to protect Trade Secrets or Confidential Information.
2.2 Noncompetition and Nonsolicitation.
(a) Coverage. The parties hereto acknowledge and agree that each
Covenantor is currently engaged in the Covenantor Activities throughout the
Territory. Each Covenantor acknowledges that, to adequately protect the
interests of Eclipsys in the business of MSI, it is essential that each
noncompetition covenant and nonsolicitation covenant with respect to the
business of MSI cover each of the Covenantors, all of the Covenantor Activities
and the entire Territory.
(b) Covenantor's Covenants. Each Covenantor hereby covenants and
agrees that such Covenantor shall not, in any manner (other than in connection
with their employment with MSI Solutions or as otherwise authorized in writing
by Eclipsys, which authorization shall be granted or withheld in Eclipsys's sole
discretion), during the Noncompete and Nonsolicitation Period, directly or
indirectly, on such Covenantor's own behalf or in the service of or on behalf of
any other individual or entity, either as a proprietor, employee, agent,
independent contractor, consultant, director, officer, partner or stockholder:
(i) engage in, have any equity or profit interest in
(other than acquiring a passive investment, not in excess of 5%, of
the outstanding common stock, of a public corporation whose equity
securities are traded on a national securities exchange or in the
over-the-counter market) make any loan to or for the benefit of, or
render services of any kind to any business which engages in the
Covenantor Activities in the Territory without the prior written
consent of Eclipsys, which consent shall be granted or withheld in
Eclipsys' sole discretion;
(ii) divert, solicit, attempt to solicit or accept
business that falls within the Covenantor's Activities from any (a)
current client of the MSI business as set forth on Exhibit A hereto, or
(b) prospective client of the MSI business that was actively sought as
a client of the MSI business at any time during the one (1) year period
prior to the Closing; or
3
60
(iii) employ, or seek to employ, on Covenantor's behalf or
on behalf of any other person, firm or corporation, any person who is
or was employed in the MSI business as of the Closing Date, without the
prior written consent of Eclipsys, which consent shall be granted or
withheld at Eclipsys' sole discretion.
2.3 Covenantor Standstill. Each Covenantor hereby covenants and
agrees that, during the Noncompete and Nonsolicitation Period, that such
Covenantor shall not in any manner, directly or indirectly, employ or seek to
employ on behalf of any Covenantor or on behalf of any other person, firm or
corporation, any employee of Eclipsys or any of its subsidiaries, including any
employee providing services for the MSI business, who was introduced to such
Covenantor and with whom such Covenantor or any personnel or representatives
thereof had substantive discussions in connection with the consummation of the
transactions contemplated under the Merger Agreement, without the prior written
consent of Eclipsys, which consent shall be granted or withheld at Eclipsys'
sole discretion.
2.4 Severability. If a judicial determination is made that any of
the provisions of this Section 2 constitutes an unreasonable or otherwise
unenforceable restriction against any of the parties hereto, the provisions of
this Section 2 shall be rendered void only to the extent that such judicial
determination finds such provision to be unreasonable or otherwise
unenforceable. In this regard, each of the parties hereto hereby agrees that any
judicial authority construing this Agreement shall be empowered to sever or
modify any portion of the Territory, any prohibited business activity or any
time period from the coverage of this Section 2 and to apply the provisions of
this Section 2 to the remaining portion of the Territory, the remaining business
activities or the remaining time period not so severed or modified by such
judicial authority. Moreover, notwithstanding the fact that any provision of
this Section 2 is determined not to be specifically enforceable, each of the
parties hereto shall nevertheless be entitled to recover monetary damages as a
result of any breach of any such provision. The time period during which the
prohibitions set forth in this Section 2 shall apply shall be tolled and
suspended as to each applicable party for a period equal to the aggregate
quantity of time during which such party violates such prohibitions in any
respect.
2.5 Injunctive Relief. Each Covenantor hereby agrees that any
remedy at law for any breach of the provisions contained in Sections 2.2 and 2.3
hereof shall be inadequate and that Eclipsys shall be entitled to injunctive
relief in addition to any other remedy Eclipsys might have under this Agreement.
Section 3. Miscellaneous.
3.1 Enforcement. The parties hereto further acknowledge and agree
that Covenantors are executing and delivering this Agreement in order to
materially induce Eclipsys and Merger Sub to consummate the transactions
contemplated under the Merger Agreement. Each of the Covenantors acknowledge and
agree that in the event any such Covenantor's employment with MSI Solutions
terminates for any reason whatsoever, such Covenantor will be able to earn a
livelihood without violating the covenants set forth in this Agreement.
4
61
3.2 Binding Effect. This Agreement shall inure to the benefit of
and shall be binding upon Eclipsys and its respective successors and assigns and
upon Covenantors and each of their respective successors, assigns,
representatives, executors, heirs and beneficiaries; provided, however, that
neither Eclipsys nor Covenantors shall be entitled to delegate or assign any of
their respective obligations hereunder.
3.3 Governing Law. This Agreement shall be deemed to be made in,
and in all respects shall be interpreted, construed and governed by and in
accordance with, the laws of the State of Georgia without regard to the choice
of law rules of the State of Georgia.
3.4 Headings. The section headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
3.5 Notices. All notices, requests, demands and other
communications hereunder will be in writing signed by the party making the same
and will be mailed to the parties at the addresses shown below (or at such other
addresses as will be given in writing by the parties to one another) and will be
effective and deemed given if sent by registered or certified mail addressed to
the respective parties as follows:
To Eclipsys and Merger Sub:
Eclipsys Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, General Counsel
To Bean:
▇▇▇▇ ▇. ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
King & Spalding
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
To Cote:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
5
62
with a copy to:
King & Spalding
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
To ▇▇▇▇▇▇▇:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
King & Spalding
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
3.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument, and it shall not be
necessary in making proof of this Agreement or the terms hereof to produce or
account for more than one of such counterparts.
3.7 Jurisdiction and Forum. By execution and delivery of this
Agreement, each of the parties hereto hereby agrees that the appropriate forum
and venue for any disputes between any of the parties hereto arising out of this
Agreement shall be any state or federal court in the State of Georgia and each
of the parties hereto hereby submits to the personal jurisdiction of any such
court. The foregoing shall not limit the rights of any party to obtain execution
of judgment in any other jurisdiction.
3.8 Entire Agreement. This Agreement is intended by the parties
hereto to be the final expression of their agreement with respect to the subject
matter hereof and is the complete and exclusive statement of the terms thereof
notwithstanding any representations, statements or agreements to the contrary
heretofore made. This Agreement may be modified only by a written instrument
signed by each of the parties hereto.
3.9 No Waiver. No failure or delay on the part of any party hereto
in the exercise of any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right preclude any other or
further exercise thereof or of any other right. All rights and remedies under
this Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
6
63
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ECLIPSYS CORPORATION
By:
-----------------------------
Title:
--------------------------
ECLP MERGER CORP.
By:
-----------------------------
Title:
--------------------------
▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
7
64
EXHIBIT E
FORM OF ▇▇▇▇ AND ▇▇▇▇ LLP OPINION
(1) Each of Eclipsys and Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
(2) Each of Eclipsys and Merger Sub has all requisite power and authority
to execute and deliver the Agreement and to perform its obligations thereunder.
The execution and delivery by Eclipsys and Merger Sub of the Agreement and the
consummation by Eclipsys and Merger Sub of the transactions contemplated thereby
have been duly and validly authorized by all necessary corporate action on the
part of Eclipsys and Merger Sub. The Agreement has been duly and validly
executed and delivered by Eclipsys and Merger Sub and constitutes the valid and
binding obligation of Eclipsys and Merger Sub, enforceable against Eclipsys and
Merger Sub in accordance with its terms, except (a) as rights to indemnity and
contribution under the Agreement may be limited by applicable federal or state
securities laws or announced public policy, (b) as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally, (c) as the
enforceability thereof may be limited by general principles of equity
(regardless of whether such enforceability is considered in an action at law or
a suit in equity) including the availability of equitable remedies, and (d) that
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to certain equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
(3) Except as set forth in the Agreement, the execution and delivery of the
Agreement by Eclipsys and Merger Sub and the consummation by Eclipsys and Merger
Sub of the transactions contemplated by the Agreement do not and will not, with
the passing of time or the giving of notice, violate or conflict with,
constitute a breach of or default under, result in the loss of any material
benefit under, or permit the acceleration of any obligation under any term or
provision of the Certificate of Incorporation or Bylaws of Eclipsys or Merger
Sub.
(4) The shares of Eclipsys Stock to be issued in connection with the
Mergers have been duly authorized for issuance and, when issued in accordance
with the terms of the Agreement, will be validly issued, fully paid and
nonassessable.
65
\ EXHIBIT F
MSI SHAREHOLDERS
NAME % INTEREST MAXIMUM LIABILITY
---- ---------- -----------------
▇▇▇▇ ▇. ▇▇▇▇ 54.3% $3,258,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 24.4 1,464,000
THE 1997 ▇▇▇▇▇▇▇ FAMILY TRUST 16.3 978,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ 5.0 300,000
---- ----------
100.00% $6,000,000
====== =========