EXHIBIT 2
[EXECUTION COPY]
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ALLSCRIPTS HOLDING, INC.,
ALLSCRIPTS, INC.,
BURSAR ACQUISITION, INC.,
BURSAR ACQUISITION NO. 2, INC.,
IDX SYSTEMS CORPORATION
AND
CHANNELHEALTH INCORPORATED
DATED AS OF JULY 13, 2000
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TABLE OF CONTENTS
Section Page
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Article I THE MERGERS.....................................................................................2
1.1 The Allscripts Merger................................................................................2
1.2 The ChannelHealth Merger.............................................................................3
1.3 Closing..............................................................................................3
1.4 Effective Time.......................................................................................3
1.5 Effects of the Mergers...............................................................................4
1.6 Names of Surviving Corporations......................................................................4
1.7 Charter Documents....................................................................................4
1.8 Directors............................................................................................4
Article II EFFECT OF THE MERGERS ON THE STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES....4
2.1 Effect on Allscripts Stock...........................................................................4
2.2 Effect on ChannelHealth Common Stock.................................................................5
2.3 Exchange of Certificates.............................................................................7
2.4 Lost Certificates...................................................................................10
2.5 Withholding Rights..................................................................................10
2.6 Stockholders' Representative........................................................................11
2.7 Effect of ChannelHealth Stockholders' Approval of the ChannelHealth Merger..........................12
2.8 Further Assurances..................................................................................13
Article III EARNOUT........................................................................................13
3.1 Earnout.............................................................................................13
3.2 Registration of Earnout Shares......................................................................15
3.3 Registration Procedures.............................................................................15
3.4 Requirements of ChannelHealth Stockholders..........................................................17
3.5 Indemnification and Contribution....................................................................17
3.6 Registrations on behalf of Other Holders............................................................20
3.7 Assignment of Rights................................................................................20
3.8 Blackouts...........................................................................................20
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Section Page
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Article IV RETENTION OF ASSETS............................................................................20
4.1 Assets Retained by IDX..............................................................................20
Article V ACCRUED LIABILITIES ADJUSTMENT.................................................................21
5.1 Adjustment to ChannelHealth Cash Reserves...........................................................21
5.2 Termination of Agreement............................................................................23
5.3 Procedure Upon Termination..........................................................................23
5.4 Effect of Termination...............................................................................23
ARTICLE VI-A 23
REPRESENTATIONS AND WARRANTIES OF IDX....................................................................................23
6A.1 Organization and Good Standing......................................................................23
6A.2 Authorization of Agreement..........................................................................23
6A.3 Conflicts; Consents of Third Parties................................................................24
6A.4 Financial Advisors..................................................................................24
6A.5 ChannelHealth Capitalization........................................................................25
6A.6 Ownership and Transfer of Shares....................................................................25
6A.7 Related Party Transactions..........................................................................25
6A.8 Material Contracts..................................................................................25
6A.9 Opinion of Financial Advisor........................................................................25
Article VI REPRESENTATIONS AND WARRANTIES OF CHANNELHEALTH................................................26
6.1 Organization and Good Standing......................................................................26
6.2 Authorization of Agreement..........................................................................26
6.3 Capitalization......................................................................................26
6.4 No Subsidiaries.....................................................................................27
6.5 Corporate Records...................................................................................27
6.6 Conflicts; Consents of Third Parties................................................................27
6.7 Financial Statements................................................................................28
6.8 No Undisclosed Liabilities..........................................................................28
6.9 Absence of Certain Developments.....................................................................28
6.10 Taxes...............................................................................................30
6.11 Real Property.......................................................................................32
6.12 Tangible Personal Property..........................................................................32
6.13 Intangible Property.................................................................................33
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Section Page
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6.14 Material Contracts..................................................................................34
6.15 Employee Benefits...................................................................................34
6.16 Labor...............................................................................................37
6.17 Litigation..........................................................................................37
6.18 Compliance with Laws; Permits.......................................................................38
6.19 Environmental Matters...............................................................................38
6.20 Insurance...........................................................................................39
6.21 Inventories; Receivables; Payables..................................................................39
6.22 Related Party Transactions..........................................................................39
6.23 Customers and Suppliers.............................................................................39
6.24 Banks...............................................................................................40
6.25 Registration Statement; Proxy Statement/Prospectus..................................................40
6.26 No Misrepresentation................................................................................40
6.27 Financial Advisors..................................................................................41
Article VII REPRESENTATIONS AND WARRANTIES OF PARENT AND ALLSCRIPTS........................................41
7.1 Organization and Good Standing......................................................................41
7.2 Authorization of Agreement..........................................................................41
7.3 Conflicts; Consents of Third Parties................................................................41
7.4 Shares..............................................................................................42
7.5 Capitalization......................................................................................42
7.6 Options and Warrants; Registration Rights...........................................................43
7.7 Allscripts SEC Filings..............................................................................43
7.8 Litigation..........................................................................................43
7.9 Financial Advisors..................................................................................44
7.10 Absence of Material Adverse Change..................................................................44
7.11 No Undisclosed Liabilities..........................................................................44
7.12 Compliance with Laws; Permits.......................................................................44
7.13 Registration Statement; Proxy Statement/Prospectus..................................................44
7.14 Operation of SubA and SubB..........................................................................45
7.15 Opinion of Financial Advisor........................................................................45
7.16 No Misrepresentation................................................................................45
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Section Page
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Article VIII COVENANTS......................................................................................45
8.1 Access to Information...............................................................................45
8.2 Conduct of Business Pending the Closing.............................................................46
8.3 Consents............................................................................................49
8.4 Filings with Governmental Bodies....................................................................50
8.5 Other Actions.......................................................................................50
8.6 No Solicitation.....................................................................................50
8.7 Preservation of Records.............................................................................51
8.8 Publicity...........................................................................................51
8.9 Repayment of Loans..................................................................................51
8.10 Use of Names........................................................................................51
8.11 Stock Options.......................................................................................52
8.12 Employees and Employee Benefit Obligations..........................................................52
8.13 Listing of Parent Shares and Earnout Shares.........................................................53
8.14 Allscripts Special Meeting..........................................................................53
8.15 ChannelHealth Special Meeting.......................................................................53
8.16 Blue Sky Approvals..................................................................................54
8.17 Indemnification of Officers and Directors...........................................................54
8.18 Proxy Statement/Prospectus; Registration Statement..................................................55
8.19 Rule 144............................................................................................55
8.20 Tax Covenant........................................................................................56
8.21 Stock Rights and Restrictions Agreement.............................................................56
Article IX CONDITIONS TO CLOSING..........................................................................56
9.1 Conditions Precedent to Obligations of Parent and Allscripts........................................56
9.2 Conditions Precedent to Obligations of IDX and ChannelHealth........................................58
Article X DOCUMENTS TO BE DELIVERED......................................................................59
10.1 Documents to be Delivered by IDX and ChannelHealth..................................................59
10.2 Documents to be Delivered by Allscripts.............................................................60
Article XI INDEMNIFICATION................................................................................60
11.1 Non-Tax Indemnification.............................................................................60
11.2 Non-Tax Indemnification Procedures..................................................................62
11.3 Tax Matters.........................................................................................64
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Section Page
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11.4 Employee Benefits and Labor Indemnity...............................................................68
11.5 Tax Treatment of Indemnity Payments.................................................................68
11.6 Limitations.........................................................................................68
11.7 Acknowledgement by Allscripts.......................................................................69
Article XII MISCELLANEOUS..................................................................................70
12.1 Certain Definitions.................................................................................70
12.2 Survival of Representations and Warranties..........................................................77
12.3 Expenses............................................................................................78
12.4 Specific Performance................................................................................78
12.5 Further Assurances..................................................................................78
12.6 Submission to Jurisdiction; Consent to Service of Process...........................................78
12.7 Entire Agreement; Amendments and Waivers............................................................79
12.8 Governing Law.......................................................................................79
12.9 Table of Contents and Headings......................................................................79
12.10 No Third Party Beneficiaries........................................................................79
12.11 Notices.............................................................................................79
12.12 Severability........................................................................................81
12.13 Binding Effect; Assignment..........................................................................81
12.14 Counterpart Execution...............................................................................81
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SCHEDULES AND EXHIBITS
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SCHEDULES
IDX SCHEDULES:
Schedule 6A.3 - Conflicts
Schedule 6A.5 - Capitalization
Schedule 6A.7 - Related Party Transactions
Schedule 6A.8 - Material Contracts
CHANNELHEALTH SCHEDULES:
Schedule 3.1(b)(ii) - Qualifying Sales
Schedule 4.1 - Retained Assets
Schedule 6.3(b) - Capitalization
Schedule 6.6(a) - Conflicts
Schedule 6.8 - Assumed Liabilities
Schedule 6.9 - Certain Developments
Schedule 6.10 - Tax Returns
Schedule 6.10(o) - Tax Incentives
Schedule 6.11 - Real Property
Schedule 6.12(a) - Personal Property Leases
Schedule 6.13 - Intangible Property
Schedule 6.14 - Material Contracts
Schedule 6.15(a) - Plans
Schedule 6.15(c) - Qualified Plan Exceptions
Schedule 6.16(a) - Labor Agreements
Schedule 6.16(b) - Labor Organizations
Schedule 6.17 - Litigation
Schedule 6.19 - Environmental Matters
Schedule 6.20 - Insurance Policies
Schedule 6.22 - Related Party Transactions
Schedule 6.23 - Customers and Suppliers
Schedule 6.24 - Banks
Schedule 7.3 - Conflicts
Schedule 7.6 - Registration Rights
Schedule 8.10 - Names
Schedule 8.12(a) - Management Employees
Schedule 8.12(b) - Operational Employees
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EXHIBITS
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Exhibit A-1 - Voting Agreement and Irrevocable Proxy of IDX
Exhibit A-2 - Voting Agreement and Irrevocable Proxy of Pequot
Exhibit B-1 - Voting Agreement and Irrevocable Proxy of Morgan Stanley Venture Partners III, L.P. and Morgan
Stanley Venture Investors III, L.P.
Exhibit B-2 - Voting Agreement and Irrevocable Proxy of Liberty Partners Holdings 6, LLC
Exhibit C - ChannelHealth/IDX Asset Purchase Agreement
Exhibit D - Strategic Alliance Agreement
Exhibit E - Stock Rights and Restrictions Agreement
Exhibit F - Cross-License Agreement
Exhibit G - Terms of Transition Services Agreement
Exhibit H - Lease Agreement
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AGREEMENT AND PLAN OF MERGER, dated as of July 13, 2000
("this Agreement"), among ALLSCRIPTS HOLDING, INC., a Delaware corporation
("Parent"), ALLSCRIPTS, INC., a Delaware corporation ("Allscripts"), BURSAR
ACQUISITION, INC., a Delaware corporation ("SubA"), BURSAR ACQUISITION NO. 2,
INC., a Delaware corporation ("SubB"), IDX SYSTEMS CORPORATION, a Vermont
corporation ("IDX") and CHANNELHEALTH INCORPORATED, a Delaware corporation
("ChannelHealth").
WHEREAS, (i) Parent is a newly formed corporation organized
and existing under the laws of the State of Delaware, the issued and outstanding
capital stock of which is owned by Allscripts; (ii) Allscripts is a corporation
organized and existing under the laws of the State of Delaware; (iii) IDX is a
corporation organized and existing under the laws of the State of Vermont and
(iv) ChannelHealth is a corporation organized and existing under the laws of the
State of Delaware, 88.49% of the issued and outstanding capital stock of which
is owned by IDX as of the date of this Agreement;
WHEREAS, Allscripts has caused Parent to form SubA and
SubB, each a wholly owned subsidiary of Parent, and all the outstanding capital
stock of each of SubA and SubB is owned by Parent;
WHEREAS, the Board of Directors of each of Allscripts and
ChannelHealth deem it advisable and in the best interests of their stockholders
that each of Allscripts and ChannelHealth become subsidiaries of Parent pursuant
to the Mergers (as defined in Section 1.2) as provided for in this Agreement;
WHEREAS, simultaneously with the execution and delivery of
this Agreement and as a condition and inducement to Parent and Allscripts
entering into this Agreement, Allscripts and each of IDX and Pequot Private
Equity Fund II, L.P. ("Pequot") are entering into a separate Voting Agreement
and Irrevocable Proxy dated the date hereof (the "ChannelHealth Voting
Agreements") in the forms of Exhibit A-1 and Exhibit A-2 hereto, respectively,
pursuant to which each of IDX and Pequot will agree to vote to adopt this
Agreement and to take such certain other actions in furtherance of the
ChannelHealth Merger;
WHEREAS, simultaneously with the execution and delivery of
this Agreement and as a condition and inducement to IDX and ChannelHealth
entering into this Agreement, ChannelHealth and each of Morgan Stanley Venture
Partners III, L.P., Morgan Stanley Venture Investors III, L.P. and Liberty
Partners Holdings 6, LLC are entering into a separate Voting Agreement and
Irrevocable Proxy dated the date hereof (the "Allscripts Voting Agreements") in
the forms of Exhibit B-1 and Exhibit B-2 hereto, respectively, pursuant to which
each of Morgan Stanley Venture Partners III, L.P., Morgan Stanley Venture
Investors III, L.P. and Liberty Partners Holdings 6, LLC will agree to vote to
approve the issuance of the shares of Parent Common Stock to the stockholders of
ChannelHealth necessary to consummate the ChannelHealth Merger and to take such
certain other actions in furtherance of the Merger;
WHEREAS, simultaneously with the execution and delivery of
this Agreement, ChannelHealth and IDX are entering into an Asset Purchase
Agreement dated the date hereof (the "ChannelHealth/IDX Asset Purchase
Agreement") in the form of Exhibit C hereto;
WHEREAS, the parties desire to make certain
representations, warranties, covenants and agreements in connection with the
Mergers and also to prescribe various conditions to the Mergers;
WHEREAS, for federal income tax purposes, it is intended
that the formation of Parent and the Mergers to effectuate the contribution of
all the outstanding shares of ChannelHealth Stock (as defined herein) and
Allscripts Common Stock (as defined herein) to Parent in exchange for Parent
Common Stock constitute an exchange under Section 351 and/or a reorganization
within the meaning of Section 368(a) of the Code; and
WHEREAS, for financial accounting purposes, it is intended
that the transactions contemplated by this Agreement will be accounted for as a
purchase transaction.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the parties hereby agree
as follows:
Article I
THE MERGERS
1.1 The Allscripts Merger.
(a) Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the Delaware General Corporation Law
(the "DGCL"), SubA shall merge with and into Allscripts (the "Allscripts
Merger") at the Effective Time (as defined in Section 1.4), and each share of
common stock, par value $0.01 per share, of Allscripts (the "Allscripts Common
Stock") not directly owned by Allscripts and issued and outstanding immediately
prior to the Effective Time shall be converted into the right to receive shares
of common stock, par value $0.01 per share, of Parent (the "Parent Common
Stock") as set forth in Section 2.1. Following the Effective Time, the separate
corporate existence of SubA shall cease and Allscripts shall be the surviving
corporation in the Allscripts Merger (the "Allscripts Surviving Corporation")
and shall become a wholly owned subsidiary of Parent. Allscripts shall succeed
to and assume all the rights and obligations of SubA in accordance with the
DGCL.
(b) In connection with the Allscripts Merger, Allscripts
shall take such actions as may be necessary to cause Parent to reserve
sufficient shares of Parent Common Stock, prior to the Allscripts Merger, to
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permit the issuance of shares of Parent Common Stock to the holders of the
Allscripts Common Stock as of the Effective Time in accordance with the terms of
this Agreement.
1.2 The ChannelHealth Merger.
(a) Upon the terms and subject to the conditions set forth
in this Agreement and in accordance with the DGCL, SubB shall merge with and
into ChannelHealth (the "ChannelHealth Merger", and together with the Allscripts
Merger, the "Mergers") at the Effective Time, and each issued and outstanding
share of common stock , $0.001 par value of ChannelHealth (the "ChannelHealth
Common Stock") and each outstanding share of Series A Convertible Preferred
Stock, $0.001 par value of ChannelHealth (the "ChannelHealth Preferred Stock"
and together with the ChannelHealth Common Stock, the "ChannelHealth Stock") not
directly owned by ChannelHealth shall be converted into the right to receive
shares of Parent Common Stock as set forth in Section 2.2. Following the
Effective Time, the separate corporate existence of SubB shall cease and
ChannelHealth shall be the surviving corporation in the ChannelHealth Merger
(the "ChannelHealth Surviving Corporation", and together with the Allscripts
Surviving Corporation, the "Surviving Corporations") and shall become a wholly
owned subsidiary of Parent. ChannelHealth shall succeed to and assume all the
rights and obligations of SubB in accordance with the DGCL.
(b) In connection with the ChannelHealth Merger, Allscripts
shall take such actions as may be necessary to cause Parent to reserve
sufficient shares of Parent Common Stock, prior to the ChannelHealth Merger, to
permit the issuance of shares of Parent Common Stock to the holders of the
ChannelHealth Stock as of the Effective Time in accordance with the terms of
this Agreement.
1.3 Closing. The closing of the Mergers (the "Closing")
will take place at 9:00 a.m. on a date to be specified by the parties (the
"Closing Date"), which shall be no later than the second business day after
satisfaction or waiver of the conditions set forth in Article IX (other than
those conditions that by their nature are to be satisfied at the Closing, but
subject to the satisfaction or waiver of those conditions), unless another time
or date is agreed to by the parties hereto. The Closing will be held at the
offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York
10153.
1.4 Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the parties
shall file a certificate of merger or other appropriate documents (in any such
case, individually, a "Certificate of Merger" with respect to one of the Mergers
and collectively with respect to both Mergers, the "Certificates of Merger")
executed in accordance with the DGCL for each Merger, and shall make all other
filings or recordings required under the DGCL as applicable. Each Merger shall
become effective at such time as is specified in the applicable Certificate of
Merger (the time at which both the Mergers become fully effective being
hereinafter referred to as the "Effective Time").
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1.5 Effects of the Mergers. The Mergers shall have the
effects set forth in Section 259 of the DGCL.
1.6 Names of Surviving Corporations. The names of the
Surviving Corporations from and after the Effective Time shall be "Allscripts"
and "ChannelHealth" respectively, until changed or amended in accordance with
applicable law.
1.7 Charter Documents. At the Effective Time (i) the
Certificate of Incorporation and Bylaws of SubA, as in effect immediately prior
to the Effective Time, shall be the Certificate of Incorporation and Bylaws,
respectively, of the Allscripts Surviving Corporation, and (ii) the Certificate
of Incorporation and Bylaws of SubB, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation and Bylaws,
respectively, of the ChannelHealth Surviving Corporation.
1.8 Directors.
(a) SubA. The directors of SubA at the Effective Time shall
be the directors of the Allscripts Surviving Corporation until the next annual
meeting of stockholders of the Allscripts Surviving Corporation (or their
earlier resignation or removal) and until their respective successors are duly
elected and qualified, as the case may be.
(b) SubB. The directors of SubB at the Effective Time shall
be the directors of the ChannelHealth Surviving Corporation until the next
annual meeting of stockholders of the ChannelHealth Surviving Corporation (or
their earlier resignation or removal) and until their respective successors are
duly elected and qualified, as the case may be.
Article II
EFFECT OF THE MERGERS ON THE STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
2.1 Effect on Allscripts Stock. At the Effective Time, by
virtue of the Allscripts Merger and without any action on the part of SubA,
Allscripts or the holders of any securities of Allscripts or SubA:
(a) Cancellation of Treasury Stock. Each share of
Allscripts Common Stock that is owned directly by Allscripts immediately prior
to the Effective Time, if any, shall automatically be cancelled and retired and
shall cease to exist, and no consideration shall be delivered in exchange
therefor.
(b) Conversion of Allscripts Common Stock. Subject to
Section 2.3(e), each share of Allscripts Common Stock (other than shares to be
cancelled in accordance with Section 2.1(a)) issued and outstanding immediately
prior to the Effective Time shall be converted into the right to receive one (1)
(the "Allscripts Exchange Ratio") fully paid and non-assessable share of Parent
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Common Stock (subject to equitable adjustment in the event of any stock split,
stock dividend, reverse stock split or similar event affecting the Parent Common
Stock or the Allscripts Common Stock between the date of this Agreement and the
Closing) (the "Allscripts Merger Consideration"). As of the Effective Time and
without any action on the part of the holders thereof, all such shares of
Allscripts Common Stock shall no longer be outstanding and shall automatically
be cancelled and retired and shall cease to exist, and each holder of a
certificate or certificates that immediately prior to the Effective Time
represented outstanding shares of Allscripts Common Stock (the "Allscripts
Certificates") shall cease to have any rights with respect thereto, except the
right to receive (i) certificates ("Parent Certificates") representing the
number of whole shares of Parent Common Stock into which such shares have been
converted, (ii) if applicable, certain dividends and other distributions in
accordance with Section 2.3(c) and (iii) if applicable, cash in lieu of
fractional shares of Parent Common Stock in accordance with Section 2.3(e),
without interest.
(c) Conversion of Common Stock of SubA. Each share of
common stock, par value $.01 per share, of SubA issued and outstanding
immediately prior to the Effective Time shall be converted into and become one
validly issued, fully paid and nonassessable share of common stock of the
Allscripts Surviving Corporation.
2.2 Effect on ChannelHealth Common Stock. As of the
Effective Time, by virtue of the ChannelHealth Merger and without any action on
the part of SubB, ChannelHealth or the holders of any securities of
ChannelHealth or SubB:
(a) Cancellation of Treasury Stock. Each share of
ChannelHealth Stock that is owned directly by ChannelHealth, if any, shall
automatically be cancelled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(b) Conversion of ChannelHealth Stock. Subject to Section
2.3(e), each share of ChannelHealth Stock issued and outstanding immediately
prior to the Effective Time (other than shares to be cancelled in accordance
with Section 2.2(a) and ChannelHealth Dissenting Shares (as defined in Section
2.2(e) below)) shall be converted into the right to receive .33730 (the
"ChannelHealth Exchange Ratio") fully paid and non-assessable shares of Parent
Common Stock (subject to equitable adjustment in the event of any stock split,
stock dividend, reverse stock split or similar event affecting the Parent Common
Stock or the Allscripts Common Stock between the date of this Agreement and the
Closing) (the "ChannelHealth Merger Consideration"). As of the Effective Time
and without any action on the part of the holders thereof, all such shares of
ChannelHealth Stock shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each holder (each, a
"ChannelHealth Stockholder") of a certificate or certificates that immediately
prior to the Effective Time represented outstanding shares of ChannelHealth
Stock (the "ChannelHealth Certificates" and together with the Allscripts
Certificates, the "Certificates") shall cease to have any rights with respect
thereto, except the right to receive (i) the applicable ChannelHealth Merger
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Consideration, (ii) if applicable, certain dividends and other distributions in
accordance with Section 2.3(c), without interest, (iii) if applicable, cash in
lieu of fractional shares of Parent Common Stock in accordance with Section
2.3(e), without interest and (iv) Earnout Shares, if applicable.
(c) Conversion of Common Stock of SubB. Each share of
common stock, par value $0.01 per share, of SubB issued and outstanding
immediately prior to the Effective Time shall be converted into and become one
validly issued, fully paid and nonassessable share of common stock of the
ChannelHealth Surviving Corporation.
(d) ChannelHealth Stock Options. As soon as practicable
following the date of this Agreement, Parent shall take such action as may be
required to effect the following provisions of this Section 2.2(d). As of the
time of Closing each option to purchase shares of ChannelHealth Common Stock (a
"ChannelHealth Option") which is then outstanding shall be assumed by Parent and
converted into an option (an "Assumed Option") to purchase the number of shares
of Parent Common Stock (rounded up to the nearest whole share) equal to (i) the
number of shares of ChannelHealth Common Stock subject to such option multiplied
by (ii) the ChannelHealth Exchange Ratio, at an exercise price per share of
Parent Common Stock (rounded down to the nearest penny) equal to (A) the former
exercise price per share of ChannelHealth Common Stock under such option
immediately prior to the Closing divided by (B) the ChannelHealth Exchange
Ratio; provided, however, that in the case of any ChannelHealth Option to which
Section 421 of the Code applies by reason of its qualification under Section 422
of the Code, the conversion formula shall be adjusted, if necessary, to comply
with Section 424(a) of the Code. Except as provided above, the Assumed Options
shall be subject to the same terms and conditions (including expiration date,
vesting and exercise provisions) as were applicable to the converted
ChannelHealth Option immediately prior to the Closing. As soon as practicable
after the Effective Time, Parent shall deliver to the holders of Assumed Options
appropriate notices setting forth such holders' rights pursuant to such Assumed
Options, as amended by this Section 2.2(d), and the agreements evidencing such
Assumed Options shall continue in effect on the same terms and conditions
(subject to the amendments provided for in this Section 2.2(d) and such notice).
Parent shall take such actions as are reasonably necessary for the assumption of
the ChannelHealth Options pursuant to this Section 2.2(d), including the
reservation, issuance and listing of shares of Parent Common Stock as is
necessary to effectuate the transactions contemplated by this Section 2.2(d).
Parent shall prepare and file with the SEC a registration statement on Form S-8
or other appropriate form with respect to the shares of Parent Common Stock
subject to the Assumed Options as soon as practicable, and in any event within
thirty (30) days after the Closing Date, and to maintain the effectiveness of
such registration statement or registration statements covering such Assumed
Options (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as any Assumed Options remain outstanding.
(e) ChannelHealth Dissenting Shares.
(i) For purposes of this Agreement, "ChannelHealth
Dissenting Shares" means shares of ChannelHealth Common Stock held as of the
Effective Time by a stockholder who has not voted such shares of ChannelHealth
Common Stock in favor of the adoption of this Agreement and the ChannelHealth
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Merger and with respect to which appraisal shall have been duly demanded and
perfected in accordance with Section 262 of the DGCL and not effectively
withdrawn or forfeited prior to the Effective Time. ChannelHealth Dissenting
Shares shall not be converted into or represent the right to receive shares of
Parent Common Stock, unless such stockholder shall have forfeited his, her or
its right to appraisal under the DGCL or properly withdrawn his, her or its
demand for appraisal. If such stockholder has so forfeited or withdrawn his, her
or its right to appraisal of ChannelHealth Dissenting Shares, then (A) as of the
occurrence of such event, such holder's ChannelHealth Dissenting Shares shall
cease to be ChannelHealth Dissenting Shares and shall be converted into and
represent the right to receive the shares of Parent Common Stock issuable in
respect of such shares of ChannelHealth Common Stock pursuant to Section 2.2(b),
and (B) promptly following the occurrence of such event, Parent shall deliver to
the Exchange Agent a certificate representing the shares of Parent Common Stock
to which such holder is entitled pursuant to Section 2.2(b).
(ii) ChannelHealth shall give Parent (A) prompt notice of
any written demands for appraisal of any shares of ChannelHealth Common Stock,
withdrawals of such demands, and any other instruments that relate to such
demands received by ChannelHealth and (B) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
DGCL. ChannelHealth shall not, except with the prior written consent of Parent,
make any payment with respect to any demands for appraisal of shares of
ChannelHealth Common Stock or offer to settle or settle any such demands.
2.3 Exchange of Certificates.
(a) Exchange Agent. Prior to the Effective Time, Parent,
Allscripts and ChannelHealth shall enter into an agreement with such bank or
trust company as may be designated by Allscripts and ChannelHealth to act as
exchange agent for the purpose of exchanging Certificates for the applicable
Merger Consideration (the "Exchange Agent"). At or prior to the Effective Time,
Parent shall deposit with the Exchange Agent, in trust for the benefit of the
holders of shares of Allscripts Common Stock and ChannelHealth Stock, for
exchange in accordance with this Article II through the Exchange Agent, Parent
Certificates representing the number of whole shares of Parent Common Stock
issuable pursuant to Section 2.1 in exchange for outstanding shares of
Allscripts Common Stock and issuable pursuant to Section 2.2 in exchange for
outstanding shares of ChannelHealth Stock. Parent Certificates deposited with
the Exchange Agent shall hereinafter be referred to as the "Exchange Fund".
Parent shall make available to the Exchange Agent, from time to time as required
after the Effective Time, cash necessary to pay dividends and distributions in
accordance with Section 2.3(c) and to make payments in lieu of any fractional
shares in accordance with Section 2.3(e).
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, Parent shall cause the Exchange Agent to mail to each
holder of record of a Certificate whose shares were converted into the
Allscripts Merger Consideration pursuant to Section 2.1, or the ChannelHealth
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Merger Consideration pursuant to Section 2.2 (collectively, the "Merger
Consideration"), (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in
such form and have such other provisions as Allscripts and ChannelHealth may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the applicable Merger Consideration. Upon
surrender of a Certificate for cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Exchange Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor a Parent Certificate
representing that number of whole shares of Parent Common Stock which such
holder has the right to receive pursuant to the provisions of this Article II,
certain dividends or other distributions, if any, in accordance with Section
2.3(c) and cash in lieu of any fractional share in accordance with Section
2.3(e), and the Certificate so surrendered shall forthwith be cancelled. In the
event of a transfer of ownership of ChannelHealth Stock that is not registered
in the transfer records of ChannelHealth, or of Allscripts Common Stock that is
not registered in the transfer records of Allscripts, a Parent Certificate
representing the proper number of shares of Parent Common Stock may be issued to
a person other than the person in whose name the Certificate so surrendered is
registered if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such issuance shall pay any
transfer or other non-income taxes required by reason of the issuance of shares
of Parent Common Stock to a person other than the registered holder of such
Certificate or establish to the satisfaction of Parent that such tax has been
paid or is not applicable. Until surrendered as contemplated by this Section
2.3, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the applicable Merger
Consideration that the holder thereof has the right to receive pursuant to the
provisions of this Article II, if applicable, certain dividends or other
distributions in accordance with Section 2.3(c) and, if applicable, cash in lieu
of any fractional share in accordance with Section 2.3(e). No interest will be
paid or will accrue on any cash payable to holders of Certificates pursuant to
the provisions of this Article II.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to Parent Common Stock with a
record date on or after the Closing Date shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Parent Common Stock
represented thereby, and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to Section 2.3(e), and all such dividends,
other distributions and cash in lieu of fractional shares of Parent Common Stock
shall be paid by Parent to the Exchange Agent and shall be included in the
Exchange Fund, in each case until the surrender of such Certificate in
accordance with this Article II. Subject to the effect of applicable escheat or
similar laws, following surrender of any such Certificate there shall be paid to
the holder of the Parent Certificate representing whole shares of Parent Common
Stock issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of dividends or other distributions with a record date on
or after the Closing Date theretofore paid with respect to such whole shares of
Parent Common Stock and the amount of any cash payable in lieu of a fractional
share of Parent Common Stock to which such holder is entitled pursuant to
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Section 2.3(e) and (ii) at the appropriate payment date, the amount of dividends
or other distributions with a record date on or after the Closing Date but prior
to such surrender and with a payment date subsequent to such surrender payable
with respect to such whole shares of Parent Common Stock. Parent shall make
available to the Exchange Agent cash for these purposes.
(d) No Further Ownership Rights in Allscripts Common Stock
or ChannelHealth Stock. All shares of Parent Common Stock issued, and all cash
paid, upon the surrender for exchange of Certificates in accordance with the
terms of this Article II shall be deemed to have been issued (and paid) in full
satisfaction of all rights pertaining to the shares of Allscripts Common Stock
or ChannelHealth Stock theretofore represented by such Certificates, subject,
however, to the applicable Surviving Corporation's obligation to pay any
dividends or make any other distributions with a record date prior to the
Closing Date that may have been authorized or made by Allscripts on such shares
of Allscripts Common Stock or by ChannelHealth on such shares of ChannelHealth
Stock that remain unpaid at the Effective Time, and there shall be no further
registration of transfers on the stock transfer books of the applicable
Surviving Corporation of the shares of Allscripts Common Stock or ChannelHealth
Stock that were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the applicable Surviving
Corporation or the Exchange Agent for any reason, they shall be cancelled and
exchanged as provided in this Article II, except as otherwise provided by law.
(e) No Fractional Shares.
(i) No Parent Certificates or scrip representing fractional
shares of Parent Common Stock shall be issued upon the surrender for exchange of
Certificates, no dividend or distribution of Parent shall relate to such
fractional share interests and such fractional share interests will not entitle
the owner thereof to vote or to any rights of a stockholder of Parent.
(ii) The Surviving Corporations shall pay each former
holder of Allscripts Common Stock or ChannelHealth Stock, as applicable, an
amount in cash equal to the product obtained by multiplying (A) the fractional
share interest to which such former holder (after taking into account all shares
of Allscripts Common Stock or ChannelHealth Stock held at the Effective Time by
such holder) would otherwise be entitled by (B) the closing price for a share of
Parent Common Stock as reported on the Nasdaq Stock Market, Inc. (the "Nasdaq")
(as reported in The Wall Street Journal, or, if not reported thereby, any other
authoritative source) on the first trading day following the Closing Date.
(iii) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Allscripts Common Stock and
ChannelHealth Stock with respect to any fractional share interests, the Exchange
Agent will make available such amounts to such holders of Allscripts Common
Stock and ChannelHealth Common Stock subject to and in accordance with the terms
of Section 2.3(c).
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(f) Termination of Exchange Fund. Any portion of the
Exchange Fund that remains undistributed to the holders of the Certificates for
six months after the Effective Time shall be delivered to Parent, upon demand,
and any holders of the Certificates who have not theretofore complied with this
Article II shall thereafter look only to Parent for payment of their claim for
the applicable Merger Consideration, any cash in lieu of fractional shares of
Parent Common Stock and any dividends or distributions with respect to Parent
Common Stock.
(g) No Liability. None of Parent, Allscripts, ChannelHealth
or the Exchange Agent shall be liable to any person in respect of any shares of
Parent Common Stock (or dividends or distributions with respect thereto) or cash
from the Exchange Fund in each case delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. If any Certificate
shall not have been surrendered prior to seven years after the Effective Time
(or immediately prior to such earlier date on which any Merger Consideration,
any cash payable to the holder of such Certificate pursuant to this Article II
or any dividends or distributions payable to the holder of such Certificate
would otherwise escheat to or become the property of any governmental body or
authority) any such Merger Consideration or cash, dividends or distributions in
respect of such Certificate shall, to the extent permitted by applicable law,
become the property of Parent, free and clear of all claims or interest of any
person previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall
invest any cash included in the Exchange Fund, as directed by Parent, on a daily
basis. Any interest and other income resulting from such investments shall be
paid to Parent.
2.4 Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the related Surviving Corporation, the posting by such person of a
bond in such reasonable amount as the related Surviving Corporation may direct
as indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the applicable Merger Consideration and, if applicable,
any cash in lieu of fractional shares, and unpaid dividends and distributions on
shares of Parent Common Stock deliverable in respect thereof, in each case
pursuant to this Agreement.
2.5 Withholding Rights. Each of the Surviving Corporations
and Parent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of
Allscripts Common Stock or ChannelHealth Stock such amounts as it is required to
deduct and withhold with respect to the making of such payment under the Code
and the rules and regulations promulgated thereunder, or any provision of state,
local or foreign Tax law. To the extent that amounts are so withheld by either
of the Surviving Corporations or Parent, as the case may be, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the shares of Allscripts Common Stock or ChannelHealth Stock in
respect of which such deduction and withholding was made by either of the
Surviving Corporations or Parent, as the case may be.
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2.6 Stockholders' Representative.
(a) In order to efficiently administer the transactions
contemplated hereby, including (i) the waiver of any condition to the obligation
of ChannelHealth to consummate the transactions contemplated hereby, (ii) any
adjustment in the Cash Reserves (as defined in Section 5.1(d) below) pursuant to
Article V, (iii) the ability to consent, approve and agree on behalf of the
holders of ChannelHealth Stock at the Effective Time (the "ChannelHealth
Stockholders") to the calculation of the Earnout Revenue pursuant to Article III
and (iv) the orderly distribution of the ChannelHealth Merger Consideration and,
if applicable, the Earnout Shares from Parent to the ChannelHealth Stockholders,
the ChannelHealth Stockholders (other than IDX) hereby designate IDX as their
representative (in such capacity, the "Stockholders' Representative") in the
manner described in Section 2.6(d) below.
(b) The ChannelHealth Stockholders hereby authorize the
Stockholders' Representative (i) to make all decisions on behalf of the
ChannelHealth Stockholders relating to any adjustment in the Cash Reserves
pursuant to Section 4.2, (ii) to make all decisions and grant all consents and
approvals on behalf of the ChannelHealth Stockholders relating to the
calculation of the Earnout Revenue and any distribution of Earnout Shares
pursuant to Article III, (iii) to take all action necessary in connection with
the waiver of any condition to the obligation of ChannelHealth to consummate the
transactions contemplated hereby, (iv) to determine the ChannelHealth
Stockholders to whom ChannelHealth Merger Consideration shall be distributed the
amount of consideration to be so distributed, and the address of such
ChannelHealth Stockholders, (v) to give and receive all notices required to be
given under this Agreement and (vi) to take any and all additional action as is
contemplated to be taken by or on behalf of the ChannelHealth Stockholders by
the terms of this Agreement.
(c) All decisions and actions by the Stockholders'
Representative shall be binding upon all of the ChannelHealth Stockholders and
no ChannelHealth Stockholder shall have the right to object, dissent, protest or
otherwise contest the same.
(d) By virtue of the adoption of this Agreement and the
approval of the ChannelHealth Merger by the ChannelHealth Stockholders at a
meeting of the ChannelHealth Stockholders (or by written consent in lieu of a
meeting) pursuant to, and in accordance with, the applicable provisions of the
DGCL, each ChannelHealth Stockholder that is not a holder of ChannelHealth
Dissenting Shares hereby agrees that:
(i) Parent shall be able to rely conclusively on the
instructions and decisions of the Stockholders' Representative as to any actions
required or permitted to be taken by the Stockholders' Representative hereunder,
and no party hereunder shall have any cause of action against Parent or
Allscripts to the extent the Parent has relied upon the instructions or
decisions of the Stockholders' Representative;
(ii) all actions, decisions and instructions of the
Stockholders' Representative shall be conclusive and binding upon all of the
ChannelHealth Stockholders and no ChannelHealth Stockholder shall have any cause
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of action against the Stockholders' Representative for any action taken,
decision made or instruction given by the Stockholders' Representative under
this Agreement, except for fraud or willful breach of this Agreement by the
Stockholders' Representative;
(iii) the provisions of this Section 2.6 are independent
and severable, are irrevocable and coupled with an interest and shall be
enforceable notwithstanding any rights or remedies that any ChannelHealth
Stockholder may have in connection with the transactions contemplated by this
Agreement;
(iv) the provisions of this Section 2.6 shall be binding
upon the executors, heirs, legal representatives, personal representatives,
successor trustees, and successors of each ChannelHealth Stockholder, and any
references in this Agreement to a ChannelHealth Stockholder or the ChannelHealth
Stockholders shall mean and include the successors to the ChannelHealth
Stockholders' rights hereunder, whether pursuant to testamentary disposition,
the laws of descent and distribution or otherwise; and
(v) All fees and expenses incurred by the Stockholders'
Representative shall be paid by the ChannelHealth Stockholders (other than
holders of ChannelHealth Dissenting Shares) in proportion to their ownership of
ChannelHealth Stock immediately prior to the Effective Time.
2.7 Effect of ChannelHealth Stockholders' Approval of the
ChannelHealth Merger. Subject to the provisions of the last sentence of this
Section 2.7, the adoption of this Agreement and the approval of the
ChannelHealth Merger by the ChannelHealth Stockholders at a meeting of the
ChannelHealth Stockholders (or by written consent in lieu of a meeting) pursuant
to, and in accordance with, the applicable provisions of the DGCL shall be
deemed to constitute approval by each ChannelHealth Stockholder individually, to
the same extent as if such ChannelHealth Stockholder were a party to this
Agreement, of (i) all of the provisions of this Agreement that pertain to the
ChannelHealth Stockholders and that impose liabilities, obligations or burdens
on the ChannelHealth Stockholders or that limit the rights of the ChannelHealth
Stockholders (including, without limitation, with respect to the rights of the
ChannelHealth Stockholders to receive all or any portion of the ChannelHealth
Merger Consideration), (ii) the appointment of the Stockholders' Representative,
(iii) the grant to the Stockholders' Representative of all of the powers, rights
and privileges contemplated under this Agreement, (iv) the provisions of this
Agreement concerning the replacement and substitution of the Stockholders'
Representative and (v) any and all provisions of this Agreement that
contemplate, authorize or provide for any adjustment in the ChannelHealth Merger
Consideration payable to the ChannelHealth Stockholders pursuant to the
ChannelHealth Merger (including, without limitation, any provisions of this
Agreement that specify or provide a procedure for determining or implementing
any such increase, reduction or other adjustment in the ChannelHealth Merger
Consideration). Notwithstanding the foregoing, the provisions of this Section
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2.7 shall not apply to those ChannelHealth Stockholders that duly exercise the
appraisal rights afforded to dissenting stockholders pursuant to Section 262 of
the DGCL.
2.8 Further Assurances. At and after the Effective Time,
the officers and directors of the Surviving Corporations shall be authorized to
execute and deliver, in the name and on behalf of Allscripts or ChannelHealth,
any deeds, bills of sale, assignments or assurances and to take and do, in the
name and on behalf of Allscripts or ChannelHealth, any other actions and things
to vest, perfect or confirm of record or otherwise in the Surviving Corporations
any and all right, title and interest in, to and under any of the rights,
properties or assets acquired or to be acquired by the Surviving Corporations as
a result of, or in connection with, the Mergers.
Article III
EARNOUT
3.1 Earnout.
(a) In further consideration of the ChannelHealth Merger,
the Parent shall issue and deliver or cause to be issued and delivered to the
Stockholders' Representative for the benefit of the ChannelHealth Stockholders
on or before March 31, 2003 (the "Earnout Date"), if the following conditions
are satisfied:
(i) if the Gross Qualifying Revenues (as defined below) to
Parent, or any Affiliate of Parent from January 1, 2002 to December 31, 2002
(the "Earnout Revenue") is greater than or equal to $180 million but less than
or equal to $210 million, .04131 additional shares of Parent Common Stock for
each share of ChannelHealth Stock held at the Effective Time (subject to
equitable adjustment in the event of any stock split, stock dividend, reverse
stock split or similar event affecting the Parent Common Stock or the Allscripts
Common Stock between the date of this Agreement and the Earnout Date);
(ii) if Earnout Revenue is greater than $210 million,
.06278 additional shares of Parent Common Stock for each share of ChannelHealth
Stock held at the Effective Time (subject to equitable adjustment in the event
of any stock split, stock dividend, reverse stock split or similar event
affecting the Parent Common Stock or the Allscripts Common Stock between the
date of this Agreement and the Earnout Date);
(iii) if Earnout Revenue is less than $180 million, no
additional shares of Parent Common Stock; or
(iv) if, prior to December 31, 2002, Parent sells,
transfers or otherwise disposes of, or causes any of its Affiliates to sell,
transfer or otherwise dispose of all or substantially all of its business or
intellectual property related to physician-focused, internet based services that
automate clinical, financial and administrative functions involved in the
healthcare delivery process, .06278 additional shares of Parent Common Stock for
13
each share of ChannelHealth Stock held at the Effective Time (subject to
equitable adjustment in the event of any stock split, stock dividend, reverse
stock split or similar event affecting the Parent Common Stock or the Allscripts
Common Stock between the date of this Agreement and the Earnout Date).
Any shares of Parent Common Stock issued by Parent pursuant
to this Section 3.1(a) are referred to in this Agreement as the "Earnout
Shares." Parent shall issue the Parent Certificates representing the Earnout
Shares, if any, pursuant to this Section 3.1(a) in the name of each
ChannelHealth Stockholder and representing a number of shares of Parent Common
Stock equal to such ChannelHealth Stockholder's percentage interest in the
Earnout Shares, which percentage interests shall be based upon each holder's pro
rata interest in all shares of ChannelHealth Stock issued and outstanding
immediately prior to the Effective Time. No Parent Certificates or scrip
representing fractional shares of Parent Common Stock shall be issued pursuant
to this Section 3.1(a), and in lieu thereof the ChannelHealth Stockholders
entitled thereto will be paid cash for their fractional share interests pursuant
to the procedures set forth in Section 2.3(e). Notwithstanding anything herein
to the contrary, no ChannelHealth Stockholder shall be entitled to any Earnout
Shares in respect of such ChannelHealth Stockholder's ownership of ChannelHealth
Dissenting Shares.
(b) For the purposes of this Agreement, the following terms
shall have the respective meanings set forth below:
(i) "Gross Qualifying Revenues" means revenues from
Qualifying Sales (as defined below) which are recognized by Parent or any
Affiliate of Parent in accordance with GAAP, prior to any reductions of any
kind, including reductions of commissions paid to IDX.
(ii) "Qualifying Sales" are sales generated from the
service lines set forth on Schedule 3.1(b)(ii), less the commissions payable to
IDX set forth on such Schedule.
(c) Parent will report Gross Qualifying Revenues to the
Stockholders' Representative on a monthly basis during the period from January
1, 2002 through December 31, 2002 not later than 30 days after the end of the
month. After receiving a report from Parent and upon 15 business days written
notice, up to four times per year, the Stockholders' Representative shall have
the right at its expense to have reasonable access, during normal business
hours, to inspect the books and records of Parent and any Affiliate of Parent
relating to Gross Qualifying Revenues for the limited purpose of verifying
Parent's compliance with this Article III. Parent shall make such books and
records available at its offices in Libertyville, Illinois and such books and
records shall be made available in the manner which they are regularly
maintained by Parent. In addition, at the request of the Stockholders'
Representative in accordance with this Section 3.1(c), Parent shall also make
photocopies of such books and records available at IDX's primary Vermont office
for inspection by the Stockholders' Representative.
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(d) Following receipt from Parent of the final report of
Gross Qualifying Revenues as provided in Section 3.1(c), the Stockholders'
Representative shall have a period of 20 days after delivery to present in
writing to Parent any objections thereto, which objections shall be set forth in
reasonable detail. If no objections are raised within such 20-day period, the
report shall be deemed accepted and approved by the Stockholders'
Representative. However, in the event of a dispute, the parties shall follow the
procedures set forth in Sections 5.1(c) and 5.1(e).
3.2 Registration of Earnout Shares. If any Earnout Shares
are issued pursuant to Section 3.1, Parent shall file with the Commission,
within five business days following the Earnout Date, a non-exclusive "shelf"
registration statement pursuant to Rule 415 under the Securities Act covering
the resale to the public by the holders of all of the Earnout Shares on a
continuous basis (the "Earnout Registration Statement"). The Earnout
Registration Statement will be on Form S-3 unless Parent ceases to be eligible
to register the Earnout Shares for resale on such Form, in which case such
registration will be on another appropriate form in accordance herewith. Parent
shall use its best efforts to cause the Earnout Registration Statement to be
declared effective by the Commission as soon as practicable after the filing
thereof. Parent shall cause the Earnout Registration Statement to remain
effective until the second anniversary of the filing thereof or such earlier
time as all of the Earnout Shares covered by the Earnout Registration Statement
have been sold pursuant thereto.
3.3 Registration Procedures. In connection with Parent's
registration obligations hereunder, Parent will:
(a) Not less than two business days prior to the filing of
the Earnout Registration Statement, or any related prospectus or amendment or
supplement thereto (but excluding any documents incorporated or deemed to be
incorporated by reference), furnish to each ChannelHealth Stockholder and its
counsel copies of all such documents proposed to be filed, which documents
(other than those incorporated or deemed to be incorporated by reference) will
be subject to the review of each ChannelHealth Stockholder and its counsel.
Parent will in good faith seek to address any questions or issues raised by any
ChannelHealth Stockholder or its counsel as a result of such review.
(b) (i) Prepare and file with the Commission such
amendments, including post-effective amendments, as may be necessary to keep the
Earnout Registration Statement continuously effective for resale of all of the
Earnout Shares; (ii) cause the prospectus included therein to be amended or
supplemented as required; (iii) promptly provide each ChannelHealth Stockholder
and its counsel with copies of all correspondence from and to the Commission
relating to the Earnout Registration Statement; and (iv) comply in all material
respects with the provisions of the Securities Act and the Exchange Act with
respect to the disposition of all Earnout Shares covered by the Earnout
Registration Statement.
(c) Notify each ChannelHealth Stockholder and its counsel
immediately: (i) when a prospectus, prospectus supplement or post-effective
amendment to the Earnout Registration Statement is proposed to be filed; (ii) on
15
effectiveness of the Earnout Registration Statement or any post-effective
amendment; (iii) of any request by the Commission, or other federal or state
governmental authority, for amendments or supplements to the Earnout
Registration Statement or prospectus or for additional information; (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Earnout Registration Statement or the initiation of any proceedings for that
purpose; (v) of the receipt by Parent of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Earnout Shares for sale in any jurisdiction, or the initiation or threatening of
any proceeding for such purpose; and (vi) of the occurrence of any event that
makes any statement made in the Earnout Registration Statement or prospectus or
any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to the Earnout
Registration Statement, prospectus or other documents so that such document will
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.
(d) Furnish to each ChannelHealth Stockholder and its
counsel without charge (i) at least one conformed copy of each Earnout
Registration Statement and amendment thereto, including financial statements and
schedules, all documents incorporated or deemed to be incorporated therein by
reference, and all exhibits to the extent requested reasonably promptly after
the filing of such documents with the Commission, and (ii) as many copies of the
prospectus or prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Persons may reasonably request; and
Parent hereby consents to the use of such prospectus and each amendment or
supplement thereto by the ChannelHealth Stockholders and any underwriters in
connection with the offering and sale of the Earnout Shares covered by such
prospectus and any amendment or supplement thereto.
(e) Use its best efforts to register or qualify the Earnout
Shares covered by the Earnout Registration Statement under the securities laws
of each jurisdiction as any ChannelHealth Stockholder may reasonably request;
provided, however that Parent will not be required in connection with this
paragraph (e) to qualify as a foreign corporation or execute a general consent
to service of process in any jurisdiction.
(f) If Parent has delivered preliminary or final
prospectuses to the ChannelHealth Stockholders and after having done so the
prospectus is amended to comply with the requirements of the Securities Act,
promptly notify each ChannelHealth Stockholder and promptly provide each
ChannelHealth Stockholder with revised or supplemented prospectuses.
(g) Pay the following expenses incurred in complying with
Sections 3.2 and 3.3: all registration and filing fees, exchange listing fees,
fees and expenses of counsel for Parent, and fees and expenses of accountants
for Parent, but excluding any brokerage fees, selling commissions or
16
underwriting discounts and legal fees incurred by each ChannelHealth Stockholder
in connection with sales under the Earnout Registration Statement.
3.4 Requirements of ChannelHealth Stockholders. Each
ChannelHealth Stockholder shall furnish to Parent in writing such information
regarding such ChannelHealth Stockholder and the proposed sale of Earnout Shares
by such ChannelHealth Stockholder as is required by law to be disclosed in the
Earnout Registration Statement.
3.5 Indemnification and Contribution.
(a) Indemnification by Parent. Parent will indemnify and
hold harmless each ChannelHealth Stockholder, its agents (including any
underwriters retained by such ChannelHealth Stockholder in connection with the
offer and sale of Earnout Shares) and any directors, officers and employees of
any such Person, each Person who controls any such Person (within the meaning of
Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and the directors, officers, agents and
employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all debts, obligations and other
liabilities, monetary damages, fines, fees, penalties, interest obligations,
deficiencies, losses, costs and expenses (including without limitation
reasonable attorneys' fee and expenses) (collectively, "Damages") arising out of
or relating to any untrue or alleged untrue statement of a material fact
contained in the Earnout Registration Statement, any prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein (in the case of any prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that such untrue
statements or omissions are based solely upon information regarding such
ChannelHealth Stockholder furnished in writing to Parent by such ChannelHealth
Stockholder expressly for use therein or by such ChannelHealth Stockholder's
failure to deliver a copy of the Earnout Registration Statement or prospectus or
amendment or supplement thereto. Parent will notify each ChannelHealth
Stockholder promptly of the institution, threat or assertion of any proceeding
of which Parent is aware in connection with the subject matter of this Section
3.5.
(b) Indemnification by the ChannelHealth Stockholders. Each
ChannelHealth Stockholder will indemnify and hold harmless Parent, the
directors, officers, agents and employees of Parent, each person who controls
Parent (within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act), and the directors, officers, agents and employees of each
such controlling Person, to the fullest extent permitted by applicable law, from
and against any and all Damages arising solely out of or relating solely to any
untrue or alleged untrue statement of a material fact contained in the Earnout
Registration Statement, any prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising
solely out of or relating solely to any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein (in the case of any prospectus or form of prospectus or supplement
thereto, in light of the circumstances under which they were made) not
misleading, to the extent, but only to the extent, that such untrue statement or
omission is contained in any information regarding such ChannelHealth
17
Stockholder so furnished in writing by such ChannelHealth Stockholder to Parent
specifically for inclusion in the Earnout Registration Statement or such
prospectus. In no event will the liability of any ChannelHealth Stockholder
hereunder be greater in amount than the net proceeds actually received by such
ChannelHealth Stockholder from the sale of Earnout Shares pursuant to the
Earnout Registration Statement. Each ChannelHealth Stockholder will notify
Parent promptly of the institution, threat or assertion of any proceeding of
which such ChannelHealth Stockholder is aware in connection with the subject
matter of this Section 3.5.
(c) Conduct of Indemnification Proceedings. A party
entitled, or seeking to assert rights, to indemnification under this Section 3.5
(an "Indemnified Party") shall give written notification to the party from whom
indemnification is sought (an "Indemnifying Party") of the commencement of any
action, suit or proceeding relating to a third-party claim for which
indemnification pursuant to this Section 3.5 may be sought or, if earlier, upon
the assertion of any such claim by a third party. Such notification shall be
given within 20 days after receipt by the Indemnified Party of notice of such
action, suit, proceeding or claim, and shall describe (to the extent known by
the Indemnified Party) the facts constituting the basis for such action, suit,
proceeding or claim and the amount of the claimed damages; provided, however,
that no delay on the part of the Indemnified Party in notifying the Indemnifying
Party shall relieve the Indemnifying Party of any liability or obligation
hereunder except to the extent the Indemnifying Party thereby is prejudiced.
Within 30 days after delivery of such notification, the Indemnifying Party may,
upon written notice thereof to the Indemnified Party, assume control of the
defense of such action, suit, proceeding or claim with counsel reasonably
satisfactory to the Indemnified Party. If the Indemnifying Party does not so
assume control of such defense, the Indemnified Party shall control such
defense. The Party not controlling such defense (the "Non-controlling Party")
may participate therein at its own expense; provided that if the Indemnifying
Party assumes control of such defense and the Indemnified Party reasonably
concludes, based on advice from counsel, that the Indemnifying Party and the
Indemnified Party have conflicting interests with respect to such action, suit,
proceeding or claim, the reasonable fees and expenses of counsel to the
Indemnified Party shall be considered "Damages" for purposes of this Agreement;
provided, however, that in no event shall the Indemnifying Party be responsible
for the fees and expenses of more than one counsel per jurisdiction for all
Indemnified Parties. The Party controlling such defense (the "Controlling
Party") shall keep the Non-controlling Party advised of the status of such
action, suit, proceeding or claim and the defense thereof and shall consider
recommendations made by the Non-controlling Party with respect thereto. The
Non-controlling Party shall furnish the Controlling Party with such information
as it may have with respect to such action, suit, proceeding or claim (including
copies of any summons, complaint or other pleading which may have been served on
such party and any written claim, demand, invoice, billing or other document
evidencing or asserting the same) and shall otherwise cooperate with and assist
the Controlling Party in the defense of such action, suit, proceeding or claim.
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The Indemnifying Party shall not agree to any settlement of, or the entry of any
judgment arising from, any such action, suit, proceeding or claim that does not
include a complete release of the Indemnified Party from all liability with
respect thereto or that imposes any liability or obligation on the Indemnified
Party without the prior written consent of the Indemnified Party, which shall
not be unreasonably withheld or delayed. The Indemnified Party shall not agree
to any settlement of, or the entry of any judgment arising from, any such
action, suit, proceeding or claim without the prior written consent of the
Indemnifying Party.
(d) Contribution. If a claim for indemnification under
Section 3.5(a) or 3.5(b) is unavailable to an Indemnified Party because of a
failure or refusal of a governmental authority to enforce such indemnification
in accordance with its terms (by reason of public policy or otherwise), then
each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any losses shall be deemed to include any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any
proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section 3.5 was available
to such party in accordance with its terms.
The Parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 3.5(d) were determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 3.5(d), no
ChannelHealth Stockholder shall be required to contribute any amount in excess
of the amount by which the net proceeds actually received by such ChannelHealth
Stockholder from the sale of Earnout Shares pursuant to the Earnout Registration
Statement exceeds the amount of any damages that such ChannelHealth Stockholder
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The indemnity and contribution agreements contained in
this Section 3.5 are in addition to any liability that the Indemnifying Parties
may have to the Indemnified Parties.
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3.6 Registrations on behalf of Other Holders. Parent may,
at its election, include securities of other holders of Parent's securities in
the Earnout Registration Statement.
3.7 Assignment of Rights. No ChannelHealth Stockholder may
assign any of its rights under Section 3.2 through 3.7 except in connection with
the transfer of some or all of its Earnout Shares to a child or spouse, or trust
or other entity for their benefit; provided, however, each such transferee
agrees in a written instrument delivered to Parent to be bound by the provisions
of Section 3.2 through 3.7. Any such permitted transferee shall be deemed to be
a "ChannelHealth Stockholder" for purposes of Section 3.2 through 3.7
3.8 Blackouts. Anything in this Agreement to the contrary
notwithstanding, it is understood and agreed that Parent shall not be required
to keep any Earnout Registration Statement effective or useable for offers and
sales of the Earnout Shares, file a post effective amendment to an Earnout
Registration Statement or any prospectus supplement or to supplement or amend
any Earnout Registration Statement, if Parent is then involved in discussions
concerning, or otherwise engaged in, any material financing, offering or
investment, acquisition or divestiture transaction or other material business
purpose if Parent determines in good faith that the making of such a filing,
supplement or amendment at such time would interfere with such transaction or
purpose. Parent shall promptly give the holders of Earnout Shares written notice
of such postponement containing a general statement of the reasons for such
postponement and an approximation of the anticipated delay. Upon receipt by a
holder of Earnout Shares of notice of an event of the kind described in this
Section 3.8, such holder shall forthwith discontinue such holder's disposition
of Earnout Shares until such holder's receipt of notice from Parent that such
disposition may continue and of any supplemented or amended prospectus indicated
in such notice. Parent shall use its reasonable efforts to permit sales of
Earnout Shares on such shelf registration statement for at least 180 days during
any 360-day period.
Article IV
RETENTION OF ASSETS
4.1 Assets Retained by IDX. Notwithstanding anything in
this Agreement to the contrary, it is specifically understood and agreed that
the assets of ChannelHealth identified on Schedule 4.1 hereto shall be assigned,
sold, conveyed, transferred and delivered by ChannelHealth to IDX on or before
the Closing Date as contemplated by the ChannelHealth/IDX Asset Purchase
Agreement and shall not be included in the properties or assets of ChannelHealth
acquired by Parent through the ChannelHealth Merger (the "Retained Assets").
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Article V
ACCRUED LIABILITIES ADJUSTMENT
5.1 Adjustment to ChannelHealth Cash Reserves.
(a) As soon as practicable following the Closing Date and
in any event within 60 days of the Closing Date, Parent shall cause the
ChannelHealth Surviving Corporation to prepare and deliver to Parent and the
Stockholders' Representative a balance sheet of ChannelHealth as at the close of
business on the Closing Date (the "Closing Date Balance Sheet"). The Closing
Date Balance Sheet shall be audited and certified by Ernst & Young LLP,
ChannelHealth's regular independent certified public accountants
("ChannelHealth's Accountants"), shall be based upon the books and records of
ChannelHealth, shall be prepared in accordance with GAAP applied on a basis
consistent with that of the preceding fiscal year, and shall present fairly the
financial position of ChannelHealth as at the Closing Date. All accruals as at
the Closing Date which, in accordance with GAAP applied on a basis consistent
with ChannelHealth's practice of the preceding fiscal year, should be reflected
on a balance sheet, shall be reflected on the Closing Date Balance Sheet,
including, without limitation, with respect to such items as employee bonuses,
profit-sharing plan contributions and promotional expenses. Allscripts's regular
independent public accountants, PricewaterhouseCoopers LLP ("Allscripts's
Accountants") and the Stockholders' Representative's regular independent public
accountants, Ernst & Young LLP (the "Stockholders' Representative's
Accountants"), shall each have the opportunity to observe the taking of
inventories in connection with the preparation of the Closing Date Balance
Sheet, to consult with and to examine the work papers, schedules and other
documents prepared or reviewed by ChannelHealth's Accountants in connection with
the preparation of their report and of the Accrued Liabilities Certificate
referred to in Section 5.1(b).
(b) "Accrued Liabilities" shall be the accounts payable,
other current liabilities and accrued liabilities of ChannelHealth as reflected
on the Closing Date Balance Sheet; provided, however, the Closing Date Balance
Sheet shall not include accrued liabilities relating to Taxes for which IDX is
indemnifying Allscripts pursuant to Article XI.
The calculation of Accrued Liabilities shall be made by
ChannelHealth's Accountants, who shall render a certificate (the "Accrued
Liabilities Certificate") showing such calculation and stating that such
calculation has been made in accordance with the provisions of this Article V.
The Accrued Liabilities Certificate shall be delivered to Parent and IDX as soon
as practicable following the Closing Date but in no event later than 90 days
thereafter.
(c) Each of Parent and IDX shall have a period of 20 days
after delivery of Accrued Liabilities Certificate to present in writing to
ChannelHealth's Accountants (with a copy to the other party) any objections
Parent or IDX, as the case may be, may have to any of the matters set forth
therein, which objections shall be set forth in reasonable detail. If no
objections are raised within such 20-day period, the Accrued Liabilities
21
Certificate shall be deemed accepted and approved by Parent and by IDX, and
appropriate payment shall be made as contemplated by Section 5.2(d)
If IDX shall raise any objections within such 20-day
period, ChannelHealth's Accountants and Parent's Accountants shall attempt to
resolve the matter or matters in dispute and, if resolved, such firms shall send
a joint notice to Parent and IDX stating the manner in which the dispute was
resolved, ChannelHealth's Accountants shall send to Parent and IDX a
confirmation of the original Accrued Liabilities Certificate or, if necessary, a
revised Accrued Liabilities Certificate prepared in accordance with such
resolution, and Parent's Accountants shall send a letter to Parent and IDX
confirming that such confirmed or revised Accrued Liabilities Certificate is in
accordance with such resolution, whereupon the confirmed or revised Accrued
Liabilities Certificate shall be final and binding on the parties hereto and
payment shall be made as contemplated by Section 5.2(d) within five business
days following the receipt of such documents by IDX and Allscripts.
If such dispute cannot be resolved by Parent and IDX or by
such accounting firms within 40 days after the delivery of the Accrued
Liabilities Certificate, then the specific matters in dispute shall be submitted
to Arthur Andersen LLP, or, if such firm declines to act in such capacity, such
other firm of independent public accountants mutually acceptable to Parent and
IDX, which firm shall make a final and binding determination as to such matter
or matters. Arthur Andersen LLP or such other accounting firm shall send its
written determination to Parent, IDX, ChannelHealth's Accountants and Parent's
Accountants. ChannelHealth's Accountants shall then send to Parent and IDX a
confirmation of the original Accrued Liabilities Certificate or, if necessary, a
revised Accrued Liabilities Certificate prepared in accordance with such
determination, and Parent's Accountants shall send a letter to Parent and IDX
confirming that such confirmed or revised Accrued Liabilities Certificate is in
accordance with such determination, whereupon the confirmed or revised Accrued
Liabilities Certificate shall be binding on the parties hereto and payment shall
be made as contemplated by Section 5.2(d) within five business days following
the receipt of such documents by Parent and IDX.
The parties agree to cooperate with each other and each
other's authorized representatives and with Arthur Andersen LLP or any other
accounting firm selected by Parent and IDX in order that any and all matters in
dispute shall be resolved as soon as practicable and that a final determination
of the Accrued Liabilities shall be made.
(d) If the amount of the Accrued Liabilities shall exceed
Cash Reserves (as defined below) of ChannelHealth as reflected on the Closing
Date Balance Sheet, IDX shall pay to Parent, by the delivery to Parent of a
certified or bank cashier's check in New York Clearing House funds, payable to
the order of Parent or, at Parent's option, by wire transfer of immediately
available funds to an account designated by Parent, the amount of such excess.
For purposes of this Agreement, "Cash Reserves" shall mean cash and cash
equivalents as reflected on the Closing Date Balance Sheet.
22
(e) The fees and expenses hereunder of ChannelHealth's
Accountants shall be paid by IDX, those of Parent's Accountants shall be paid by
Parent and those of Arthur Andersen LLP or any other accounting firm selected by
Parent and IDX pursuant to Section 5.1(c) above shall be paid one-half by Parent
and one-half by IDX.
5.2 Termination of Agreement. This Agreement may be
terminated prior to the Closing as follows:
(a) At the election of IDX or Allscripts on or after
December 31, 2000, if the Closing shall not have occurred by the close of
business on such date, provided that the terminating party is not in default of
any of its obligations hereunder;
(b) by mutual written consent of IDX and Allscripts; or
(c) by IDX or Allscripts if there shall be in effect a
final Order of a Governmental Body of competent jurisdiction restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby.
5.3 Procedure Upon Termination. In the event of termination
by Allscripts or IDX, or both, pursuant to Section 5.2 hereof, written notice
thereof shall forthwith be given to the other party or parties, and this
Agreement shall terminate, and the Mergers contemplated hereunder shall be
abandoned, without further action by Allscripts, IDX or any other party hereto.
If this Agreement is terminated as provided herein each party shall redeliver
all documents, work papers and other material of any other party relating to the
transactions contemplated hereby, whether so obtained before or after the
execution hereof, to the party furnishing the same.
5.4 Effect of Termination. In the event that this Agreement
is validly terminated as provided herein, then each of the parties shall be
relieved of their duties and obligations arising under this Agreement after the
date of such termination and such termination shall be without liability to any
such party; provided, however, that the obligations of the parties set forth in
Section 12.3 hereof and in the Non-Disclosure and Non-Use Agreement dated April
26, 2000 between IDX and Allscripts shall survive any such termination and shall
be enforceable hereunder; provided, further, however, that nothing in this
Section 5.4 shall relieve any party hereto of any liability for a breach of this
Agreement.
ARTICLE VI-A
REPRESENTATIONS AND WARRANTIES OF IDX
IDX hereby represents and warrants to Parent and Allscripts
that:
6A.1 Organization and Good Standing. IDX is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Vermont.
6A.2 Authorization of Agreement. IDX has full corporate
power and authority to execute and deliver this Agreement, a Strategic Alliance
Agreement substantially in the form of Exhibit D hereto, a Stock Rights and
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Restrictions Agreement substantially in the form of Exhibit E hereto, an Amended
and Restated Cross License and Software Maintenance Agreement substantially in
the form of Exhibit F hereto (the "Cross License Agreement"), a Transition
Services Agreement substantially in the form of Exhibit G hereto and a
Facilities Lease Agreement substantially in the form of Exhibit H hereto
(collectively, the "Ancillary Agreements") and each other agreement, document,
or instrument or certificate contemplated by this Agreement or to be executed by
IDX in connection with the consummation of the transactions contemplated by this
Agreement (together with this Agreement and the Ancillary Agreements, the "IDX
Documents"), and to consummate the transactions contemplated hereby and thereby.
This Agreement has been, and each of the IDX Documents will be at or prior to
the Closing, duly executed and delivered by the IDX and (assuming the due
authorization, execution and delivery by the other parties hereto and thereto)
this Agreement constitutes, and each of IDX Documents when so executed and
delivered will constitute, legal, valid and binding obligations of IDX,
enforceable against IDX in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
6A.3 Conflicts; Consents of Third Parties.
(a) Except as set forth on Schedule 6A.3 hereto, neither
the execution and delivery by IDX of this Agreement and of the IDX Documents,
nor the compliance by IDX with any of the provisions hereof or thereof will (i)
conflict with, or result in the breach of, any provision of the certificate of
incorporation or by-laws of IDX, (ii) conflict with, violate, result in the
breach of, or constitute a default under any note, bond, mortgage, indenture,
license, agreement or other obligation to which IDX is a party or by which IDX
or its properties or assets are bound or (iii) violate any statute, rule,
regulation, order or decree of any governmental body or authority by which IDX
is bound, except, in the case of clauses (ii) and (iii), for such violations,
breaches or defaults as would not, individually or in the aggregate, have a
material adverse effect on the business, properties, results of operations or
financial condition of IDX and its subsidiaries, taken as a whole.
(b) No consent, waiver, approval, Order, Permit or
authorization of, or declaration or filing with, or notification to, any Person
or Governmental Body is required on the part of IDX in connection with the
execution and delivery of this Agreement or the IDX Documents or the compliance
by IDX with any of the provisions hereof or thereof, except for compliance with
the applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 and the rules and regulations promulgated thereunder (the "HSR Act").
6A.4 Financial Advisors. Other than Credit Suisse First
Boston Corporation, the fees of which are the responsibility solely of IDX, no
Person has acted, directly or indirectly, as a broker, finder or financial
advisor for IDX in connection with the transactions contemplated by this
24
Agreement and no Person is entitled to any fee or commission or like payment in
respect thereof.
6A.5 ChannelHealth Capitalization. Except as set forth on
Schedule 6A.5 hereof, there is no existing option, warrant, call, right,
commitment or other agreement of any character to which IDX is a party requiring
the issuance, sale or transfer of any additional shares of capital stock or
other equity securities of ChannelHealth or other securities convertible into,
exchangeable for or evidencing the right to subscribe for or purchase shares of
capital stock or other equity securities of ChannelHealth. IDX is not a party to
any voting trust or other voting agreement with respect to any of the shares of
ChannelHealth Common Stock or to any agreement relating to the issuance, sale,
redemption, transfer or other disposition of the capital stock of ChannelHealth.
6A.6 Ownership and Transfer of Shares. As of the date
hereof, IDX is the record and beneficial owner of (i) 25,000,000 shares of
ChannelHealth Common Stock, free and clear of any and all Liens except Permitted
Exceptions and (ii) no shares of ChannelHealth Preferred Stock.
6A.7 Related Party Transactions. Except as set forth on
Schedule 6A.7, neither IDX nor any of its Affiliates has borrowed any moneys
from or has outstanding any indebtedness or other similar obligations to
ChannelHealth. To IDX's knowledge, except as set forth in Schedule 6A.7, neither
IDX nor any Affiliate of IDX nor any officer or employee of any of them is a
party to any Material Contract (as such term is defined in Section 6.14).
6A.8 Material Contracts. Schedule 6A.8 sets forth each
Contract to which IDX is a party or by which it is bound under which
ChannelHealth receives a direct benefit (whether by addendum to such Contract or
otherwise) (the "IDX Contracts"). There have been made available to Allscripts
true and complete copies of all of IDX Contracts. Except as set forth on
Schedule 6A.8, each of the IDX Contracts is in full force and effect and is the
legal, valid and binding obligation of IDX, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity). Except as
set forth on Schedule 6A.8, IDX is not in default in any material respect under
any IDX Contract, nor to the knowledge of IDX has there occurred any event that
but for the passage of time, the giving of notice or both would constitute such
a default; nor, to the knowledge of IDX, is any other party to any IDX Contract
in default thereunder in any material respect.
6A.9 Opinion of Financial Advisor. The financial advisor of
IDX, Credit Suisse First Boston Corporation, has delivered to IDX an opinion
dated on or about the date of this Agreement to the effect, as of such date,
that the ChannelHealth Exchange Ratio is fair to the holders of the Common Stock
of IDX from a financial point of view.
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Article VI
REPRESENTATIONS AND WARRANTIES OF CHANNELHEALTH
ChannelHealth hereby represents and warrants to Parent and
Allscripts that:
6.1 Organization and Good Standing.
ChannelHealth is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation as set forth above and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now conducted. ChannelHealth is duly qualified or authorized to do business
as a foreign corporation and is in good standing under the laws of each
jurisdiction in which it owns or leases real property and each other
jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification or authorization, except for any such
failures to be qualified or in good standing that would not reasonably be
expected to have a Material Adverse Effect.
6.2 Authorization of Agreement. ChannelHealth has full
corporate power and authority to execute and deliver this Agreement, the
Ancillary Agreements and each other agreement, document or instrument or
certificate contemplated by this Agreement or to be executed by ChannelHealth in
connection with the consummation of the transactions contemplated by this
Agreement (together with this Agreement and the Ancillary Agreements, the
"ChannelHealth Documents"), and to consummate the transactions contemplated
hereby and thereby. This Agreement has been, and each of ChannelHealth Documents
will be at or prior to the Closing, duly and validly executed and delivered by
ChannelHealth and (assuming the due authorization, execution and delivery by the
other parties hereto and thereto) this Agreement constitutes, and each of the
ChannelHealth Documents when so executed and delivered will constitute, legal,
valid and binding obligations of ChannelHealth, enforceable against
ChannelHealth in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
6.3 Capitalization.
(a) The authorized capital stock of ChannelHealth consists
of (i) 100,000,000 shares of ChannelHealth Common Stock and (ii) 3,000,000
shares of ChannelHealth Preferred Stock. As of the date hereof, there are
25,527,425 shares of Common Stock issued and outstanding, there are 2,719,429
shares of Preferred Stock issued and outstanding and no shares of ChannelHealth
Common Stock are held by ChannelHealth as treasury stock. All of the issued and
outstanding shares of ChannelHealth Stock were duly authorized for issuance and
are validly issued, fully paid and non-assessable.
26
(b) Except as set forth on Schedule 6.3(b) hereof, there is
no existing option, warrant, call, right, commitment or other agreement of any
character to which ChannelHealth is a party requiring, and there are no
securities of ChannelHealth outstanding which upon conversion or exchange would
require, the issuance, sale or transfer of any additional shares of capital
stock or other equity securities of ChannelHealth or other securities
convertible into, exchangeable for or evidencing the right to subscribe for or
purchase shares of capital stock or other equity securities of ChannelHealth.
ChannelHealth is not a party to any voting trust or other voting agreement with
respect to any of the shares of ChannelHealth Common Stock or to any agreement
relating to the issuance, sale, redemption, transfer or other disposition of the
capital stock of ChannelHealth.
6.4 No Subsidiaries. ChannelHealth does not, directly or
indirectly, own any stock or other equity interest in any other Person.
6.5 Corporate Records.
(a) ChannelHealth has delivered to Allscripts true, correct
and complete copies of the certificate of incorporation (certified by the
Secretary of State or other appropriate official of Delaware) and by-laws
(certified by the secretary, assistant secretary or other appropriate officer)
or comparable organizational documents of ChannelHealth.
(b) The minute books of ChannelHealth previously made
available to Allscripts contain complete and accurate records of all meetings
and accurately reflect all other corporate action of the stockholders and board
of directors (including committees thereof) of ChannelHealth. The stock
certificate books and stock transfer ledgers of ChannelHealth previously made
available to Allscripts are true, correct and complete. All stock transfer Taxes
levied or payable with respect to all transfers of shares of ChannelHealth prior
to the date hereof have been paid and appropriate transfer tax stamps affixed.
6.6 Conflicts; Consents of Third Parties.
(a) Except as set forth in Schedule 6.6(a), none of the
execution and delivery by ChannelHealth of this Agreement and the ChannelHealth
Documents, the consummation of the transactions contemplated hereby or thereby,
or compliance by ChannelHealth with any of the provisions hereof or thereof will
(i) conflict with, or result in the breach of, any provision of the certificate
of incorporation or by-laws or comparable organizational documents of
ChannelHealth; (ii) conflict with, violate, result in the breach or termination
of, or constitute a default under any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which ChannelHealth is a party or
by which it or any of its properties or assets is bound; (iii) violate any
statute, rule, regulation, order or decree of any governmental body or authority
by which ChannelHealth is bound; or (iv) result in the creation of any Lien upon
the properties or assets of ChannelHealth except Permitted Exceptions and,
27
except, in the case of clauses (ii) and (iii) for such violations, breaches or
defaults as would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(b) No consent, waiver, approval, Order, Permit or
authorization of, or declaration or filing with, or notification to, any Person
or Governmental Body is required on the part of ChannelHealth in connection with
the execution and delivery of this Agreement or the ChannelHealth Documents, or
the compliance by ChannelHealth with any of the provisions hereof or thereof,
except for compliance with the applicable requirements of the HSR Act.
6.7 Financial Statements. ChannelHealth has delivered to
Allscripts copies of (i) the unaudited balance sheet of ChannelHealth as at
December 31, 1999 and the related unaudited statements of income and of cash
flows of ChannelHealth for the year then ended and (ii) the unaudited balance
sheet of ChannelHealth as at March 31, 2000 and the related statements of income
and cash flows of ChannelHealth for the three-month period then ended (such
unaudited statements are referred to herein as the "Financial Statements"). Each
of the Financial Statements is complete and correct in all material respects,
has been prepared using ChannelHealth's past practices and in accordance with
GAAP (subject to the lack of footnotes and normal year-end adjustments) and
presents fairly in all material respects the financial position, results of
operations and cash flows of ChannelHealth as at the dates and for the periods
indicated.
For the purposes hereof, the unaudited balance sheet of
ChannelHealth as at March 31, 2000 is referred to as the "Balance Sheet" and
March 31, 2000 is referred to as the "Balance Sheet Date".
6.8 No Undisclosed Liabilities. Except as set forth in
Schedule 6.8, ChannelHealth has no material indebtedness, obligations or
liabilities of any kind (whether accrued, absolute, contingent or otherwise, and
whether due or to become due) that would have been required to be reflected in,
reserved against or otherwise described on the Balance Sheet or in the notes
thereto in accordance with GAAP which was not fully reflected in, adequately
reserved against or otherwise described in the Balance Sheet or the notes
thereto or was not incurred in the ordinary course of business consistent with
past practice since the Balance Sheet Date.
6.9 Absence of Certain Developments. Except as expressly
contemplated by this Agreement or as set forth on Schedule 6.9, since the
Balance Sheet Date:
(i) there has not been any Material Adverse Change nor has
there occurred any event which is reasonably likely to result in a Material
Adverse Change;
(ii) there has not been any damage, destruction or loss,
whether or not covered by insurance, with respect to the property and assets of
ChannelHealth having a replacement cost of more than $25,000 for any single loss
or $100,000 for all such losses;
28
(iii) there has not been any declaration, setting aside or
payment of any dividend or other distribution in respect of any shares of
capital stock of ChannelHealth or any repurchase, redemption or other
acquisition by ChannelHealth of any outstanding shares of capital stock or other
securities of, or other ownership interest in, ChannelHealth;
(iv) ChannelHealth has not awarded or paid any bonuses to
employees of ChannelHealth with respect to the fiscal year ended December 31,
1999, except to the extent accrued on the Balance Sheet, or entered into any
employment, deferred compensation, severance or similar agreement (nor amended
any such agreement) or agreed to increase the compensation payable or to become
payable by it to any of ChannelHealth's directors, officers or employees or
agreed to increase the coverage or benefits available under any severance pay,
termination pay, vacation pay, company awards, salary continuation for
disability, sick leave, deferred compensation, bonus or other incentive
compensation, insurance, pension or other employee benefit plan, payment or
arrangement made to, for or with such directors, officers, employees (other than
normal increases in the ordinary course of business consistent with past
practice and that in the aggregate have not resulted in a material increase in
the benefits or compensation expense of ChannelHealth);
(v) there has not been any material change by ChannelHealth
in accounting or Tax reporting principles, methods or policies except as
required by GAAP;
(vi) ChannelHealth has not conducted its business other
than in the ordinary course consistent with past practice;
(vii) ChannelHealth has not failed to promptly pay and
discharge material current liabilities except where disputed in good faith by
appropriate proceedings;
(viii) ChannelHealth has not made any loans, advances or
capital contributions to, or investments in, any Person or paid any fees or
expenses to IDX or any Affiliate of IDX;
(ix) ChannelHealth has not mortgaged, pledged or subjected
to any Lien, other than a Permitted Exception, any of its assets, or acquired
any assets or sold, assigned, transferred, conveyed, leased or otherwise
disposed of any assets of ChannelHealth, except for assets acquired or sold,
assigned, transferred, conveyed, leased or otherwise disposed of in the ordinary
course of business consistent with past practice;
(x) ChannelHealth has not discharged or satisfied any Lien,
or paid any obligation or liability (fixed or contingent), except in the
ordinary course of business consistent with past practice;
29
(xi) ChannelHealth has not canceled or compromised any debt
or claim or amended, canceled, terminated, relinquished, waived or released any
Contract or right except in the ordinary course of business consistent with past
practice;
(xii) ChannelHealth has not made or committed to make any
capital expenditures or capital additions or betterments in excess of $25,000
individually or $100,000 in the aggregate;
(xiii) ChannelHealth has not instituted or settled any
material Legal Proceeding;
(xiv) ChannelHealth has not made or revoked any Tax
election (and no such election has been made or revoked on its behalf), and
ChannelHealth has not (and no Person on ChannelHealth's behalf has) settled or
compromised a Tax dispute; and
(xv) ChannelHealth has not agreed to do anything set forth
in this Section 6.9.
6.10 Taxes.
(a) Except as set forth on Schedule 6.10, all Tax Returns
required to be filed by or on behalf of ChannelHealth, and all consolidated,
combined or unitary Tax Returns that include ChannelHealth, have been properly
prepared and duly and timely filed with the appropriate taxing authorities in
all jurisdictions in which such Tax Returns are required to be filed (after
giving effect to any valid extensions of time in which to make such filings),
and all such Tax Returns are true, complete and correct in all material
respects; all Taxes for which ChannelHealth may be liable (including interest
and penalties) have been fully and timely paid or have been adequately provided
for in the Financial Statements; and ChannelHealth has not executed or filed
with the IRS or any other taxing authority any agreement, waiver or other
document or arrangement extending or having the effect of extending the period
for assessment or collection of Taxes (including, but not limited to, any
applicable statute of limitation), and no power of attorney with respect to any
Tax matter is currently in force.
(b) ChannelHealth has complied with all applicable Laws,
rules and regulations relating to the payment and withholding of Taxes and has
duly and timely withheld from employee salaries, wages and other compensation
and has paid over to the appropriate taxing authorities all amounts required to
be so withheld and paid over for all periods under all applicable Laws.
(c) Except as set forth on Schedule 6.10, Allscripts has
received complete copies of (i) all federal, state, local and foreign Tax
Returns of ChannelHealth relating to the taxable periods since ChannelHealth's
date of incorporation and (ii) any audit report issued within the last year (or
otherwise with respect to any audit or investigation in progress) relating to
Taxes due from or with respect to ChannelHealth, its income, assets or
operations. All income and franchise Tax Returns filed by or on behalf of
ChannelHealth for the taxable years ended on the respective dates set forth on
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Schedule 6.10 have been examined by the relevant taxing authority or the statute
of limitations with respect to such Tax Returns has expired.
(d) No claim has been made by a taxing authority in a
jurisdiction where ChannelHealth does not file Tax Returns such that it is or
may be subject to taxation by that jurisdiction.
(e) All deficiencies asserted or assessments made as a
result of any examinations by the IRS or any other taxing authority of the Tax
Returns of or covering or including ChannelHealth have been fully paid, and
there are no other audits or investigations by any taxing authority in progress,
nor has IDX or ChannelHealth received any written notice from any taxing
authority that it intends to conduct such an audit or investigation. No issue
has been raised by a federal, state, local or foreign taxing authority in any
current or prior examination which, by application of the same or similar
principles, could reasonably be expected to result in a proposed deficiency for
any subsequent taxable period.
(f) Neither ChannelHealth nor any other Person (including
IDX) on behalf of ChannelHealth has (A) filed a consent pursuant to Section
341(f) of the Code or agreed to have Section 341(f)(2) of the Code (or any
predecessor provision) apply to any disposition of a subsection (f) asset (as
such term is defined in Section 341(f)(4) of the Code) owned by ChannelHealth,
(B) agreed to or is required to make any adjustments pursuant to Section 481(a)
of the Code or any similar provision of state, local or foreign Law by reason of
a change in accounting method initiated by ChannelHealth (and neither
ChannelHealth nor IDX has any knowledge that the IRS has proposed any such
adjustment or change in accounting method), or has any application pending with
any taxing authority requesting permission for any changes in accounting methods
that relate to the business or operations of ChannelHealth, (C) executed or
entered into a closing or similar agreement pursuant to Section 7121 of the Code
or any predecessor provision thereof or any similar provision of state, local or
foreign Law with respect to ChannelHealth, or (D) requested any extension of
time within which to file any Tax Return, which Tax Return has since not been
filed.
(g) No property owned by ChannelHealth (i) is property
required to be treated as being owned by another Person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended
and in effect immediately prior to the enactment of the Tax Reform Act of 1986,
(ii) constitutes "tax-exempt use property" within the meaning of Section
168(h)(1) of the Code or (iii) is "tax-exempt bond financed property" within the
meaning of Section 168(g) of the Code.
(h) ChannelHealth is not a US. real property holding
corporation within the meaning of Section 897 of the Code.
(i) ChannelHealth is not a party to any Tax sharing or
similar Contract, agreement or arrangement (whether or not written) pursuant to
which it will have any obligation to make any payments after the Closing.
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(j) There is no Contract, agreement, plan or arrangement
involving ChannelHealth and covering any Person that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible by ChannelHealth, Allscripts or their respective Affiliates by reason
of Section 280G of the Code, except as set forth on Schedule 6.10(j), or would
constitute compensation in excess of the limitation set forth in Section 162(m)
of the Code.
(k) ChannelHealth has not obtained and is not subject to
any private letter ruling of the IRS or comparable rulings, advisory opinions or
similar documents of other taxing authorities.
(l) There are no Liens as a result of any unpaid Taxes upon
any of the assets of ChannelHealth.
(m) ChannelHealth has no elections in effect for federal
income tax purposes under Sections 108, 168, 338, 441, 463, 472, 1017, 1033 or
4977 of the Code.
(n) ChannelHealth has never owned any Subsidiaries and,
except for the consolidated group for which IDX is the common parent, has never
been a member of any consolidated, combined or affiliated group of corporations
for any Tax purposes.
(o) Schedule 6.10(o) sets forth all Tax incentives, credits
or similar arrangements available to ChannelHealth by reason of job creation,
job training or similar activities. The availability of such incentives, credits
or other arrangements will not be adversely affected by the transactions
contemplated hereby.
6.11 Real Property.
Except as set forth on Schedule 6.11, ChannelHealth does
not now own or lease, and has never owned any real property, and at the Closing
Date will not own or lease any real property, except for the property subject to
the Facilities Lease Agreement attached hereto as Exhibit H, to be executed as
of the Closing Date.
6.12 Tangible Personal Property.
(a) Schedule 6.12(a) sets forth all leases of personal
property ("Personal Property Leases") involving annual payments in excess of
$25,000 relating to personal property used in the business of ChannelHealth or
to which ChannelHealth is a party or by which the properties or assets of
ChannelHealth is bound. ChannelHealth has delivered or otherwise made available
to Allscripts true, correct and complete copies of the Personal Property Leases,
together with all amendments, modifications or supplements thereto.
(b) ChannelHealth has a valid leasehold interest under each
of the Personal Property Leases under which it is a lessee, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity), and there is no
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default under any Personal Property Lease by ChannelHealth or, to the best
knowledge of ChannelHealth, by any other party thereto, and no event has
occurred that with the lapse of time or the giving of notice or both would
constitute a default thereunder, in each case where such default would
reasonably be expected to have a Material Adverse Effect.
(c) ChannelHealth has good title to all of the items of
tangible personal property reflected in the Balance Sheet (except as sold,
consumed or disposed of subsequent to the date thereof in the ordinary course of
business consistent with past practice), free and clear of any and all Liens
other than the Permitted Exceptions. All such items of tangible personal
property which, individually or in the aggregate, are material to the operation
of the business of ChannelHealth are in good condition and in a state of good
maintenance and repair (ordinary wear and tear excepted).
(d) All of the items of tangible personal property used by
ChannelHealth under the Personal Property Leases are in good condition and
repair (ordinary wear and tear excepted).
6.13 Intangible Property. Schedule 6.13 contains a complete
and correct list of each patent, trademark, trade name, service mark and
copyright owned or, to the knowledge of ChannelHealth, used by ChannelHealth as
well as all registrations thereof and pending applications therefor, and each
license or other agreement relating thereto. Except as set forth on Schedule
6.13, each of the foregoing is owned by the party shown on such Schedule 6.13 as
owning the same, free and clear of all Liens and is in good standing and not the
subject of any challenge. Except as set forth in Schedule 6.13, there have been
no claims made and, except as set forth in Schedule 6.13, (i) neither IDX nor
ChannelHealth has received any notice or otherwise knows or has reason to
believe that any of the foregoing is invalid or unenforceable or conflicts with
the asserted rights of others; (ii) none of the foregoing infringes upon the
intellectual property rights of any Person and (iii) the use of the foregoing or
any component thereof will not subject Allscripts, Parent or any other Person to
any infringement claim. Except as set forth in Schedule 6.13, together with the
benefit of the rights granted pursuant to the Cross-License Agreement attached
hereto as Exhibit F, ChannelHealth possesses all patents, patent licenses, trade
names, trademarks, service marks, brand marks, brand names, copyrights,
know-how, formulae and other proprietary and trade rights necessary for the
conduct of its business as now conducted and as it is contemplated that its
business will be conducted in the future, not subject to any restrictions and
without any known conflict with the rights of others and ChannelHealth has not
forfeited or otherwise relinquished any such patent, patent license, trade name,
trademark, service mark, brand mark, brand name, copyright, know-how, formulae
or other proprietary right necessary for the conduct of its business as
conducted on the date hereof and as it is contemplated that its business will be
conducted in the future. ChannelHealth is not under any obligation to pay any
royalties or similar payments in connection with any license to IDX or any
affiliate thereof. ChannelHealth has at all times (i) taken reasonable measures
to ensure the confidentiality of its confidential information and (ii) entered
into agreements with all employees and independent contractors providing that
the employees and contractors are obligated to assign to ChannelHealth all their
ownership interest in any patentable or unpatentable inventions or developments,
33
trade secrets and copyrightable works created in the course of their employment.
To the knowledge of ChannelHealth, no third party is infringing or
misappropriating any patent, trademark, trade name, service mark, copyright or
other intellectual property rights owned by or exclusively licensed to
ChannelHealth. To the knowledge of ChannelHealth, no party to a license
agreement under which ChannelHealth is licensed to use any patent, trademark,
trade name, service mark or copyright of a third party or under which
ChannelHealth has licensed a third party the right to use any patent, trademark,
trade name, service mark or copyright owned by or licensed to ChannelHealth is
or has been in material breach of that agreement.
6.14 Material Contracts. Schedule 6.14 sets forth all of
the following Contracts to which ChannelHealth is a party or by which it is
bound or under which ChannelHealth receives direct benefit: (i) Contracts with
IDX or any current officer or director of ChannelHealth or IDX, or any Affiliate
thereof; (ii) Contracts with any labor union or association representing any
employee of ChannelHealth; (iii) Contracts pursuant to which any party is
required to purchase or sell a stated portion of its requirements or output from
or to another party; (iv) Contracts for the sale of any of the assets of
ChannelHealth other than in the ordinary course of business or for the grant to
any person of any preferential rights to purchase any of its assets; (v) joint
venture agreements; (vi) material Contracts containing covenants of
ChannelHealth not to compete in any line of business or with any person in any
geographical area or covenants of any other person not to compete with
ChannelHealth in any line of business or in any geographical area; (vii)
Contracts relating to the acquisition by ChannelHealth of any operating business
or the capital stock of any other person; (viii) Contracts relating to the
borrowing of money; or (ix) any other Contracts that involve the expenditure of
more than $150,000 in the aggregate or $25,000 annually and require performance
by any party more than one year from the date hereof. The Contracts set forth on
Schedule 6.14 are referred to herein, collectively, as the "Material Contracts."
There have been made available to Allscripts, true and complete copies of all of
the Material Contracts. Except as set forth on Schedule 6.14, all of the
Material Contracts and other agreements are in full force and effect and are the
legal, valid and binding obligations of ChannelHealth, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity). Except as set forth on Schedule 6.14, ChannelHealth is not in default
in any material respect under any Material Contracts, nor has there occurred any
event that but for the passage of time, the giving of notice or both would
constitute such a default; nor, to the knowledge of ChannelHealth, is any other
party to any Material Contract in default thereunder in any material respect.
6.15 Employee Benefits.
(a) Schedule 6.15(a) sets forth a complete and correct list
of (i) all "employee benefit plans", as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and any other
pension plans or employee benefit arrangements, programs or payroll practices
(including, without limitation, severance pay, vacation pay, company awards,
34
salary continuation for disability, sick leave, retirement, deferred
compensation, bonus or other incentive compensation, stock purchase arrangements
or policies, hospitalization, medical insurance, life insurance and scholarship
programs) maintained by ChannelHealth or to which ChannelHealth contributes or
is obligated to contribute thereunder with respect to employees of ChannelHealth
("Employee Benefit Plans") and (ii) any other "employee pension plans", as
defined in Section 3(2) of ERISA, maintained by ChannelHealth or any trade or
business (whether or not incorporated) which are under control, or which are
treated as a single employer, with ChannelHealth under Section 414(b), (c), (m)
or (o) of the Code ("ERISA Affiliate") or to which ChannelHealth or any ERISA
Affiliate contributed or is obligated to contribute thereunder ("Pension
Plans"). Schedule 6.15(a) clearly identifies, Employee Benefit Plans or Pension
Plans that are "benefit plans", within the meaning of Section 5000(b)(1) of the
Code providing continuing benefits after the termination of employment (other
than as required by Section 4980B of the Code or Part 6 of Title I of ERISA and
at the former employee's or his beneficiary's sole expense).
(b) No plan listed in Schedule 6.15(a) is a "multiemployer
plan" (within the meaning of Section 3(37) of ERISA and Section 413 of the
Code). Neither ChannelHealth nor any of its ERISA Affiliates has ever
contributed to or had an obligation to contribute to any multiemployer plan.
(c) No plan listed in Schedule 6.15(a) is a plan subject to
Title IV of ERISA. Neither ChannelHealth nor any of its ERISA Affiliates has
ever contributed to or had an obligation to contribute to any plan subject to
Title IV of ERISA.
(d) Each of the Employee Benefit Plans and Pension Plans
intended to qualify under Section 401 of the Code ("Qualified Plans") is either
in receipt of a favorable determination letter or is the subject of an opinion
letter from the IRS and ChannelHealth has no knowledge of facts that are likely
to result in the revocation of any Qualified Plan's qualified status under
Section 401 of the Code and tax exempt status of the trusts maintained thereto
as exempt from federal income taxation under Section 501 of the Code.
(e) All contributions and premiums required by law or by
the terms of any Employee Benefit Plan or Pension Plan which are defined benefit
plans or money purchase plans or any agreement relating thereto have been timely
made (without regard to any waivers granted with respect thereto) to any funds
or trusts established thereunder or in connection therewith, and no accumulated
funding deficiencies exist in any of such plans subject to Section 412 of the
Code.
(f) There has been no violation of ERISA with respect to
the filing of applicable returns, reports, documents and notices regarding any
of the Employee Benefit Plans or Pension Plans with the Secretary of Labor or
the Secretary of the Treasury or the furnishing of such notices or documents to
the participants or beneficiaries of the Employee Benefit Plans or Pension
Plans.
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(g) True, correct and complete copies of the following
documents, with respect to each of the Employee Benefit Plans and Pension Plans
(as applicable), have been made available to Allscripts (A) any plans and
related trust documents, and all amendments thereto, (B) the most recent Forms
5500 for the past three years and schedules thereto, (C) the most recent
financial statements and actuarial valuations for the past three years, (D) the
most recent Internal Revenue Service determination letter, (E) the most recent
summary plan descriptions (including letters or other documents updating such
descriptions) and (F) written descriptions of all non-written agreements
relating to the Employee Benefit Plans and Pension Plans.
(h) There are no pending Legal Proceedings which have been
asserted or instituted against any of the Employee Benefit Plans or Pension
Plans, the assets of any such plans or ChannelHealth, or the plan administrator
or any fiduciary of the Employee Benefit Plans or Pension Plans with respect to
the operation of such plans (other than routine, uncontested benefit claims),
and ChannelHealth has no knowledge of any facts or circumstances which could
form the basis for any such Legal Proceeding.
(i) All Employee Benefit Plans and Pension Plans are in
compliance with applicable provisions of ERISA, the Code and other applicable
Laws and comply in form and in operation with the applicable requirements of
ERISA, the Code, the regulations and published authorities thereunder and other
applicable laws. The Employee Benefit Plans and Pension Plans have been
administered consistent in all material respects with their written terms, or
with respect to each such Employee Benefit Plan and Pension Plan that is a
Qualified Plan, in accordance with such operational policies and procedures as
have been or shall be adopted and implemented for the purpose of operationally
complying with any otherwise "disqualifying provisions" (as defined in Treasury
Regulation Section 1.401(b)-1T(b)) for which such Qualified Plan will be amended
within the "remedial amendment period" (as defined in Treasury Regulation
Section 1.401(b)-1T(b)).
(j) ChannelHealth and any ERISA Affiliate which maintains a
"benefits plan" within the meaning of Section 5000(b)(1) of ERISA, have complied
with the notice and continuation requirements of Section 4980B of the Code or
Part 6 of Title I of ERISA and the applicable regulations thereunder.
(k) Neither ChannelHealth nor any of its ERISA Affiliates
has divested any business or entity maintaining or sponsoring a defined benefit
pension plan having unfunded benefit liabilities (within the meaning of Section
4001(a)(18) of ERISA) or transferred any such plan to any person other than IDX
or any ERISA Affiliate during the five-year period ending on the Closing Date.
(l) Neither the Company nor any "party in interest" or
"disqualified person" with respect to the Employee Benefit Plans or Pension
Plans has engaged in a "prohibited transaction" within the meaning of Section
4975 of the Code or Section 406 of ERISA.
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(m) Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will (i) result in
any payment becoming due to any employee of ChannelHealth; (ii) increase any
benefits otherwise payable under any Employee Benefit Plan or Pension Plan; or
(iii) result in the acceleration of the time of payment or vesting of any such
benefits.
(n) Except as set forth on Schedule 6.15(a), no stock or
other security issued by IDX or ChannelHealth forms or has formed a material
part of the assets of any Employee Benefit Plan or Pension Plan.
6.16 Labor.
(a) Except as set forth on Schedule 6.16(a), ChannelHealth
is not party to any labor or collective bargaining agreement and there are no
labor or collective bargaining agreements which pertain to employees of
ChannelHealth. IDX has delivered or otherwise made available to Allscripts true,
correct and complete copies of the labor or collective bargaining agreements
listed on Schedule 6.16(a), together with all amendments, modifications or
supplements thereto.
(b) Except as set forth on Schedule 6.16(b), no employees
of ChannelHealth are represented by any labor organization. No labor
organization or group of employees of ChannelHealth has made a pending demand
for recognition, and there are no representation proceedings or petitions
seeking a representation proceeding presently pending or, to the best knowledge
of ChannelHealth, threatened to be brought or filed, with the National Labor
Relations Board or other labor relations tribunal. There is no organizing
activity involving ChannelHealth pending or, to the best knowledge of
ChannelHealth, threatened by any labor organization or group of employees of
ChannelHealth.
(c) There are no pending or, to the knowledge of
ChannelHealth, threatened (i) strikes, work stoppages, slowdowns, lockouts or
arbitrations or (ii) material grievances or other labor disputes involving
ChannelHealth. There are no unfair labor practice charges, grievances or
complaints pending or, to the best knowledge of ChannelHealth, threatened by or
on behalf of any employee or group of employees of ChannelHealth before any
labor tribunal.
6.17 Litigation. Except as set forth in Schedule 6.17,
there is no suit, action, proceeding, investigation, claim or order pending or,
to the knowledge of ChannelHealth, overtly threatened against ChannelHealth (or
to the knowledge of ChannelHealth, pending or threatened, against any of the
officers, directors or key employees of ChannelHealth with respect to their
business activities on behalf of ChannelHealth), or to which ChannelHealth is
otherwise a party, which, if adversely determined, would have a Material Adverse
Effect, before any court, or before any governmental department, commission,
board, agency, or instrumentality. ChannelHealth is not subject to any judgment,
order or decree of any court or governmental agency except to the extent the
37
same are not reasonably likely to have a Material Adverse Effect and except as
set forth on Schedule 6.17, ChannelHealth is not engaged in any legal action to
recover monies due it or for damages sustained by it.
6.18 Compliance with Laws; Permits.
ChannelHealth is in compliance with all Laws applicable to
ChannelHealth or to the conduct of the business or operations of ChannelHealth
or the use of its properties (including any leased properties and assets),
except for such non-compliances as would not, individually or in the aggregate,
have a Material Adverse Effect. ChannelHealth has all governmental permits and
approvals from state, federal or local authorities which are required for
ChannelHealth to operate its business, except for those the absence of which
would not, individually or in the aggregate, have a Material Adverse Effect.
6.19 Environmental Matters. Except as set forth on Schedule
6.19 hereto:
(a) the operations of ChannelHealth are in material
compliance with all applicable Environmental Laws and all permits issued
pursuant to Environmental Laws or otherwise;
(b) ChannelHealth has obtained all permits required under
all applicable Environmental Laws necessary to operate its business, except
where any failure to have so obtained any such permit would not reasonably be
expected to have a Material Adverse Effect;
(c) ChannelHealth is not the subject of any outstanding
written order or Contract with any governmental authority or person respecting
(i) Environmental Laws, (ii) Remedial Action or (iii) any Release or threatened
Release of a Hazardous Material;
(d) ChannelHealth has not received any written
communication alleging either or both that ChannelHealth may be in violation of
any Environmental Law, or any permit issued pursuant to Environmental Law, or
may have any liability under any Environmental Law;
(e) ChannelHealth does not have any current contingent
liability in connection with any Release of any Hazardous Materials into the
indoor or outdoor environment (whether on-site or off-site);
(f) to ChannelHealth's knowledge, there are no
investigations of the business, operations, or currently or previously owned,
operated or leased property of ChannelHealth pending or threatened which could
lead to the imposition of any material liability pursuant to Environmental Law;
(g) to ChannelHealth's knowledge there is not located at
any of the properties of ChannelHealth any (i) underground storage tanks, (ii)
asbestos-containing material or (iii) equipment containing polychlorinated
biphenyls; and,
38
(h) ChannelHealth has provided to Allscripts all
environmentally related audits, studies, reports, analyses, and results of
investigations that are currently in ChannelHealth's possession, and which
constitute final reports of results of environmental audits or assessments, that
have been performed with respect to the currently or previously owned, leased or
operated properties of ChannelHealth.
6.20 Insurance. Schedule 6.20 sets forth a complete and
accurate list of all policies of insurance covering ChannelHealth or any of its
employees, properties or assets, including, without limitation, policies of
life, disability, fire, theft, workers compensation, employee fidelity and other
casualty and liability insurance. All such policies are in full force and
effect, and, to ChannelHealth's knowledge, ChannelHealth is not in default of
any provision thereof, except for such defaults as would not, individually or in
the aggregate, have a Material Adverse Effect.
6.21 Inventories; Receivables; Payables.
(a) The inventories of ChannelHealth are in good and
marketable condition, and are saleable in the ordinary course of business,
subject to the reserves as described in the following sentence. Adequate
reserves have been reflected in the Balance Sheet for shorts, drops, off-cuts,
obsolete or otherwise unusable inventory, which reserves were calculated in a
manner consistent with past practice and in accordance with GAAP consistently
applied.
(b) All accounts receivable of ChannelHealth have arisen
from bona fide transactions in the ordinary course of business consistent with
past practice. All accounts receivable of ChannelHealth reflected on the Balance
Sheet are good and collectible at the aggregate recorded amounts thereof, net of
any applicable reserve for returns or doubtful accounts reflected thereon, which
reserves are adequate and were calculated in a manner consistent with past
practice and in accordance with GAAP consistently applied. All accounts
receivable arising after the Balance Sheet Date are good and collectible at the
aggregate recorded amounts thereof, net of any applicable reserve for returns or
doubtful accounts, which reserves are adequate and were calculated in a manner
consistent with past practice and in accordance with GAAP consistently applied.
6.22 Related Party Transactions. Except as set forth on
Schedule 6.22, neither IDX nor any of its Affiliates has borrowed any moneys
from or has outstanding any indebtedness or other similar obligations to
ChannelHealth. To ChannelHealth's knowledge except as set forth in Schedule
6.22, neither IDX, ChannelHealth, any Affiliate of ChannelHealth or IDX nor any
officer or employee of any of them is a party to any Material Contract.
6.23 Customers and Suppliers. Schedule 6.23 sets forth a
list of the 20 largest customers and the 20 largest suppliers of ChannelHealth,
as measured by the dollar amount of purchases therefrom or thereby, during the
fiscal year ended December 31, 1999 and the three-month period ended March 31,
2000. Schedule 6.23 sets forth the approximate total sales by ChannelHealth to
each customer identified thereon and the approximate total purchases by
39
ChannelHealth from each supplier identified thereon, during such period. Since
March 31, 2000, there has not been any material adverse change in the business
relationship of ChannelHealth with any customer or supplier listed on Schedule
6.23, except for such changes resulting from the expiration or termination of
such business relationships in the ordinary course according to their respective
terms. Except as disclosed on Schedule 6.23, there are no customers of IDX or
ChannelHealth as to whom ChannelHealth has an obligation to provide products or
services at below fair market value.
6.24 Banks. Schedule 6.24 contains a complete and correct
list of the names and locations of all banks in which ChannelHealth has accounts
or safe deposit boxes and the names of all persons authorized to draw thereon or
to have access thereto. Except as set forth on Schedule 6.24, no person holds a
power of attorney to act on behalf of ChannelHealth.
6.25 Registration Statement; Proxy Statement/Prospectus.
The information to be supplied by IDX and ChannelHealth for inclusion in the
registration statement on Form S-4 (the "Registration Statement") pursuant to
which all of the shares of Parent Common Stock issued in the ChannelHealth
Merger will be registered under the Securities Act of 1933, as amended (the
"Securities Act"), shall not at the time the Registration Statement is declared
effective by the Securities and Exchange Commission (the "Commission") contain
any untrue statement of a material fact or omit to state any material fact
required to be stated in the Registration Statement or necessary in order to
make the statements in the Registration Statement, in light of the circumstances
under which they were made, not misleading. The information to be supplied by
IDX and ChannelHealth for inclusion in the proxy statement/prospectus (the
"Proxy Statement") to be sent to the stockholders of Allscripts in connection
with the Allscripts Special Meeting (as defined in Section 8.14 below) shall
not, on the date the Proxy Statement is first mailed to stockholders of
Allscripts, at the time of the Allscripts Special Meeting and at the Effective
Time, contain any statement which, at such time and in light of the
circumstances under which it shall be made, is false or misleading with respect
to any material fact, or omit to state any material fact necessary in order to
make the statements made in the Proxy Statement not false or misleading; or omit
to state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Allscripts
Special Meeting which has become false or misleading. If at any time prior to
the Effective Time any event relating to ChannelHealth or any of its Affiliates,
officers or directors should be discovered by ChannelHealth which should be set
forth in an amendment to the Registration Statement or a supplement to the Proxy
Statement, ChannelHealth shall promptly inform Allscripts.
6.26 No Misrepresentation. No representation or warranty of
ChannelHealth contained in this Agreement or in any schedule hereto or in any
certificate or other instrument furnished by ChannelHealth pursuant to the terms
hereof contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading.
40
6.27 Financial Advisors. Other than Credit Suisse First
Boston Corporation, the fees of which are the responsibility solely of IDX, no
Person has acted, directly or indirectly, as a broker, finder or financial
advisor for ChannelHealth in connection with the transactions contemplated by
this Agreement and no Person is entitled to any fee or commission or like
payment in respect thereof.
Article VII
REPRESENTATIONS AND WARRANTIES OF PARENT AND ALLSCRIPTS
Parent and Allscripts hereby represent and warrant to IDX
and ChannelHealth that:
7.1 Organization and Good Standing. Each of Parent and
Allscripts are corporations duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each of Parent and Allscripts
has all requisite corporate power and authority to carry on the businesses in
which it is now engaged and to own and use the properties now owned and used by
it. Each of Parent and Allscripts has made available to ChannelHealth correct
and complete copies of its Certificate of Incorporation and By-laws, each as
amended and as in effect on the date hereof.
7.2 Authorization of Agreement. Each of Parent and
Allscripts has full corporate power and authority to execute and deliver this
Agreement, the Ancillary Agreements and each other agreement, document,
instrument or certificate contemplated by this Agreement or to be executed by
Parent and Allscripts in connection with the consummation of the transactions
contemplated hereby and thereby (together with this Agreement, the Ancillary
Agreements, the "Allscripts Documents"), and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by each
of Parent and Allscripts of this Agreement and each Allscripts Document have
been duly authorized by all necessary corporate action on behalf of Parent and
Allscripts. This Agreement has been, and each Allscripts Document will be at or
prior to the Closing, duly executed and delivered by Parent and Allscripts and
(assuming the due authorization, execution and delivery by the other parties
hereto and thereto) this Agreement constitutes, and each of the Allscripts
Documents when so executed and delivered will constitute, legal, valid and
binding obligations of Parent and Allscripts, enforceable against each of Parent
and Allscripts in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
7.3 Conflicts; Consents of Third Parties.
(a) Except as set forth on Schedule 7.3 hereto, neither of
the execution and delivery by Parent and Allscripts of this Agreement and of the
Allscripts Documents, nor the compliance by Parent and Allscripts with any of
41
the provisions hereof or thereof will (i) conflict with, or result in the breach
of, any provision of the certificate of incorporation or by-laws of Parent or
Allscripts, (ii) conflict with, violate, result in the breach of, or constitute
a default under any note, bond, mortgage, indenture, license, agreement or other
obligation to which Parent or Allscripts is a party or by which Parent or
Allscripts or its properties or assets are bound or (iii) violate any statute,
rule, regulation, order or decree of any governmental body or authority by which
Parent or Allscripts is bound, except, in the case of clauses (ii) and (iii),
for such violations, breaches or defaults as would not, individually or in the
aggregate, have a material adverse effect on the business, properties, results
of operations or financial condition of Parent, or Allscripts and its
subsidiaries, taken as a whole.
(b) No consent, waiver, approval, Order, Permit or
authorization of, or declaration or filing with, or notification to, any Person
or Governmental Body is required on the part of Parent or Allscripts in
connection with the execution and delivery of this Agreement or the Allscripts
Documents or the compliance by Parent or Allscripts with any of the provisions
hereof or thereof, except for compliance with the applicable requirements of the
HSR Act.
7.4 Shares. The shares of Parent Common Stock to be issued
pursuant to the Mergers and the Earnout Shares have been duly authorized for
such issuance pursuant to this Agreement and, when issued and delivered by
Parent in accordance with this Agreement, will be validly issued, fully paid and
nonassessable, and free and clear of all Liens. The issuance of the Parent
Shares or the Earnout Shares under this Agreement is not subject to any
preemptive rights.
7.5 Capitalization.
(a) The authorized capital of Allscripts consists of (i)
1,000,000 shares of undesignated preferred stock, none of which is issued or
outstanding and (ii) 75,000,000 shares of Common Stock, of which (x) 29,336,398
shares were issued and outstanding at June 30, 2000, (y) 5,442,709 shares were
reserved for issuance under Allscripts's Amended and Restated 1993 Stock
Incentive Plan (the "Allscripts Option Plan") at June 30, 2000 (under which plan
options to acquire an aggregate of 2,405,137 shares of Common Stock had been
granted and were outstanding at June 30, 2000) and (z) warrants to purchase an
aggregate of 29,467 shares of Allscripts Common Stock were outstanding at June
30, 2000. All of the issued and outstanding shares of Allscripts Common Stock
are duly authorized, validly issued, fully paid and nonassessable.
(b) The authorized capital of each of Parent, SubA and SubB
consists of 1,000 shares of Common Stock, all of which shares were issued and
outstanding at the date hereof. All of the issued and outstanding shares of such
Common Stock are duly authorized, validly issued, fully paid and nonassessable.
(c) Prior to the Effective Time, the certificate of
incorporation of Parent will be amended to provide authorized capital consisting
of (i)1,000,000 shares of undesignated preferred stock, none of which will be
42
issued or outstanding and (ii) 75,000,000 shares of common stock, 1,000 of which
will be duly authorized, validly issued, fully paid and nonassessable.
7.6 Options and Warrants; Registration Rights. Except for
(i) the stock options granted and outstanding under the Allscripts Option Plan
and (ii) as described in Section 7.5(a) and/or the Allscripts SEC Filings (as
defined in Section 7.7), Allscripts has no outstanding options, warrants,
rights, agreements or commitments to issue, dispose of or purchase shares of
Allscripts Common Stock. Except as contemplated by this Agreement, Parent has no
outstanding options, warrants, rights, agreements or commitments to issue,
dispose of or purchase shares of Parent Common Stock. Except as described in
Schedule 7.6, Allscripts has no obligation to register under the Securities Act
any shares of Allscripts Common Stock held by any person. There are no
agreements, voting trusts, proxies or understandings with respect to the voting
of shares of Allscripts Common Stock.
7.7 Allscripts SEC Filings. Allscripts has filed with the
SEC all documents required to be filed by it since July 31, 1999, and has made
available to IDX each registration statement, report, proxy statement or
information statement (other than preliminary materials) it has so filed since
July 31, 1999, each in the form (including exhibits and any amendments thereto)
filed with the SEC (collectively, the "Allscripts SEC Filings"). As of their
respective dates, each of the Allscripts SEC Filings (i) was prepared in all
material respects in accordance with the applicable requirements of the
Securities Act, the Securities Exchange Act of 1934, as amended and the rules
and regulations thereunder and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading except for such statements, if any,
as have been modified by subsequent filings with the SEC prior to the date
hereof. Each of the consolidated balance sheets included in or incorporated by
reference into the Allscripts SEC Filings (including the related notes and
schedules) fairly presents in all material respects the consolidated financial
position of Allscripts as of its date, and each of the consolidated statements
of income, cash flows and changes in stockholders' equity included in or
incorporated by reference into the Allscripts SEC Filings (including any related
notes and schedules) fairly presents in all material respects the results of
operations, cash flows or changes in stockholders' equity, as the case may be,
of Allscripts for the periods set forth therein (subject, in the case of
unaudited statements, to (A) such exceptions as may be permitted by Form 10-Q of
the SEC and (B) normal year-end audit adjustments), in each case in accordance
with generally accepted accounting principles consistently applied during the
periods involved, except as may be noted therein. As of July 31, 2000,
Allscripts will be, and at the Closing, Parent will be, eligible to file a
registration statement on Form S-3. Allscripts has taken and at the Closing,
Parent will have taken, all actions which would be required to permit sales of
its securities under Rule 144 of the Securities Act.
7.8 Litigation. There are no Legal Proceedings pending or,
to the best knowledge of Allscripts, threatened that are reasonably likely to
prohibit or restrain the ability of Allscripts or Parent to enter into this
Agreement, to perform their respective covenants and agreements hereunder or to
consummate the transactions contemplated hereby or which, if adversely
43
determined, would reasonably be likely to have a material adverse effect on the
business, properties, results of operations or financial condition of Allscripts
and it subsidiaries, taken as a whole.
7.9 Financial Advisors. Other than Goldman, Sachs & Co.,
the fees of which are the responsibility solely of Allscripts, no Person has
acted, directly or indirectly, as a broker, finder or financial advisor for
Allscripts or Parent in connection with the transactions contemplated by this
Agreement and no person is entitled to any fee or commission or like payment in
respect thereof.
7.10 Absence of Material Adverse Change. Since March 31,
2000, there has occurred no event or development which would reasonably be
expected to have a material adverse effect on the business, properties, results
of operations or financial condition of Allscripts and its subsidiaries, taken
as a whole.
7.11 No Undisclosed Liabilities. Allscripts has no material
indebtedness, obligations or liabilities of any kind (whether accrued, absolute,
contingent or otherwise, and whether due or to become due) that would have been
required to be reflected in, reserved against or otherwise described on the
consolidated balance sheets included or incorporated by reference in the
Allscripts SEC Filings or in the notes thereto in accordance with GAAP which was
not fully reflected in, reserved against or otherwise described in such balance
sheet or the notes thereto or were not incurred in the ordinary course of
business consistent with past practice since March 31, 2000.
7.12 Compliance with Laws; Permits. Each of Allscripts and
Parent are in compliance with all laws applicable to them or to the conduct of
their respective businesses or operations or the use of their properties
(including any leased properties and assets), except for such non- compliances
as would not, individually or in the aggregate, have a material adverse effect
on the business, properties, results of operations or financial condition of
Allscripts, Parent and their respective subsidiaries, taken as a whole. Each of
Parent and Allscripts has all governmental permits and approvals from state,
federal or local authorities which are required for them to operate their
respective business, except for those the absence of which would not,
individually or in the aggregate, have a material adverse effect on the
business, properties, results of operations or financial condition of
Allscripts, Parent and their respective subsidiaries, taken as a whole.
7.13 Registration Statement; Proxy Statement/Prospectus.
The information in the Registration Statement (except for information supplied
by ChannelHealth and IDX for inclusion in the Registration Statement, as to
which Allscripts makes no representation and which shall not constitute part of
a Allscripts SEC Filing for purposes of this Agreement) shall not at the time
the Registration Statement is declared effective by the Commission contain any
untrue statement of a material fact or omit to state any material fact required
to be stated in the Registration Statement or necessary in order to make the
statements in the Registration Statement, in light of the circumstances under
which they were made, not misleading. The information (except for information to
be supplied by ChannelHealth and IDX for inclusion in the Proxy Statement, as to
44
which Allscripts makes no representation) in the Proxy Statement shall not, on
the date the Proxy Statement is first mailed to stockholders of Allscripts, at
the time of the Allscripts Special Meeting and at the Effective Time, contain
any statement which, at such time and in light of the circumstances under which
it shall be made, is false or misleading with respect to any material fact, or
omit to state any material fact necessary in order to make the statements made
in the Proxy Statement not false or misleading; or omit to state any material
fact necessary to correct any statement in any earlier communication with
respect to the solicitation of proxies for the Allscripts Special Meeting which
has become false or misleading. If at any time prior to the Effective Time any
event relating to Allscripts or any of its Affiliates, officers or directors
should be discovered by Allscripts which should be set forth in an amendment to
the Registration Statement or a supplement to the Proxy Statement, Allscripts
shall promptly inform ChannelHealth and IDX.
7.14 Operation of SubA and SubB. Each of Sub A and Sub B
was formed solely for the purpose of engaging in the transactions contemplated
by this Agreement, has engaged in no other business activities and has conducted
its operations only as contemplated by this Agreement.
7.15 Opinion of Financial Advisor. The financial advisor of
Allscripts, Goldman, Sachs & Co., has delivered to Allscripts an opinion dated
on or about the date of this Agreement to the effect, as of such date, that the
ChannelHealth Merger is fair to Allscripts from a financial point of view.
7.16 No Misrepresentation. No representation or warrant of
Allscripts or Parent contained in this Agreement or in any schedule hereto or in
any certificate or other instrument furnished by Allscripts or Parent pursuant
to the terms hereof contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading.
Article VIII
COVENANTS
8.1 Access to Information.
(a) Each of IDX and ChannelHealth agree that, prior to the
Closing Date, Allscripts shall be entitled, through its officers, employees and
representatives (including, without limitation, its legal advisors and
accountants), to make such investigation of the properties, businesses and
operations of IDX (to the extent such investigation relates to ChannelHealth)
and ChannelHealth and such examination of the books, records and financial
condition of IDX (to the extent such investigation relates to ChannelHealth) and
ChannelHealth as it reasonably requests and to make extracts and copies of such
books and records. Any such investigation and examination shall be conducted
upon reasonable advance notice during regular business hours and under
reasonable circumstances, and IDX and ChannelHealth shall cooperate fully
therein. In order that Allscripts may have full opportunity to make such
45
physical, business, accounting and legal review, examination or investigation as
it may reasonably request of the affairs of ChannelHealth, each of IDX and
ChannelHealth shall cause the respective officers, employees, consultants,
agents, accountants, attorneys and other representatives to cooperate reasonably
with such representatives in connection with such review and examination.
(b) Allscripts agrees that, prior to the Closing Date,
ChannelHealth shall be entitled, through its officers, employees and
representatives (including, without limitation, its legal advisors and
accountants), to make such investigation of the properties, businesses and
operations of Allscripts and Parent and such examination of the books, records
and financial condition of Allscripts and Parent as it reasonably requests and
to make extracts and copies of such books and records. Any such investigation
and examination shall be conducted upon reasonable advance notice during regular
business hours and under reasonable circumstances, and Allscripts and Parent
shall cooperate fully therein. In order that ChannelHealth may have full
opportunity to make such physical, business, accounting and legal review,
examination or investigation as it may reasonably request of the affairs of
Allscripts and Parent , the officers, employees, consultants, agents,
accountants, attorneys and other representatives of Allscripts and Parent shall
cooperate reasonably with such representatives in connection with such review
and examination.
(c) Each of IDX, Allscripts and ChannelHealth (i) shall
treat, and shall cause each of its Affiliates to treat and hold as confidential
any Confidential Information (as defined below), (ii) not use any of the
Confidential Information except in connection with this Agreement and (iii) if
this Agreement is terminated for any reason whatsoever, return to such receiving
party all tangible embodiments (and all copies) thereof which are in its
possession. For purposes of this Agreement, "Confidential Information" means any
confidential or proprietary information of a party that is furnished to a
receiving party or its Affiliates by such furnishing party in connection with
this Agreement; provided, however, that it shall not include any information (A)
which, at the time of disclosure, is available publicly, (B) which, after
disclosure, becomes available publicly through no fault of the receiving party,
(C) which the receiving party knew or to which the receiving party had access
prior to disclosure or (D) which the receiving party rightfully obtains from a
source other than the furnishing party.
8.2 Conduct of Business Pending the Closing.
(a) Except as otherwise expressly contemplated by this
Agreement or with the prior written consent of Allscripts, ChannelHealth shall,
and IDX shall cause ChannelHealth to:
(i) conduct the businesses of ChannelHealth only in the
ordinary course consistent with past practice;
(ii) use its commercially reasonable efforts to (A)
preserve its present business operations and organization (including, without
limitation, management and the sales force) and (B) preserve its present
46
relationship with those customers and suppliers set forth on Schedule 6.23;
(iii) maintain (A) all of the material assets and
properties of ChannelHealth in their current condition, ordinary wear and tear
excepted and (B) insurance upon all of the properties and assets of
ChannelHealth in such amounts and of such kinds com-parable to that in effect on
the date of this Agreement;
(iv) (A) maintain the books, accounts and records of
ChannelHealth in the ordinary course of business consistent with past practice,
(B) continue to collect accounts receivable and pay accounts payable utilizing
normal procedures and without discounting or accelerating payment of such
accounts and (C) comply in all material respects with all contractual and other
obligations applicable to the operations of ChannelHealth;
(v) comply in all material respects with applicable laws,
including, without limitation, Environmental Laws; and
(vi) consummate the transactions contemplated by the
ChannelHealth/IDX Asset Purchase Agreement in accordance with the terms thereof.
(b) Except as otherwise expressly contemplated by this
Agreement or with the prior written consent of Allscripts, ChannelHealth shall
not, and IDX shall cause ChannelHealth not to:
(i) declare, set aside, make or pay any dividend or other
distribution in respect of the capital stock of ChannelHealth or repurchase,
redeem or otherwise acquire any outstanding shares of the capital stock or other
securities of, or other ownership interests in, ChannelHealth;
(ii) transfer, issue, sell or dispose of any shares of
capital stock or other securities of ChannelHealth or grant options, warrants,
calls or other rights to purchase or otherwise acquire shares of the capital
stock or other securities of ChannelHealth, other than (A) the issuance of
ChannelHealth Common Stock pursuant to the exercise of options outstanding on
the date of this Agreement and disclosed in Schedule 6.3(b) and (B) the grant of
options under ChannelHealth's stock option plan to purchase not more than 30,000
shares of ChannelHealth Common Stock at an exercise price not less than the fair
market value on the date of grant to employees of ChannelHealth not holding any
such options at the date hereof;
(iii) effect any recapitalization, reclassification, stock
split or like change in the capitalization of ChannelHealth;
(iv) amend the certificate of incorporation or by-laws of
ChannelHealth;
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(v) (A) materially increase the annual level of
compensation of any employee of ChannelHealth, (B) increase the annual level of
compensation payable or to become payable by ChannelHealth to any of its
executive officers, (C) grant any unusual or extraordinary bonus, benefit or
other direct or indirect compensation to any employee, director or consultant,
other than in the ordinary course consistent with past practice or in such
amounts as are fully reserved against in the Financial Statements, (D) increase
the coverage or benefits available under any (or create any new) severance pay,
termination pay, vacation pay, ChannelHealth awards, salary continuation for
disability, sick leave, deferred compensation, bonus or other incentive
compensation, insurance, pension or other employee benefit plan or arrangement
made to, for, or with any of the directors, officers, employees, agents or
representatives of ChannelHealth or otherwise modify or amend or terminate any
such plan or arrangement or (E) enter into any employment, deferred
compensation, severance, consulting, non-competition or similar agreement (or
amend any such agreement) to which ChannelHealth is a party or involving a
director, officer or employee of ChannelHealth in his or her capacity as a
director, officer or employee of ChannelHealth;
(vi) except for trade payables, advances for employee
reimbursable expenses and for indebtedness for borrowed money incurred in each
case in the ordinary course of business and consistent with past practice,
borrow monies for any reason or draw down on any line of credit or debt
obligation, or become the guarantor, surety, endorser or otherwise liable for
any debt, obligation or liability (contingent or otherwise) of any other Person;
(vii) subject to any Lien, except for Permitted Exceptions,
any of the properties or assets (whether tangible or intangible) of
ChannelHealth;
(viii) acquire any material properties or assets or sell,
assign, transfer, convey, lease or otherwise dispose of any of the material
properties or assets (except for fair consideration in the ordinary course of
business consistent with past practice) of ChannelHealth except with respect to
the Retained Assets, as contemplated by the ChannelHealth/IDX Asset Purchase
Agreement;
(ix) cancel or compromise any debt or claim or waive or
release any material right of ChannelHealth except in the ordinary course of
business consistent with past practice;
(x) enter into any commitment for capital expenditures in
excess of $50,000 for any individual commitment and $150,000 for all commitments
in the aggregate;
(xi) enter into, modify or terminate any labor or
collective bargaining agreement of ChannelHealth or, through negotiation or
otherwise, make any commitment or incur any liability to any labor organization
with respect to ChannelHealth;
48
(xii) enter into or agree to enter into any merger or
consolidation with any corporation or other Person, or engage in any new
business or invest in, make a loan, advance or capital contribution to, or
otherwise acquire the securities of any other Person (other than advances for
reimbursable employee expenses);
(xiii) except for transfers of cash pursuant to normal cash
management practices or otherwise in the ordinary course of business, make any
investments in or loans to, or pay any fees or expenses to, or enter into or
modify any Contract with, IDX or any Affiliate of IDX;
(xiv) make any change in any method of accounting for Tax
or financial accounting purposes (except as required by GAAP), make or revoke
any Tax election or settle or compromise any Tax dispute;
(xv) amend the ChannelHealth/IDX Asset Purchase Agreement;
or
(xvi) agree to do anything prohibited by this Section 8.2
or anything which would make any of the representations and warranties of
ChannelHealth in this Agreement untrue or incorrect in any material respect as
of any time through and including the Effective Time.
(c) Except as otherwise expressly contemplated by this
Agreement or with the prior written consent of IDX and ChannelHealth, Allscripts
shall not, and shall cause Parent not to:
(i) except as contemplated by Section 7.5(c), amend its
certificate of incorporation or by-laws;
(ii) effect any recapitalization, reclassification, stock
split or like change the capitalization of Allscripts or Parent; or
(iii) issue any additional shares of Allscripts Common
Stock or Parent Common Stock other than at fair market value, as determined by
resolution of the Allscripts Board of Directors, or options or warrants to
acquire such shares except (A) in the case of stock options, pursuant to the
Allscripts Option Plan at fair market value at the date of grant or (B)
otherwise at fair market value, as determined by resolution of the Allscripts
Board of Directors.
8.3 Consents.
(a) IDX and ChannelHealth shall obtain, and Allscripts
shall cooperate with IDX to obtain, at the earliest practicable date all
consents and approvals required to consummate the transactions contemplated by
this Agreement, including, without limitation, the consents and approvals
referred to in Section 6.A.3 and 6.6 hereof.
(b) Allscripts and Parent shall obtain, and IDX and
ChannelHealth shall cooperate with Allscripts and Parent to obtain, at the
earliest practicable date all consents and approvals required to consummate the
49
transactions contemplated by this Agreement, including, without limitation, the
consents and approvals referred to in Section 7.3(b) hereof.
8.4 Filings with Governmental Bodies.
(a) As promptly as practicable after the execution of this
Agreement, each party shall, in cooperation with the other, file or cause to be
filed any reports, notifications or other information that may be required under
the HSR Act and shall furnish or cause to be furnished to the other all such
information in its possession as may be reasonably necessary for the completion
of the reports, notifications or submissions to be filed by the other. Each
party hereto agrees to use its best efforts to comply and cause its Affiliates
to comply in a full and timely manner with any request from a Governmental Body
for additional information.
(b) Notwithstanding anything to the contrary contained
herein, nothing in this Agreement will require Allscripts, IDX or ChannelHealth,
whether pursuant to an order of the Federal Trade Commission or the United
States Department of Justice or otherwise, to dispose of any assets, lines of
business or equity interests in order to obtain the consent of the Federal Trade
Commission or the United States Department of Justice to the transactions
contemplated by this Agreement.
8.5 Other Actions. Each of Parent, Allscripts, IDX and
ChannelHealth shall use its best efforts to (i) take all actions necessary or
appropriate to consummate the transactions contemplated by this Agreement and
(ii) cause the fulfillment at the earliest practicable date of all of the
conditions to their respective obligations to consummate the transactions
contemplated by this Agreement. IDX will use its best efforts to cause
ChannelHealth to comply with the covenants and obligations set forth herein and
Allscripts will use its best efforts to cause Parent to comply with the
covenants and obligations set forth herein.
8.6 No Solicitation. Prior to the Closing IDX will not, and
will not cause or permit ChannelHealth or any of IDX's or ChannelHealth's
directors, officers, employees, representatives or agents (collectively, the
"Representatives") to, directly or indirectly, (i) discuss, negotiate,
undertake, authorize, recommend, propose or enter into, either as the proposed
surviving, merged, acquiring or acquired corporation, any transaction involving
a merger, consolidation, business combination, purchase or disposition of any
amount of the assets or capital stock of or other equity interest in
ChannelHealth or of or in the Enterprise Solutions Division or Systems Division
of IDX as currently conducted by IDX or any Affiliate of IDX other than the
transactions contemplated by this Agreement (an "Acquisition Transaction"), (ii)
facilitate, encourage, solicit or initiate discussions, negotiations or
submissions of proposals or offers in respect of an Acquisition Transaction,
(iii) furnish or cause to be furnished to any Person any information concerning
the business, operations, properties or assets of ChannelHealth or IDX in
connection with an Acquisition Transaction or (iv) otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other Person to do or seek to do any of the foregoing. IDX will
50
inform Allscripts in writing immediately following the receipt by IDX,
ChannelHealth or any Representative of any proposal or inquiry in respect of any
Acquisition Transaction.
8.7 Preservation of Records. Subject to Section 11.3(c)
hereof (relating to the preservation of Tax records), IDX, Allscripts and Parent
agree that each of them shall preserve and keep the records held by it relating
to the business of ChannelHealth for a period of three years from the Closing
Date and shall make such records and personnel available to the other as may be
reasonably required by such party in connection with, among other things, any
insurance claims by, legal proceedings against or governmental investigations of
IDX, Allscripts or Parent or any of their respective Affiliates or in order to
enable IDX, Allscripts or Parent to comply with their respective obligations
under this Agreement, the Ancillary Agreements and each other agreement,
document or instrument contemplated hereby or thereby. In the event IDX, on the
one hand, or Allscripts or Parent, on the other, wishes to destroy such records
after that time, such party shall first give 90 days prior written notice to the
other and such other party shall have the right at its option and expense, upon
prior written notice given to such party within that 90 day period, to take
possession of the records within 180 days after the date of such notice.
8.8 Publicity. No party shall issue any press release or
public announcement concerning this Agreement or the transactions contemplated
hereby without obtaining the prior written approval of the other parties hereto,
which approval will not be unreasonably withheld or delayed, unless, in the sole
judgment of Allscripts or IDX, disclosure is otherwise required by applicable
Law or by the applicable rules of any stock exchange on which Allscripts, Parent
or IDX lists securities, provided that, to the extent required by applicable
law, the party intending to make such release shall use its best efforts
consistent with such applicable law to consult with the other party with respect
to the text thereof; provided, however, that after each of the signing of this
Agreement and the Closing, Allscripts and IDX shall make a public announcement
of the transaction described in this Agreement, the contents of which shall be
mutually agreeable to Allscripts and IDX (the "Initial Releases") and thereafter
either Allscripts or IDX may make a public announcement of the information set
forth on the Initial Releases without the consent of the other party.
8.9 Repayment of Loans. On or prior to the Closing Date,
all loans or other advances to IDX or any of its Affiliates listed on Schedule
6.22 (the "Affiliate Loans"), including any accrued and unpaid interest thereon,
shall be repaid in full to ChannelHealth.
8.10 Use of Names. IDX hereby agrees that upon the
consummation of the transactions contemplated hereby, Allscripts and
ChannelHealth shall have the sole right to the use of each name set forth on
Schedule 8.10 (collectively, the "Names") and IDX shall not, and shall not cause
or permit any Affiliate to, use any of the Names or any variation or simulation
of the Names in any business involving the provision of healthcare information
and/or point of care clinical applications and devices or any related business.
If, after the Closing Date, ChannelHealth changes its name or ChannelHealth and
its Affiliates cease to use any of the Names or any variation thereof in any of
51
their businesses for a period of twelve consecutive months, then the foregoing
restriction with respect to the use of the particular Name of which
ChannelHealth's use has ceased shall cease and IDX may use such Name in the
conduct of any business.
8.11 Stock Options.
(a) IDX agrees that IDX shall be responsible for all of its
obligations and rights with respect to any stock options held on the Closing
Date by any employees of ChannelHealth under IDX's stock option plans.
(b) Promptly after the Closing, Parent shall issue stock
options under its employee stock equity plan ("Parent Stock Options") to
purchase shares of Parent Common Stock to each of ChannelHealth's employees in
such amounts, and with such vesting, as is determined by Parent in accordance
with the terms of Parent's employee stock equity plan. Such Parent Stock Options
shall be subject to the benefits of a Registration Statement on Form S-8.
8.12 Employees and Employee Benefit Obligations.
(a) The ChannelHealth Surviving Corporation shall continue
the employment at will of each of the management level employees identified on
Schedule 8.12(a) (the "Management Employees") for initially the same positions
and occupations and location and at initially the same or greater rate of base
pay as those in and at which they were employed by the Company immediately prior
to the Closing Date.
(b) The ChannelHealth Surviving Corporation shall continue
the employment at will of each of the operational level employees identified on
Schedule 8.12(b) (the "Operational Employees" and together with the Management
Employees, the "Hired Employees") for initially the same or greater rate of base
pay as those in and at which they were employed by the Company immediately prior
to the Closing Date.
(c) For the period commencing on the Closing Date through
December 31, 2001 (the "Transition Period"), the ChannelHealth Surviving
Corporation shall provide the Hired Employees with benefits that, in the
aggregate, are substantially comparable to the benefits provided to the Hired
Employees under the Employee Benefits Plans, at no additional cost to the Hired
Employees. The Hired Employees shall retain for eligibility and vesting purposes
with respect to the employee benefit plans of the ChannelHealth Surviving
Corporation or Allscripts covering the Hired Employees (collectively, the
"Allscripts Plans"), any credit for their past service under the Employee
Benefit Plans immediately prior to the Closing Date. Without limiting the
foregoing, during the Transition Period, Hired Employees shall be provided with
benefits under the Allscripts Plans that are no less favorable than benefits
provided to similarly situated employees of Allscripts. Hired Employees shall be
eligible to participate in the Allscripts Plans without any evidence of
insurability and without the application of any pre-existing physical or mental
condition restrictions except to the extent applicable under the Employee
Benefit Plans, but counting expenditures made prior to the Closing Date for
purposes of applying deductible, out-of-pocket maximums and other such matters.
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(d) As of the Closing Date, all Hired Employees shall
immediately cease to participate or maintain eligibility to participate as
active employees in all of the Employee Benefit Plans and Pension Plans.
(e) Except as set forth in Schedule 8.12(e), nothing in
this Agreement, expressed or implied, shall confer upon any Hired Employee or
legal representative thereof any rights or remedies, including, without
limitation, any right to employment, or continued employment for any specified
period or the benefits, terms and conditions thereof, of any nature or kind
whatsoever under or by reason of this Agreement.
8.13 Listing of Parent Shares and Earnout Shares. Prior to
the Effective Time, Parent shall take all actions necessary to authorize the
shares of Parent Common Stock to be issued in the Mergers and the Earnout Shares
for quotation on the Nasdaq, subject to official notice of issuance.
8.14 Allscripts Special Meeting.
(a) Allscripts shall call a meeting of its stockholders to
be held as promptly as practicable after the date hereof for purposes of voting
to authorize, as necessary, the transactions contemplated by this Agreement (the
"Allscripts Special Meeting"). Allscripts shall comply with all applicable
provisions of the DGCL in the calling and holding of the Allscripts Special
Meeting.
(b) Allscripts, acting through its Board of Directors,
shall include in any proxy statement or written action relating to the
Allscripts Special Meeting the recommendation of its Board of Directors that
Allscripts's stockholders vote to authorize, as necessary, the transactions
contemplated by this Agreement, and shall otherwise use its best efforts to
obtain its stockholders' approval of the transaction.
(c) By signing a Voting Agreement and Irrevocable Proxy on
the forms of Exhibits B-1 and B-2 hereto, each of Morgan Stanley Venture
Partners III, L.P., Morgan Stanley Venture Investors III, L.P. and Liberty
Partners Holdings 6, LLC have agreed to (i) vote all shares of Allscripts Common
Stock that are beneficially owned by him or it, or for which he or it has voting
authority, to authorize, as necessary, the transactions contemplated by this
Agreement and (ii) otherwise use his or its best efforts to obtain Allscripts's
stockholders' approval.
8.15 ChannelHealth Special Meeting.
(a) ChannelHealth shall call a meeting of its stockholders
to be held as promptly as practicable after the date hereof for purposes of
voting upon this Agreement and the ChannelHealth Merger (the "ChannelHealth
Special Meeting"). ChannelHealth shall comply with all applicable provisions of
the DGCL in the calling and holding of the ChannelHealth Special Meeting.
(b) ChannelHealth, acting through its Board of Directors,
shall include in any proxy statement or written action relating to the
ChannelHealth Special Meeting the recommendation of its Board of Directors that
ChannelHealth's stockholders vote in favor of the adoption of this Agreement and
53
the approval of the ChannelHealth Merger, and shall otherwise use its best
efforts to obtain its stockholders' approval of the transaction.
(c) By signing a Voting Agreement and an Irrevocable Proxy
on the forms of Exhibits A-1 and A-2 hereto, each of IDX and Pequot have agreed
to (i) vote all shares of ChannelHealth Stock that are beneficially owned by it,
or for which it has voting authority, in favor of the adoption of this Agreement
and the approval of the ChannelHealth Merger and (ii) otherwise use its best
efforts to obtain ChannelHealth's stockholders' approval.
8.16 Blue Sky Approvals. Parent will file all documents
required to obtain the "Blue Sky" permits and approvals, if any, required to
carry out the transactions contemplated by this Agreement, will pay all expenses
incident thereto and will use its best efforts to obtain such permits and
approvals; provided, however, that Parent shall not be required in connection
with this Section 8.16 to qualify as a foreign corporation or execute a general
consent to service of process in any jurisdiction.
8.17 Indemnification of Officers and Directors.
(a) From and after the Effective Time, Parent and
Allscripts shall, jointly and severally, guarantee and shall cause ChannelHealth
to maintain and perform ChannelHealth's existing indemnification provisions with
respect to present and former directors and officers of ChannelHealth for all
losses, claims, damages, expenses or liabilities arising out of actions or
omissions or alleged actions or omissions in their capacities as directors
and/or officers occurring at or prior to the Closing to the extent required
under ChannelHealth's certificate of incorporation and by-laws in effect as of
the date hereof and permitted under and consistent with applicable law, for a
period of not less than six years after the Closing.
(b) From and after the Effective Time, Parent and the
ChannelHealth Surviving Corporation shall guarantee and shall cause the
Allscripts Surviving Corporation to maintain and perform Allscripts's existing
indemnification provisions with respect to present and former directors and
officers of Allscripts for all losses, claims, damages, expenses or liabilities
arising out of actions or omissions or alleged actions or omissions in their
capacities as directors and/or officers occurring at or prior to the Closing to
the extent required under Allscripts's certificate of incorporation and by-laws
in effect as of the date hereof and permitted under and consistent with
applicable law, for a period of not less than six years after the Closing.
(c) For six years from the Effective Time, Parent shall,
maintain in effect (i) ChannelHealth's current directors' and officers'
liability insurance covering those persons who are currently covered by
ChannelHealth's directors' and officers' liability insurance policy and (ii)
Allscripts's current directors' and officers' liability insurance covering those
persons who are currently covered by Allscripts's directors' and officers'
liability insurance policy; provided, however, that in no event shall Parent be
required to expend for any one year an amount in excess of 200% of the annual
54
premiums currently paid by ChannelHealth for such insurance described in clause
(i); and, provided, further, however, that if the annual premiums of such
insurance coverage exceed such amount, Parent shall be obligated to obtain a
policy with the greatest coverage available for a cost not exceeding such
amount.
8.18 Proxy Statement/Prospectus; Registration Statement. As
promptly as practical after the execution of this Agreement, Allscripts and
Parent shall prepare and file with the Commission the Registration Statement, in
which the Proxy Statement will be included as a prospectus; provided, however,
that Allscripts may delay the filing of the Registration Statement until
approval of the Proxy Statement by the Commission. Each of Allscripts and Parent
shall use all reasonable efforts to cause the Registration Statement to become
effective as soon after such filing as practicable. Each of Allscripts and
Parent will promptly respond to any comments of the Commission and will use its
commercially reasonable efforts to have the Proxy Statement cleared by the
Commission and the Registration Statement declared effective under the
Securities Act as promptly as practicable after such filings and will cause the
Proxy Statement and the prospectus contained within the Registration Statement
to be mailed to its stockholders at the earliest practicable time after both the
Proxy Statement is cleared by the Commission and the Registration Statement is
declared effective under the Securities Act. Allscripts will notify
ChannelHealth and IDX promptly upon the receipt of any comments from the
Commission or its staff or any other government officials and of any request by
the Commission or its staff or any other government officials for amendments or
supplements to the Registration Statement, the Proxy Statement or any filing
pursuant to Section 8.16 or for additional information and will supply
ChannelHealth and IDX with copies of all correspondence between Allscripts and
Parent or any of their respective representatives, on the one hand, and the
Commission, or its staff or any other government officials, on the other hand,
with respect to the Registration Statement, the Proxy Statement, the Mergers or
any filing pursuant to Section 8.16. Allscripts will cause all documents that it
is responsible for filing with the Commission or other regulatory authorities
under this Section 8.18 or Section 8.16 to comply in all material respects with
all applicable requirements of law and the rules and regulations promulgated
thereunder. Whenever any event occurs which is required to be set forth in an
amendment or supplement to the Proxy Statement, the Registration Statement or
any filing pursuant to Section 8.16, Allscripts will promptly inform
ChannelHealth and IDX of such occurrence and cooperate in filing with the
Commission or its staff or any other government officials, and/or mailing to
stockholders of Allscripts, such amendment or supplement. IDX shall obtain the
opinion of Hale and Dorr LLP, counsel to IDX (or other counsel reasonably
acceptable to IDX and Allscripts), concerning the federal income tax
consequences of the ChannelHealth Merger to the stockholders of ChannelHealth,
for inclusion in the Registration Statement. Allscripts shall obtain the opinion
of Weil, Gotshal & Manges LLP, counsel to Allscripts, concerning the federal
income tax consequences of the Allscripts Merger to the stockholders of
Allscripts, for inclusion in the Registration Statement. Such counsel may
require and rely on representations made by the parties hereto in rendering such
opinions.
8.19 Rule 144. Parent will file all reports required to be
filed by it under the Securities Act and the Exchange Act in a timely manner
and, if at any time prior to the seventh anniversary of the Effective Time
55
Parent is not required to file such reports, it will, on the request of the
ChannelHealth Stockholders, make publicly available other information so long as
is necessary to permit sales of its securities pursuant to Rule 144 promulgated
under the Securities Act, and take such further action as the ChannelHealth
Stockholders may reasonably request to enable the ChannelHealth Stockholders to
sell shares of Parent Common Stock without registration under the Securities Act
as provided by Rule 144.
8.20 Tax Covenant. Prior to the Effective Time, Allscripts
will not agree to all or substantially all of the material terms of a
transaction that (i) would be integrated with the Mergers for federal income tax
purposes (an "Integrated Transaction") and (ii) would cause the stockholders of
Allscripts and the ChannelHealth Stockholders immediately before the Mergers and
any Integrated Transferors (as defined below) not to be in control (within the
meaning of Section 368(c) of the Code) of Parent immediately after the Mergers.
For purposes of this Agreement, an "Integrated Transferor" includes any Person
who receives shares of Parent capital stock in an Integrated Transaction and
would be treated as a transferor of property to Parent in such transaction for
purposes of Section 351 of the Code.
8.21 Stock Rights and Restrictions Agreement. At or prior
to the Effective Time, Parent and Allscripts will all take actions under the
DGCL or their respective certificates of incorporation or by-laws as may be
required to enable Parent to comply with its obligations under the Stock Rights
and Restrictions Agreement to be entered into at the Closing Date between Parent
and IDX, as contemplated by this Agreement.
Article IX
CONDITIONS TO CLOSING
9.1 Conditions Precedent to Obligations of Parent and
Allscripts. The obligations of Parent and Allscripts to consummate the
transactions contemplated by this Agreement are subject to the fulfillment, on
or prior to the Closing Date, of each of the following conditions (any or all of
which may be waived by Parent or Allscripts in whole or in part to the extent
permitted by applicable law):
(a) all representations and warranties of IDX and
ChannelHealth contained herein shall be true and correct as of the date hereof,
except those representations and warranties that address matters only as of a
particular date (which shall be true and correct as of such date);
(b) all representations and warranties of IDX and
ChannelHealth contained herein qualified as to materiality shall be true and
correct, and all representations and warranties of IDX and ChannelHealth
contained herein not qualified as to materiality shall be true and correct in
all material respects, at and as of the Closing Date with the same effect as
though those representations and warranties had been made again at and as of
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that date except for (i) changes contemplated or permitted by this Agreement,
(ii) those representations and warranties that address matters only as of a
particular date (which shall be true and correct as of such date, subject to
clause (iii)), and (iii) where the failure of the representations and warranties
to be true and correct would not reasonably be expected to have a Material
Adverse Effect (it being agreed that this clause (iii) shall be inapplicable to
any portion of a representation and warranty which already contains a Material
Adverse Effect or other materiality qualification);
(c) IDX and ChannelHealth shall have performed and complied
in all material respects with all obligations and covenants required by this
Agreement to be performed or complied with by them on or prior to the Closing
Date;
(d) Parent and Allscripts shall have been furnished with
certificates (dated the Closing Date and in form and substance reasonably
satisfactory to Allscripts) executed by the Chief Executive Officer and Chief
Financial Officer of each of IDX and ChannelHealth certifying as to the
fulfillment of the conditions specified in Sections 9.1(a), 9.1(b) and 9.1(c)
hereof;
(e) IDX and ChannelHealth shall have obtained all consents
and waivers referred to in Section 6.6 hereof, and all consents and waivers
required by the terms of any Material Contract or IDX Document with respect to
the transactions contemplated by this Agreement, each in a form reasonably
satisfactory to Parent and Allscripts, except as otherwise provided in Schedules
6.6 or 6.17;
(f) no action, suit or proceeding shall be pending by or
before any Governmental Body wherein an unfavorable judgment, order, decree,
stipulation or injunction would reasonably be expected to (i) prevent
consummation of any of the transactions contemplated by this Agreement or (ii)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, and no such judgment, order, decree, stipulation or
injunction shall be in effect;
(g) the waiting period under the HSR Act shall have expired
or early termination shall have been granted;
(h) all Affiliate Loans shall have been repaid to
ChannelHealth prior to the Closing Date;
(i) Allscripts shall have received an opinion of Weil,
Gotshal & Manges LLP, special counsel to Allscripts, dated as of the Closing
Date, in form and substance reasonably satisfactory to Allscripts, substantially
to the effect that, on the basis of the facts, representations and assumptions
set forth in such opinion: the Allscripts Merger shall be treated as a
reorganization within the meaning of Section 368(a) of the Code or an exchange
under Section 351 of the Code. In rendering such opinion, Weil, Gotshal & Manges
LLP may require and rely upon representations and covenants made by the parties
hereto;
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(j) the Registration Statement shall have become effective
under the Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order; and
(k) the requisite approval by Allscripts's stockholders of
the transactions contemplated by this Agreement shall have been obtained.
9.2 Conditions Precedent to Obligations of IDX and
ChannelHealth . The obligations of IDX and ChannelHealth to consummate the
transactions contemplated by this Agreement are subject to the fulfillment,
prior to or on the Closing Date, of each of the following conditions (any or all
of which may be waived by IDX or ChannelHealth in whole or in part to the extent
permitted by applicable law):
(a) all representations and warranties of Parent and
Allscripts contained herein shall be true and correct as of the date hereof;
(b) all representations and warranties of Parent and
Allscripts contained herein qualified as to materiality shall be true and
correct, and all representations and warranties of Parent and Allscripts
contained herein not qualified as to materiality shall be true and correct in
all material respects, at and as of the Closing Date with the same effect as
though those representations and warranties had been made again at and as of
that date except for (i) changes contemplated or permitted by this Agreement,
(ii) those representations and warranties that address matters only as of a
particular date (which shall be true and correct as of such date, subject to
clause (iii)), and (iii) where the failure of the representations and warranties
to be true and correct would not reasonably be expected to have a material
adverse effect on the business, properties, results of operations or financial
condition of Allscripts and its subsidiaries, taken as a whole (it being agreed
that this clause (iii) shall be inapplicable to any portion of a representation
and warranty which already contains a material adverse effect or other
materiality qualification);
(c) Parent and Allscripts shall have performed and complied
in all material respects with all obligations and covenants required by this
Agreement to be performed or complied with by Parent and Allscripts on or prior
to the Closing Date;
(d) IDX and ChannelHealth shall have been furnished with
certificates (dated the Closing Date and in form and substance reasonably
satisfactory to IDX and ChannelHealth) executed by the Chief Executive Officer
and Chief Financial Officer of each of Parent and Allscripts certifying as to
the fulfillment of the conditions specified in Sections 9.2(a), 9.2(b) and
9.2(c);
(e) no action, suit or proceeding shall be pending by or
before any Governmental Body wherein an unfavorable judgment, order, decree,
stipulation or injunction would reasonably be expected to (i) prevent
consummation of any of the transactions contemplated by this Agreement or (ii)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, and no such judgment, order, decree, stipulation or
injunction shall be in effect;
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(f) the waiting period under the HSR Act shall have expired
or early termination shall have been granted;
(g) the shares of Parent Common Stock to be issued in the
Merger and the Earnout Shares shall have been authorized for quotation on the
Nasdaq, subject to official notice of issuance;
(h) Parent and Allscripts shall have obtained all of the
waivers, permits, consents, approvals or other authorizations and effected all
of the requisitions, filings and notices which are required to be obtained by
them to consummate the transactions contemplated by this Agreement, except for
any which if not obtained or effected would not reasonably be expected to have a
Material Adverse Effect;
(i) the Registration Statement shall have become effective
under the Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order; and
(j) the requisite approval by ChannelHealth's stockholders
of this Agreement and the ChannelHealth Merger shall have been obtained.
Article X
DOCUMENTS TO BE DELIVERED
10.1 Documents to be Delivered by IDX and ChannelHealth. At
the Closing, IDX and ChannelHealth shall deliver, or cause to be delivered, to
Allscripts the following:
(a) the certificates referred to in Section 9.1(d) hereof;
(b) copies of all consents and waivers referred to in
Section 9.1(e) hereof;
(c) written evidence of the repayment to ChannelHealth of
all Affiliate Loans;
(d) the Strategic Alliance Agreement, substantially in the
form of Exhibit D hereto, duly executed by IDX;
(e) the Stock Rights and Restrictions Agreement,
substantially in the form of Exhibit E hereto, duly executed by IDX;
(f) the Cross-License Agreement, substantially in the form
of Exhibit F hereto, duly executed by IDX;
(g) the Transition Services Agreement, based on the terms
of Exhibit G hereto, duly executed by IDX;
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(h) the Facilities Lease Agreement, substantially in the
form of Exhibit H hereto, duly executed by IDX;
(i) certificates of good standing with respect to
ChannelHealth issued by the Secretary of State of the State of Delaware and for
each state in which ChannelHealth is qualified to do business as a foreign
corporation; and (j) the executive employment agreement between Pamela J. Pure
and Allscripts.
(k) such other documents as Allscripts shall reasonably
request.
10.2 Documents to be Delivered by Allscripts. At the
Closing, Parent and Allscripts shall deliver to IDX and ChannelHealth the
following:
(a) the certificates referred to in Section 9.2(d) hereof;
(b) copies of all consents and waivers referred to in
Section 9.2(h);
(c) the Co-Marketing Agreement, substantially in the form
of Exhibit D hereto, duly executed by Allscripts;
(d) the Stock Rights and Restrictions Agreement,
substantially in the form of Exhibit E hereto, duly executed by Allscripts;
(e) the Cross-License Agreement, substantially in the form
of Exhibit F hereto, duly executed by Allscripts;
(f) the Transition Services Agreement, substantially in the
form of Exhibit G hereto, duly executed by Allscripts;
(g) the Facilities Lease Agreement, substantially in the
form of Exhibit H hereto, duly executed by Allscripts; and
(h) the executive employment agreement referred to in
Section 10.1(j) above.
Article XI
INDEMNIFICATION
11.1 Non-Tax Indemnification.
(a) IDX hereby agrees to indemnify and hold Parent,
Allscripts, ChannelHealth and their respective directors, officers, employees,
Affiliates, agents, successors and assigns (collectively, the "Allscripts
Indemnified Parties") harmless from and against:
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(i) any and all liabilities of ChannelHealth of every kind,
nature and description, absolute or contingent, as existing against
ChannelHealth prior to and including the Closing Date or thereafter coming into
being or arising by reason of any state of facts existing, or any transaction
entered into, on or prior to the Closing Date, except (A) to the extent that the
same have been fully provided for in the Balance Sheet and accrued and applied
as a liability therein; (B) to the extent that the same were incurred in the
ordinary course of business between the Balance Sheet Date and the Closing Date
and not as a result of any breach by IDX of any covenant set forth in Section
8.2 hereof, and were fully provided for in the Closing Date Balance Sheet and
accrued and applied as a liability therein; and (C) as disclosed in the
representations and warranties of IDX or ChannelHealth, the Schedules attached
hereto or any certificate delivered by or on behalf of IDX or ChannelHealth
pursuant to this Agreement;
(ii) any and all losses, liabilities, obligations, claims,
damages, costs and expenses arising out of or related (A) to the operation or
ownership of the businesses or properties comprising the Retained Assets or (B)
the authorization, approval, execution, delivery or performance of the
ChannelHealth/IDX Asset Purchase Agreement;
(iii) any and all losses, liabilities, obligations, claims,
damages, costs and expenses attributable to or resulting from any default under
or breach of any IDX Contract (A) by IDX, or (B) by ChannelHealth, which default
or breach, in the case of this subclause (B), occurs prior to the Closing Date
(except as provided for or disclosed in the exceptions clause set forth in
Section 11.1(a)(i) above); provided, however, IDX shall have no liability under
this Section 11.1(a)(iii) for any breach occurring after the Closing Date to the
extent such breach is attributable to the negligence or willful misconduct of
Parent, Allscripts, the ChannelHealth Surviving Corporation or any of their
Affiliates after the Closing Date;
(iv) any and all losses, liabilities, obligations, claims,
damages, costs and expenses attributable to or resulting from the litigation
identified on Schedule 6.17 (the "ChannelHealth Litigation") and any other
matter, claim, proceeding, dispute, state of facts or condition disclosed on any
Schedule hereto with respect to which such Schedule reflects that the Allscripts
Indemnified Parties are entitled to indemnification from IDX hereunder;
(v) any and all losses, liabilities, obligations, damages,
costs and expenses based upon, attributable to or resulting from the failure of
any representation or warranty of IDX or ChannelHealth set forth in Article VIA
or VI hereof, or any representation or warranty contained in any certificate
delivered by or on behalf of IDX or ChannelHealth pursuant to this Agreement, to
be true and correct in all respects as of the date made;
(vi) any and all losses, liabilities, obligations, damages,
costs and expenses based upon, attributable to or resulting from the breach of
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any covenant or other agreement on the part of IDX or ChannelHealth under this
Agreement; and
(vii) any and all notices, actions, suits, proceedings,
claims, demands, assessments, judgments, costs, penalties and expenses,
including attorneys' and other professionals' fees and disbursements
(collectively, "Expenses") incident to any and all losses, liabilities,
obligations, damages, costs and expenses with respect to which indemnification
is provided hereunder (collectively, "Losses").
(b) Allscripts and Parent, jointly and severally, hereby
agree to indemnify and hold IDX and its Affiliates, agents, successors and
assigns (collectively, the "IDX Indemnified Parties") harmless from and against:
(i) any and all Losses attributable to or resulting from
the conduct of the business or operations of ChannelHealth following the
Closing;
(ii) any and all Losses based upon, attributable to or
resulting from the failure of any representation or warranty of Allscripts or
Parent set forth in Article VII or Section 11.3(i) hereof, or any representation
or warranty contained in any certificate delivered by or on behalf of Allscripts
or Parent pursuant to this Agreement, to be true and correct in all respects as
of the date made;
(iii) any and all Losses based upon, attributable to or
resulting from the breach of any covenant or other agreement on the part of
Allscripts or Parent under this Agreement;
(iv) any and all Losses attributable to or resulting from
any default by the ChannelHealth Surviving Corporation under, or any breach by
the ChannelHealth Surviving Corporation of, any IDX Contract that occurs in
either case after the Closing Date; provided, however, neither Parent,
Allscripts nor the ChannelHealth Surviving Corporation shall have any liability
under this Section 11.1(b)(iv) for any such breach to the extent such breach is
attributable to the gross negligence or willful misconduct of IDX or any of its
Affiliates after the Closing Date; and
(v) any and all Expenses incident to the foregoing.
11.2 Non-Tax Indemnification Procedures.
(a) In the event that any Legal Proceedings shall be
instituted or that any claim or demand ("Claim") shall be asserted by any Person
in respect of which payment may be sought under Section 11.1 hereof, the
indemnified party shall reasonably and promptly cause written notice of the
assertion of any Claim of which it has knowledge which is covered by this
indemnity to be forwarded to the indemnifying party. The indemnifying party
shall have the right, at its sole option and expense, to be represented by
counsel of its choice, which must be reasonably satisfactory to the indemnified
party, and to defend against, negotiate, settle or otherwise deal with any Claim
which relates to any Losses indemnified against hereunder. If the indemnifying
62
party elects to defend against, negotiate, settle or otherwise deal with any
Claim which relates to any Losses indemnified against hereunder, it shall within
five days (or sooner, if the nature of the Claim so requires) notify the
indemnified party of its intent to do so. If the indemnifying party elects not
to defend against, negotiate, settle or otherwise deal with any Claim which
relates to any Losses indemnified against hereunder, fails to notify the
indemnified party of its election as herein provided or contests its obligation
to indemnify the indemnified party for such Losses under this Agreement, the
indemnified party may defend against, negotiate, settle or otherwise deal with
such Claim. If the indemnified party defends any Claim, then the indemnifying
party shall reimburse the indemnified party for the Expenses of defending such
Claim upon submission of periodic bills. If the indemnifying party shall assume
the defense of any Claim, the indemnified party may participate, at his or its
own expense, in the defense of such Claim; provided, however, that such
indemnified party shall be entitled to participate in any such defense with
separate counsel at the expense of the indemnifying party if, so requested by
the indemnifying party to participate or (ii) in the reasonable opinion of
counsel to the indemnified party, a conflict or potential conflict exists
between the indemnified party and the indemnifying party that would make such
separate representation advisable; and provided, further, that the indemnifying
party shall not be required to pay for more than one such counsel for all
indemnified parties in connection with any Claim. The parties hereto agree to
cooperate fully with each other in connection with the defense, negotiation or
settlement of any such Claim. The indemnified party shall not agree to such
settlement of any such Legal Proceeding or Claim without the prior written
consent of the indemnifying party. The indemnifying party shall have full
discretion to agree to any settlement of any such Legal Proceeding or Claim;
provided, however, that the indemnifying party may not agree to any settlement
of such Legal Proceeding or Claim that does not include a release of the
indemnified party from all liability with respect thereto without the prior
written consent of the indemnified party, which consent shall not be
unreasonably withheld or delayed.
(b) After any final judgment or award shall have been
rendered by a court, arbitration board or administrative agency of competent
jurisdiction and the expiration of the time in which to appeal therefrom, or a
settlement shall have been consummated, or the indemnified party and the
indemnifying party shall have arrived at a mutually binding agreement with
respect to a Claim hereunder, the indemnified party shall forward to the
indemnifying party notice of any sums due and owing by the indemnifying party
pursuant to this Agreement with respect to such matter and the indemnifying
party shall be required to pay all of the sums so due and owing to the
indemnified party by wire transfer of immediately available funds within 10
business days after the date of such notice.
(c) Notwithstanding the foregoing, IDX shall continue to
defend the Claim comprising the ChannelHealth Litigation until such Claim is
disposed of as described in Section 11.2(b).
(d) The failure of the indemnified party to give reasonably
prompt notice of any Claim shall not release, waive or otherwise affect the
indemnifying party's obligations with respect thereto except to the extent that
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the indemnifying party can demonstrate actual loss and prejudice as a result of
such failure.
11.3 Tax Matters.
(a) Tax Indemnification. IDX agrees to be responsible for
and to indemnify and hold the Allscripts Indemnified Parties harmless from and
against any and all Taxes that may be imposed upon or assessed against
ChannelHealth or the assets thereof:
(A) with respect to all taxable periods ending on or prior
to the Closing Date;
(B) with respect to any and all Taxes of ChannelHealth for
the period allocated to IDX pursuant to Section 11.3(b)(iv);
(C) arising by reason of any breach by ChannelHealth or any
inaccuracy of any of the representations contained in Section 6.10 hereof;
(D) by reason of being a successor-in-interest or
transferee of another entity;
(E) with respect to any and all Taxes of any member of a
consolidated, combined or unitary group of which ChannelHealth (or any
predecessor) is or was a member on or prior to the Closing Date, by reason of
the liability of ChannelHealth pursuant to Treasury Regulation Section
1.1502-6(a) or any analogous or similar state, local or foreign Law or
regulation; and
(F) by reason of the transactions contemplated by Article
IV hereof.
IDX shall also pay and shall indemnify and hold harmless the Allscripts
Indemnified Parties from and against any losses, damages, liabilities,
obligations, deficiencies, costs and expenses (including, without limitation,
reasonable expenses and fees for attorneys and accountants) ("Related Costs")
incurred in connection with the Taxes for which IDX is responsible to indemnify
the Allscripts Indemnified Parties pursuant to this Section 11.3(a) (or any
asserted deficiency, claim, demand, action, suit, proceeding, judgment or
assessment, including the defense or settlement thereof, relating to such Taxes)
or the enforcement of this Section 11.3(a).
(b) Preparation of Tax Returns; Payment of Taxes.
(i) IDX shall (A) include ChannelHealth and (where
applicable) any of its Subsidiaries in (1) the U.S. consolidated federal income
Tax Returns of IDX required to be filed after the date hereof for all taxable
periods ending on or before the Closing Date and (2) where applicable, all
combined consolidated or unitary Tax Returns that are required to be filed by
IDX for any taxable period ending on or before the Closing Date and (B) cause
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ChannelHealth to file all Tax Returns required to be filed by ChannelHealth on
or prior to the Closing Date. IDX shall pay any and all Taxes due with respect
to such Tax Returns. All Tax Returns described in this Section 11.3(b)(i) shall
be prepared in a manner consistent with prior practice unless a past practice
has been finally determined to be incorrect by the applicable taxing authority
or a contrary treatment is required by applicable tax Laws (or judicial or
administrative interpretations thereof). IDX shall cause ChannelHealth to
provide Allscripts with copies of such completed Tax Returns at least 10 days
prior to the filing date, and Allscripts shall be provided an opportunity to
review such Tax Returns and supporting workpapers and Schedules prior to the
filing of such Tax Returns. The failure of Allscripts to propose any changes to
any such Tax Return within such 10 days shall be deemed to be an indication of
its approval thereof. IDX and Allscripts shall attempt in good faith mutually to
resolve any disagreements regarding such Tax Returns prior to the due date for
filing thereof. Any disagreements regarding such Tax Returns which are not
resolved prior to the filing thereof shall be promptly resolved pursuant to
Section 11.3(f) which shall be binding on the parties.
(ii) Following the Closing, Allscripts shall be responsible
for preparing or causing to be prepared all federal, foreign, state and local
Tax Returns required to be filed by ChannelHealth after the Closing Date.
(iii) Not later than five days before the due date for
payment of Taxes with respect to any Tax Returns which Allscripts has the
responsibility to file, IDX shall pay to Allscripts an amount equal to that
portion of the Taxes shown on such return for which IDX has an obligation to
indemnify Allscripts and its Affiliates pursuant to the provisions of Section
11.3(a).
(iv) For federal income Tax purposes, the taxable year of
ChannelHealth shall end as of the close of the Closing Date and, with respect to
all other Taxes, IDX and Allscripts will, unless prohibited by applicable law,
close the taxable period of ChannelHealth as of the close of the Closing Date.
Neither IDX nor Allscripts shall take any position inconsistent with the
preceding sentence on any Tax Return. In any case where applicable law does not
permit ChannelHealth to close its taxable year on the Closing Date or in any
case in which a Tax is assessed with respect to a taxable period which includes
the Closing Date (but does not begin or end on that day), then Taxes, if any,
attributable to the taxable period of ChannelHealth beginning before and ending
after the Closing Date shall be allocated (i) to IDX for the period up to and
including the Closing Date, and (ii) to Allscripts for the period subsequent to
the Closing Date. Any allocation of income or deductions required to determine
any Taxes attributable to any period beginning before and ending after the
Closing Date shall be prepared by Allscripts and shall be made by means of a
closing of the books and records of ChannelHealth as of the close of the Closing
Date, provided that exemptions, allowances or deductions that are calculated on
an annual basis (including, but not limited to, depreciation and amortization
deductions) shall be allocated between the period ending on the Closing Date and
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the period after the Closing Date in proportion to the number of days in each
such period. Allscripts shall provide IDX with a schedule showing the
computation of the allocation at least 30 days prior to the due date for filing
a Tax Return which includes the Closing Date. IDX shall have the right to review
such schedule, and Allscripts and IDX shall attempt in good faith mutually to
resolve any disagreements regarding the determination of such allocation. Any
disagreements regarding such determination shall be resolved pursuant to Section
11.3(f). Any amount owing from IDX under this Section 11.3(b)(iv) shall be paid
no later than five days prior to the filing of the underlying Tax Return.
(v) With respect to any Tax Returns required to be filed by
Allscripts with respect to any taxable period of ChannelHealth ending on or
before the Closing Date, Allscripts shall provide IDX with a copy of such
completed Tax Returns at least 10 days prior to the due date for filing of such
Tax Returns. IDX shall have the right to review such Tax Returns, and Allscripts
and IDX shall attempt in good faith mutually to resolve any disagreements
regarding the preparation thereof prior to filing thereof. The failure of IDX to
propose any changes to any such Tax Return within such 10 days shall be deemed
to be an indication of its approval thereof. Any disagreements regarding such
determination shall be resolved pursuant to Section 11.3(f). If such
disagreement cannot be resolved prior to the due date for filing such Tax
Return, Allscripts may cause such Tax Return to be filed in the manner proposed
by Allscripts, without prejudice to IDX's right to pursue a final resolution of
such disagreement. Any amount owing from IDX under this Section 11.3(b)(v) shall
be paid no later than five days prior to the filing of the underlying Tax
Return.
(c) Cooperation with Respect to Tax Returns. Allscripts and
IDX agree to furnish or cause to be furnished to each other, and each at their
own expense, as promptly as practicable, such information (including access to
books and records) and assistance, including making employees available on a
mutually convenient basis to provide additional information and explanations of
any material provided, relating to ChannelHealth as is reasonably necessary for
the filing of any Tax Return, for the preparation for any audit, and for the
prosecution or defense of any claim, suit or proceeding relating to any
adjustment or proposed adjustment with respect to Taxes. Allscripts or
ChannelHealth shall retain in its possession, and shall provide IDX reasonable
access to (including the right to make copies of), such supporting books and
records and any other materials that IDX may specify with respect to Tax matters
relating to any taxable period ending on or prior to the Closing Date until the
relevant statute of limitations has expired. After such time, Allscripts may
dispose of such material, provided that prior to such disposition Allscripts
shall give IDX a reasonable opportunity to take possession of such materials.
(d) Carrybacks. IDX shall pay to Allscripts the amount of
any Tax benefit (including interest thereon) realized by IDX or any Affiliate
thereof as a result of the carryback of any Tax loss, deduction or credit of
ChannelHealth from any taxable period beginning after the Closing Date to a
taxable period ending on or before the Closing Date. IDX shall pay such amount
to Allscripts within 10 business days after such Tax benefit is realized by IDX
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or any Affiliate of it as a refund or otherwise, provided that Allscripts shall
return to IDX the amount, if any, by which the amount of such Tax benefit is
thereafter reduced pursuant to a final determination.
(e) Transfer Taxes. IDX shall be liable for and shall pay
(and shall indemnify and hold harmless Allscripts against) all sales, use,
stamp, documentary, filing, recording, transfer or similar fees or Taxes or
governmental charges (including, without limitation, real property transfer
gains Taxes, UCC-3 filing fees, FAA, ICC, DOT, real estate and motor vehicle
registration, title recording or filing fees and other amounts payable in
respect of transfer filings) as levied by any taxing authority or governmental
agency in connection with the transactions contemplated by this Agreement (other
than Taxes measured by or with respect to income imposed on Allscripts or its
Affiliates). IDX hereby agree to file all necessary Documents (including, but
not limited to, all Tax Returns) with respect to all such amounts in a timely
manner.
(f) Dispute Resolution. Any dispute as to any matter
covered hereby shall be resolved by an independent accounting firm mutually
acceptable to IDX and Allscripts. The fees and expenses of such accounting firm
shall be borne equally by IDX and Allscripts.
(g) Sole Remedy. The indemnification provided for in this
Section 11.3 shall be the sole remedy for any claim in respect of Taxes and the
provisions of Sections 11.1 through 11.2 hereof shall not apply to such claims.
(h) Survival. Any claim for indemnity under this Section
11.3 may be made at any time prior to 60 days after the expiration of the
applicable Tax statute of limitations with respect to the relevant taxable
period (including all periods of extension, whether automatic of permissive).
(i) Certain Representations. Each of Parent and Allscripts
has no present intention to merge or liquidate Parent or Allscripts with or into
another Person or transfer any of the assets thereof other than in the ordinary
course of business or, in the case of Allscripts, other than pursuant to a
transaction described in Section 368(a)(2)(C) of the Code or Treasury Regulation
Sections 1.368-2(f) or 1.368-2(k). As of the date of consummation of the
Mergers, Parent and Allscripts have no plan or intention to engage in a
transaction that (i) would be an Integrated Transaction (as defined in Section
8.20 hereof) and (ii) would cause the stockholders of Allscripts and the
ChannelHealth Stockholders immediately before the Mergers and any Integrated
Transferors (as defined in Section 8.20 hereof) not to be in control (within the
meaning of Section 368(c) of the Code) of Parent immediately after the Mergers.
(j) Plan of Reorganization This Agreement and the
transactions contemplated hereby are intended to constitute a "plan of
reorganization" within the meaning of Treasury Regulation Section 1.368-2(g).
Following the Closing Date, Parent and IDX shall report and otherwise treat for
Tax purposes the exchange of ChannelHealth Stock for Parent Common Stock under
Section 351 of the Code.
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11.4 Employee Benefits and Labor Indemnity. IDX hereby
agrees to indemnify and hold the Allscripts Indemnified Parties harmless from
and against any and all Losses, if any, (i) arising out of or based upon or with
respect to any Employee Benefit Plan or Pension Plan or any other "employee
benefit plan" within the meaning of Section 3(3) of ERISA maintained by,
contributed to or to which there is or was an obligation to contribute to by
IDX, ChannelHealth or any ERISA Affiliate and (ii) as a result of any Claim made
with respect to employment prior to or on the Closing Date with ChannelHealth
including, without limitation, any Claim with respect to, relating to arising
out of or in connection with discrimination by ChannelHealth or wrongful
discharge (including constructive discharge) prior to the Closing Date.
11.5 Tax Treatment of Indemnity Payments. IDX and
Allscripts agree to treat any indemnity payment made pursuant to this Article XI
as an adjustment to the consideration paid hereunder for federal, state, local
and foreign income Tax purposes. If any indemnification payment under Article XI
(including, without limitation, this Section 11.5) is determined to be taxable
to Allscripts or ChannelHealth by any taxing authority, IDX shall also indemnify
Allscripts or ChannelHealth for any Taxes incurred by reason of the receipt of
such payment and any Related Costs incurred by Allscripts or ChannelHealth in
connection with such Taxes (or any asserted deficiency, claim, demand, action,
suit, proceeding, judgment or assessment, including the defense or settlement
thereof, relating to such Taxes).
11.6 Limitations.
(a) Except with respect to Claims based on actual fraud,
the rights of the Indemnified Parties under this Article XI shall be the sole
and exclusive remedies of the Indemnified Parties and their respective
Affiliates with respect to Claims resulting from or relating to any
misrepresentation, breach of warranty or failure to perform any covenant or
agreement contained in this Agreement or otherwise relating to the transactions
that are the subject of this Agreement. Without limiting the generality of the
foregoing sentence, in no event shall any party hereto, nor its successors or
permitted assigns be entitled to claim or seek rescission of the transactions
consummated under this Agreement.
(b) Notwithstanding anything to the contrary contained in
this Agreement, each of the following three limitations shall apply:
(i) the aggregate liability of IDX for the sum of all
Losses under Sections 11.1(a)(i), (iii), (v), (vi) and (vii) (insofar as the
Expenses referred to therein relate to Losses arising under Sections 11.1(a)(i),
(iii), (v) or (vi)) and clause (ii) of Section 11.4 shall not exceed $50
million;
(ii) the aggregate liability of Allscripts for the sum of
all Losses under Sections 11.1(b)(ii) (excluding Losses arising from a breach of
Section 11.3(i)), (iii) and (v) (insofar as the Expenses referred to therein
relate to Losses arising under Sections 11.1(b)(ii) or (iii)) shall not exceed
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$50 million; provided, however, any issuance of Earnout Shares shall not be
counted against such amount; and
(iii) IDX shall not be liable for any individual Loss under
Sections 11.1(a)(i), (iii), (v), (vi) or (vii) (insofar as the Expenses referred
to therein relate to Losses arising under Sections 11.1(a)(i), (iii), (v) or
(vi)) and clause (ii) of Section 11.4 unless such Loss exceeds $50,000 and IDX
shall not be liable for any such individual Losses in excess of $50,000 unless
and until the aggregate amount of such individual Losses in excess of $50,000
exceeds $1 million (it being understood that in such case IDX shall be liable
only for the amount of such Losses in excess of $500,000).
(c) In no event shall any Indemnifying Party be responsible
and liable for any Losses or other amounts under this Article XI that are
consequential, in the nature of lost profits, diminution in value, damage to
reputation or the like, special or punitive or otherwise not actual Losses.
Allscripts shall (and shall cause the ChannelHealth Surviving Corporation to)
use commercially reasonable efforts to pursue all legal rights and remedies
available in order to minimize the Losses for which indemnification is provided
to Allscripts by IDX under Article XI.
(d) The amount of any Losses for which indemnification is
provided under this Article XI shall be reduced by any related recoveries to
which the Indemnified Party is entitled under insurance policies or other
related payments received or receivable from third parties and any tax benefits
actually received by the Indemnified Party or any of its Affiliates or for which
the Indemnified Party or any of its Affiliates is eligible on account of the
matter resulting in such Losses or the payment of such Losses.
(e) Notwithstanding anything to the contrary in this
Agreement, the amount of any Losses for which indemnification by IDX is provided
under this Article XI shall be calculated net of any accruals, reserves or
provisions reflected in the Closing Date Balance Sheet.
(f) Effective as of the Effective Time, each of Parent and
Allscripts hereby waives and releases (and shall cause the ChannelHealth
Surviving Corporation to waive and release), any claim ChannelHealth may have
against IDX, except (i) any claims or rights hereunder or under any Ancillary
Agreement and (ii) any claims or rights under the ChannelHealth/IDX Asset
Purchase Agreement. Effective as of the Effective Time, IDX hereby waives and
releases any claim IDX may have against the ChannelHealth Surviving Corporation,
except any claims or rights hereunder or under any Ancillary Agreement.
11.7 Acknowledgement by Allscripts. Allscripts acknowledges
that in making its determination to proceed with the transactions contemplated
by this Agreement, Allscripts has relied on the results of its own independent
investigation and verification and the representations and warranties of IDX and
ChannelHealth expressly and specifically set forth in Article VI-A and Article
VI of this Agreement, respectively, including the Schedules (and any updates
thereto). SUCH REPRESENTATIONS AND WARRANTIES BY IDX AND CHANNELHEALTH
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CONSTITUTE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF IDX AND
CHANNELHEALTH TO ALLSCRIPTS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED
HEREBY, AND ALLSCRIPTS UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT ALL OTHER
REPRESENTATIONS AND WARRANTIES OF ANY KIND OR NATURE WHETHER EXPRESS, IMPLIED OR
STATUTORY (INCLUDING, BUT NOT LIMITED TO, ANY RELATING TO THE FUTURE OR
HISTORICAL FINANCIAL CONDITION, RESULTS OF OPERATIONS, ASSETS OR LIABILITIES OF
CHANNELHEALTH AND ANY SET FORTH IN ANY CONFIDENTIAL DESCRIPTIVE MEMORANDUM
PREVIOUSLY DELIVERED TO ALLSCRIPTS) ARE SPECIFICALLY DISCLAIMED BY IDX AND
CHANNELHEALTH.
Article XII
MISCELLANEOUS
12.1 Certain Definitions.
For purposes of this Agreement, the following terms shall
have the meanings specified in this Section 12.1:
"Accrued Liabilities" shall have the meaning ascribed to
such term in Section 5.1(b) hereof.
"Accrued Liabilities Certificate" shall have the meaning
ascribed to such term in Section 5.1(b) hereof.
"Affiliate" means, with respect to any Person, any other
Person controlling, controlled by or under common control with such Person.
"Allscripts Certificates" shall have the meaning ascribed
to such term in Section 2.1(b) hereof.
"Allscripts Common Stock" shall have the meaning ascribed
to such term in Section 1.1(a) hereof.
"Allscripts Exchange Ratio" shall have the meaning ascribed
to such term in Section 2.1(b) hereof.
"Allscripts Merger" shall have the meaning ascribed to such
term in Section 1.1(a) hereof.
"Allscripts Merger Consideration" shall have the meaning
ascribed to such term in Section 1.1(a) hereof.
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"Allscripts Shares" shall have the meaning ascribed to such
term in Section 2.1 hereof.
"Allscripts Surviving Corporation" shall have the meaning
ascribed to such term in Section 1.1(a) hereof.
"Allscripts's Accountants" shall have the meaning ascribed
to such term in Section 5.1(a) hereof.
"Ancillary Agreements" shall have the meaning ascribed to
such term in Section 6A.2 hereof.
"Arbitrator" shall have the meaning ascribed to such term
in Section 4.2(d) hereof.
"Assumed Liabilities" shall have the meaning ascribed to
such term in Section 3.2 hereof.
"Assumed Option" shall have the meaning ascribed to such
term in Section 2.2(d) hereof.
"Balance Sheet" shall have the meaning ascribed to such
term in Section 2.2(3) hereof.
"Balance Sheet" shall have the meaning ascribed to such
term in Section 6.7 hereof.
"Balance Sheet Date" shall have the meaning ascribed to
such term in Section 6.7 hereof.
"Business Day" means any day of the year on which national
banking institutions in New York are open to the public for conducting business
and are not required or authorized to close.
"Certificates" shall have the meaning ascribed to such term
in Section 2.2(b) hereof.
"Certificate of Merger" shall have the meaning ascribed to
such term in Section 1.4 hereof.
"ChannelHealth Certificates" shall have the meaning
ascribed to such term in Section 2.2(b) hereof.
"ChannelHealth Common Stock" shall have the meaning
ascribed to such term in Section 1.2(a) hereof.
"ChannelHealth Dissenting Shares" shall have the meaning
ascribed to such term in Section 2.2(3) hereof.
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"ChannelHealth Documents" shall have the meaning ascribed
to such term in Section 6.2 hereof.
"ChannelHealth Exchange Ratio" shall have the meaning
ascribed to such term in Section 2.2(b) hereof.
"ChannelHealth Merger" shall have the meaning ascribed to
such term in Section 1.2(a) hereof.
"ChannelHealth Merger Consideration" shall have the meaning
ascribed to such term in Section 2.2(b) hereof.
"ChannelHealth Option" shall have the meaning ascribed to
such term in Section 2.2(d) hereof.
"ChannelHealth Preferred Stock" shall have the meaning
ascribed to such term in Section 1.2(a) hereof.
"ChannelHealth Property" shall have the meaning ascribed to
such term in Section 5.12(a) hereof.
"ChannelHealth Stock" shall have the meaning ascribed to
such term in Section 1.2(a) hereof.
"ChannelHealth Stockholder" shall have the meaning ascribed
to such term in Section 2.2(b) hereof.
"ChannelHealth Stockholders" shall have the meaning
ascribed to such term in Section 2.6(a) hereof.
"ChannelHealth Surviving Corporation" shall have the
meaning ascribed to such term in Section 1.2(a) hereof.
"ChannelHealth's Accountants" shall have the meaning
ascribed to such term in Section 5.1(a) hereof.
"Closing" shall have the meaning ascribed to such term in
Section 1.3 hereof.
"Closing Date" shall have the meaning ascribed to such term
in Section 1.3 hereof.
"Closing Date Balance Sheet" shall have the meaning
ascribed to such term in Section 4.1(a) hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Contract" means any contract, agreement, indenture, note,
bond, loan, instrument, lease, commitment or other
arrangement or agreement.
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"Controlling Party" shall have the meaning ascribed to such
term in Section 3.5(c) hereof.
"Cross-License Agreement" shall have the meaning ascribed
to such term in Section 6A.2 hereof.
"Damages" shall have the meaning ascribed to such term in
Section 3.5(a) hereof.
"DGCL shall have the meaning ascribed to such term in
Section 1.1(a) hereof.
"Earnout Date" shall have the meaning ascribed to such term
in Section 3.1(b) hereof.
"Earnout Registration Statement" shall have the meaning
ascribed to such term in Section 3.2 hereof.
"Earnout Revenues" shall have the meaning ascribed to such
term in Section 3.1(b) hereof.
"Earnout Shares" shall have the meaning ascribed to such
term in Section 3.1(a) hereof.
"Effective Time" shall have the meaning ascribed to such
term in Section 1.4 hereof.
"Environmental Law" means any foreign, federal, state or
local statute, regulation, ordinance, or rule of common law as now or hereafter
in effect in any way relating to the protection of human health and safety or
the environment including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C.ss. 9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. App.ss. 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C.ss. 6901 et seq.), the Clean
Water Act (33 U.S.C.ss. 1251 et seq.), the Clean Air Act (42 U.S.C.ss. 7401 et
seq.), the Toxic Substances Control Act (15 U.S.C.ss. 2601 et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.ss. 136 et seq.), and the
Occupational Safety and Health Act (29 U.S.C.ss. 651 et seq.), and the
regulations promulgated pursuant thereto.
"Exchange Act" shall have the meaning ascribed to such term
in Section 3.5(a) hereof.
"Exchange Agent" shall have the meaning ascribed to such
term in Section 2.3(a) hereof.
"Exchange Fund" shall have the meaning ascribed to such
term in Section 2.3(a) hereof.
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"Facilities Lease Agreement" shall have the meaning
ascribed to such term in Section 7.17 hereof.
"Financial Statements" shall have the meaning ascribed to
such term in Section 6.7 hereof.
"GAAP" means generally accepted United States accounting
principles as of the date hereof.
"Governmental Body" means any government or governmental or
regulatory body thereof, or political subdivision thereof, whether federal,
state, local or foreign, or any agency, instrumentality or authority thereof, or
any court or arbitrator (public or private).
"Gross Qualifying Revenues" shall have the meaning ascribed
to such term in Section 3.1(b)(i).
"Hazardous Material" means any substance, material or waste
which is regulated by the United States or any state or local governmental
authority including, without limitation, petroleum and its by-products,
asbestos, and any material or substance which is defined as a "hazardous waste,"
"hazardous substance," "hazardous material," "restricted hazardous waste,"
"industrial waste," "solid waste," "contaminant," "pollutant," "toxic waste" or
"toxic substance" under any provision of Environmental Law;
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976.
"IDX Contracts" shall have the meaning ascribed to such
term in Section 6.A.8 hereof.
"IDX Documents" shall have the meaning ascribed to such
term in Section 5.1(b) hereof.
"Indemnified Party" shall have the meaning ascribed to such
term in Section 3.5(c) hereof.
"Indemnifying Party" shall have the meaning ascribed to
such term in Section 3.5(c) hereof.
"Integrated Transaction" shall have the meaning ascribed to
such term in Section 8.20 hereof.
"Integrated Transferor" shall have the meaning ascribed to
such term in Section 8.20 hereof.
"IRS" shall refer to the Internal Revenue Service.
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"Law" means any federal, state, local or foreign law
(including common law), statute, code, ordinance, rule,
regulation or other requirement.
"Legal Proceeding" means any judicial, administrative or
arbitral actions, suits, proceedings (public or private), claims or governmental
proceedings.
"Lien" means any lien, pledge, mortgage, deed of trust,
security interest, claim, lease, charge, option, right of first refusal,
easement, servitude, transfer restriction under any shareholder or similar
agreement, encumbrance or any other restriction or limitation whatsoever.
"Material Adverse Change" means any material adverse change
in the business, properties, results of operations or condition (financial or
otherwise) of ChannelHealth (other than changes that are the result of economic
factors affecting the economy as a whole or changes that are the result of
factors generally affecting the specific industry or markets in which
ChannelHealth competes); provided, however, that a "Material Adverse Change"
shall not include any adverse change, effect or circumstance primarily arising
out of or resulting primarily from (i) actions contemplated by the parties in
connection with this Agreement or that is primarily attributable to the
announcement or performance of this Agreement or the transactions contemplated
by this Agreement or (ii) continued operating losses of ChannelHealth.
"Material Adverse Effect" means any effect which has
resulted in, or is reasonably likely to result in, a Material Adverse Change.
"Material Contracts" shall have the meaning ascribed to
such term in Section 5.15 hereof.
"Mergers" shall have the meaning ascribed to such term in
Section 1.2(a) hereof.
"Merger Consideration" shall have the meaning ascribed to
such term in Section 2.3(b) hereof.
"Nasdaq" shall have the meaning ascribed to such term in
Section 2.3(e)(ii) hereof.
"Non-Controlling Party" shall have the meaning ascribed to
such term in Section 3.5(c) hereof.
"Order" means any order, injunction, judgment, decree,
ruling, writ, assessment or arbitration award.
"Parent Certificates" shall have the meaning ascribed to
such term in Section 2.1(b) hereof.
"Parent Common Stock" shall have the meaning ascribed to
such term in Section 1.1(a) hereof.
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"Parent Stock Options" shall have the meaning ascribed to
such term in Section 8.11(b) hereof.
"Permits" means any approvals, authorizations, consents,
licenses, permits or certificates.
"Permitted Exceptions" means (i) all defects, exceptions,
restrictions, easements, rights of way and encumbrances disclosed in policies of
title insurance which have been made available to Allscripts; (ii) statutory
liens for current Taxes, assessments or other governmental charges not yet
delinquent or the amount or validity of which is being contested in good faith
by appropriate proceedings, provided an appropriate reserve is established
therefor; (iii) mechanics', carriers', workers', repairers' and similar Liens
arising or incurred in the ordinary course of business that are not material to
the business, operations and financial condition of the property so encumbered
or ChannelHealth; (iv) liens arising under worker's compensation, unemployment
insurance, social security, retirement, and similar legislation, (v) 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 of ChannelHealth, (vi) zoning, entitlement and other land use and
environmental regulations by any Governmental Body, provided that such
regulations have not been violated; and (vii) such other imperfections in title,
charges, easements, restrictions and encumbrances which do not materially
detract from the value of or materially interfere with the present use of any
ChannelHealth Property subject thereto or affected thereby.
"Person" means any individual, corporation, partnership,
firm, joint venture, association, joint-stock ChannelHealth, trust,
unincorporated organization, Governmental Body or other entity.
"Personal Property Lease" shall have the meaning ascribed
to such term in Section 5.13 hereof.
"Qualified Plans" shall have the meaning ascribed to such
term in Section 6.16(d) hereof.
"Real Property Lease" shall have the meaning ascribed to
such term in Section 5.12 hereof.
"Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, or leaching into
the indoor or outdoor environment, or into or out of any property.
"Remedial Action" means all actions to (x) clean up,
remove, treat or in any other way address any Hazardous Material; (y) prevent
the Release of any Hazardous Material so it does not endanger or threaten to
endanger public health or welfare or the indoor or outdoor environment; or (z)
perform pre-remedial studies and investigations or post-remedial monitoring and
care.
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"Retained Assets" shall have the meaning ascribed to such
term in Section 4.1 hereof.
"Stock Rights and Restrictions Agreement" shall have the
meaning ascribed to such term in Section 7.14 hereof.
"Stockholders' Representative" shall have the meaning
ascribed to such term in Section 2.6(a) hereof.
"Stockholders' Representative's Accountants" shall have the
meaning ascribed to such term in Section 5.1(a) hereof.
"Strategic Alliance" shall have the meaning ascribed to
such term in Section 7.13 hereof.
"Subsidiary" means any Person of which a majority of the
outstanding voting securities or other voting equity interests are owned,
directly or indirectly, by ChannelHealth.
"Surviving Corporations" shall have the meaning ascribed to
such term in Section 1.2(a) hereof.
"Tax" or "Taxes" means all federal, state, local and
foreign taxes, charges, fees, levies, imposts, duties or other assessments,
including, without limitation, income, gross receipts, excise, unemployment,
sales, use, transfer, license, payroll, franchise, severance, stamp, occupation,
windfall profits, environmental (including taxes under Code section 59A),
premium, federal highway use, commercial rent, customs duties, capital stock,
paid up capital, profits, withholding, social security, single business and
unemployment, disability, real property, personal property, registration, ad
valorem, value added, goods and services, sales, land transfer, employer health,
employment, alternative or add-on minimum, estimated or estimable, or other tax
or governmental fee of any kind whatsoever, imposed or required to be withheld
by the United States or any state, local, foreign government or subdivision or
agency thereof, including any interest, penalties or additions thereto, whether
disputed or not, and shall include any liability in respect of Taxes as a
transferee or as an indemnitor, guarantor, surety or in a similar capacity
(including, without limitation, pursuant to Treasury Regulation Section 1.1502-6
or a similar provision of state, local or foreign tax law) under any contract,
arrangement, understanding or commitment (whether oral or written). "Tax Return"
means all returns, declarations, reports, estimates, information returns and
statements or other information required to be filed with a taxing authority in
respect of any Taxes.
"Transition Services Agreement" shall have the meaning
ascribed to such term in Section 7.16 hereof.
12.2 Survival of Representations and Warranties. The
parties hereto hereby agree that the representations and warranties contained in
this Agreement or in any certificate, document or instrument delivered in
77
connection herewith, shall survive the execution and delivery of this Agreement,
and the Closing hereunder, regardless of any investigation made by the parties
hereto; provided, however, that any claims or actions with respect thereto shall
terminate unless by March 31, 2002 written notice of such claims is given to the
Indemnifying Party or such actions are commenced, except for the representations
and warranties set forth in Section 6.10, which shall survive the Closing until
60 days after the expiration of the applicable Tax statute of limitations.
12.3 Expenses. Except as otherwise provided in this
Agreement, IDX and ChannelHealth, on the one hand, and Allscripts, Parent, Sub A
and Sub B, on the other, shall each bear its own expenses incurred in connection
with the negotiation and execution of this Agreement and each other agreement,
document and instrument contemplated by this Agreement and the consummation of
the transactions contemplated hereby and thereby, it being understood that in no
event shall the ChannelHealth Surviving Corporation be liable for any such costs
and expenses required to be borne by IDX and ChannelHealth as provided above.
IDX shall reimburse Parent for 50% of the amount of reasonable out-of-pocket
expenses incurred by Parent or Allscripts associated with this transaction that
would not have been incurred had the transaction been structured so as not to
contemplate a reorganization described in Section 351 of the Code.
12.4 Specific Performance. The parties hereto acknowledge
and agree that the breach of this Agreement would cause irreparable damage to
the other and that such party will not have an adequate remedy at law.
Therefore, the obligations of the parties under this Agreement shall be
enforceable by a decree of specific performance issued by any court of competent
jurisdiction, and appropriate injunctive relief may be applied for and granted
in connection therewith. Such remedies shall, however, be cumulative and not
exclusive and shall be in addition to any other remedies which any party may
have under this Agreement or otherwise.
12.5 Further Assurances. IDX and Allscripts each agrees to
execute and deliver such other documents or agreements and to take such other
action as may be reasonably necessary or desirable for the implementation of
this Agreement and the consummation of the transactions contemplated hereby.
12.6 Submission to Jurisdiction; Consent to Service of
Process.
(a) The parties hereto hereby irrevocably submit to the
non-exclusive jurisdiction of any federal or state court located within the
State of Delaware over any dispute arising out of or relating to this Agreement
or any of the transactions contemplated hereby and each party hereby irrevocably
agrees that all claims in respect of such dispute or any suit, action or
proceeding related thereto may be heard and determined in such courts. The
parties hereby irrevocably waive, to the fullest extent permitted by applicable
law, any objection which they may now or hereafter have to the laying of venue
of any such dispute brought in such court or any defense of inconvenient forum
for the maintenance of such dispute. Each of the parties hereto agrees that a
judgment in any such dispute may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law.
78
(b) Each of the parties hereto hereby consents to process
being served by any party to this Agreement in any suit, action or proceeding by
the mailing of a copy thereof in accordance with the provisions of Section
12.10.
12.7 Entire Agreement; Amendments and Waivers. This
Agreement (including the schedules and exhibits hereto) represents the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and can be amended, supplemented or changed, and any
provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by the party against whom enforcement of any
such amendment, supplement, modification or waiver is sought. No action taken
pursuant to this Agreement, including without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representation, warranty, covenant or
agreement contained herein. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a further or
continuing waiver of such breach or as a waiver of any other or subsequent
breach. No failure on the part of any party to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law.
12.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
12.9 Table of Contents and Headings. The table of contents
and section headings of this Agreement are for reference purposes only and are
to be given no effect in the construction or interpretation of this Agreement.
12.10 No Third Party Beneficiaries. This Agreement shall
not confer any rights or remedies upon any Person other than the parties and
their respective successors and permitted assigns; provided, however, the
provisions of Sections 8.20, 11.3(i) and 11.3(j) are expressly undertaken for
the benefit of, and may be enforced directly by, Pequot.
12.11 Notices. All notices and other communications under
this Agreement shall be in writing and shall be deemed given when delivered
personally or mailed by certified mail, return receipt requested, to the parties
(and shall also be transmitted by facsimile to the Persons receiving copies
thereof) at the following addresses (or to such other address as a party may
have specified by notice given to the other party pursuant to this provision):
79
If to IDX, to:
IDX Systems Corporation
P. O. Box 1070
1400 Shelburne Road
Burlington, VT 05402
Attention:Robert W. Baker
Vice President and General Counsel
Fax: (802) 862-3304
With a copy to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Attn: Virginia Kapner
Fax: (617) 526-5000
If to ChannelHealth, to:
ChannelHealth Incorporated
P. O. Box 1070
1400 Shelburne Road
Burlington, VT 05402
Attention:Jeffrey McMahan
General Counsel
Fax: (802) 864-1197
With a copy to:
Goodwin, Proctor & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
Attention:Robert Whalen, Jr., P.C.
Fax: (617) 523-1231
If to Allscripts Holding, Inc.,
Allscripts, Inc.,
Bursar Acquisition, Inc. or
Bursar Acquisition No. 2, Inc. to:
c/o Allscripts, Inc.
2401 Commerce Drive
Libertyville, IL 60048
Attention:President
Fax: (847) 680-3721
80
With a copy to:
Weil, Gotshal & Manges LLP
700 Louisiana, Suite 1600
Houston, Texas 77002
Attention:James L. Rice III
Fax: (713) 224-9511
12.12 Severability. If any provision of this Agreement is
invalid or unenforceable, the balance of this Agreement shall remain in effect.
12.13 Binding Effect; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns. No assignment of this Agreement or of any
rights or obligations hereunder may be made by either IDX or ChannelHealth, on
the one hand, or Allscripts, Parent, Sub A or Sub B, on the other (by operation
of law or otherwise) without the prior written consent of the other party hereto
and any attempted assignment without the required consent shall be void.
12.14 Counterpart Execution. This Agreement may be executed
in one or more counterparts, no one of which need be executed by all parties but
all of which counterparts shall constitute but one and the same instrument.
81
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first written above.
ALLSCRIPTS HOLDING, INC.:
By: /s/ Glen Tullman
---------------------------------------
Name: Glen Tullman
Title: Chief Executive Officer
ALLSCRIPTS, INC.:
By: /s/ Glen Tullman
---------------------------------------
Name: Glen Tullman
Title: Chief Executive Officer
BURSAR ACQUISITION, INC.:
By: /s/ Glen Tullman
---------------------------------------
Name: Glen Tullman
Title: Chief Executive Officer
BURSAR ACQUISITION NO. 2, INC.:
By: /s/ Glen Tullman
---------------------------------------
Name: Glen Tullman
Title: Chief Executive Officer
IDX SYSTEMS CORPORATION:
By: /s/ James H. Crook
---------------------------------------
Name: James H. Crook
Title: President
82
CHANNELHEALTH INCORPORATED:
By: /s/ Robert W. Baker
---------------------------------------
Name: Robert W. Baker, Jr.
Title: Vice President
83
EXHIBIT A-1
VOTING AGREEMENT AND IRREVOCABLE PROXY
THIS VOTING AGREEMENT AND IRREVOCABLE PROXY (the "Agreement"), dated
as of July 13, 2000, between IDX Systems Corporation, a Vermont corporation (the
"Stockholder"), who is a Stockholder of Channelhealth Incorporated, a Delaware
corporation (the "Company"), and Allscripts, Inc., a Delaware corporation (the
"Buyer").
WHEREAS, concurrently with the execution of this Agreement, the
Company, the Stockholder, the Buyer, Allscripts Holding, Inc., Bursar
Acquisition, Inc. and Bursar Acquisition No. 2, Inc. have entered into an
Agreement and Plan of Merger (as the same may be amended from time to time, the
"Merger Agreement"), providing for the acquisition of the Company by the Buyer,
pursuant to the terms and conditions of the Merger Agreement (the "Merger"); and
WHEREAS, the Stockholder owns of record and beneficially the number
of shares of capital stock of the Company set forth beneath its signature below
(the "Shares"); and
WHEREAS, the Stockholder wishes to enter into this Agreement with
respect to all of the Shares and all of the shares of the Company's capital
stock which the Stockholder acquires during the term of this Agreement or as to
which it has, directly or indirectly, the right to vote or direct the voting of
(collectively, the "Proxy Shares"); and
WHEREAS, approval and adoption of the Merger Agreement by the
Company's Stockholders is a condition to the consummation of the Merger; and
WHEREAS, in order to induce the Buyer to enter into the Merger
Agreement, the Stockholder has agreed, upon the terms and subject to the
conditions set forth herein, to vote the Proxy Shares and to deliver an
irrevocable proxy to the Buyer to vote the Proxy Shares at any meeting of the
Company's Stockholders or in connection with any action by consent of the
Company's Stockholders, in favor of the approval and adoption of the Merger
Agreement and in favor of the approval of the Merger.
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to such terms in the Merger Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1. Agreement to Vote Shares. The Stockholder agrees during the term
of this Agreement to vote the Proxy Shares, in person or by proxy (or by written
consent if action is taken by written consent) in favor of approval and adoption
of the Merger Agreement and in favor of the approval of the Merger at any
meeting of the Stockholders of the Company (or any written action in lieu of a
meeting) at which such matters are considered and at every adjournment thereof.
The Stockholder agrees with respect to the Proxy Shares, not to, and not to
permit any of its Affiliates to, vote or execute any written consent in lieu of
a stockholders meeting or vote of the Company, if such consent or vote by the
Stockholders of the Company would be inconsistent with or frustrate the purposes
of the other agreements of the Stockholder pursuant to this paragraph. The
parties acknowledge and agree that, notwithstanding anything contained herein to
the contrary, any shares of the Company's capital stock sold or otherwise
transferred by Indy in connection with the ChannelHealth/IDX Asset Purchase
Agreement shall not be subject to the provisions of this Agreement.
2. Irrevocable Proxy. The Stockholder hereby irrevocably appoints the
Buyer, with full power of substitution, as the Stockholder's attorney and proxy
to attend any meeting of Stockholders (and any adjournment or adjournments
thereof) called for the purpose of approving and adopting, among other purposes,
the Merger Agreement and the Merger and to vote such Stockholder's Proxy Shares
at such meeting and at any adjournment or adjournments thereof in favor of the
approval of the Merger Agreement and the Merger. This proxy is coupled with the
interests provided for or contemplated under this Agreement and the Merger
Agreement and shall be irrevocable until terminated in accordance with the
provisions of Section 6 hereof.
3. No Voting Trusts. The Stockholder agrees that the Stockholder will
not, nor will the Stockholder permit any entity under the Stockholder's control
to, deposit any of the Proxy Shares in a voting trust or subject any of the
Proxy Shares to any arrangement with respect to the voting of the Proxy Shares
inconsistent with this Agreement.
4. Revocation of Prior Proxies; Limitation on Dispositions and
Proxies. The Stockholder hereby revokes any and all previous proxies with
respect to the Proxy Shares or any other voting securities of the Company that
relate to the approval of the Merger Agreement. During the term of this
Agreement, the Stockholder agrees not to (a) sell, assign, pledge, transfer or
otherwise dispose of any of the Proxy Shares, or (b) grant any proxies with
respect to (except for a Proxy or a proxy which is not inconsistent with the
terms of this Agreement) any of the Proxy Shares.
5. Specific Performance. Each party hereto acknowledges that it will
be impossible to measure in money the damages to the other party if a party
hereto fails to comply with the obligations imposed by this Agreement, and that,
in the event of any such failure, the other party will not have an adequate
remedy at law or in damages. Accordingly, each party hereto agrees that
injunctive relief or other equitable remedy, in addition to remedies at law or
damages, is the appropriate remedy for any such failure and will not oppose the
granting of such relief on the basis that the other party has an adequate remedy
at law. Each party hereto agrees that it will not seek, and agrees to waive any
requirement for, the securing, or posting of a bond in connection with any other
party's seeking or obtaining such equitable relief.
6. Term of Agreement; Termination. Subject to Section 10(e), the term
of this Agreement shall commence on the date hereof and such term and this
Agreement shall terminate upon the earliest to occur of (i) the Effective Time,
(ii) the date on which the Merger Agreement is terminated in accordance with its
terms or (iii) the date on which the Voting Agreement and Irrevocable Proxy
dated as of the date hereof between the Buyer and Pequot Private Equity Fund II,
L.P. is terminated. Upon such termination, no party shall have any further
obligations or liabilities hereunder; provided, that such termination shall not
relieve any party from liability for any breach of this Agreement prior to such
termination.
7. Securities Act Covenants and Representations. In addition to, and
not in lieu of, the other covenants and representations set forth herein, the
Stockholder hereby agrees and represents to Bursar that such Stockholder
understands that, to the extent such Stockholder is an "affiliate" (as such term
2
is defined in Rule 405 under the Securities Act) of the Company as of the date
hereof or the date the Merger Agreement is submitted for a vote of the
stockholders of the Company, any public offering, sale or other disposition by
such Stockholder or any of its wholly owned affiliates of any shares of Parent
Common Stock received by such person in the Merger (collectively, the
"Restricted Sales") will, under current law, require any of (i) the further
registration under the Securities Act of any such shares to be sold by such
person, (ii) compliance with applicable provisions of Rule 145 promulgated by
the SEC under the Securities Act, as amended or (iii) the availability of
another exemption from such registration under the Securities Act. The
Stockholder agrees not to, and not to cause or permit any of its wholly owned
Affiliates to, make any Restricted Sale unless the conditions of clause (i),
(ii) or (iii) are met.
8. Representations and Warranties. The Stockholder represents and
warrants to the Buyer as follows:
(a) The Stockholder is the lawful owner of the Shares, free and clear
of all liens, charges, options, rights, encumbrances, stockholders agreements,
voting agreements, agreements to transfer or otherwise dispose of such Shares
and commitments of every kind, other than this Agreement and has the sole power
to vote (or cause to be voted) the Shares as set forth in this Agreement.
Neither the Stockholder nor any of its Affiliates owns or holds any rights to
acquire any additional securities of the Company or any interest therein or any
voting rights with respect to any additional shares of Company any other
securities of the Company.
(b) This Agreement has been duly executed and delivered by a duly
authorized officer to the Stockholder.
(c) This Agreement constitutes the valid and binding agreement of the
Stockholder, enforceable against the Stockholder in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, oratorium and similar laws relating to or
affecting creditors generally by general equity principles (regardless of
whether enforceability is considered in a proceeding in equity or at law) or by
an implied covenant of good faith and fair dealing.
(d) The execution and delivery of this Agreement by the Stockholder
does not violate or breach, and will not give rise to any violation or breach,
of the Stockholder's charter or by-laws, except as will not materially impair
the ability of such Stockholder to effectuate, carry out or comply with all of
the terms of this Agreement, any law, third party consent, Governmental Body
approval or Contract by which the Stockholder, the Proxy Shares or its assets or
properties may be bound.
9. Entire Agreement. This Agreement supersedes all prior agreements,
written or oral, among the parties hereto with respect to the subject matter
hereof and contains the entire agreement among the parties with respect to the
subject matter hereof. This Agreement may not be amended, supplemented or
modified, and no provisions hereof may be modified or waived, except by an
instrument in writing signed by all parties hereto. No waiver of any provisions
hereof by any party shall be deemed a waiver of any other provisions hereof by
any such party, nor shall any such waiver be deemed a continuing waiver of any
provision hereof by such party.
3
10. Notices. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission (with confirmation) and on the next business day
when sent by Federal Express, Express Mail or other reputable overnight courier
service to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
If to the Buyer:
Allscripts, Inc.
2401 Commerce Drive
Libertyville, IL 60048
Telephone: (847) 680-3515
Facsimile: (847) 680-3573
Attention: President
If to Stockholder:
IDX Systems Incorporated
1400 Shelburne Road
South Burlington, VT 05403
Telephone: (802) 862-1022
Facsimile: (802) 865-3681
Attention: General Counsel
11. Miscellaneous.
(a) This Agreement shall be deemed a contract made under, and for all
purposes shall be construed in accordance with, the laws of the State of
Delaware without reference to its conflicts of law principles.
(b) If any provision of this Agreement or the application of such
provision to any person or circumstances shall be held invalid or unenforceable
by a court of competent jurisdiction, such provision or application shall be
unenforceable only to the extent of such invalidity or unenforceability, and the
remainder of such provision and the application of such provision to persons or
circumstances, other than the party as to which it is held invalid, and the
remainder of this Agreement shall not be affected.
(c) This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
(d) All Section headings herein are for convenience of reference only
and are not part of this Agreement, and no construction or reference shall be
derived therefrom.
(e) The obligations of the Stockholder set forth in this Agreement
shall not be effective or binding upon the Stockholder until after such time as
the Merger Agreement is executed and delivered by the Company and the Buyer, and
4
the parties agree that there is not and has not been any other agreement,
arrangement or understanding between the parties hereto with respect to the
matters set forth herein.
(f) The Stockholder's Agreement and understanding herein is not made
as a director or officer of the Company or in any capacity other than a
stockholder of the Company. The Stockholder signs solely in its capacity as a
record holder and beneficial owner of Shares and nothing herein shall limit or
affect any actions taken by a representative of the Stockholder in such
representative's capacity as an officer or director of the Company.
[Remainder of page intentionally blank.]
5
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
ALLSCRIPTS, INC.
By: /s/ Glen Tullman
-----------------------------------
Name: Glen Tullman
Title: Chief Executive Officer
IDX SYSTEMS CORPORATION
By: /s/ James H. Crook
-----------------------------------
Name: James H. Crook
Title: President
Number of Shares 25,475,880
---------------------
6
EXHIBIT A-2
VOTING AGREEMENT AND IRREVOCABLE PROXY
THIS VOTING AGREEMENT AND IRREVOCABLE PROXY (the "Agreement"), dated as
of July 13, 2000, between Pequot Private Equity Fund II, L.P. (the
"Stockholder"), who is a stockholder of Channelhealth Incorporated, a Delaware
corporation (the "Company"), Allscripts, Inc., a Delaware corporation (the
"Buyer"), and IDX Systems Corporation, a Vermont corporation ("Parent").
WHEREAS, concurrently with the execution of this Agreement, the
Company, Allscripts Holding, Inc., Bursar Acquisition, Inc., Bursar Acquisition
No. 2, Inc., Parent, and the Buyer have entered into an Agreement and Plan of
Merger (as the same may be amended from time to time, the "Merger Agreement"),
providing for the acquisition of the Company by the Buyer, pursuant to the terms
and conditions of the Merger Agreement (the "Merger"); and
WHEREAS, concurrently with the execution of this Agreement, the Company
and Parent have entered into an Asset Purchase Agreement (as the same may be
amended from time to time, the "Asset Purchase Agreement"), providing for the
purchase by Parent from the Company of certain assets in consideration of the
cancellation of certain shares of the Company's common stock held by Parent, all
as provided in the Asset Purchase Agreement (the "Asset Sale"); and
WHEREAS, the Stockholder owns of record and beneficially the number and
class of shares of capital stock of the Company set forth beneath its signature
below (the "Shares"); and
WHEREAS, the Stockholder wishes to enter into this Agreement with
respect to all of the Shares and all of the shares of the Company's capital
stock which the Stockholder acquires during the term of this Agreement or as to
which it has, directly or indirectly, the right to vote or direct the voting of
(collectively, the "Proxy Shares"); and
WHEREAS, approval and adoption of the Merger Agreement by the Company's
stockholders is a condition to the consummation of the Merger; and
WHEREAS, in order to induce the Buyer to enter into the Merger
Agreement and Parent to enter into the Asset Purchase Agreement, the Stockholder
has agreed, upon the terms and subject to the conditions set forth herein, to
vote the Proxy Shares and to deliver an irrevocable proxy to the Buyer to vote
the Proxy Shares at any meeting of the Company's stockholders or in connection
with any action by consent of the Company's stockholders, in favor of the
approval and adoption of the Merger Agreement, in favor of the approval of the
Merger and in favor of the approval of the Asset Sale.
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to such terms in the Merger Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1. Agreement to Vote Shares. The Stockholder agrees during the term of
this Agreement to vote the Proxy Shares, in person or by proxy (or by written
consent if action is taken by written consent) in favor of approval and adoption
of the Merger Agreement and in favor of the approval of the Merger and in favor
of approval of the Asset Sale at every meeting of the Stockholders of the
Company (or written action in lieu of a meeting) at which such matters are
considered and at every adjournment thereof. The Stockholder agrees with respect
to the Proxy Shares, not to, and not to permit any of its Affiliates to, vote or
execute any written consent in lieu of a stockholders meeting of the Company, if
such consent or vote would be inconsistent with or frustrate the purposes of the
other agreements of the Stockholder pursuant to this paragraph.
2. Irrevocable Proxy. The Stockholder hereby irrevocably appoints the
Buyer, with full power of substitution, as the Stockholder's attorney and proxy
to attend any meeting of stockholders (and any adjournment or adjournments
thereof) called for the purpose of approving and adopting, among other purposes,
the Merger Agreement and the Merger and in favor of the approval of the Asset
Sale and to vote such Stockholder's Proxy Shares at such meeting and at any
adjournment or adjournments thereof in favor of the approval of the Merger
Agreement and the Merger and in favor of the approval of the Asset Sale. This
proxy is coupled with the interests provided for or contemplated under this
Agreement and the Merger Agreement and shall be irrevocable until terminated in
accordance with the provisions of Section 6 hereof.
3. No Voting Trusts. The Stockholder agrees that the Stockholder will
not, nor will the Stockholder permit any entity under the Stockholder's control
to, deposit any of the Proxy Shares in a voting trust or subject any of the
Proxy Shares to any arrangement with respect to the voting of the Proxy Shares
inconsistent with this Agreement.
4. Revocation of Prior Proxies; Limitation on Dispositions and Proxies.
The Stockholder hereby revokes any and all previous proxies with respect to the
Proxy Shares or any other voting securities of the Company that relate to the
approval of the Merger Agreement or the Asset Sale. During the term of this
Agreement, the Stockholder agrees not to (a) sell, assign, pledge, transfer or
otherwise dispose of any of the Proxy Shares, or (b) grant any proxies with
respect to (except for a Proxy or a proxy which is not inconsistent with the
terms of this Agreement) any of the Proxy Shares.
5. Specific Performance. Each party hereto acknowledges that it will be
impossible to measure in money the damages to the other party if a party hereto
fails to comply with the obligations imposed by this Agreement, and that, in the
event of any such failure, the other party will not have an adequate remedy at
law or in damages. Accordingly, each party hereto agrees that injunctive relief
or other equitable remedy, in addition to remedies at law or damages, is the
appropriate remedy for any such failure and will not oppose the granting of such
relief on the basis that the other party has an adequate remedy at law. Each
party hereto agrees that it will not seek, and agrees to waive any requirement
for, the securing, or posting of a bond in connection with any other party's
seeking or obtaining such equitable relief.
6. Term of Agreement; Termination. Subject to Section 11(e), the term
of this Agreement shall commence on the date hereof and such term and this
Agreement shall terminate upon the earliest to occur of (i) the Effective Time,
(ii) the date on which the Merger Agreement is terminated in accordance with its
2
terms, (iii) the date on which the Voting Agreement and Irrevocable Proxy dated
as of the date hereof between Parent and the Buyer is terminated, or (iv)
January 31, 2001. Upon such termination, no party shall have any further
obligations or liabilities hereunder; provided, that such termination shall not
relieve any party from liability for any breach of this Agreement prior to such
termination.
7. Securities Act Covenants and Representations. In addition to, and
not in lieu of, the other covenants and representations set forth herein, the
Stockholder hereby agrees and represents to the Buyer that the Stockholder
understands that, to the extent the Stockholder is an "affiliate" (as such term
is defined in Rule 405 under the Securities Act) of the Company as of the date
hereof or the date the Merger Agreement is submitted for a vote of the
stockholders of the Company, any public offering, sale or other disposition by
the Stockholder or any of its wholly owned Affiliates of any shares of Parent
Common Stock received by such person in the Merger (collectively, the
"Restricted Sales") will, under current law, require any of (i) the further
registration under the Securities Act of any such shares to be sold by such
person, (ii) compliance with applicable provisions of Rule 145 promulgated by
the SEC under the Securities Act, as amended or (iii) the availability of
another exemption from such registration under the Securities Act. The
Stockholder agrees not to, and not to cause or permit any of its wholly owned
Affiliates to, make any Restricted Sale unless the conditions of clause (i),
(ii) or (iii) are met.
8. Representations and Warranties. The Stockholder represents and
warrants to the Buyer and Parent as follows:
(a) The Stockholder is the lawful owner of the Shares, free
and clear of all liens, charges, options, rights, encumbrances, stockholders
agreements, voting agreements, agreements to transfer or otherwise dispose of
such Shares and commitments of every kind, other than this Agreement and has the
sole power to vote (or cause to be voted) the Shares as set forth in this
Agreement. Neither the Stockholder nor any of its Affiliates owns or holds any
rights to acquire any additional securities of the Company or any interest
therein or any voting rights with respect to any additional shares of Company
any other securities of the Company.
(b) This Agreement has been duly executed and delivered by a
duly authorized officer of the investment manager of Stockholder.
(c) This Agreement constitutes the valid and binding agreement
of the Stockholder, enforceable against the Stockholder in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, oratorium and similar laws relating to or
affecting creditors generally by general equity principles (regardless of
whether enforceability is considered in a proceeding in equity or at law) or by
an implied covenant of good faith and fair dealing.
(d) The execution and delivery of this Agreement by or on
behalf of the Stockholder does not violate or breach, and will not give rise to
any violation or breach, of the Stockholder's limited partnership agreement,
3
except as will not materially impair the ability of such Stockholder to
effectuate, carry out or comply with all of the terms of this Agreement, any
law, third party consent, Governmental Body approval or Contract by which the
Stockholder, the Proxy Shares or its assets or properties may be bound.
9. Entire Agreement. This Agreement supersedes all prior agreements,
written or oral, among the parties hereto with respect to the subject matter
hereof and contains the entire agreement among the parties with respect to the
subject matter hereof. This Agreement may not be amended, supplemented or
modified, and no provisions hereof may be modified or waived, except by an
instrument in writing signed by all parties hereto. No waiver of any provisions
hereof by any party shall be deemed a waiver of any other provisions hereof by
any such party, nor shall any such waiver be deemed a continuing waiver of any
provision hereof by such party.
10. Notices. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission (with confirmation) and on the next business day
when sent by Federal Express, Express Mail or other reputable overnight courier
service to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
If to the Buyer:
Allscripts, Inc.
2401 Commerce Drive
Libertyville, IL 60048
Telephone: (847) 680-3515
Facsimile: (847) 680-3573
Attention: President
If to Parent:
IDX Systems Incorporated
1400 Shelburne Road
South Burlington, VT 05403
Telephone: (802) 862-1022
Facsimile: (802) 865-3681
Attention: General Counsel
If to the Stockholder:
Pequot Private Equity Fund II, L.P.
500 Nyala Farm Road
Westport, CT 06880
Telephone: (203) 429-2200
Facsimile: (203) 429-2400
Attention: Carol Holley
David J. Malat
4
11. Miscellaneous.
(a) This Agreement shall be deemed a contract made under, and for all
purposes shall be construed in accordance with, the laws of the State of
Delaware without reference to its conflicts of law principles.
(b) If any provision of this Agreement or the application of such
provision to any person or circumstances shall be held invalid or unenforceable
by a court of competent jurisdiction, such provision or application shall be
unenforceable only to the extent of such invalidity or unenforceability, and the
remainder of such provision and the application of such provision to persons or
circumstances, other than the party as to which it is held invalid, and the
remainder of this Agreement shall not be affected.
(c) This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
(d) All Section headings herein are for convenience of reference only
and are not part of this Agreement, and no construction or reference shall be
derived therefrom.
(e) The obligations of the Stockholder set forth in this Agreement
shall not be effective or binding upon the Stockholder until after such time as
the Merger Agreement and the Asset Purchase Agreement are executed and delivered
by the respective parties thereto, and the parties agree that there is not and
has not been any other agreement, arrangement or understanding between the
parties hereto with respect to the matters set forth herein.
(f) The Stockholder's agreement and understanding herein is not made as
a director or officer of the Company or in any capacity other than a stockholder
of the Company. The Stockholder signs solely in its capacity as a record holder
and beneficial owner of Shares and nothing herein shall limit or affect any
actions taken by a representative of the Stockholder in such representative's
capacity as an officer or director of the Company.
(g) The Stockholder hereby waives for the benefit of the Company and
its stockholders any and all rights it may have under the Stockholders'
Agreement dated as of January 10, 2000 by and among the Company, Parent, the
Stockholder and the other stockholders of the Company party thereto (including,
without limitation, any consent rights, rights to receive notice or rights to
purchase or sell any securities of the Company) solely with respect to the
Merger and the Asset Sale and the other transactions and agreements contemplated
by the Merger Agreement and the Asset Purchase Agreement.
12. Restrictions on Transfer. During any period of five (5) consecutive
Trading Days from and after the Closing Date, the Stockholder agrees not to
effect any Transfer (or Transfers) of the shares of Allscripts Holding, Inc. it
receives in the Merger involving in excess of 100,000 shares in the aggregate.
Notwithstanding the above, the Stockholder may deliver a written notice to
Allscripts Holding, Inc. that Stockholder desires to effect a sale to a single
purchaser of a number of such shares in excess of 100,000 shares (a "Block"),
which notice (a "Notice of Block Transfer") sets forth (A) the number of shares
of Allscripts Holding, Inc. Common Stock that the Stockholder desires to
5
Transfer, or maximum and minimum number of, such shares and (B) the price per
share at which the Stockholder would be willing to Transfer such shares (the
"Specified Price"). The Notice of Transfer shall constitute an offer by the
Stockholder, which shall be irrevocable for a period of 10 days following
receipt of such notice by Allscripts Holding, Inc., to permit Allscripts
Holding, Inc. to arrange for the purchase of the maximum number (but not fewer
than the minimum number) of such shares by a purchaser selected by Allscripts
Holding, Inc. in its sole discretion for cash at a price per share equal to the
average of the Per Share Market Value (as defined below) of such shares for the
five (5) Trading Days immediately preceding (and excluding) the date that
Allscripts Holding, Inc. delivers a written notice to the Stockholder (the
"Notice of Purchase") that Allscripts Holding, Inc. has arranged for such
purchase at such price per share (the "Current Price"); provided, however, that
the Stockholder shall have no obligation to Transfer any of its shares to the
proposed purchaser if the Current Price does not equal at least 90% of the
Specified Price offered in the Notice of Transfer.
The consummation of such purchase shall take place on such date, not later than
10 days after receipt of the Notice of Purchase by the Stockholder , as
Allscripts Holding, Inc. and the Stockholder shall select. Upon the consummation
of such purchase, (A) the Stockholder shall deliver the certificate or
certificates evidencing the shares so purchased duly endorsed in blank for
transfer or accompanied by written instruments of transfer in form satisfactory
to the purchaser duly executed by the Stockholder, free and clear of any liens,
encumbrances and claims and (B) the purchaser shall simultaneously with the
delivery of the certificate or certificates evidencing the shares so purchased
pay to the Stockholder the aggregate Current Price of such shares.
Allscripts Holding, Inc. shall have no obligation to deliver a Notice of
Purchase in response to any Notice of Transfer delivered by the Stockholder, and
the decision as to whether to deliver any Notice of Purchase shall be made by
Allscripts Holding, Inc. in the exercise of its sole discretion. In the event
that Allscripts Holding, Inc. shall have received a Notice of Transfer from the
Stockholder but shall not have given a Notice of Purchase to the Stockholder
with respect thereto prior to the expiration of the 10-day period following
receipt of such Notice of Transfer, nothing in this Section 12 shall limit the
right of the Stockholder to Transfer any shares that are not to be purchased
pursuant to a Notice of Purchase otherwise subject to the foregoing provision of
this Section 12.
For the purposes of this Section 12, "Per Share Market Value" shall mean, on any
particular date (i) the last sale price per share of the Allscripts Holding,
Inc. Common Stock on such date on the principal stock exchange on which the
Allscripts Holding, Inc. Common Stock has been listed or, if there is no such
price on such date, then the last price on such exchange on the date nearest
preceding such date, or (ii) if the Allscripts Holding, Inc. Common Stock is not
listed on any stock exchange, the final bid price for a share of Allscripts
Holding, Inc. Common Stock in the over-the-counter market, as reported by The
Nasdaq Stock Market at the close of business on such date, or the last sales
price if such price is reported and final bid prices are not available, or (iii)
if the Allscripts Holding, Inc. Common Stock is not quoted on The Nasdaq Stock
Market, the bid price for a share of Allscripts Holding, Inc. Common Stock in
the over- the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding to its functions
of reporting prices), or (iv) if the Allscripts Holding, Inc. Common Stock is no
6
longer publicly traded, as determined by an investment banking firm to be
mutually selected by Allscripts Holding, Inc. and the Stockholder.
[Remainder of page intentionally blank.]
7
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
ALLSCRIPTS, INC.
By: /s/ Glen Tullman
--------------------------------------
Name: Glen Tullman
Title: Chief Executive Officer
IDX SYSTEMS CORPORATION
By: /s/ Robert W. Baker
--------------------------------------
Name: Robert W. Baker, Jr.
Title: Vice President
[Remainder of page intentionally blank.]
8
PEQUOT PRIVATE EQUITY FUND II, L.P.
By: PEQUOT CAPITAL MANAGEMENT, INC., as
Investment Manager
By: /s/ Peter G. Streinger
----------------------------------
Peter G. Streinger
Chief Financial Officer
500 Nyala Farm Road
Westport, CT 06880
Class of Shares Series A Convertible Preferred
------------------------------
Number of Shares 2,542,243
--------------------------
9
EXHIBIT B-1
VOTING AGREEMENT AND IRREVOCABLE PROXY
THIS VOTING AGREEMENT AND IRREVOCABLE PROXY (the "Agreement"), dated
as of July 13, 2000, between Morgan Stanley Venture Partners III, L.P., Morgan
Stanley Venture Investors III, L.P., and Morgan Stanley Venture Partners
Entrepreneur Fund, L.P., (collectively, the "Stockholder"), who are stockholders
of Allscripts, Inc., a Delaware corporation (the "Company"), and Channelhealth
Incorporated, a Delaware corporation ("ChannelHealth").
WHEREAS, concurrently with the execution of this Agreement, the
Company, ChannelHealth, IDX Systems Corporation, a Vermont corporation and a
principal stockholder of ChannelHealth ("IDX"), Allscripts Holding, Inc., Bursar
Acquisition, Inc. and Bursar Acquisition No. 2, Inc. have entered into an
Agreement and Plan of Merger (as the same may be amended from time to time, the
"Merger Agreement"), providing for the acquisition of ChannelHealth by the
Company, pursuant to the terms and conditions of the Merger Agreement (the
"ChannelHealth Merger"); and
WHEREAS, the Stockholder owns of record and beneficially the number
of shares of capital stock of the Company set forth beneath his, her or its
signature below (the "Shares"); and
WHEREAS, in connection with the transaction contemplated by the
Merger Agreement, the Company may become a wholly owned subsidiary of a holding
company ("Newco") and the Stockholder may receive shares of capital stock of
Newco in exchange for the shares (the "Newco Shares"); and
WHEREAS, the Stockholder wishes to enter into this Agreement with
respect to (i) all of the Shares, (ii)all of the shares of the Company's capital
stock which the Stockholder acquires during the term of this Agreement and (iii)
any Newco Shares the stockholder acquires during the term of this Agreement and
any such capital as to which it has, directly or indirectly, the right to vote
or direct the voting of and held at the time of any stockholder vote
(collectively, the "Proxy Shares");
WHEREAS, approval and adoption of the Merger Agreement by the
Company's stockholders is a condition to the consummation of the ChannelHealth
Merger; and
WHEREAS, in order to induce ChannelHealth and IDX to enter into the
Merger Agreement, the Stockholder has agreed, upon the terms and subject to the
conditions set forth herein, to vote the Proxy Shares and to deliver an
irrevocable proxy to ChannelHealth to vote the Proxy Shares at any meeting of
the Company's Stockholders or in connection with any action by consent of the
Company's Stockholders, in favor of (i) the issuance of the ChannelHealth Merger
Shares and the Allscripts Merger Shares pursuant to the Merger Agreement and
(ii) the approval and adoption of the Merger Agreement and the approval of the
ChannelHealth Merger and the Allscripts Merger.
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to such terms in the Merger Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1. Agreement to Vote Shares. The Stockholder agrees during the term
of this Agreement to vote, and to cause its Affiliates to vote, the Proxy
Shares, in person or by proxy (or by written consent if action is taken by
written consent) in favor of (i) the issuance of the ChannelHealth Merger Shares
and the Allscripts Merger Shares pursuant to the Merger Agreement and (ii)
approval and adoption of the Merger Agreement and the approval of the
ChannelHealth Merger and the Allscripts Merger at any meeting of the
Stockholders of the Company (or any written action in lieu of a meeting) at
which such matters are considered and at every adjournment thereof. The
Stockholder agrees, not to, and not to permit any of its Affiliates to, vote or
execute any written consent in lieu of a stockholders meeting or vote of the
Company, if such consent or vote by the stockholders of the Company would be
inconsistent with or frustrate the purposes of the other agreements of the
Stockholder pursuant to this paragraph.
2. Irrevocable Proxy. The Stockholder hereby irrevocably appoints
ChannelHealth, with full power of substitution, as the Stockholder's attorney
and proxy to attend any meeting of Stockholders of the Company or Newco (and any
adjournment or adjournments thereof) called for the purpose of approving the
issuance of the ChannelHealth Merger Shares and the Allscripts Merger Shares and
approving and adopting, among other purposes, the Merger Agreement and the
ChannelHealth Merger and the Allscripts Merger and to vote such Stockholder's
Proxy Shares at such meeting and at any adjournment or adjournments thereof in
favor of the approval of the issuance of the ChannelHealth Merger Shares and the
Allscripts Merger Shares and in favor of the Merger Agreement and the
ChannelHealth Merger and the Allscripts Merger. This proxy is coupled with the
interests provided for or contemplated under this Agreement and the Merger
Agreement and shall be irrevocable until terminated in accordance with the
provisions of Section 6 hereof.
3. No Voting Trusts. The Stockholder agrees that the Stockholder will
not, nor will the Stockholder permit any entity under the Stockholder's control
to, deposit any of the Proxy Shares in a voting trust or subject any of the
Proxy Shares to any arrangement with respect to the voting of the Proxy Shares
inconsistent with this Agreement.
4. Revocation of Prior Proxies; Limitation on Dispositions and
Proxies. The Stockholder hereby revokes any and all previous proxies with
respect to the Proxy Shares or any other voting securities of the Company that
relate to the approval of the Merger Agreement. During the term of this
Agreement, the Stockholder agrees not to grant any proxies with respect to
(except for this Proxy or a proxy which is not inconsistent with the terms of
this Agreement) any of the Proxy Shares.
5. Specific Performance. Each party hereto acknowledges that it will
be impossible to measure in money the damages to the other party if a party
hereto fails to comply with the obligations imposed by this Agreement, and that,
in the event of any such failure, the other party will not have an adequate
remedy at law or in damages. Accordingly, each party hereto agrees that
2
injunctive relief or other equitable remedy, in addition to remedies at law or
damages, is the appropriate remedy for any such failure and will not oppose the
granting of such relief on the basis that the other party has an adequate remedy
at law. Each party hereto agrees that it will not seek, and agrees to waive any
requirement for, the securing, or posting of a bond in connection with any other
party's seeking or obtaining such equitable relief.
6. Term of Agreement; Termination. Subject to Section 10(e), the term
of this Agreement shall commence on the date hereof and such term and this
Agreement shall terminate upon the earliest to occur of (i) the Effective Time,
or (ii) the date on which the Merger Agreement is terminated in accordance with
its terms. Upon such termination, no party shall have any further obligations or
liabilities hereunder; provided, that such termination shall not relieve any
party from liability for any breach of this Agreement prior to such termination.
7. Representations and Warranties of the Stockholder. Stockholder
represents and warrants to ChannelHealth and IDX as follows:
(a) The Stockholder is the lawful owner of the Shares, free and clear
of all liens, charges, options, rights, encumbrances, stockholders agreements,
voting agreements, agreements to transfer or otherwise dispose of such Shares
and commitments of every kind, other than this Agreement and has the sole power
to vote (or cause to be voted) the Shares as set forth in this Agreement.
Neither the Stockholder nor any of its Affiliates owns or holds any rights to
acquire any additional securities of the Company or any interest therein or any
voting rights with respect to any additional shares of Company any other
securities of the Company.
(b) This Agreement has been duly executed and delivered by a duly
authorized officer to the Stockholder.
(c) This Agreement constitutes the valid and binding agreement of the
Stockholder, enforceable against the Stockholder in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, oratorium and similar laws relating to or
affecting creditors generally by general equity principles (regardless of
whether enforceability is considered in a proceeding in equity or at law) or by
an implied covenant of good faith and fair dealing.
(d) The execution and delivery of this Agreement by the Stockholder
does not violate or breach, and will not give rise to any violation or breach,
of the Stockholder's charter or by-laws, except as will not materially impair
the ability of such Stockholder to effectuate, carry out or comply with all of
the terms of this Agreement, any law, third party consent, Governmental Body
approval or Contract by which the Stockholder, the Proxy Shares or its assets or
properties may be bound.
8. Entire Agreement. This Agreement supersedes all prior agreements,
written or oral, among the parties hereto with respect to the subject matter
hereof and contains the entire agreement among the parties with respect to the
subject matter hereof. This Agreement may not be amended, supplemented or
modified, and no provisions hereof may be modified or waived, except by an
instrument in writing signed by all parties hereto. No waiver of any provisions
3
hereof by any party shall be deemed a waiver of any other provisions hereof by
any such party, nor shall any such waiver be deemed a continuing waiver of any
provision hereof by such party.
9. Notices. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission (with confirmation) and on the next business day
when sent by Federal Express, Express Mail or other reputable overnight courier
service to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
If to ChannelHealth:
Channelhealth Incorporated
25 Green Mountain Drive
Burlington, VT 05402
Telephone: (802) 951-2418
Facsimile: (802) 865-1197
Attention: General Counsel
With a copy to:
IDX Systems Corporation
1400 Shelbourne Road
South Burlington, VT 05403
Telephone: (802) 862-1022
Facsimile: (802) 865-3681
Attention: General Counsel
If to Stockholder:
Morgan Stanley Dean Witter Venture Partners 1221 Avenue of the
Americas New York, New York 10020.
Telephone:
Facsimile
Attention:
With a copy to:
-----------------------------
-----------------------------
-----------------------------
4
10. Miscellaneous.
(a) This Agreement shall be deemed a contract made under, and for all
purposes shall be construed in accordance with, the laws of the State of
Delaware without reference to its conflicts of law principles.
(b) If any provision of this Agreement or the application of such
provision to any person or circumstances shall be held invalid or unenforceable
by a court of competent jurisdiction, such provision or application shall be
unenforceable only to the extent of such invalidity or unenforceability, and the
remainder of such provision and the application of such provision to persons or
circumstances, other than the party as to which it is held invalid, and the
remainder of this Agreement shall not be affected.
(c) This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
(d) All Section headings herein are for convenience of reference only
and are not part of this Agreement, and no construction or reference shall be
derived therefrom.
(e) The obligations of the Stockholder set forth in this Agreement
shall not be effective or binding upon the Stockholder until after such time as
the Merger Agreement is executed and delivered by the Company, IDX and
ChannelHealth, and the parties agree that there is not and has not been any
other agreement, arrangement or understanding between the parties hereto with
respect to the matters set forth herein.
(f) The Stockholder's Agreement and understanding herein is not made
as a director or officer of the Company or in any capacity other than a
stockholder of the Company. The Stockholder signs solely in its capacity as a
record holder and beneficial owner of Shares and nothing herein shall limit or
affect any actions taken by a representative of the Stockholder in such
representative's capacity as an officer or director of the Company.
[Remainder of page intentionally blank.]
5
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
CHANNELHEALTH INCORPORATED
By:
----------------------------------------
Name:
Title:
MORGAN STANLEY VENTURE PARTNERS III, L.P.
MORGAN STANLEY VENTURE INVESTORS III, L.P.
THE MORGAN STANLEY VENTURE PARTNERS
ENTREPRENEUR FUND, L.P.
By: Morgan Stanley Venture Partners III, L.L.C.,
as General Partner of each of the limited
partnerships named above
By: Morgan Stanley Venture Capital III, Inc.,
as Member
----------------------------------
Print Name
----------------------------------
(Signature)
Number and type of Shares_________________
6
EXHIBIT B-2
VOTING AGREEMENT AND IRREVOCABLE PROXY
THIS VOTING AGREEMENT AND IRREVOCABLE PROXY (the "Agreement"), dated
as of July 13, 2000, between Liberty Partners Holdings 6, L.L.C. (the
"Stockholder"), who is a stockholder of Allscripts, Inc., a Delaware corporation
(the "Company"), and Channelhealth Incorporated, a Delaware corporation
("ChannelHealth").
WHEREAS, concurrently with the execution of this Agreement, the
Company, ChannelHealth, IDX Systems Corporation, a Vermont corporation and a
principal stockholder of ChannelHealth ("IDX"), Allscripts Holding, Inc., Bursar
Acquisition, Inc. and Bursar Acquisition No. 2, Inc. have entered into an
Agreement and Plan of Merger (as the same may be amended from time to time, the
"Merger Agreement"), providing for the acquisition of ChannelHealth by the
Company, pursuant to the terms and conditions of the Merger Agreement (the
"ChannelHealth Merger"); and
WHEREAS, the Stockholder owns of record and beneficially the number
of shares of capital stock of the Company set forth beneath his, her or its
signature below (the "Shares"); and
WHEREAS, in connection with the transaction contemplated by the
Merger Agreement, the Company may become a wholly owned subsidiary of a holding
company ("Newco") and the Stockholder may receive shares of capital stock of
Newco in exchange for the shares (the "Newco Shares"); and
WHEREAS, the Stockholder wishes to enter into this Agreement with
respect to all of the Shares and all of the shares of the Company's capital
stock which the Stockholder acquires during the term of this Agreement, together
with any Newco Shares the stockholder acquires during the term of this Agreement
and any such capital as to which it has, directly or indirectly, the right to
vote or direct the voting of (collectively, the "Proxy Shares");
WHEREAS, approval and adoption of the Merger Agreement by the
Company's stockholders is a condition to the consummation of the ChannelHealth
Merger; and
WHEREAS, in order to induce ChannelHealth and IDX to enter into the
Merger Agreement, the Stockholder has agreed, upon the terms and subject to the
conditions set forth herein, to vote the Proxy Shares and to deliver an
irrevocable proxy to ChannelHealth to vote the Proxy Shares at any meeting of
the Company's Stockholders or in connection with any action by consent of the
Company's Stockholders, in favor of (i) the issuance of the ChannelHealth Merger
Shares and the Allscripts Merger Shares pursuant to the Merger Agreement and
(ii) the approval and adoption of the Merger Agreement and the approval of the
ChannelHealth Merger and the Allscripts Merger.
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to such terms in the Merger Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1. Agreement to Vote Shares. The Stockholder agrees during the term
of this Agreement to vote, and to cause its Affiliates to vote, the Proxy
Shares, in person or by proxy (or by written consent if action is taken by
written consent) in favor of (i) the issuance of the ChannelHealth Merger Shares
and the Allscripts Merger Shares pursuant to the Merger Agreement and (ii)
approval and adoption of the Merger Agreement and the approval of the
ChannelHealth Merger and the Allscripts Merger at any meeting of the
Stockholders of the Company (or any written action in lieu of a meeting) at
which such matters are considered and at every adjournment thereof. The
Stockholder agrees, not to, and not to permit any of its Affiliates to, vote or
execute any written consent in lieu of a stockholders meeting or vote of the
Company, if such consent or vote by the stockholders of the Company would be
inconsistent with or frustrate the purposes of the other agreements of the
Stockholder pursuant to this paragraph.
2. Irrevocable Proxy. The Stockholder hereby irrevocably appoints
ChannelHealth, with full power of substitution, as the Stockholder's attorney
and proxy to attend any meeting of Stockholders of the Company or Newco (and any
adjournment or adjournments thereof) called for the purpose of approving the
issuance of the ChannelHealth Merger Shares and the Allscripts Merger Shares and
approving and adopting, among other purposes, the Merger Agreement and the
ChannelHealth Merger and the Allscripts Merger and to vote such Stockholder's
Proxy Shares at such meeting and at any adjournment or adjournments thereof in
favor of the approval of the issuance of the ChannelHealth Merger Shares and the
Allscripts Merger Shares and in favor of the Merger Agreement and the
ChannelHealth Merger and the Allscripts Merger. This proxy is coupled with the
interests provided for or contemplated under this Agreement and the Merger
Agreement and shall be irrevocable until terminated in accordance with the
provisions of Section 6 hereof.
3. No Voting Trusts. The Stockholder agrees that the Stockholder will
not, nor will the Stockholder permit any entity under the Stockholder's control
to, deposit any of the Proxy Shares in a voting trust or subject any of the
Proxy Shares to any arrangement with respect to the voting of the Proxy Shares
inconsistent with this Agreement.
4. Revocation of Prior Proxies; Limitation on Dispositions and
Proxies. The Stockholder hereby revokes any and all previous proxies with
respect to the Proxy Shares or any other voting securities of the Company that
relate to the approval of the Merger Agreement. During the term of this
Agreement, the Stockholder agrees not to grant any proxies with respect to
(except for this Proxy or a proxy which is not inconsistent with the terms of
this Agreement) any of the Proxy Shares.
5. Specific Performance. Each party hereto acknowledges that it will
be impossible to measure in money the damages to the other party if a party
hereto fails to comply with the obligations imposed by this Agreement, and that,
in the event of any such failure, the other party will not have an adequate
remedy at law or in damages. Accordingly, each party hereto agrees that
injunctive relief or other equitable remedy, in addition to remedies at law or
damages, is the appropriate remedy for any such failure and will not oppose the
granting of such relief on the basis that the other party has an adequate remedy
at law. Each party hereto agrees that it will not seek, and agrees to waive any
requirement for, the securing, or posting of a bond in connection with any other
party's seeking or obtaining such equitable relief.
2
6. Term of Agreement; Termination. Subject to Section 10(e), the term
of this Agreement shall commence on the date hereof and such term and this
Agreement shall terminate upon the earliest to occur of (i) the Effective Time,
or (ii) the date on which the Merger Agreement is terminated in accordance with
its terms. Upon such termination, no party shall have any further obligations or
liabilities hereunder; provided, that such termination shall not relieve any
party from liability for any breach of this Agreement prior to such termination.
7. Representations and Warranties of the Stockholder. Stockholder
represents and warrants to ChannelHealth and IDX as follows:
(a) The Stockholder is the lawful owner of the Shares, free and clear
of all liens, charges, options, rights, encumbrances, stockholders agreements,
voting agreements, agreements to transfer or otherwise dispose of such Shares
and commitments of every kind, other than this Agreement and has the sole power
to vote (or cause to be voted) the Shares as set forth in this Agreement.
Neither the Stockholder nor any of its Affiliates owns or holds any rights to
acquire any additional securities of the Company or any interest therein or any
voting rights with respect to any additional shares of Company any other
securities of the Company.
(b) This Agreement has been duly executed and delivered by a duly
authorized officer to the Stockholder.
(c) This Agreement constitutes the valid and binding agreement of the
Stockholder, enforceable against the Stockholder in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws relating to or
affecting creditors generally by general equity principles (regardless of
whether enforceability is considered in a proceeding in equity or at law) or by
an implied covenant of good faith and fair dealing.
(d) The execution and delivery of this Agreement by the Stockholder
does not violate or breach, and will not give rise to any violation or breach,
of the Stockholder's charter or by-laws, except as will not materially impair
the ability of such Stockholder to effectuate, carry out or comply with all of
the terms of this Agreement, any law, third party consent, Governmental Body
approval or Contract by which the Stockholder, the Proxy Shares or its assets or
properties may be bound.
8. Entire Agreement. This Agreement supersedes all prior agreements,
written or oral, among the parties hereto with respect to the subject matter
hereof and contains the entire agreement among the parties with respect to the
subject matter hereof. This Agreement may not be amended, supplemented or
modified, and no provisions hereof may be modified or waived, except by an
instrument in writing signed by all parties hereto. No waiver of any provisions
hereof by any party shall be deemed a waiver of any other provisions hereof by
any such party, nor shall any such waiver be deemed a continuing waiver of any
provision hereof by such party.
9. Notices. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission (with confirmation) and on the next business day
when sent by Federal Express, Express Mail or other reputable overnight courier
3
service to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
If to ChannelHealth:
Channelhealth Incorporated
25 Green Mountain Drive
Burlington, VT 05402
Telephone: (802) 951-2418
Facsimile: (802) 865-1197
Attention: General Counsel
With a copy to:
IDX Systems Corporation
1400 Shelbourne Road
South Burlington, VT 05403
Telephone: (802) 862-1022
Facsimile: (802) 865-3681
Attention: General Counsel
If to Stockholder:
Liberty Partners Holdings 6, L.L.C.
c/o Liberty Partners, L.P.
1177 Avenue of the Americas
New York, New York 10036.
Telephone:
Facsimile:
Attention: Michael J. Kluger
With a copy to:
-----------------------------
-----------------------------
-----------------------------
10. Miscellaneous.
(a) This Agreement shall be deemed a contract made under, and for all
purposes shall be construed in accordance with, the laws of the State of
Delaware without reference to its conflicts of law principles.
4
(b) If any provision of this Agreement or the application of such
provision to any person or circumstances shall be held invalid or unenforceable
by a court of competent jurisdiction, such provision or application shall be
unenforceable only to the extent of such invalidity or unenforceability, and the
remainder of such provision and the application of such provision to persons or
circumstances, other than the party as to which it is held invalid, and the
remainder of this Agreement shall not be affected.
(c) This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
(d) All Section headings herein are for convenience of reference only
and are not part of this Agreement, and no construction or reference shall be
derived therefrom.
(e) The obligations of the Stockholder set forth in this Agreement
shall not be effective or binding upon the Stockholder until after such time as
the Merger Agreement is executed and delivered by the Company, IDX and
ChannelHealth, and the parties agree that there is not and has not been any
other agreement, arrangement or understanding between the parties hereto with
respect to the matters set forth herein. The Stockholder agrees that the
obligations of the Stockholder hereinsetforth shall be binding upon any
transferee of the Proxy Shares that is an Affiliate of the Stockholder,
provided, however, that the State Board of Administration of Florida shall not
be deemed an Affiliate of the Stockholder for the purposes of the Agreement.
(f) The Stockholder's Agreement and understanding herein is not made
as a director or officer of the Company or in any capacity other than a
stockholder of the Company. The Stockholder signs solely in its capacity as a
record holder and beneficial owner of Shares and nothing herein shall limit or
affect any actions taken by a representative of the Stockholder in such
representative's capacity as an officer or director of the Company.
[Remainder of page intentionally blank.]
5
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
CHANNELHEALTH INCORPORATED
By:_______________________________
Name:
Title:
LIBERTY PARTNERS HOLDINGS 6, L.L.C.
----------------------------------
(Name)
----------------------------------
(Signature)
Number and type of Shares_________________
6
EXHIBIT C
---------
ASSET PURCHASE AGREEMENT
------------------------
This ASSET PURCHASE AGREEMENT ("Agreement") is dated as of the 13th day of July,
2000, by and between Channelhealth Incorporated (the "Seller"), a corporation
organized and existing under the laws of the State of Delaware and having its
principal place of business in South Burlington, Vermont, and IDX Systems
Corporation (the "Buyer"), a corporation organized and existing under the laws
of the State of Vermont and having its principal place of business in South
Burlington, Vermont.
W I T N E S S E T H:
WHEREAS, the Buyer formed the Seller as a subsidiary of the Buyer to carry on
certain Internet-related businesses previously carried on by the Buyer and known
as the "Physician Channel", the "Patient Channel" and the "eCommerce Channel"
(collectively the "ChannelHealth Business"); and
WHEREAS, the Buyer contributed assets related to the ChannelHealth Business to
the Seller and the Buyer and the Seller entered into a Cross License and
Software Maintenance Agreement and a Marketing, Development and Services
Agreement, both dated January 1, 2000, governing the licensing of intellectual
property rights related to the ChannelHealth Business and the marketing and
distribution of the ChannelHealth Business services; and
WHEREAS, the Seller and the Buyer have agreed that it is in the best interests
of both corporations for the Seller to convey the "eCommerce Channel" and
certain components of the "Patient Channel" businesses back to the Buyer; and
WHEREAS, the Seller has agreed to sell certain assets and assign certain
intellectual property rights, contract rights and obligations and certain
liabilities related to the "eCommerce Channel" and certain components of the
"Patient Channel" businesses (the "Discontinued Businesses") to the Buyer, and
the Buyer has agreed to purchase such assets and assume such contract rights and
obligations and such liabilities pursuant to the terms of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual agreements,
covenants, and provisions hereinafter set forth, the Seller and the Buyer hereby
agree as follows:
ARTICLE I
ASSETS TO BE CONVEYED
---------------------
At the Closing (as hereinafter defined), the Seller shall assign, sell, convey,
transfer, and deliver to the Buyer, by good and sufficient instruments, as
listed on Exhibit D and in forms acceptable to Buyer and Seller, and the Buyer
shall purchase from the Seller the following tangible and intangible assets (the
"Assets"):
SECTION 1.1 PERSONAL PROPERTY. All tangible personal property used in the
operation of the Discontinued Businesses, including, without limitation, all
personal property listed on Exhibit A attached hereto and incorporated herein.
SECTION 1.2 INTANGIBLE ASSETS.
1.2(A) CONTRACT RIGHTS. The Seller's right, title, and interest in and
to (a) all contracts, contract rights, contract proposals, and open accounts
related exclusively to the Discontinued Businesses and to which the Seller is a
party and which are in effect on the Closing Date (as hereinafter defined),
including, without limitation, the contracts identified as "Transferred
Contracts" on Exhibit B attached hereto and incorporated herein, and all
documents, and records pertaining to such contracts; and (b) all contract rights
and obligations related to the Discontinued Businesses arising in contracts
related to both the Discontinued Businesses and other portions of the
ChannelHealth Businesses and which are in effect on the Closing Date, including
without limitation, contract rights and obligations related to the Discontinued
Businesses in the contracts identified as "Divided Contracts" on Exhibit B. The
"Transferred Contracts" and the "Divided Contracts" are sometimes hereafter
referred to as the "Contracts."
1.2(B) INTELLECTUAL PROPERTY RIGHTS. At the Closing Seller shall
transfer and assign to Buyer all of its copyrights in and to the products known
as DietSite, eCommerce Channel and the Virtual Office component of Patient
Channel (specifically excluding Health Resources, MyHealth, the WebWorks Task
Engine, the Task Engine Database, and "secure messaging") and any patents with
claims directed wholely or in part to inventions embodied in, or necessary to
implement or practice any portion of the products known as DietSite, eCommerce
Channel and the Virtual Office component of Patient Channel (specifically
excluding Health Resources, MyHealth, the WebWorks Task Engine, the Task Engine
Database, and "secure messaging"). Seller shall execute an assignment to
effectuate and confirm such assignment.
SECTION 1.3 TRADENAME; DOMAIN NAME; GOODWILL. All goodwill connected in any way
with the Discontinued Businesses together with Seller's right, title and
interest to the trademarks and domain names "PATIENT CHANNEL",
"www.patientchannel.com" "VIRTUAL OFFICE", "MYHEALTH", "ECOMMERCE CHANNEL",
"www.ecommercechannel.com", "DIETSITE", "www.dietsite.com" and the DIETSITE
logo, and any related registrations or pending registration applications.
SECTION 1.4 CASH. All of the Seller's cash and cash equivalents in excess of its
Accrued Liabilities as of the Closing Date. "Accrued Liabilities" shall mean the
Seller's accounts payable, other current liabilities and accrued liabilities.
SECTION 1.5 EXCLUDED ASSETS. The Assets do not include any other assets of the
Seller.
ARTICLE II
TRANSFERRED EMPLOYEES
---------------------
The Buyer agrees to offer employment to each of the employees
identified on Exhibit E (the "Hired Employees") for the same or greater rate of
compensation as that at which they were employed by the Seller immediately prior
to the Closing Date and shall continue the employee benefits of the Hired
Employees without interruption.
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ARTICLE III
PURCHASE PRICE
--------------
SECTION 3.1 PURCHASE PRICE. The purchase price to be paid by the Buyer to the
Seller for the Assets shall be equal to the sum of Twenty-Five Million Dollars
($25,000,000) (the "Purchase Price"), which shall be allocated as mutually
agreed by the parties at Closing.
SECTION 3.2 PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid by
cancellation of 2,771,009 shares of the Seller's Common Stock held by the Buyer.
Such number of shares representing a value of $25 million based on the aggregate
value of the consideration as of the close of trading on July 7, 2000, to be
received by Seller's shareholders pursuant to that certain Agreement and Plan of
Merger by and among Allscripts Holding, Inc., Allscripts, Inc., Bursar
Acquistion, Inc., Bursar Acquisition No. 2, Inc., IDX Systems Corporation,
and Channelhealth Incorporated.
ARTICLE IV
LIABILITIES
-----------
The Seller hereby assigns and the Buyer assumes responsibility for, and, in
accordance with Article IX, the Buyer shall indemnify and hold the Seller, its
officers, directors, agents, employees, affiliates, subsidiaries, predecessors,
successors and assigns harmless from and against, the liabilities of the Seller
identified on Exhibit C (the "Liabilities").
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
SECTION 5.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents,
warrants, and agrees with and to the Buyer, as of the date hereof and shall
represent, warrant and agree with the Buyer as of the Closing Date, as follows:
(A) ORGANIZATION AND QUALIFICATION. The Seller is a corporation duly organized,
and validly existing in good standing under the laws of the State of Delaware
and has all necessary corporate power, authority, and capacity to own its assets
and to carry on the ChannelHealth Business as currently conducted.
(B) DUE AUTHORIZATION. The Seller has taken all necessary corporate action and
has full corporate power and authority to assume and to perform its obligations
and to transfer the Assets under the terms of this Agreement
(C) TITLE TO ASSETS. The Seller has title to all of the Assets as good and
marketable as the title Buyer conveyed to Seller upon contribution of the
Assets, and the Assets are free and clear of all claims, liens, pledges, and
encumbrances, if any, created since contribution of the Assets to the Seller by
the Buyer.
(D) CONDITION OF ASSETS. The Seller's tangible assets to be conveyed pursuant to
this Agreement are sold "AS IS."
3
(E) CONTRACTS. The Seller has performed all of its material obligations and is
not in default in any material respect under any of the Contracts. The Contracts
are in full force and effect and are enforceable by the Seller in accordance
with their terms, subject to no defenses or offsets.
(F) COMPLIANCE WITH OTHER INSTRUMENTS. Except as set forth on Schedule 5.1(f),
the execution, delivery, and performance of this Agreement by the Seller does
not conflict with, result in a breach of the terms or conditions of, accelerate
any provision of, or constitute any default under the Seller's Certificate of
Incorporation or Bylaws, or any contract, agreement, lease, or other instrument
to which the Seller is a party or by which the Seller is bound, except where
such conflict, breach, acceleration, or default would not cause a material
adverse effect on the Seller's business or financial condition or ability to
perform its obligations under this Agreement.
(L) SURVIVAL. The representations, warranties, and agreements of the Seller
contained herein shall be true on and as of the Closing Date, but they shall not
survive the Closing.
SECTION 5.2 REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents,
warrants, and agrees with and to the Seller, as of the date hereof, as follows:
(A) ORGANIZATION AND QUALIFICATION. The Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Vermont.
(B) DUE AUTHORIZATION. The Buyer has taken, or will have taken as of the Closing
Date, all necessary corporate action and has full power and authority to assume
and to perform its obligations under this Agreement.
(C) BINDING OBLIGATION. This Agreement constitutes a valid and binding
obligation of the Buyer enforceable in accordance with its terms.
(D) COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery, and performance
of this Agreement by the Buyer does not, and on the Closing Date will not,
conflict with, result in a breach of the terms or conditions of, accelerate any
provision of, or constitute any default under the Buyer's Articles of
Incorporation or Bylaws, or any contract, agreement, lease or other instrument
to which the Buyer is a party or by which the Buyer is bound, except where such
conflict, breach, acceleration, or default would not cause a material adverse
effect on the Buyer's business or financial condition or ability to perform its
obligations under this Agreement.
(E) SURVIVAL. The representations, warranties and agreements of the Buyer
contained herein shall be true on and as of the Closing Date, but they shall not
survive the Closing.
4
ARTICLE VI
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
-------------------------------------------
The obligation of the Buyer to purchase the Assets is subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
SECTION 6.1 REPRESENTATIONS AND WARRANTIES TRUE. Each of the representations and
warranties of the Seller contained in Section 5.1 shall be true and correct when
made and as of the Closing Date.
SECTION 6.2 BOARD APPROVAL. The Buyer shall have obtained approval of the
transactions contemplated by this Agreement by its Board of Directors.
ARTICLE VII
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
--------------------------------------------
The obligation of the Seller to sell the Assets is subject to the satisfaction,
on or prior to the Closing Date, of the following conditions:
SECTION 7.1 REPRESENTATIONS AND WARRANTIES TRUE. Each of the representations and
warranties of the Buyer contained in Section 5.2 shall be true and correct when
made and as of the Closing Date.
SECTION 7.2 BOARD APPROVAL. The Seller shall have obtained approval of the
transactions contemplated by this Agreement by its Board of Directors.
SECTION 7.3 SHAREHOLDER APPROVAL. The Seller shall have obtained approval of the
transactions contemplated by this Agreement by its shareholders.
ARTICLE VIII
CLOSING
-------
SECTION 8.1 CLOSING DATE. The closing of the transactions contemplated by this
Agreement ("Closing") shall take place on or before the Closing Date of that
certain Agreement and Plan of Merger by and among Allscripts Holding, Inc.,
Allscripts, Inc., Bursar Acquistion, Inc., Bursar Acquisition No. 2,
Inc., IDX Systems Corporation, and Channelhealth Incorporated, of even date
herewith (the "Closing Date") at such time and in such place as the Seller and
the Buyer may mutually agree upon.
SECTION 8.2 DOCUMENTS TO BE DELIVERED BY THE SELLER. At the Closing, the Seller
shall deliver or cause to be delivered to the Buyer the following:
(a) A copy of the resolutions of the Seller's Board of Directors
and minutes of the meeting of Seller's shareholders, certified
5
by the Secretary of the Seller, authorizing the Seller's
execution of this Agreement and performance of its obligations
under this Agreement.
(b) A bill of sale in the form of that attached hereto, and other
instruments of assignment, transfer, and conveyance, for all
of the Assets to be conveyed by Seller to Buyer under Article
I of this Agreement, executed by a duly authorized agent of
the Seller and conveying title to the Assets listed on Exhibit
A.
(c) An assignment of the Contracts and Waiver of any rights under
the Divided Contracts.
(d) An Assignment of the trademarks and domain names listed in
Section 1.3.
(e) An assignment or assignments of the copyrights and patent
rights listed in Section 1.2(b).
SECTION 8.3 DOCUMENTS TO BE DELIVERED BY THE BUYER. At the Closing, the Buyer
shall deliver or cause to be delivered to the Seller the following:
(a) A copy of the resolutions of the Buyer's Board of Directors,
certified by the Secretary of the Buyer, authorizing the
Buyer's execution of this Agreement and performance of its
obligations under this Agreement.
(b) The Purchase Price.
(c) An assumption of the Contracts and Liabilities.
ARTICLE IX
INDEMNIFICATION
---------------
The Buyer shall indemnify, defend and hold harmless the Seller, its
officers, directors, employees, successors and assigns from, against and in
respect of any and all claims, liabilities, damages and all related expenses
(including without limitation, reasonable attorney's fees, court costs and
expert witness fees), whether fixed or contingent, liquidated or unliquidated,
known or unknown to the Buyer, related to the Liabilities.
ARTICLE X
TERMINATION AND AMENDMENT
-------------------------
SECTION 10.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing by:
(a) mutual consent of the Seller and Buyer;
6
(b) the Buyer upon failure of a condition precedent to the obligations of Buyer
set forth in Article VI; or
(c) the Seller upon failure of a condition precedent to the obligations of
Seller set forth in Article VII.
SECTION 10.2 EFFECT OF TERMINATION. In the event of any permitted termination of
this Agreement, this Agreement shall thereafter be void, and no party hereto
will have any liability to any other party.
SECTION 10.3 AMENDMENT. This Agreement may be amended by an instrument in
writing signed on behalf of each of the parties hereto.
SECTION 10.4 EXTENSION. At any time prior to the Closing, the parties hereto may
by written instrument:
(a) extend the time for the performance of any of the obligations or other acts
of the other parties hereto;
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto; or (c) waive compliance
with any of the agreements or satisfaction of any of the conditions contained
herein.
ARTICLE XI
MISCELLANEOUS
-------------
SECTION 11.1 GOVERNING LAW; JURISDICTION. This Agreement shall be governed by
and construed in accordance with the laws of the State of Vermont.
SECTION 11.2 BINDING EFFECT. This Agreement shall be binding upon, and shall
inure to the benefit of, and shall be enforceable by, the parties hereto and
their respective legal representatives, successors, and assigns.
SECTION 11.3 ENTIRE AGREEMENT. This Agreement, including the Exhibits hereto,
contains the entire agreement of the parties hereto with respect to the
transactions contemplated hereby and supersedes all prior agreements, writings
and negotiations with respect thereto.
SECTION 11.4 BROKERS. Each party represents and warrants to the other that, to
the knowledge of the party making the representation, no broker or agent is
entitled to any brokerage fee or commission with respect to the transactions
contemplated by this Agreement.
SECTION 11.5 NOTICES. All notices, requests, waivers, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if hand delivered, mailed, first class postage prepaid, return
receipt requested, or sent by facsimile:
7
(a) If to the Seller, to:
Jeffrey J. McMahan
Channelhealth Incorporated
25 Green Mountain Drive
P.O. Box 8370
Burlington, VT 05402-8370
Facsimile: 802-865-1197
(b) If to the Buyer, to:
Robert W. Baker, Jr.
IDX Systems Corporation
1400 Shelburne Road
P.O. Box 1070
South Burlington, Vermont 05402-1070
Facsimile: 802-862-6351
SECTION 11.6 HEADINGS. The headings in this Agreement are for convenience and
identification purposes only and are not to be considered in the interpretation
of any part hereof.
SECTION 11.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which shall
constitute together one and the same instrument.
8
IN WITNESS WHEREOF, the parties to this Agreement have caused this Agreement to
be duly executed as of the date first written above.
SELLER:
CHANNELHEALTH INCORPORATED
By:
---------------------------------
Its Duly Authorized Agent
BUYER:
IDX SYSTEMS CORPORATION
By:
---------------------------------
Its Duly Authorized Agent
9
EXHIBITS
--------
Exhibit A Tangible Assets
Exhibit B Intangible Assets
Exhibit C Assumed Liabilities
Exhibit D Conveyance Instruments
Exhibit E Hired Employees
EXHIBIT A
TANGIBLE ASSETS
All equipment used in connection with the Company's mailing services business,
all equipment for individual use (such as personal computers, phone sets, PDAs
and cellular phones) but not general office equipment (such as copiers, network
printers and fax machines), related to the eCommerce Channel and Patient Channel
business.
EXHIBIT B
INTANGIBLE ASSETS
TRANSFERRED CONTRACTS
- ---------------------
eCommerce Channel Contracts with the following customers:
1. Lewis Galle
Patient Channel contracts with the following customers:
1. Duke University
All Employment, Non competition, and Non disclosure Agreements between
the Seller (or the Buyer as predecessor to the Seller) and each of the Hired
Employees
2 . DIVIDED CONTRACTS (RIGHTS RELATED TO DISCONTINUED BUSINESSES)
Seller has rights under agreements entered into prior to January 1,
2000 by the Buyer with the following customers to retain revenues associated
with the Discontinued Business. Al the closing Seller shall waive all such
rights.
1. East Hudson Community Care Physicians
2. Austin Cardiovascular
3. Austin Radiological
4. Kerlan-Jobe Orthopedic Clinic
5. Marin Medical Practice Concepts
6. MSMI
7. Winchester Surgical Clinic
8. Center for Orthopedics
All of Seller's rights related to the Discontinued Businesses contained
in contracts with the following customers:
9. Hopestar
EXHIBIT C
ASSUMED LIABILITIES
Any and all liabilities associated with the Seller's eCommerce Channel and
Patient Channel businesses, including without limitation, all liabilities
associated with the Contracts, and in all cases arising from and after the
Closing, and all liabilities, claims or damages related to the transfer of the
employment of the Hired Employees.
EXHIBIT D
CONVEYANCE INSTRUMENTS
1. Bill of Sale
2. Assignment of Contracts, Waiver of Contract Rights and Assumption of
Liabilities
3. Assignment of TradeMarks and Domain Names
4. Assignment of Copyrights
5. Assignment of Patents
Exhibit E see attached list.
SCHEDULE 5.1(f)
The sale of the Retained Assets to IDX may cause the Company to be in
breach of Section 1.3 of its Agreement with Healtheon/WebMD Corporation
("WebMD") dated June 6, 2000, which section requires that the Company "feature"
WebMD Content on the Patient Channel and may allow WebMD to terminate such
agreement.
EXHIBIT D
FORM OF
STRATEGIC ALLIANCE AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered into
as of __________ ___, 2000 by and between ALLSCRIPTS, INC., a Delaware
corporation ("Allscripts") and IDX SYSTEMS CORPORATION, a Vermont corporation
("IDX").
W I T N E S S E T H
WHEREAS, Allscripts is in the business of developing and
marketing products and services (the "Allscripts Products") to automate the
delivery of physician or licensed clinical professional care and associated
administrative tasks using technology at whatever location the physician or
licensed clinical professional performs such activities;
WHEREAS, IDX has business units that develop and market
computer technology to automate administrative and financial aspects of
physician office medical practice. Through its subsidiary CHANNELHEALTH
INCORPORATED, a Delaware corporation ("ChannelHealth"), IDX is in the business
of developing and marketing products and services ( the "Physician Channel
Products") to automate the delivery of physician or allied professional clinical
care and associated administrative tasks carried out by physicians and licensed
clinical professionals using technology at whatever location such physicians or
clinical professionals perform such activities;
WHEREAS, IDX desires to divest its Physician Channel
business and Allscripts desires to acquire such business;
WHEREAS, IDX and Allscripts have entered into an Agreement
and Plan of Merger whereby Allscripts will acquire all of the issued and
outstanding capital stock of ChannelHealth, and ChannelHealth will become a
wholly-owned subsidiary of Allscripts (the "Acquisition");
WHEREAS, IDX and ChannelHealth entered into that certain
Cross License and Software Maintenance Agreement, dated as of January 1, 2000,
pertaining to the use and distribution of certain technology and products (the
"Cross License Agreement"), and, concurrently herewith, the parties are entering
into an Amended and Restated Cross License Agreement to modify the terms and
conditions thereof to provide for the transfer of certain technology to
Allscripts (the "License Addendum" and, together with the Cross License
Agreement, the License Agreement"); and
WHEREAS, IDX and Allscripts desire to enter into an
exclusive strategic relationship whereby Allscripts and its Affiliates and
successors, including without limitation, ChannelHealth, and IDX and its
Affiliates and successors, will cooperate in marketing the Allscripts Products
and the Physician Channel Products to IDX customers. Allscripts would agree to
sell IDX products with agreeable revenue sharing or commission arrangement.
NOW, THEREFORE, in consideration of the premises, the
mutual covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. DEFINITIONS
Capitalized terms used in this Agreement, unless otherwise
defined in this Agreement, shall have the meanings ascribed to them on Schedule
1 attached hereto.
2. CONTINGENCY
Except for the obligation to mutually develop the Marketing
Plan pursuant to Section 6, this Agreement is contingent and shall become
effective only upon the Closing.
3. TERM AND TERMINATION
3.1 Term. This Agreement shall be in effect for an initial term of
ten (10) years (the "Initial Term") and shall automatically
renew for additional, successive two (2) year terms unless
earlier terminated by either of IDX or Allscripts by giving
written notice of such party's election not to renew this
Agreement not later than one (1) year prior to the expiration
of the Initial Term or six (6) months prior to the expiration
of any then current successive term.
3.2 Termination. Notwithstanding the provisions of Section 3.1,
this Agreement may be terminated:
3.2.1 by Allscripts if IDX shall have defaulted under or
breached any material term of this Agreement and
shall not have cured such breach within one hundred
twenty (120) days after receiving written notice from
Allscripts specifying the nature of such default or
breach; or
3.2.2 by IDX if Allscripts shall have defaulted under or
breached any material term of this Agreement and
shall not have cured such breach within one hundred
twenty (120) days after receiving written notice from
IDX specifying the nature of such default or breach;
or
3.2.3 by either party upon receipt of a notice from the
other party that such other party requires a
composition or other similar arrangement with
creditors, files for bankruptcy or is declared
bankrupt.
3.3 Effect of Termination; Survival.
3.3.1 In the event that this Agreement is validly
terminated as provided herein, then each of the
parties shall be relieved of their duties and
obligations arising under this Agreement after the
2
date of such termination and such termination shall
be without liability to Allscripts or IDX; provided,
however, that the obligations of the parties set
forth in Sections 12.7 and 12.8 hereof shall survive
any such termination and shall be enforceable
hereunder; provided, further, however, that nothing
in this Section 3.3 shall relieve Allscripts or IDX
of any liability for a breach of this Agreement.
3.4 Change of Control.
3.4.1 Allscripts Change of Control. If a Change of Control
of Allscripts or the Physician Channel Products
business shall occur at any time during the term of
this Agreement whereby a Direct Competitor of IDX
shall Control Allscripts or the Physician Channel
Products business, IDX shall (i) thereafter, for the
term of this Agreement, be entitled to payment of
compensation on the sale or license of all Allscripts
Products (other than pharmaceutical products) in a
percentage amount equivalent to that provided to IDX
at the time of such Change of Control pursuant to the
Compensation Table set forth in the Development Plan
and (ii) immediately at the end of the term of this
Agreement, Allscripts shall deliver the source code
for all Allscripts Products to IDX.
3.4.2 IDX or Patient Channel Change of Control. If a Change
of Control of IDX or the Patient Channel business of
IDX shall occur at any time during the term of this
Agreement whereby a Direct Competitor of Allscripts
shall Control IDX of IDX or the Patient Channel
business of IDX , Allscripts shall (i) thereafter,
for the term of this Agreement, be entitled to
payment of compensation on the sale or license of all
Patient Channel Products in a percentage amount
equivalent to that provided to Allscripts at the time
of such Change of Control pursuant to the
Compensation Table set forth in the Development Plan
and (ii) immediately at the end of the term of this
Agreement, IDX shall deliver the source code for all
Patient Channel Products to Allscripts.
3.4.3 "Intellectual Property". All rights and licenses
granted under or pursuant to this Agreement are, and
shall otherwise be deemed to be, for purposes of
Section 365(n) of the United States Bankruptcy Code
(the "Code"), licenses to rights to "intellectual
property" as defined in the Code. A party receiving
such rights under this Agreement shall retain and may
fully exercise all of its rights and elections under
the Code. The parties further agree that, in the
event of the commencement of bankruptcy proceeding by
3
or against a party under the Code, the other party
shall be entitled to retain all of its rights under
this Agreement.
4. OPERATIONAL MANAGEMENT
The following obligations shall be in effect during the
Initial Term of this Agreement only:
4.1 Executive Management. Allscripts and IDX shall each appoint an
executive with the title of vice president or higher to
oversee performance under this Agreement. These two executives
shall meet not less frequently than once each calendar quarter
during the Initial Term (and more frequently as needed) and
shall produce not later than five (5) business days after the
end of each such calendar quarter a written report to the
boards of directors of IDX and Allscripts setting forth in
detail:
4.1.1 the accomplishments of Allscripts and IDX during the
preceding month in performing this Agreement;
4.1.2 plans for managing the relationship between IDX and
Allscripts during the next calendar month;
4.1.3 any items of dispute or disagreement between IDX and
Allscripts;
4.1.4 plans for resolving any dispute or disagreement
between IDX and Allscripts;
4.1.5 any changes proposed to be made to the Marketing Plan
or Development Plan; and
4.1.6 such other items as may be deemed appropriate by such
executives.
5. PRODUCT DEVELOPMENT
The following obligations shall be in effect during the
Initial Term of this Agreement only:
5.1 Product Development.
5.1.1 Development and Enhancement of Allscripts Products.
Allscripts shall be responsible for development of
the Physician Channel Products as described in the
Development Plan attached hereto as Exhibit A, as
such Development Plan is updated from time to time
pursuant to Section 5.1.2. IDX shall perform all of
its duties under the Development Plan. The parties
shall cooperate to jointly test any software used in
connection with the Allscripts Products to ensure the
4
functionality of such software prior to distribution
thereof to any IDX Customer.
5.1.2 Update of Development Plan. IDX and Allscripts shall
update the Development Plan every calendar quarter
during the term of this Agreement unless earlier
updated as necessary to maintain the commercial
reasonableness thereof. The Development Plan, as
updated from time to time, shall describe detailed
activities and responsibilities for two-year periods
initially commencing on the Closing Date. Not later
than three (3) months prior to the expiration of the
initial two-year term of the Development Plan, and
thereafter not later than three (3) months prior to
the expiration of each successive two-year period,
the parties shall commence work on a revised
Development Plan for the following two-year period.
The Development Plan, as updated from time to time,
shall be executed by the parties and shall become
subject to this Agreement. Should the parties have
failed to agree upon and execute a revised an updated
Development Plan at the time of the expiration of the
then current Development Plan, the parties shall
continue to perform under the terms of the then
current Development Plan until such time as the
parties shall agree upon a revised Development Plan.
Notwithstanding anything contained herein or in any
Development Plan to the contrary, at all times during
the Initial Term, Allscripts shall continue to fund
the development of the Physician Channel Products as
provided in the Development Plan as adopted on the
Closing Date.
5.1.3 Participation in Development. Upon reasonable request
by the other party, each party agrees to cooperate
during the term of this Agreement in the provision of
suggestions and specifications for enhancement and
improvement of their respective products and services
based upon the needs and requirements of their
respective customers. If either party agrees to
develop additional products, features, functionality,
or interfaces, the material terms with respect to
such additional development shall be memorialized in
a written addendum to this Agreement specifying such
terms.
5.1.4 User Groups. Allscripts shall be given an opportunity
to present and participate at IDX's annual ESD and
Systems Division national sales and user group
conferences.
5.1.5 Early Releases and Testing. IDX and Allscripts shall
deliver to each other for testing purposes only,
copies of the earliest test releases of all
development deliverables provided for in the
5
Development Plan prior to delivery thereof to any
other customers or Distribution Partners.
5.1.6 Demonstration Products. Each party shall develop
demonstration versions of its products for use in
selling its products to the other party's customers
and prospects and shall have access to the
demonstration systems of the other party, in
accordance with the Demonstration Product
Specification.
5.2 Technologies and Architectures.
5.2.1 Standards.
5.2.1.1 To facilitate data exchange and ease of use
of the parties' respective products,
Allscripts Products shall connect with the
appropriate technical, architectural,
communication, functional design and
programming standards embodied in IDX
Practice Management Products, as well as the
Patient Channel and EDiX products, from time
to time, including without limitation the
technical standards, protocols, conventions
and platforms incorporated in the IDX Web
FrameWork. IDX shall provide Allscripts with
no less than ninety (90) days' prior written
notice before implementing any change with
respect to such standards, protocols,
conventions or platforms.
5.2.1.2 IDX represents and warrants, as of the
Closing Date, that Physician Channel
Products connect with the appropriate
technical, architectural, communication,
functional design and programming standards
embodied in IDX Practice Management
Products, as well as the Patient Channel and
EDiX products, including without limitation
the technical standards, protocols,
conventions and platforms incorporated in
the IDX Web FrameWork.
5.2.1.3 To facilitate data exchange between the
Patient Channel and the portions of the
Allscripts Products related to the Patient
Channel, all IDX products shall connect with
the appropriate technical, architectural,
communication, functional design and
programming standards embodied in such
Allscripts Products, such compliance to
allow for connection with such products.
Allscripts shall provide IDX with no less
than ninety (90) days' prior written notice
before implementing any change with respect
to such technical, architectural,
communication, design and programming
6
standards embodied in such Allscripts
Products from time to time.
5.2.2 Databases. Allscripts shall not create the capability
in its products and services, or permit the use of
its products and services, to write to Practice
Management Product database except in conformance
with written standards and procedures approved by IDX
in advance. IDX shall not create the capability in
its products and services, or permit the use of its
products and services, to write to any Allscripts
Product database except in conformance with written
standards and procedures approved by Allscripts in
advance. The parties shall regularly keep each other
informed of their respective standards and
procedures.
5.3 Data Exchange.
5.3.1 Interfaces. Each of IDX and Allscripts shall develop
and maintain Interfaces with respect to each of the
products of the other party identified in the
Development Plan. The Interfaces, and any updates
thereof required to be made to maintain the
Interfaces, shall be developed at the complete and
sole expense of the developing party with respect to
any particular Interface and shall be provided to the
other party at no charge. Allscripts shall migrate
toward a service oriented architecture in 2002
provided that such architecture is stable,
deployable, has comparable performance to currently
utilized technologies and has a similar cost
structure to currently utilized technologies.
Allscripts shall be responsible for integration and
support costs related to the guaranteed methods
developed by Allscripts in connection with such
architecture.
5.3.2 Synchronization. Each of IDX and Allscripts shall be
required to reasonably maintain the compatibility of
their respective products with any updates or new
version releases of the products of the other party
identified in the Development Plan.
5.3.3 Additional Interfaces. If the parties agree to
develop interfaces between their respective products
in addition to the Interfaces, the material terms
with respect to such additional interfaces shall be
memorialized in a written addendum to this Agreement
specifying such terms. Upon the execution of such an
addendum by each party, such additional interfaces
shall be deemed to be Interfaces hereunder.
5.3.4 Effects on Integration. Each party shall provide
ninety (90) days' prior notice to the other of any
new versions or other material changes in any of its
respective products that might affect any Interface.
7
Within a reasonable time following receipt of such
notice, the notified party shall make any alterations
or updates to any so affected Interface necessary to
maintain such Interface, at its own expense.
5.4 Other Products. The parties shall make suggestions for
developing functional integration and data exchange among
other IDX Practice Management Products, EDiX products, Patient
Channel Products and Allscripts Products for the purpose of
creating work flows and processes that benefit physicians.
6. MARKETING OF ALLSCRIPTS PRODUCTS
The following obligations shall be in effect during the
Initial Term of this Agreement only:
6.1 Marketing Plan. On or before the Closing Date, IDX and
Allscripts shall mutually develop and, during the Initial
Term, shall regularly update a marketing plan for marketing
Allscripts Products to IDX Customers and prospects (the
"Marketing Plan"). The Marketing Plan shall commence on the
Closing Date, shall include the physician installation targets
of new physician users of Allscripts Products set forth in
Schedule 6.1 and shall describe detailed activities and
responsibilities (including without limitation, with respect
to implementation) and sales forecasts over the initial
two-year period of this Agreement, but shall be updated not
less frequently than every three (3) months. The Marketing
Plan for the initial two-year period shall be completed and
executed by the parties on or before the Closing Date and
shall be subject to the terms of this Agreement. Not less than
three (3) months prior to the expiration of the initial
two-year period, and thereafter three (3) months prior to the
expiration of each successive two-year period of the Initial
Term, the parties shall commence work on a revised Marketing
Plan for the following two-year sales forecast period. The
initial and each revised two-year Marketing Plan shall be
executed by the parties and shall be subject to the terms of
this Agreement. Should the parties have failed to agree upon
and execute a revised Marketing Plan at the time of the
expiration of the then current Marketing Plan, the parties
shall continue to perform under the terms of the then current
Marketing Plan until such time as the parties shall agree upon
a revised Marketing Plan.
6.2 Certain Restrictions on Marketing Rights.
6.2.1 Restrictions on Allscripts. Except as provided in
Section 6.2.3:
6.2.1.1 Allscripts shall not develop any Practice
Management Products and shall not enter into
any relationship or arrangement with any
Direct Competitor of IDX whereby Allscripts
or such Direct Competitor of IDX Provides
Practice Management Products; provided, that
8
except as expressly set forth in this
Agreement, nothing shall preclude Allscripts
from developing or marketing any product,
service, or functionality that it currently
markets.
6.2.1.2 Allscripts shall not Provide any products to
IDX Customers that are similar to the
Virtual Office Products unless IDX has
abandoned the marketing of such products.
6.2.2 Restrictions on IDX. Except as provided in Section
6.2.3, (i) IDX shall not develop or Provide any
products similar to the Allscripts Products and (ii)
shall not enter into any relationship or arrangement
with any Direct Competitor of Allscripts whereby IDX
Provides products similar to or in competition with
the Allscripts Products, including without
limitation, the IDX products referred to as "OCM" or
"Order Communication" or "ESD's Mobile Schedule"
(except to continue to market the "ESD Mobile
Schedule" as a stand alone application on the Palm
Pilot). The Practice Management System of IDX as of
the date hereof shall not be deemed to be similar to
the Allscripts Products.
6.2.3 Restrictions Not Applicable. Notwithstanding anything
to the contrary contained in this Agreement or in any
other agreement between the parties:
6.2.3.1 Allscripts may cooperatively market
Allscripts Products with any vendor of
Practice Management Products that is not a
Direct Competitor of IDX, to any Person
other than IDX Customers.
6.2.3.2 Allscripts may cooperate with a Person that
Provides products and services similar to
the Practice Management Products for the
purpose of deploying such products and
services, on a case-by-case basis to any
Allscripts customer or prospect, including
without limitation by development of data
exchange or interfaces, if such Allscripts
customer or prospect requests such similar
products or services; provided, that
interface development and data exchange
performed by Allscripts in
connection with such other products or
services shall be performed at a charge that
is consistent with the ordinary and
customary practices of Allscripts, and
Allscripts will not cooperate with any
Direct Competitor of IDX to provide any
financial benefits beyond payment of such
ordinary and customary charge.
9
6.2.3.3 IDX may Provide any products or services
similar to Allscripts Products only as an
offering integrated with its LastWord and
IDXrad and Imaging Suite product lines, and
any other non-Practice Management Product
products and services, such as image
management. IDX shall not Provide any
products or services similar to Allscripts
Products as an offering integrated with any
Practice Management Products. IDX may
Provide any hand-held device for dictation
only in connection with its EDiX product
line, but not any other products similar to
Allscripts Products in connection therewith.
6.2.3.4 IDX may establish direct connections for
pharmacy benefit management companies, drug
manufacturers and drug distributors
involving a direct message to a patient via
the Patient Channel only (except with
respect to IDX Customers that utilize
LastWord as their inpatient EMR).
6.2.3.5 IDX may cooperate with a Person that
Provides products and services similar to
the Allscripts Products for the purpose of
deploying such products and services, on a
case-by-case basis to any IDX Customer or
prospect, using any means, including without
limitation, development of interfaces or
publication of specifications, if such IDX
Customer or prospect requests such similar
products or services; provided, that
interface development and data exchange
performed by IDX in connection with
such other products or services shall be
performed at a charge which is consistent
with the ordinary and customary practices of
IDX, and IDX will not cooperate with any
Direct Competitor of Allscripts to provide
any financial benefits beyond payment of
such ordinary and customary charge.
6.2.3.6 Allscripts may market Allscripts Products to
any IDX Customer; provided, that Allscripts
shall notify IDX of any such marketing
efforts within seven (7) days after
Allscripts' initial contact with such IDX
Customer.
6.2.3.7 IDX may sell and market CMS subject to the
compensation provisions of Section10.1.
6.2.3.8 Clinical Trials. Nothing in this Agreement
shall prevent either party from developing
or marketing functionality that that
facilitates participation by customers and
prospects of such party in clinical trials.
With respect to and in connection with
marketing such functionality as may be
10
contained in IDX's Practice Management
Products, however, IDX shall not resell or
distribute products of any Person that are
similar to the Allscripts Products.
6.2.4 Termination of Restrictions. Allscripts may elect to
terminate Section 6.2.1 in the event of a Material
Adverse Change with respect to IDX, and IDX may elect
to terminate Section 6.2.2 in the event of a Material
Adverse Change with respect to Allscripts. In the
event of a notice given pursuant to this Section
6.2.4 by either party, the notified party may, in its
sole and absolute discretion, refer to arbitration
pursuant to Section 12.20, the determination of
whether the change which is the subject of such
notice is a Material Adverse Change.
6.3 Joint Marketing Duties.
6.3.1 Joint Marketing Materials. At their joint expense,
shared equally, Allscripts and IDX shall develop and
produce product marketing documentation and materials
similar in kind and quality to that currently
provided by Allscripts and IDX to their respective
sales prospects for the purpose of promoting and
marketing the joint solution for physician office
practice, including without limitation,
administrative, financial and clinical information
systems, through integration of the IDX Practice
Management Products and the Allscripts Products.
6.3.2 User Groups and Trade Shows. Allscripts shall provide
for featured participation by IDX at Allscripts' user
group meetings involving the Allscripts Products, and
IDX shall provide for featured participation by
Allscripts at IDX's user group meetings involving the
Practice Management Products. Each of Allscripts and
IDX shall provide space at their respective user
group meetings for the other party's products and
shall show such products together with their own
respective products. In accordance with the Marketing
Plan, Allscripts and IDX shall publicize the alliance
created hereby at appropriate trade shows.
6.3.3 Information Regarding IDX Customers and Competitors.
Allscripts and IDX shall keep each other informed of
opportunities that may exist for marketing products
to their respective customers. Allscripts shall
promptly notify IDX of any sales contact with an IDX
Customer. IDX shall provide Allscripts with access to
IDX sales pipelines and IDX Customer and competitor
databases to the same extent and in the same manner
as provided to ChannelHealth prior to the Closing
Date.
11
6.3.4 Joint Sales. Each of Allscripts and IDX shall bill
and collect for its own respective products and
services provided to IDX Customers. Allscripts and
IDX shall each be responsible for the payment to
members of their own respective sales forces of any
appropriate commissions earned by such members on
sales of Allscripts Products pursuant to Sections 6.4
and 6.5. Glen Tullman and Rich Tarrant shall be
reasonably available for initial marketing efforts
undertaken by Allscripts in connection with the
Merger Agreement and for subsequent meetings with
customers of the Physician Channel Products (which
shall occur no less frequently than once per month).
6.4 Marketing Duties of Allscripts--Allscripts Products.
Allscripts shall market the Allscripts Products in accordance
with the Marketing Plan and in any event shall provide
services necessary to support IDX's marketing of Allscripts
Products to IDX Customers as set forth below, at its own
expense:
6.4.1 Allscripts shall continue to develop and produce
product marketing documentation and collateral
similar in kind and quality to that currently
provided by Allscripts to its sales prospects.
Allscripts shall deliver such documentation and
collateral in reasonable quantities and at such times
and places reasonably requested by IDX.
6.4.2 Allscripts shall provide sales support services with
respect to the Allscripts Products as generally and
customarily employed by IDX in support of sales of
its products, including without limitation, assisting
in making sales calls, providing product
demonstrations, facilitating site visits and
responding to inquiries from prospects and customers,
such as requests for proposal, requests for
information and requests for quotations.
6.4.3 Allscripts shall maintain a qualified sales and
marketing support staff in numbers reasonably
sufficient to support IDX sales activities related to
Allscripts Products.
6.4.4 Allscripts shall provide training to the IDX sales
staff in the Allscripts Products and Allscripts'
business strategy.
6.4.5 Allscripts shall provide IDX with current sales
projections and regular updates thereto.
6.4.6 Allscripts shall develop and maintain a program for
incenting at least one IDX Customer in each IDX sales
region to be a reference site for every Allscripts
Product in general release.
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6.4.7 Allscripts shall appropriately compensate and incent
its sales personnel to sell Allscripts Products to
IDX Customers and prospects.
6.5 Marketing Duties of IDX--Allscripts Products. IDX shall market
the Allscripts Products in accordance with the Marketing Plan
and in any event shall provide services necessary to support
Allscripts' marketing of Allscripts Products to IDX Customers
as set forth below, at its own expense:
6.5.1 IDX shall educate and train its sales and sales
support personnel so as to be able to present the
Allscripts Products to IDX Customers and prospects as
necessary to appropriately commercialize the
Allscripts Products.
6.5.2 IDX shall appropriately compensate and incent its
sales personnel to sell Allscripts Products.
6.5.3 IDX shall provide Allscripts with current sales
projections and regular updates thereto.
6.5.4 IDX shall include appropriate descriptions of
Allscripts Products and Allscripts' business strategy
in sales proposals for new business as necessary to
appropriately commercialize the Allscripts Products.
6.5.5 IDX shall respond to requests for information,
quotations, proposals and the like for Allscripts
Products as necessary to appropriately commercialize
the Allscripts Products.
6.5.6 IDX shall pay reasonable compensation to its sales
force for sales of Allscripts Products to IDX
Customers; provided, that commission percentages paid
on gross profit of Allscripts Products by any member
of IDX's sales force shall be not less than
commission percentages paid to such members on sales
of any other products.
6.5.7 Quotas for sales of Allscripts Products to IDX
Customers and prospects shall be placed on members of
IDX's ESD and Systems Division sales force. IDX
account executives shall be provided with a special
bonus opportunity of $5,000 per year in each of years
2001 and 2002 for the achievement of such quotas
established pursuant to this Section 6.5.7.
6.5.8 Each member of IDX's ESD and Systems Division sales
management shall be included in bonus plans and
commission plans whereby a meaningful portion of such
person's annual compensation is based upon overall
sales of Allscripts Products.
13
6.5.9 IDX shall provide Allscripts employees involved in
the sale and development of Physician Channel
Products with reasonable access to IDX facilities for
the same or similar purposes related to the
development, marketing and sale of Physician Channel
Products as provided to ChannelHealth prior to the
Closing Date.
6.6 Use of Allscripts Names and Marks. IDX may use the name
"Allscripts" and the other Allscripts names and marks in
connection with customer communications pertaining to the
co-marketing relationship between IDX and Allscripts provided
for under this Agreement and in accordance with Allscripts'
reasonable branding standards in effect from time to time.
6.7 Use of IDX Names and Marks. Allscripts may use the name "IDX"
and the other IDX names and marks in connection with customer
communications pertaining to the co-marketing relationship
between IDX and Allscripts as provided for under this
Agreement and in accordance with IDX's reasonable branding
standards in effect from time to time.
6.8 Marketing and Administrative Duties of IDX. IDX shall have the
authority to market, sell, resell and distribute Allscripts
Products pursuant to IDX's own terms and conditions as
previously agreed upon in writing by Allscripts. At IDX's
request, IDX and Allscripts shall enter into a distribution
agreement for the term of this Agreement that shall set forth
customary terms and conditions upon which IDX may purchase,
license, sell and sublicense the Allscripts Products. To the
extent permitted by law, IDX shall have authority as
Allscripts' agent to bind Allscripts to perform for IDX
Customers all of Allscripts' standard sales terms and
conditions as previously agreed upon in writing by Allscripts;
provided, however, that in the event of a failure by an IDX
Customer to pay for a Allscripts Product, and such failure is
not based upon a dispute with respect to such Allscripts
Product, IDX shall be responsible to Allscripts for the sale
price of such Allscripts Product. Allscripts shall confirm
IDX's authority as provided in this Section 6.8 to any IDX
Customer or prospective customer on request of IDX.
7. OTHER MARKETING RIGHTS
7.1 Right to Provide on Non-exclusive Basis. Notwithstanding any
termination or non-renewal of this Agreement, other than a
termination pursuant to Section 3.2.1 and including otherwise
without limitation any termination under Section 3.2 of this
Agreement, for so long as Allscripts or any Affiliate of
Allscripts shall offer, license, support, or maintain any
Allscripts Products, or any derivatives, enhancements, or
improvements thereof, IDX shall be entitled to and Allscripts
shall offer to permit IDX to, Provide such Allscripts
Products, derivatives, enhancements, and improvements, and
support or maintenance services with respect thereto, upon the
best terms and conditions offered by Allscripts or such
Affiliate of Allscripts to any distributor of Allscripts;
14
provided, that if Allscripts or such Affiliate has no
distributor, IDX's provision of Allscripts Products shall be
upon customary terms and at a price equal to Allscripts'
direct sale price less a commercially reasonable discount.
7.2 Best Prices. Allscripts or any Affiliate of Allscripts shall
at all times during the term of this Agreement offer IDX
Customers such prices and terms for Allscripts Products
equally favorable to the prices (plus any subsidy earned by
Allscripts on such Allscripts Products) and terms offered to
any customer of Allscripts similarly situated to such IDX
Customer.
8. TERMINATION OF PRIOR MARKETING OBLIGATIONS
Upon the Closing, that certain Marketing, Development and
Service Agreement, made and entered into as of January 1, 2000, by and between
ChannelHealth and IDX shall, except for the obligations of the parties set forth
in Section 6.1 thereof, terminate and cease to be of any further effect.
9. OWNERSHIP
9.1 In General. Ownership of software developments shall be
governed by the License Agreement, except with respect to
Interfaces, which shall be governed by Section 9.2 of this
Agreement.
9.2 InterfacesDeveloped Pursuant to This Agreement. The parties
contemplate that they may individually or jointly develop
certain new Interfaces. In each instance in which a new
Interface is created, the parties will agree to a
specification for the Interface. Where the specification is in
the public domain, this Agreement does not purport to create
any rights for either party in such specification. If the
specification is owned by one of the parties, the other party
receives a perpetual, non-exclusive, non-transferable license
to use the Intellectual Property embodied in the Interface
specification for the purpose of creating the Interfaces
contemplated in this Agreement. If a specification is jointly
authored by the parties, the parties shall jointly own such
specification and shall be free to use such specification
without interference from the other party and without any
obligation to pay any royalties or account for any profits.
The parties contemplate that Intellectual Property in and to
the new Interfaces may be created as a result of the creation
of the new Interfaces. As between the parties, such
Intellectual Property related to portions of the Interfaces
intended to (a) organize data from IDX's systems in the manner
stated in the specification or (b) organize data received in
the manner stated in the specifications for use by IDX's
systems, shall be IDX's Intellectual Property. As between the
parties, the Intellectual Property related to Interfaces
intended to (x) organize data from Allscripts systems in the
manner stated in the specification, (y) organize data received
in the manner stated in the specifications for use by
15
Allscripts' systems, or (z) organize data between Allscripts'
systems and third party systems, shall be Allscripts'
Intellectual Property. IDX hereby assigns to Allscripts all
right, title, and interest in and to all Intellectual Property
in the new Interfaces that is described above as belonging to
Allscripts. Allscripts hereby assigns to IDX all right, title,
and interest in and to all Intellectual Property in the new
Interfaces that is described above as belonging to IDX. The
parties agree from time to time to exchange and agree upon a
written schedule setting forth the allocation of the ownership
and rights in and to the specifications and Intellectual
Property used or developed in connection with the development
of the new Interfaces.
10. COMPENSATION
10.1 Compensation; Payment. IDX and Allscripts shall be entitled to
compensation for the sale or license of Allscripts Products
and IDX products as set forth in the Compensation Table set
forth in the Development Plan; provided, however, that IDX
shall not be entitled to any compensation for the sale or
license of any Allscripts Products or IDX Products installed
prior to the Closing Date.
10.2 Minimum Compensation. Provided Allscripts shall not have
defaulted under or breached any material term of this
Agreement and shall not have cured such breach within one
hundred twenty (120) days after receiving written notice from
IDX specifying the nature of such default or breach:
10.2.1 If the gross revenues to Allscripts for Allscripts
Products (less any commissions paid to IDX by
Allscripts and less payments to third parties for
equipment sold) from and including the Closing Date
to and including December 31, 2000 ("2000 Revenue")
are less than the product of $6,667 times the number
of calendar days from and including the Closing Date
to and including December 31, 2000 ("2000 Target
Revenue"), IDX will pay to Allscripts an amount equal
to the difference between (x) 2000 Target Revenue
minus (y) 2000 Revenue.
10.2.2 If the gross revenues to Allscripts for Allscripts
Products (less any commissions paid to IDX by
Allscripts and less payments to third parties for
equipment sold) for fiscal year 2001 (the "2001
Revenue") are less than $4.5 million, IDX will pay to
Allscripts an amount equal to the difference between
$4.5 million minus 2001 Revenue.
10.3 Payments. Any payment to be made by a party pursuant to this
Agreement shall be made no later than the twentieth-fifth
(25th) day of the calendar month next following the calendar
month to which such payment applies and shall be made by
delivery of a check, payable to the order of the party
16
entitled to payment or by wire transfer of immediately
available funds to an account designated by such party. Any
payment to be made by IDX to Allscripts pursuant to Section
10.2 shall be made no later than March 31st of the year next
following the fiscal year to which such payment applies and
shall be made by delivery to Allscripts of a check, payable to
the order of Allscripts or by wire transfer of immediately
available funds to an account designated by Allscripts.
10.4 Late Fees. Each party agrees to pay late fees equal to one and
one-half percent (1 1/2%) per month on all amounts due but not
paid within the time provided in Section 10.3.
11. SERVICES
11.1 Customer Support Services. Allscripts shall provide customer
support services for Allscripts Products, as follows:
11.1.1 CMS. Allscripts shall provide support for all
existing CMS customers of IDX in a manner consistent
with support provided by IDX to its customers
generally and to the level necessary to fulfill all
contractual commitments of IDX to its customers for
CMS. As the sole compensation to Allscripts for such
services, IDX has previously assigned to Allscripts
all support fees for CMS it receives from such
customers.
11.1.2 Other Products. At its own expense and cost,
Allscripts shall provide Allscripts Maintenance for
all IDX Customers of Allscripts Products, including
bugs, fixes, drivers, consistent with Allscripts'
ordinary and customary business practices. Upgrades
to Allscripts Products sold to IDX Customers will be
provided in the manner and price as is consistent
with Allscripts' ordinary and customary business
practices.
11.1.3 Other Services. Notwithstanding the fact that each
party shall be responsible for servicing and
supporting its own products, the parties hereby agree
to cooperate with respect to installation and
implementation of each others' products and in the
provision of customer support services. The parties
further agree to cooperate to create a seamless help
desk, operations support and problem triage model for
customers to which products of both parties are
marketed and sold. If requested by an IDX Customer,
IDX shall be entitled to oversee and coordinate the
implementation of such model.
11.2 Service Quality. All installation services provided by
Allscripts with respect to sales by IDX of Allscripts Products
pursuant to Section 6.8 shall be performed in a good and
workmanlike manner and consistent with standards generally
17
applicable in the healthcare clinical information systems
industry and consistent with the reasonable and customary
support standards maintained in the healthcare clinical
information systems industry or, if higher, by the IDX
business unit most closely associated with the IDX Customer
using the Allscripts Products as previously communicated to
Allscripts in writing. Allscripts employees shall be permitted
to directly support IDX Customers.
12. MISCELLANEOUS
12.1 Confidentiality. Each of IDX and Allscripts will receive or
learn from, information, both orally and in writing,
concerning the business of Allscripts or IDX, respectively,
including, without limitation, financial, technical and
marketing information, data, and information related to the
development of technology and services relating to business
plans, customers, and markets, which information is deemed, in
the case of Allscripts, proprietary to Allscripts and, in the
case of IDX, proprietary to IDX. Both parties hereby agree, as
set forth below, to protect such information, whether
furnished before, on or after the date of this Agreement, as
it protects its own similar confidential information, but
never less than by commercially reasonable efforts, and not to
disclose such information to anyone except as otherwise
provided for in this Agreement. Such information, in whole or
in part, together with analyses, compilations, programs,
reports, proposals, studies or any other documentation
prepared by the parties, as the case may be, which contain or
otherwise reflect or make reference to such information, is
hereinafter referred to as "Confidential Information". Each
party hereby agrees that the Confidential Information will be
used solely for the purpose of this Agreement and not for any
other purpose. Each party further agrees that any Confidential
Information pertaining to the other party is the sole and
exclusive property of such other party, and that the receiving
party shall not have any right, title, or interest in or to
such Confidential Information except as expressly provided in
this Agreement. Each party further agrees to protect and not
to disclose to anyone (except as provided in this Agreement)
for any reason Confidential Information pertaining to the
other party; provided, however, that: (a) such Confidential
Information may be disclosed to the receiving party's
respective officers, directors, employees, agents, or
representatives (collectively, "Representatives") on a "need
to know" basis for the purpose of this Agreement on the
condition that (i) each of such Representatives will be
informed by the receiving party of the confidential nature of
such Confidential Information and will agree to be bound by
the terms of this Agreement and not to disclose the
Confidential Information to any other person and (ii) each
party agrees to accept full responsibility for any breach of
this Section 12.1 by its respective Representatives; and (b)
Confidential Information pertaining to the other party may be
disclosed upon the prior written consent of the other party.
18
Each party hereby agrees, upon the request of the other party,
to promptly deliver to the other party at the other party's
cost the Confidential Information pertaining to such other
party, without retaining any copies thereof. Specifically and
without limitation, each party agrees to notify the other
party promptly in writing upon any officer or director
learning of any unauthorized disclosure or use of the
Confidential Information.
12.2 Non-Confidential Information. The term "Confidential
Information" shall not include any information: (i) which at
the time of disclosure or thereafter is generally available to
or known by the public (other than as a result of a disclosure
directly or indirectly by the receiving party); (ii) is
independently developed by the receiving party, without
reference to or use of, the Confidential Information of the
other party; (iii) was known by the receiving party as of the
time of disclosure without a breach of confidentiality; (iv)
is lawfully learned from a third party not under obligation to
the disclosing party; or (v) is required to be disclosed
pursuant to a subpoena, court order or other legal process,
whereupon the receiving party shall provide prompt written
notice to the other party prior to such disclosure.
12.3 No-Solicitation. During the first year of the term of this
Agreement, neither party, nor any Affiliate within its
Control, shall hire any individual who had been in the employ
of the other party or any of the other party's Affiliates.
After the first year of the term of this Agreement, neither
party, nor any Affiliate within its Control, shall hire any
individual who had been in the employ of the other party or
any of the other party's Affiliates until such time as one (1)
year has passed since such individual was in the employ of the
other party.
12.4 RegulatoryMatters. Each party shall adopt, implement, and
maintain appropriate and compliant policies, procedures, and
practices necessary to comply with laws and regulations
(including without limitation the Health Insurance Portability
and Accountability Act of 1996 ("HIPAA")) applicable to it in
its business and applicable to it as a business partner of a
customer of the other to whom products or services are
provided under this Agreement. The parties agree to amend this
Agreement to contain any provisions necessary to be included
as a result of such business partner status. Each party agrees
to timely develop and include in its respective products
covered by this Agreement the functionality required to
support the minimum necessary standards applicable users of
its products as required by HIPAA.
12.5 No Consequential Damages. In no event shall either party or
any Affiliate of either party be liable hereunder for any
consequential, special, incidental, punitive or indirect
damages (including without limitation loss of profit, revenue,
business opportunity or business advantage), whether based
upon a claim or action of tort, contract, warranty,
negligence, strict liability, breach of statutory duty, or any
19
other legal theory or cause of action, even if advised of the
possibility of such damages.
12.6 Agreementswith Healtheon/WebMD. Each of IDX and Allscripts
agree not to cause any default under or termination of (other
than a termination as a result of a default by
Healtheon/WebMD) of the contracts between IDX and
Healtheon/WebMD and ChannelHealth and Healtheon/WebMD. In the
event IDX shall cause such a default or termination, IDX
agrees to pay Allscripts such amount of revenues as would have
been paid to Allscripts under the terms of the defaulted or
terminated contract if such default or termination by IDX had
not occurred.
12.7 Indemnification. Each party (an "Indemnifying Party") will
indemnify the other party, its officers, employees, and agents
(each an "Indemnified Party" and, collectively, the
"Indemnified Parties") against, and hold each Indemnified
Party harmless from, all claims, suits, judgments, losses,
damages, fines or costs (including reasonable legal fees and
expenses) ("Losses") resulting from any claim, suit, or demand
by any third party ("Third Party Claim") for injuries to or
deaths of persons or loss of or damage to property arising out
of: (i) the Indemnifying Party's products or services as
marketed by the Indemnified Parties, unless the Indemnified
Parties shall have acted outside the scope of their rights
under this Agreement; and (ii) the Indemnifying Party's
performance or willful misconduct of the Indemnifying Party,
its employees, officers, or agents in connection with the
Indemnifying Party's performance of this Agreement, except to
the extent caused by the negligence of any Indemnified Party.
12.7.1 The Indemnifying Party's obligations under this
Section 12 will survive the termination of this
Agreement.
12.7.2 Each Indemnified Party shall give an Indemnifying
Party prompt written notice of any Third Party Claim
of which such Indemnified Party has knowledge
concerning any Losses as to which such Indemnified
Party may request indemnification hereunder. If the
Indemnifying Party acknowledges in writing its
obligation to indemnify the Indemnified Party
hereunder against any Losses that may result from
such Third Party Claim, then the Indemnifying Party
shall be entitled to assume and control the defense
of such Third Party Claim at its expense and through
counsel of its choice if it gives notice of its
intention to do so to the Indemnified Party within
five (5) days of the receipt of such notice from the
Indemnified Party; provided, however, that if there
exists or is reasonably likely to exist a conflict of
interest that would make it inappropriate in the
judgment of the Indemnified Party, in its sole and
absolute discretion, for the same counsel to
represent both the Indemnified Party and the
Indemnifying Party, then the Indemnified Party shall
be entitled to retain its own counsel, at the expense
20
of the Indemnifying Party. In the event the
Indemnifying Party exercises the right to undertake
any such defense against any such Third Party Claim
as provided above, the Indemnified Party shall
cooperate with the Indemnifying Party in such defense
and make available to the Indemnifying Party, at the
Indemnifying Party's expense, all witnesses,
pertinent records, materials and information in the
Indemnified Party's possession or under the
Indemnified Party's control relating thereto as is
reasonably required by the Indemnifying Party.
Similarly, in the event the Indemnified Party is,
directly or indirectly, conducting the defense
against any such Third Party Claim, the Indemnifying
Party shall cooperate with the Indemnified Party in
such defense and make available to the Indemnified
Party, at the Indemnified Party's expense, all such
witnesses, records, materials and information in the
Indemnifying Party's possession or under the
Indemnifying Party's control relating thereto as is
reasonably required by the Indemnified Party. No such
Third Party Claim may be settled by the Indemnifying
Party without the prior written consent of the
Indemnified Party.
12.7.3 In no event shall the Indemnifying Party be liable to
an Indemnified Party for any indirect, incidental,
special, punitive, exemplary or consequential damages
arising out of or otherwise relating to this
Agreement, even if the Indemnifying Party has been
advised of the possibility or likelihood of such
damages.
12.7.4 Notwithstanding the foregoing, with respect to any
claim that would otherwise be subject to
indemnification by a party pursuant to this
Agreement, if indemnification with respect to such
claim is governed by the License Agreement, then no
indemnification shall be available under this
Agreement.
12.8 Expenses. Except as otherwise specified in this Agreement, all
costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants,
incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party
incurring such costs and expenses, whether or not the Closing
shall have occurred.
12.9 Further Assurances and Documents. IDX and Allscripts shall
take all actions and do all things, including without
limitation the execution and delivery of instruments and
documents, necessary to effectuate the purposes and intent of
this Agreement.
12.10 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be
given or made (and shall be deemed to have been duly given or
21
made upon receipt) by delivery in person, by courier service,
by telecopy or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties
at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance
with this Section 12.10):
(a) if to Allscripts:
Allscripts, Inc.
2401 Commerce Drive
Libertyville, Illinois 60048
Attention:
Facsimile:
With a copy to:
Weil, Gotshal & Manges LLP
700 Louisiana
Houston, Texas 77002
Attention: James L. Rice III
Facsimile: (713) 224-9511
(b) if to IDX:
IDX Systems Corporation
1400 Shelbourne Road
South Burlington, VT 05043
Attention:
Facsimile:
With a copy to: General Counsel at
the same address
12.11 Public Announcements. Except as required by law, governmental
regulation or by the requirements of any securities exchange
on which the securities of a party hereto are listed, no party
to this Agreement shall make, or cause to be made, any press
release or public announcement in respect of this Agreement or
the transactions contemplated hereby or otherwise communicate
with any news media without the prior written consent of the
other party, and the parties shall cooperate as to the timing
and contents of any such press release or public announcement.
12.12 Headings. The descriptive headings contained in this Agreement
are for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
12.13 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any law,
governmental regulation or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full
22
force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such
determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
12.14 Entire Agreement. This Agreement, together with the License
Agreement, constitutes the entire agreement of the parties
hereto with respect to the subject matter hereof and supersede
all prior agreements and undertakings, both written and oral,
with respect to the subject matter hereof.
12.15 Assignment. This Agreement shall be binding upon the parties
and their respective successors, representatives and permitted
assigns and their Affiliates Controlled by them, respectively.
Neither party may assign this Agreement without the prior
written consent of the other party, except that either party
hereto may assign its rights hereunder to an Affiliate of such
party and either party may, without the consent of the other
party, assign and delegate this Agreement and its rights and
obligations hereunder in connection with a merger,
consolidation or sale of substantially all of its assets
(which sale shall include the assignment and assumption of all
rights and obligations under the License Agreement); provided,
however, that such assignee or transferee shall assume all
obligations of the assigning or transferring party and any
such assignment shall not relieve the assigning or
transferring party of its obligations hereunder.
12.16 No Third Party Beneficiaries. This Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and
their permitted assigns and successors and nothing herein,
express or implied, is intended to or shall confer upon any
other person or entity, any legal or equitable right, benefit
or remedy of any nature whatsoever under or by reason of this
Agreement.
12.17 Amendment. This Agreement may not be amended or modified
except by an instrument in writing signed by, or on behalf of,
each of the parties.
12.18 Governing Law. This Agreement shall be governed by the laws of
the State of Delaware without regard to its conflict of laws
provisions.
12.19 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to
be an original but all of which taken together shall
constitute one and the same agreement.
23
12.20 Arbitration. The parties shall attempt in good faith to
resolve by agreement any claim or controversy arising out of
or relating to this Agreement or the breach hereof.
12.20.1 Subject to the first sentence of this Section 12.20,
any and all claims, counterclaims, demands, causes of
action, disputes, controversies, and other matters in
question arising out of or relating to this
Agreement, any provision hereof, the alleged breach
of any such provision, or in any way relating to the
subject matter of this Agreement or the relationship
between the parties created by this Agreement,
involving the parties, their Affiliates and/or their
respective representatives (all of which are referred
to herein as "Arbitrable Claims"), even though some
or all of such Arbitrable Claims allegedly are
extra-contractual in nature, whether such Arbitrable
Claims sound in contract, tort, or otherwise, at law
or in equity, under state or federal law, whether
provided by statute or the common law, for damages or
any other relief, will be resolved by binding
arbitration. Any arbitration will be administered by
the arbitrators in accordance with the Commercial
Arbitration Rules of the American Arbitration
Association (the "AAA") in effect at the time the
arbitration is initiated (collectively, the "Rules").
12.20.2 The validity, construction, and interpretation of
this agreement to arbitrate, and all procedural
aspects of the arbitration conducted pursuant to this
agreement to arbitrate, including without limitation,
the determination of the issues that are subject to
arbitration (i.e., arbitrability), the scope of the
arbitrable issues, allegations of "fraud in the
inducement" to enter into this Agreement or this
arbitration provision, allegations of waiver, laches,
delay or other defenses to arbitrability, and the
rules governing the conduct of the arbitration
(including without limitation, the time for filing an
answer, the time for the filing of counterclaims, the
times for amending the pleadings, the specificity of
the pleadings, the extent and scope of discovery, the
issuance of subpoenas, the times for the designation
of experts, whether the arbitration is to be stayed
pending resolution of related litigation involving
third parties not bound by this Agreement, the
receipt of evidence, and the like), will be decided
by the arbitrators in accordance with the Rules. In
deciding the substance of the parties' Arbitrable
Claims, the arbitrators shall refer to the
substantive laws of the State of Delaware for
guidance (excluding Delaware choice-of-law principles
that might call for the application of some other
state's law). Each party shall be entitled to
discovery rights equivalent to those provided under
the Federal Rules of Civil Procedure. NOTWITHSTANDING
ANY OTHER PROVISION IN THIS ARBITRATION AGREEMENT TO
24
THE CONTRARY, THE PARTIES EXPRESSLY AGREE THAT THE
ARBITRATORS WILL HAVE ABSOLUTELY NO AUTHORITY TO
AWARD CONSEQUENTIAL, TREBLE, EXEMPLARY OR PUNITIVE
DAMAGES OF ANY TYPE UNDER ANY CIRCUMSTANCES
REGARDLESS OF WHETHER SUCH DAMAGES MAY BE AVAILABLE
UNDER DELAWARE LAW, THE LAW OF ANY OTHER STATE, OR
FEDERAL LAW, OR UNDER THE FEDERAL ARBITRATION ACT, OR
UNDER THE RULES, THE PARTIES HEREBY WAIVING THEIR
RIGHT, IF ANY, TO RECOVER CONSEQUENTIAL, TREBLE,
EXEMPLARY OR PUNITIVE DAMAGES IN CONNECTION WITH ANY
ARBITRABLE CLAIMS.
12.20.3 The arbitration proceeding will be conducted in New
York, New York. Within thirty days of the notice of
initiation of the arbitration procedure, the parties
shall obtain from the AAA a list of arbitrators from
its Commercial Panel from which the parties shall
select a panel of three neutral arbitrators in
accordance with the Rules and normal procedures of
the New York office of the AAA. If necessary, the AAA
shall select some or all of the arbitrators when it
is authorized to do so under the Rules.
12.20.4 In the event of an arbitration proceeding between
Allscripts and IDX or any of their Affiliates, one
half of all fees of the arbitrators will be borne by
Allscripts and the other half will be borne by IDX.
12.20.5 To the fullest extent permitted by law, the
arbitration proceeding and the arbitrators' award
will be maintained in confidence by the parties.
12.20.6 The award of the arbitrators will be final and
binding on the parties, and judgement thereon may be
entered in a court of competent jurisdiction.
12.21 Waiver of Jury Trial. Each of the parties hereto irrevocably
and unconditionally waives trial by jury in any legal action
or proceeding relating to this Agreement or the transactions
contemplated hereby and for any counterclaim therein.
25
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized signatories
thereunto duly authorized as of the day and year first above written.
IDX SYSTEMS CORPORATION ALLSCRIPTS, INC.
By:______________________________ By:_______________________________
[Signature of Authorized Agent] [Signature of Authorized Agent]
Print Name and Title: Print Name and Title:
26
EXHIBIT A
---------
DEVELOPMENT PLAN
27
SCHEDULE 6.1
------------
PHYSICIAN INSTALLATION TARGETS
NEW PHYSICIAN ALLSCRIPTS
------------------------
YEAR PRODUCT USERS
---- -------------
2001 5000
2002 7500
2003 7500
2004 7500
2005 7500
2006 7500
2007 7500
2008 7500
2009 4000
28
SCHEDULE 1
TO
STRATEGIC ALLIANCE AGREEMENT
DEFINITIONS
"AFFILIATE" means, with respect to any specified Person, any other Person that
directly, or indirectly through one or more intermediaries, Controls, is
Controlled by, or is under common Control with, such specified Person.
"ALLSCRIPTS" means Allscripts, Inc. a Delaware corporation.
"ALLSCRIPTS PRODUCTS" means the products and services (i) offered by Allscripts
as more fully described in the Development Plan, (ii) the Physician Channel
Products as of the Closing Date and (iii) all of the products and services to be
developed as set forth under the Development Plan.
"CHANGE OF CONTROL" means any event, transaction or occurrence as a result of
which either of IDX or Allscripts (i) shall cease to own or control, directly or
indirectly through any of its respective Affiliates, a majority of the voting
rights associated with ownership of its respective voting stock or (ii) shall
cease to have the ability, directly or indirectly, through one or more of its
Affiliates, to elect a majority of its respective board of directors.
"CHANNELHEALTH" means ChannelHealth Incorporated, a Delaware corporation, its
successors and assigns, and any other entity which, as of the Closing, Controls,
is Controlled by, or is under common Control with ChannelHealth.
"CHANNELHEALTH CUSTOMERS" means customers that have contracted or are in the
process of contracting for some or all of the products and services offered by
Charley.
"CLINICAL MANAGEMENT SUITE" or "CMS" means the product currently marketed by IDX
under the trademark of "CMS" or "Clinical Management Suite," Including its
predecessor product known as "CRS."
"CLOSING" means the closing of the acquisition by Allscripts of all of the
issued and outstanding capital stock of ChannelHealth pursuant to the Merger
Agreement.
"CLOSING DATE" means the date on which the Closing occurs.
"COMPENSATION TABLE" means the revenue sharing model as provided in the
Development Plan.
"CONNECTR" means the product currently marketed by IDX under the trademark
"ConnectR."
"CONTROL" including the terms "Controlling," "Controlled by," and "under common
Control with," means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract, or otherwise.
"DEMONSTRATION PRODUCT SPECIFICATION" means the hardware and software required
to demonstrate the Bursar Products as mutually agreed to in the Marketing Plan
(as defined in the Strategic Alliance Agreement).
"DEVELOPMENT PLAN" means the Development Plan as described on Exhibit A attached
to the Strategic Alliance Agreement.
"DIRECT COMPETITOR OF ALLSCRIPTS" means any Person that Provides any products
similar to the Allscripts Products and any successor, assignee, Affiliate or
partner of such Person.
"DIRECT COMPETITOR OF IDX" means any Person that Provides any Practice
Management Products and is named on Annex A hereto and any successor, assignee,
Affiliate or partner of such Person and any Person that IDX notifies Allscripts
shall be additionally included on Annex A from time to time.
"DISTRIBUTION PARTNER" means any Person that has the right to market,
cooperatively market, distribute, resell, sublicense, license, sell or otherwise
provide a party's products or services, including by way of example and not in
limitation, any reseller, distributor, licensee, customer, contractor, service
provider, co-marketer, outsourcing vendor, or other information technology
company.
"EDI" means effecting the exchange of information and transactions between
trading partners over a network using electronic means.
"IDX" means IDX Information Systems Corporation, a Vermont corporation.
"IDX CUSTOMER" means any Person that has entered into a written agreement with
IDX pursuant to which IDX provides any of its core products, including without
limitation Practice Management Systems, IDXrad(TM), and LastWord(R) (the "Core
Products"), all Affiliates of such Person, and all Persons receiving the benefit
of any of the Core Products by or through such Person or Affiliates of such
Person including without limitation those IDX Customers as set forth in the
Development Plan.
"IDX LICENSED TECHNOLOGY" means the technology licensed to Allscripts and
ChannelHealth pursuant to the License Addendum (as such term is defined in the
Strategic Alliance Agreement).
"INITIAL TERM" means a period of ten (10) years commencing on the Closing Date.
"INTELLECTUAL PROPERTY" means, without limitation, know-how, trade secrets,
inventions (whether or not patentable), ideas, materials, discoveries,
techniques, plans, designs, formulas, processes, invention disclosures,
technology, data or information, software and documentation therefor, hardware,
source code (including all programmers' notes), procedures, methods, works and
2
other documentation and information and the right to sue and recover damages for
past, present and future infringement of such intellectual property.
"INTERFACES" means the interfaces between the Allscripts Products and the IDX
Practice Management Products, Patient Channel, and EDIX as described on Schedule
5.3.1 attached to the Strategic Alliance Agreement.
"LASTWORD" means the product marketed by IDX under the trademark LastWord.
"MAINTENANCE" means the upkeep of software products by a Person including the
provision of bugs, [fixes] and drivers, consistent with such Person's ordinary
and customary business practices
"MATERIAL ADVERSE CHANGE" means any material adverse change in the business,
properties, results of operations, condition (financial or otherwise) of an
applicable Person (other than changes that are the result of economic factors
affecting the economy as a whole or changes that are the result of factors
generally affecting the specific industry or markets in which a party competes).
"MERGER AGREEMENT" means that certain Agreement and Plan of Merger by and among
[IDX, Allscripts, and ChannelHealth], dated July __, 2000, whereby Allscripts
agrees to acquire all of the issued and outstanding capital stock of
ChannelHealth.
"OUTREACH" means the product currently marketed by IDX under the trademark
"OutReach."
"PATIENT CHANNEL" means the product marketed by ChannelHealth and IDX under the
name Patient Channel.
"PATIENT CHANNEL PRODUCTS" means the computer software and computerized or
automated products and services marketed under the name "Patient Channel" as
more fully described in the Development Plan.
"PERSON" means any individual, partnership, firm, corporation, association,
trust, limited liability company, limited liability partnership, unincorporated
organization or other entity, as well as any syndicate or group that would be
deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of
1934, as amended.
"PHYSICIAN CHANNEL PRODUCTS" means the computer software and computerized or
automated products and services marketed under the name "Physician Channel" as
more fully described in the Development Plan.
"PRACTICE MANAGEMENT PRODUCTS" means any software application expressly designed
to automate the business processes of physician billing, physician scheduling
and managed care contract administration.
"PROVIDE" means to market, sell, license, cooperatively market, or otherwise
distribute, including through one or more Distribution Partners.
3
"REGULATORY REQUIREMENTS" means all federal and state laws and regulatory
requirements applicable to the use by IDX, IDX Customers, ChannelHealth, and
ChannelHealth Customers of the ChannelHealth products from time to time during
the term of the Strategic Alliance Agreement, including without limitation those
applicable to billing and claims submittal, managed care, prescriptions, EDI
transactions, data transmission, security and privacy, and program requirements
generally applicable to healthcare organizations, such as those involving
accreditation.
"STRATEGIC ALLIANCE AGREEMENT" means that certain agreement to which these
definitions are a Schedule entitled "Strategic Alliance Agreement" by and
between Allscripts, IDX and ChannelHealth executed or intended to be executed on
the Closing Date.
"VIRTUAL OFFICE PRODUCTS" means the product currently marketed by IDX under the
name "Virtual Office" which allows for secure messaging, managing appointments,
viewing of personal information, monitoring patient account status and tasking
management.
"WEB FRAMEWORK" means the product currently marketed by IDX under the trademark
"IDX Web FrameWork" and as more fully described in the Development Plan.
4
ANNEX A
-------
DIRECT COMPETITORS OF IDX
Cerner Corporation
Eclipsys Corporation
Epic Systems Corporation
Healtheon/WebMD (except as pursuant to the agreement with ChannelHealth
dated June 6, 2000)
Infocure
McKesson/HBOC
Medic Corporation
Medical Manager Corporation
Quality Systems
Shared Medical Systems Corporation
Trizetto Corporation
5
EXHIBIT E
Stock Rights and Restrictions Agreement
1. DEFINITIONS.............................................................................1
2. SHARE RIGHTS AND RESTRICTIONS...........................................................6
2.1 LIMITATION ON CERTAIN TRANSACTIONS............................................6
2.2 ALLSCRIPTS BOARD OF DIRECTORS.................................................7
2.3 LIMITATION ON ACQUISITION OF ADDITIONAL VOTING SHARES BY IDX..................9
2.4 RESTRICTIONS ON TRANSFER.....................................................10
2.5 VOTING OF IDX SHARES.........................................................15
2.6 RIGHT TO PARTICIPATE IN CERTAIN ISSUANCES BY ALLSCRIPTS......................15
3. RESTRICTIONS ON TRANSFER...............................................................17
4. STOCK CERTIFICATES AND OTHER RESTRICTIONS..............................................17
4.1 ENDORSEMENT OF CERTIFICATES..................................................17
4.2 IMPROPER TRANSFER............................................................17
5. GENERAL PROVISIONS.....................................................................17
5.1 REPRESENTATIONS AND WARRANTIES...............................................17
5.2 AMENDMENT AND MODIFICATION; WAIVER OF COMPLIANCE.............................18
5.3 INJUNCTIVE RELIEF............................................................18
5.4 BYLAWS.......................................................................18
5.5 NO ADOPTION OR AMENDMENT OF RIGHTS PLAN......................................18
5.6 GOVERNING LAW................................................................19
5.7 TERMINATION..................................................................19
5.8 NOTICES......................................................................19
5.9 SEVERABILITY.................................................................20
5.10 ENTIRE AGREEMENT.............................................................20
5.11 PARTIES IN INTEREST..........................................................20
5.12 HEADINGS.....................................................................20
5.13 COUNTERPARTS.................................................................20
SCHEDULE I 22
SCHEDULE II.......................................................................................23
EXHIBIT E TO
AGREEMENT AND PLAN OF MERGER
STOCK RIGHTS AND RESTRICTIONS AGREEMENT
STOCK RIGHTS AND RESTRICTIONS AGREEMENT, dated as of ____,
2000, between Allscripts Holding, Inc., a Delaware corporation ("Allscripts")
and IDX Systems Corporation, a Vermont corporation ("IDX").
RECITALS:
A. After giving effect to the Closing, IDX owns __________
shares of Allscripts Common Stock (together with any additional Allscripts
Voting Shares that IDX or any Affiliate of IDX may from time to time own, the
"IDX Shares").
B. After giving effect to the Closing, Richard E. Tarrant
("R.E.T."). is the initial IDX Designee.
C. The Boards of Directors of Allscripts and IDX deem it
advisable to establish (i) insofar as concerns IDX, certain rights and
restrictions with respect to Allscripts Business Combination Transactions and
the IDX Shares and (ii) insofar as concerns Allscripts, certain restrictions
with respect to IDX Business Combination Transactions and any securities of IDX
having voting power under ordinary circumstances with respect to the election of
directors of IDX that Allscripts may hold from time to time.
ACCORDINGLY, premises considered, the parties have entered into this
Agreement.
1. DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Affiliate" shall mean, with respect to any specified
Person, any other Person, directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified Person. For the
purposes of this definition, "control" (including, with correlative meanings,
"controlling," "controlled by," and "under common control with") means the power
to direct or cause the direction of the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract, or otherwise and, with respect to a corporation or partnership,
control shall mean direct or indirect ownership of more than fifty percent (50%)
of the voting stock or general partnership interest or voting interest in any
such corporation or partnership. Notwithstanding anything to the contrary in
this definition, Affiliates of IDX who were stockholders of Channelhealth
Incorporated ("Channelhealth") immediately prior to the Closing shall not be
considered "Affiliates" for purposes of Recital A (definition of "IDX Shares")
and Sections 2.2, 2.4 (other than Section 2.4(a)), 2.5, 2.6 and 4.2 hereof.
(b) "Acceptance Notice" shall have the meaning set forth in
Section 2.6(b).
(c) "Applicable Percentage" shall mean 2%.
(d) Allscripts" shall have the meaning set forth in the
first paragraph of this Agreement; and the term "Allscripts" shall include
Allscripts and its Affiliates unless the context otherwise requires.
1
(e) "Allscripts Business Combination Transaction" shall
mean a merger, consolidation, "business combination" as defined in Section 203
of the DGCL as in effect on the date hereof, compulsory share exchange,
recapitalization or other transaction in which Allscripts is a constituent
corporation or to which Allscripts is a party and pursuant to which the
Allscripts Voting Shares are exchanged for cash, securities or other property or
a sale of all or substantially all of the assets of Allscripts and its
Subsidiaries, taken as a whole; provided, however, that none of the following
shall be deemed a Allscripts Business Combination Transaction for purposes of
this Agreement: (i) a merger, consolidation, compulsory share exchange,
recapitalization or other transaction in which the Beneficial Ownership of the
capital stock of Allscripts or the surviving corporation of the transaction (or
of the ultimate parent of Allscripts or of such surviving corporation)
immediately after the consummation of such transaction is substantially the same
as the ownership of the capital stock of Allscripts immediately prior to the
consummation of the transaction or (ii) a merger (A) in which Allscripts is the
surviving corporation, (B) in which all Allscripts Voting Shares immediately
prior to the consummation of such merger remain outstanding immediately after
the consummation thereof, (C) as a result of the consummation of which no Person
will Beneficially Own a majority of the Allscripts Fully Diluted Shares and (D)
following the consummation of which the Allscripts Continuing Directors (which,
for the purposes of this clause (e), shall include the IDX Designee) will
represent a majority of the Board of Directors of Allscripts.
(f) "Allscripts Common Stock" shall mean Allscripts's
common stock, par value $0.01 per share, and any shares of common stock or
similar securities into which the common stock of Allscripts are hereafter
reclassified into or exchanged for.
(g) "Allscripts Continuing Director" shall mean (i) any
member of the Board of Directors of Allscripts, while such Person is a member of
such Board of Directors, who (A) was a member of the Board of Directors of
Allscripts prior to the date hereof or (B) is recommended or elected to the
Board of Directors by a majority of the Allscripts Continuing Directors to fill
a vacancy arising as a result of an increase in the number of directors of
Allscripts occurring after the date hereof and (ii) any successor of a
Allscripts Continuing Director, while such successor is a member of the Board of
Directors of Allscripts, who is recommended or elected to succeed the Allscripts
Continuing Director by a majority of the Allscripts Continuing Directors.
Notwithstanding anything to the contrary in this definition, for purposes of
this Agreement, the IDX Designee shall not be considered a Allscripts Continuing
Director.
(h) "Allscripts Exchangeable Security" shall mean a
security of any type, including but not limited to debt, equity, warrants or
other rights, issued by Allscripts or representing the right to acquire
Allscripts Voting Shares from Allscripts upon exchange, conversion or exercise
thereof.
(i) "Allscripts Fully Diluted Shares" shall mean, at any
time, the sum of (i) the Allscripts Voting Shares then outstanding plus (ii) the
number of Allscripts Voting Shares reserved for issuance or issuable in
connection with the exercise, exchange or conversion of options, warrants or
securities of Allscripts then outstanding that are at such time exercisable or
exchangeable for Allscripts Voting Shares or are convertible into Allscripts
Voting Shares.
2
(j) "Allscripts Voting Shares" shall mean the Allscripts
Common Stock and any other securities of Allscripts having voting power under
ordinary circumstances with respect to the election of directors of Allscripts.
(k) Beneficially Own" shall have the meaning assigned to
such term in Rule 13d-3 under the Exchange Act in effect on the date hereof.
"Beneficial Owner" and "Beneficial Ownership" shall have correlative meanings.
(l) "Closing" shall have the meaning assigned to such term
in the Merger Agreement.
(m) "Current Price" shall have the meaning set forth in
Section 2.4(i)
(n) "DGCL" shall have the meaning set forth in Section
2.1(c).
(o) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, or any successor federal statute as in effect from time to
time.
(p) "Expenses" shall have the meaning set forth in Section
2.5(j)(v).
(q) "IDX" shall have the meaning set forth in the first
paragraph hereof; and the term "IDX" shall include IDX and its Affiliates unless
the context otherwise requires or as otherwise specified in the definition of
"Affiliate".
(r) "IDX Business Combination Transaction" shall mean a
merger, consolidation, "business combination" as defined in Section 203 of the
DGCL as in effect on the date hereof, compulsory share exchange,
recapitalization or other transaction in which IDX is a constituent corporation
or to which IDX is a party and pursuant to which the IDX Voting Shares are
exchanged for cash, securities or other property or a sale of all or
substantially all of the assets of IDX and its Subsidiaries, taken as a whole;
provided, however, that none of the following shall be deemed a IDX Business
Combination Transaction for purposes of this Agreement: (i) a merger,
consolidation, compulsory share exchange, recapitalization or other transaction
in which the Beneficial Ownership of the capital stock of IDX or the surviving
corporation of the transaction (or of the ultimate parent of IDX or of such
surviving corporation) immediately after the consummation of such transaction is
substantially the same as the ownership of the capital stock of IDX immediately
prior to the consummation of the transaction or (ii) a merger (A) in which IDX
is the surviving corporation, (B) in which all IDX Voting Shares immediately
prior to the consummation of such merger remain outstanding immediately after
the consummation thereof, (C) as a result of the consummation of which no Person
will Beneficially Own a majority of the IDX Fully Diluted Shares and (D)
following the consummation of which the IDX Continuing Directors will represent
a majority of the Board of Directors of IDX.
(s) "IDX Common Stock" shall mean IDX's common stock, par
value $0.01 per share, and any shares of common stock or similar securities into
which the common stock of IDX are hereafter reclassified into or exchanged for.
(t) "IDX Continuing Director" shall mean (i) any member of
the Board of Directors of IDX, while such Person is a member of such Board of
Directors, who (A) was a member of the Board of Directors of IDX prior to the
3
date hereof or (B) is recommended or elected to the Board of Directors by a
majority of the IDX Continuing Directors to fill a vacancy arising as a result
of an increase in the number of directors of IDX occurring after the date hereof
and (ii) any successor of an IDX Continuing Director, while such successor is a
member of the Board of Directors of IDX, who is recommended or elected to
succeed the IDX Continuing Director by a majority of the IDX Continuing
Directors.
(u) "IDX Designee" shall have the meaning set forth in
Section 2.2(a) hereof.
(v) "IDX Exchangeable Security" shall mean a security of
any type, including but not limited to debt, equity, warrants or other rights,
issued by IDX or representing the right to acquire IDX Voting Shares from IDX
upon exchange, conversion or exercise thereof.
(w) "IDX Fully Diluted Shares" shall mean, at any time, the
sum of (i) the IDX Voting Shares then outstanding plus (ii) the number of IDX
Voting Shares reserved for issuance or issuable in connection with the exercise,
exchange or conversion of options, warrants or securities of IDX then
outstanding that are at such time exercisable or exchangeable for IDX Voting
Shares or are convertible into IDX Voting Shares.
(x) "IDX Shares" shall have the meaning set forth in
Recital A.
(y) "IDX Voting Shares" shall mean the IDX Common Stock and
any other securities of IDX having voting power under ordinary circumstances
with respect to the election of directors of IDX.
(z) "Insolvency Laws" shall have the meaning set forth in
Section 5.7(a)(ii).
(aa) "Market Price" shall have the meaning set forth in
Section 2.4(h).
(bb) "Maximum Number" shall have the meaning set forth in
Section 2.4(j)(ii).
(cc) "Merger Agreement" shall mean the Agreement and Plan
of Merger dated July 13, 2000 among Allscripts, Allscripts, Inc., Bursar
Acquisition, Inc., Bursar Acquisition No. 2, Inc., IDX and Channelhealth.
(dd) "Notice of Arranged Transfer" shall have the meaning
set forth in Section 2.4(h)(i).
(ee) "Notice of Block Purchase" shall have the meaning set
forth in Section 2.4(i)(i).
(ff) "Notice of Block Transfer" shall have the meaning set
forth in Section 2.4(i)(i).
(gg) "Notice of Proposed Transfer" shall have the meaning
set forth in Section 2.4(h)(i).
(hh) "Offer Notice" shall have the meaning set forth in
Section 2.6(b).
4
(ii) "Per Share Market Value" means on any particular date
(i) the last sale price per share of the Allscripts Common Stock on such date on
the principal stock exchange on which the Allscripts Common Stock has been
listed or, if there is no such price on such date, then the last price on such
exchange on the date nearest preceding such date, or (ii) if the Allscripts
Common Stock is not listed on any stock exchange, the final bid price for a
share of Allscripts Common Stock in the over-the-counter market, as reported by
The Nasdaq Stock Market at the close of business on such date, or the last sales
price if such price is reported and final bid prices are not available, or (iii)
if the Allscripts Common Stock is not quoted on The Nasdaq Stock Market, the bid
price for a share of Allscripts Common Stock in the over- the-counter market as
reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding to its functions of reporting prices), or (iv)
if the Allscripts Common Stock is no longer publicly traded, as determined by
one of the investment banking firms listed on Schedule I, as selected by IDX.
(jj) "Person" shall mean any individual, firm, partnership,
association, group (as such term is defined in Section 13(d)(3) of the Exchange
Act, as in effect on the date hereof), corporation, trust, business trust or
other entity, and includes any successor (by merger or otherwise) of any such
entity.
(kk) "Piggyback Registration" shall have the meaning set
forth in Section 2.4(j)(i).
(ll) "Piggyback Registration Request" shall have the
meaning set forth in Section 2.4(j)(i).
(mm) "Private Placement" shall mean a Transfer of IDX
Shares pursuant to a transaction not involving a Pubic Offering; provided,
however, that (i) the sale of IDX Shares pursuant to a tender or exchange offer
is not a Private Placement; (ii) a Private Placement shall not include a
Transfer to any Person who, directly or indirectly, has as one of its material
businesses the provision of healthcare information and/or point of care clinical
applications and devices (a "Allscripts Competitor") if, as a result of such
Transfer, such Allscripts Competitor would Beneficially Own such number of
Allscripts Voting Shares as would constitute 10% or more of the then outstanding
Allscripts Voting Shares, unless any such Allscripts Competitor acquiring such
amount of securities enters into an agreement with Allscripts limiting the
Transfer of such shares on substantially the same terms as this Agreement,
except that the term of such agreement shall be 10 years from the date of such
agreement; and (iii) a Private Placement shall not include a Transfer of IDX
Shares to any Person if following such Transfer such Person Beneficially Owns
more than 10% of the then outstanding Allscripts Voting Shares unless such
Person enters into an agreement with Allscripts with terms and conditions
restricting the Transfer of such shares substantially similar to those contained
herein, except that the term of such agreement shall be for 10 years from the
date of such agreement. IDX shall be entitled to rely on a representation of the
proposed recipient in determining whether a Transfer to such recipient qualifies
as a Private Placement under clauses (ii) and (iii) of the preceding sentence.
(nn) "Public Offering" shall mean a firm commitment
underwritten public offering pursuant to a registration statement that has been
declared effective by the SEC under the Securities Act.
5
(oo) "Rule 144" shall mean Rule 144 adopted by the SEC
under the Securities Act, or any successor rule.
(pp) "SEC" shall mean the Securities and Exchange
Commission.
(qq) "Securities Act" shall mean the Securities Act of
1933, as amended, or any successor federal statute as in effect from time to
time.
(rr) "Specified Price" shall have the meaning set forth in
Section 2.4(i).
(ss) "Subsidiary" shall mean, with respect to any Person,
any other Person of which at least a majority of the voting power of the voting
equity securities or voting equity interest is owned, directly or indirectly, by
such Person.
(tt) "Target Price" shall have the meaning set froth in
Section 2.4(h).
(uu) "Trading Day" means (i) a day on which the Allscripts
Common Stock is traded on the principal stock exchange on which the Allscripts
Common Stock has been listed, or (ii) if the Allscripts Common Stock is not
listed on any stock exchange, a day on which the Allscripts Common Stock is
quoted in the over-the-counter market, as reported by The Nasdaq Stock Market,
or (iii) if the Allscripts Common Stock is not quoted on The Nasdaq Stock
Market, a day on which the Allscripts Common Stock is quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding to its functions
of reporting prices).
(vv) "Transfer" shall have the meaning set forth in Section
2.4 hereof.
2. SHARE RIGHTS AND RESTRICTIONS.
2.1 LIMITATION ON CERTAIN TRANSACTIONS.
(a) (i) Except as otherwise permitted by this Agreement,
IDX agrees that IDX shall not, during the period from the date of this Agreement
until its termination, (A) engage, or propose to engage, in any Allscripts
Business Combination Transaction with Allscripts, or (B) make any proposal to
Allscripts, the Board of Directors of Allscripts or the stockholders of
Allscripts with respect to a tender offer or exchange offer for Allscripts
Voting Shares or a liquidation of Allscripts, unless either (x) such transaction
shall have been approved by a majority of the Allscripts Continuing Directors or
(y) on the date when such transaction is proposed, no IDX Designee shall be
serving on the Board of Directors of Allscripts and IDX and its Affiliates
collectively shall Beneficially Own less than 5% of the then outstanding
Allscripts Voting Shares.
(ii) Except as otherwise permitted by this Agreement,
Allscripts agrees that Allscripts shall not, during the period from the date of
this Agreement until its termination, (A) engage, or propose to engage, in any
IDX Business Combination Transaction with IDX, or (B) make any proposal to IDX,
the Board of Directors of IDX or the stockholders of IDX with respect to a
tender offer or exchange offer for IDX Voting Shares or a liquidation of IDX,
unless either (x) such transaction shall have been approved by a majority of the
IDX Continuing Directors or (y) on the date when such transaction is proposed,
6
Allscripts and its Affiliates collectively shall Beneficially Own less than 5%
of the then outstanding IDX Voting Shares.
(b) (i) Except as otherwise permitted by this Agreement,
IDX agrees that IDX shall not, during the period from the date of this Agreement
until its termination, (i) request or solicit any Person (A) to make a tender or
exchange offer for Allscripts Voting Shares or (B) to make a proposal for a
Allscripts Business Combination Transaction, unless either (x) a majority of the
Allscripts Continuing Directors shall have approved of IDX taking such action or
(y) no IDX Designee shall be serving on the Board of Directors of Allscripts and
IDX and its Affiliates collectively shall Beneficially Own less than 5% of the
then outstanding Allscripts Voting Shares.
(ii) Except as otherwise permitted by this Agreement,
Allscripts agrees that Allscripts shall not, during the period from the date of
this Agreement until its termination, (i) request or solicit any Person (x) to
make a tender or exchange offer for IDX Voting Shares or (y) to make a proposal
for an IDX Business Combination Transaction, unless either (1) a majority of the
IDX Continuing Directors shall have approved of Allscripts taking such action or
(2) Allscripts and its Affiliates collectively shall Beneficially Own less than
5% of the then outstanding IDX Voting Shares.
(c) In connection with the Merger Agreement, Allscripts's
Board of Directors has taken all action to assure that (i) no state takeover
statute or similar statute will apply to the Merger Agreement or to any of the
transactions contemplated in the Merger Agreement or the items referenced in
subclauses (A) or (B) of Section 2.3 and (ii) Section 203 of the DGCL will not
apply to the Merger Agreement or any of the transactions contemplated in the
Merger Agreement or the items referenced in subclauses (A) or (B) of Section
2.3. Further, Allscripts has no "poison pill" or takeover defense mechanism
other than Article Twelfth of Allscripts's Certificate of Incorporation.
Allscripts shall not amend or modify any of the foregoing actions nor shall
Allscripts implement any new, additional, amended or modified poison pill or
takeover defense mechanism, unless, in each and every such case, provision shall
be made to exclude IDX and its Affiliates from all effects thereof.
(d) Allscripts and IDX agree that the operative provisions,
as presently in effect, of Section 203 of the DGCL will apply to any Allscripts
Business Combination Transaction and any IDX Business Combination Transaction
covered by Section 203 between IDX and its Affiliates and Allscripts, or
Allscripts and its Affiliates and IDX, for the term of this Agreement,
notwithstanding that the operative provisions of such Section 203 might
otherwise be applicable for a shorter period of time.
2.2 ALLSCRIPTS BOARD OF DIRECTORS.
(a) From and after the date hereof and until the earlier of
(i) termination of this Agreement and (ii) the date that IDX and its Affiliates
shall Beneficially Own fewer than ____ shares of Allscripts Common Stock [insert
an amount equal to 25% of the originally issued IDX Shares] (subject to
equitable adjustment in the event of any stock split, stock dividend, reverse
stock split or similar event affecting the Allscripts Common Stock after the
date of this Agreement), then, in connection with each election of directors of
7
Allscripts, whether at an annual or special meeting, Allscripts will nominate,
and, subject to the fiduciary obligations of the Allscripts directors, solicit
proxies for, in accordance with its procedures for the nomination of, and
solicitation of proxies for, management-slate directors, an individual
designated by IDX (such individual who, at any time, is or was designated by IDX
for purposes of this Agreement is referred to herein as the "IDX Designee").
Upon the earlier of (i) termination of this Agreement and (ii) the date that IDX
and its Affiliates shall Beneficially Own fewer than ____ shares of Allscripts
Common Stock [insert an amount equal to 25% of the originally issued IDX Shares]
(subject to equitable adjustment in the event of any stock split, stock
dividend, reverse stock split or similar event affecting the Allscripts Common
Stock after the date of this Agreement), IDX shall cause any IDX Designee then
serving as a director of Allscripts to resign immediately unless otherwise
requested by Allscripts.
(b) The director initially designated by IDX as the IDX
Designee is R.E.T. Allscripts shall provide IDX with 30 days' prior written
notice of any intended mailing of a notice to stockholders for a meeting at
which directors are to be elected. IDX shall give written notice to Allscripts,
no later than 10 days prior to such mailing, of the Person designated pursuant
to Section 2.2(a) as nominee for election as director. Allscripts agrees to
nominate and recommend for election as director the individual designated, or to
be designated, pursuant to Section 2.2(a). If IDX shall fail to give notice to
Allscripts as provided above, it shall be deemed that the IDX Designee then
serving as director shall be the IDX Designee for election.
(c) Except as otherwise provided herein, at all times (i)
when there is an IDX Designee on Allscripts's Board of Directors and IDX and its
Affiliates shall Beneficially Own ____ or more shares of Common Stock [insert an
amount equal to 75% of the originally issued IDX Shares] (subject to equitable
adjustment in the event of any stock split, stock dividend, reverse stock split
or similar event affecting the Allscripts Common Stock after the date of this
Agreement), and (ii) such designee is R.E.T., the IDX Designee shall be elected
as the sole Vice Chairman of the Allscripts Board of Directors, which shall be a
non-executive position.
(d) In the event that any IDX Designee shall cease to serve
as a director for any reason (other than as set forth in Section 2.2(a)), the
vacancy resulting thereby shall be filled by the remaining directors of
Allscripts in accordance with its Certificate of Incorporation, Bylaws and
applicable law by a new IDX Designee and such new IDX Designee shall thereafter
serve until the expiration of the term of the IDX Designee replaced by such new
IDX Designee.
(e) Notwithstanding anything to the contrary contained
herein, no IDX Designee may be a Person who previously has been a director of
Allscripts and was properly removed for cause from the Board of Directors of
Allscripts or a Person who has been convicted of a felony or a crime involving
moral turpitude.
(f) The IDX Designee will be furnished with all information
that is provided to all other directors of Allscripts (in their capacities as
such) at the same time as such information is furnished to such other directors
(in their capacities as such).
(g) IDX shall cause the IDX Designee serving as a director
of Allscripts to comply with the retirement policies of Allscripts as in effect
on the date hereof (a copy of which is attached as Exhibit A) or as hereafter
8
amended or modified from time to time by the Board of Directors of Allscripts or
its stockholders; provided, however, that no such amendment or modification to
such policies shall be binding upon IDX or the IDX Designee unless the IDX
Designee shall have voted in favor of such amendment or modification at the
meeting, or in the action in lieu of a meeting, of the Board of Directors of
Allscripts at or in which it is considered.
(h) IDX shall make the initial IDX Designee reasonably
available for initial marketing ("road show") efforts undertaken by Allscripts
in connection with the Merger Agreement and for subsequent meetings with
customers of the Channelhealth business (which shall occur not less frequently
than once per month).
2.3 LIMITATION ON ACQUISITION OF ADDITIONAL VOTING SHARES BY IDX.
(a) From and after the date hereof, IDX shall not acquire
any Allscripts Voting Shares, other than the IDX Shares owned by IDX as of the
date hereof and after giving effect to the Closing, (i) without the prior
written consent of a majority of the Allscripts Continuing Directors or (ii)
pursuant to Article III of the Merger Agreement; provided, however, that nothing
in this Section 2.3(a) shall limit IDX's power and right (A) to purchase or
acquire shares as a result of any stock dividend or stock split,
reclassification of the Allscripts Common Stock, or the exercise or conversion
of any security received by IDX from Allscripts in respect of the IDX Shares, or
(B) to acquire shares of Allscripts Common Stock or any Allscripts Exchangeable
Security pursuant to Section 2.6 or to convert, exchange or exercise any such
Allscripts Exchangeable Security.
(b) From and after the date hereof, Allscripts shall not
acquire any IDX Voting Shares without the prior written consent of a majority of
the IDX Continuing Directors; provided, however, that nothing in this Section
2.3(b) shall limit Allscripts's power and right (i) to purchase or acquire
shares as a result of any stock dividend or stock split, reclassification of the
IDX Common Stock, or the exercises or conversion of any security received by
Allscripts from IDX in respect of any IDX securities that Allscripts may hold or
(ii) to acquire shares of IDX Common Stock, or the exercise or conversion of any
security received by Allscripts in respect of any IDX securities that Allscripts
may hold or any IDX Exchangeable Security pursuant to Section 2.6 or to convert,
exchange or exercise any such IDX Exchangeable Security.
(c) Notwithstanding anything to the contrary contained
herein, in the event IDX shall effect a sale of any IDX Shares, IDX shall be
entitled to acquire additional Voting Shares, without the necessity of obtaining
prior written consent, up to an aggregate amount that would cause IDX to hold
the same amount of Voting Shares as IDX held after giving effect to the Closing,
and the obligations of Allscripts set forth in Section 2.2 shall be reinstated,
if applicable, provided, however, that (i) IDX may not undertake to acquire such
additional Voting Shares until the end of the six month period immediately
following any such sale, (ii) that in no event will IDX be entitled to reinstate
the obligations of Allscripts set forth in Section 2.2(b) once such obligations
are terminated and (iii) IDX will be restricted from making any further sales of
IDX Shares until the end of the thirty day period immediately following the
acquisition of any additional Voting Shares pursuant to this Section 2.3(c).
9
2.4 RESTRICTIONS ON TRANSFER. From and after the date
hereof until the termination of this Agreement, IDX and its Affiliates shall not
sell, transfer, write options on or otherwise convey (when used as a verb,
"Transfer" and, any sale, transfer, writing of options on or other conveyance, a
"Transfer") Beneficial Ownership of any Allscripts Voting Shares (including
Allscripts Voting Shares subject to Allscripts Exchangeable Securities), without
the prior written consent of a majority of the Allscripts Continuing Directors,
except that, in any event, any and all of the following Transfers shall be
permitted:
(a) One or more Transfers to an Affiliate of IDX; provided,
however, that each such Affiliate agrees in writing with Allscripts to be bound
by the same restrictions as are applicable to IDX hereunder.
(b) One or more Transfers to Allscripts or to a Subsidiary
of Allscripts (pursuant to a tender offer or otherwise).
(c) One or more Transfers pursuant to a merger,
consolidation or compulsory share exchange, in which Allscripts is a constituent
corporation.
(d) One or more Transfers made as a pro rata dividend or
distribution to the holders of the common stock of IDX or its Affiliates;
provided, however, unless such dividend or distribution is to the public
stockholders of IDX, such holders agree in writing with Allscripts to be bound
by the same restrictions as IDX hereunder.
(e) One or more Transfers to any Person (other than IDX or
any of its Affiliates) who shall have commenced a tender or exchange offer for
shares of Allscripts Common Stock if, at the time of public announcement of the
tender or exchange offer: (i) IDX and its Affiliates collectively Beneficially
Own less than 5% of the then outstanding Allscripts Voting Shares and no IDX
Designee is serving on the Allscripts Board of Directors, or (ii) IDX and its
Affiliates collectively Beneficially Own more than 5% of the then outstanding
Allscripts Voting Shares and a majority of the Allscripts Continuing Directors
recommend to the holders of the shares of Allscripts Common Stock that such
holders accept such tender or exchange offer.
(f) From and after the following anniversaries of the date
of this Agreement, IDX and its Affiliates may, collectively, Transfer the
following percentages of the IDX Shares in one or more Private Placements and/or
transactions described below in Sections 2.4(g) or 2.4(h):
PERCENTAGE OF
IDX SHARES
ANNIVERSARY OF PERMITTED TO TRANSFER*
THIS AGREEMENT INCREMENTAL* AGGREGATE*
-------------- ----------- ---------
First 25% 25%
Second 25% 50%
Third 25% 75%
Fourth 25% 100%
10
*These time restrictions and percentages will also apply to
any shares of Allscripts Common Stock acquired by IDX and
its Affiliates pursuant to Article III of the Merger
Agreement, which will result in additional IDX Shares that
can be Transferred based on the percentage limitations
being applied to a greater number of IDX Shares.
In any month, no more than 16.6667% of the IDX Shares eligible to be Transferred
during the then current year may be sold by IDX and its Affiliates pursuant to
this Section 2.4(f). IDX and its Affiliates shall not be permitted to cumulate,
or carry forward for Transfer in subsequent periods, either (i) unsold maximum
monthly eligible share Transfer amounts from month to month during any
particular year or (ii) unsold maximum annual eligible share Transfer amounts
from year to year.
(g) Subject to Section 2.4(f), one or more Transfers in
accordance with Rule 144; provided, however, that no Transfers shall be
permitted pursuant to Rule 144 except through one of the market makers in
Allscripts's Common Stock listed on Schedule II or as otherwise previously
approved in writing by Allscripts.
(h) (i) During each of the periods (A) from and after the
first anniversary of the date hereof through the second anniversary of the date
hereof and (B) from and after the third anniversary of the date hereof through
the fourth anniversary of the date hereof, IDX may deliver a written notice to
Allscripts that IDX desires to Transfer in a single transaction either 50% or
100% of the maximum aggregate number of its IDX Shares that it would be
permitted to Transfer in that period, which notice (the "Notice of Proposed
Transfer") must set forth (A) the number of IDX Shares that IDX desires to
Transfer (which number must equal either 50% or 100% of the maximum aggregate
number of shares that it would be permitted to Transfer in that period) and (B)
the price at which IDX would be willing to Transfer such shares (the "Target
Price"). The Notice of Proposed Transfer shall constitute an offer by IDX, which
shall be irrevocable for a period of 10 days following receipt of such notice by
Allscripts, to permit Allscripts to arrange for the purchase of such shares by a
purchaser selected by Allscripts in its sole discretion for cash at a price per
share equal to the average of the Per Share Market Value of such shares for the
five Trading Days immediately preceding (and excluding) the date that Allscripts
delivers a written notice to IDX (the "Notice of Arranged Transfer") that
Allscripts has arranged for such purchase at such price per share (the "Market
Price"); provided, however, that IDX shall have no obligation to Transfer any of
its IDX Shares to the proposed purchaser if the proposed purchase price per
share does not equal at least 90% of the Target Price.
(ii) The consummation of such purchase shall take place on
such date, not later than 10 days after receipt of the Notice of Arranged
Transfer by IDX, as Allscripts and IDX shall select. Upon the consummation of
such purchase, (A) IDX shall deliver the certificate or certificates evidencing
the IDX Shares so purchased duly endorsed in blank for transfer or accompanied
by written instruments of transfer in form satisfactory to the purchaser duly
executed by IDX, free and clear of any liens, encumbrances and claims and (B)
the purchaser shall simultaneously with the delivery of the certificate or
certificates evidencing the IDX Shares so purchased pay to IDX the aggregate
Market Price of such shares.
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(iii) Allscripts shall have no obligation to deliver a
Notice of Arranged Transfer in response to any Notice of Proposed Transfer
delivered by IDX, and the decision as to whether to deliver any Notice of
Arranged Transfer shall be made by Allscripts in the exercise of its sole
discretion. In the event that Allscripts shall have received a Notice of
Proposed Transfer from IDX but shall not have given a Notice of Arranged
Transfer to IDX with respect thereto prior to the expiration of the 10-day
period following receipt of such Notice of Proposed Transfer, nothing in this
Section 2.4(h) shall limit the right of IDX to Transfer any IDX Shares that are
not to be purchased pursuant to a Notice of Arranged Transfer, but otherwise
subject to and in accordance with the time, percentage and other restrictions
set forth in Section 2.4(f).
(i) (i) From and after the fifth anniversary of the date
hereof, IDX agrees not to effect any Transfer of IDX Shares in any single
transaction involving a number of such shares representing in excess of 2.5% of
the then issued and outstanding shares of Allscripts Common Stock unless and
until IDX delivers a written notice to Allscripts that IDX intends to effect
such Transfer, which notice (a "Notice of Block Transfer") must set forth (A)
the number of IDX Shares that IDX desires to Transfer, or maximum and minimum
number of, such shares and (B) the price per share at which IDX would be willing
to Transfer such shares (the "Specified Price"). The Notice of Block Transfer
shall constitute an offer by IDX, which shall be irrevocable for a period of 10
days following receipt of such notice by Allscripts, to permit Allscripts to
arrange for the purchase of the maximum number (but not fewer than the minimum
number) of such shares by a purchaser selected by Allscripts in its sole
discretion for cash at a price per share equal to the average of the Per Share
Market Value of such shares for the five Trading Days immediately preceding (and
excluding) the date that Allscripts delivers a written notice to IDX (the
"Notice of Block Purchase") that Allscripts has arranged for such purchase at
such price per share (the "Current Price"); provided, however, that IDX shall
have no obligation to Transfer any of its IDX Shares to the proposed purchaser
if the Current Price does not equal at least 90% of the Specified Price offered
in the Notice of Block Transfer.
(ii) The consummation of such purchase shall take place on
such date, not later than 10 days after receipt of the Notice of Block Purchase
by IDX , as Allscripts and IDX shall select. Upon the consummation of such
purchase, (A) IDX shall deliver the certificate or certificates evidencing the
IDX Shares so purchased duly endorsed in blank for transfer or accompanied by
written instruments of transfer in form satisfactory to the purchaser duly
executed by IDX, free and clear of any liens, encumbrances and claims and (B)
the purchaser shall simultaneously with the delivery of the certificate or
certificates evidencing the IDX Shares so purchased pay to IDX the aggregate
Current Price of such shares.
(iii) Allscripts shall have no obligation to deliver a
Notice of Block Purchase in response to any Notice of Block Transfer delivered
by IDX, and the decision as to whether to deliver any Notice of Block Purchase
shall be made by Allscripts in the exercise of its sole discretion. In the event
that Allscripts shall have received a Notice of Block Transfer from IDX but
shall not have given a Notice of Block Purchase to IDX with respect thereto
prior to the expiration of the 10-day period following receipt of such Notice of
Block Transfer, nothing in this Section 2.4(i) shall limit the right of IDX to
Transfer any IDX Shares that are not to be purchased pursuant to a Notice of
Block Purchase.
12
(j) (i) During the period from and after the third
anniversary of the date hereof through the fourth anniversary of the date
hereof, if Allscripts proposes to file a registration statement under the
Securities Act with respect to primary firm commitment underwritten public
offering of Allscripts Common Stock (a "Piggyback Registration"), it shall give
written notice of such proposed filing to IDX as soon as practicable, but in no
event fewer than 20 days before the anticipated filing date. Allscripts shall
include in such registration all IDX Shares with respect to which Allscripts has
received a written request for inclusion within 10 days after the giving of
Allscripts's notice (a "Piggyback Registration Request"); provided, however,
that Allscripts may in its sole discretion restrict the number of IDX Shares so
requested for inclusion to the maximum aggregate number of such shares that IDX
would be permitted to sell in such period after the date that Allscripts gives
notice of its intention to effect a Piggyback Registration.
(ii) If the managing underwriters of the Piggyback
Registration advise IDX that, in their opinion, the number of shares requested
to be included in such registration exceeds the maximum number that can be
included in such offering without adversely affecting the marketability of the
offering (the "Maximum Number"), IDX will limit the number of shares included in
such registration to the Maximum Number, and the shares registered shall be
selected in the following order of priority: (A) first, the shares of Allscripts
Common Stock Allscripts proposes to Transfer, and (B) second, the IDX Shares
covered by the Piggyback Registration Request and other shares requested to be
included in such registration based upon rights under agreements outstanding on
the date hereof; provided, however, that if shares of Common Stock are being
offered for the account of Persons other than IDX, the proportion by which the
amount of IDX Shares intended to be offered for the account of IDX is reduced
shall not exceed the proportion by which the amount of shares of Allscripts
Common Stock intended to be offered for the account of such other Persons is
reduced.
(iii) IDX may not participate in any Piggyback Registration
unless it (A) agrees to sell its shares of Allscripts Common Stock on the basis
provided in any underwriting arrangements approved by Allscripts, (B) completes
and executes all questionnaires, powers of attorney, custody arrangements,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements and this Agreement, and (C)
furnishes in writing to Allscripts such information regarding IDX and other
information as Allscripts may from time to time request or as may be legally
required in connection with such registration; provided, however, that IDX shall
not be required to make any representations or warranties in connection with any
such registration other than representations and warranties as to (x) its
ownership of its IDX Shares to be Transferred free and clear of all liens,
encumbrances and claims, (y) IDX's power and authority to effect such Transfer,
and (z) such matters pertaining to compliance with securities laws as may be
reasonably requested; provided further, however, that the obligation of IDX to
indemnify pursuant to any such underwriting agreements shall be several, not
joint and several, among such Persons selling securities, and the liability of
IDX will be in proportion to, and provided further that such liability will be
limited to, the net amount received by IDX from the sale of the IDX Shares
pursuant to such registration.
(iv) In connection with any Piggyback Registration,
Allscripts will enter into such agreements (including an underwriting agreement)
as are customary in transactions of the kind contemplated by the intended method
or methods of distribution set forth in the Piggyback Registration Statement and
13
reasonably acceptable to Allscripts, and take such other actions as are
reasonably necessary in connection therewith in order to expedite or facilitate
the Piggyback Registration; and (A) make such representations and warranties
with respect to the Piggyback Registration Statement or any post-effective
amendment or supplement thereto, prospectus or any amendment or supplement
thereto, and documents incorporated by reference, if any, to IDX and the
underwriters of the Piggyback Registration in form, substance, and scope as are
customary in connection with transactions of such kind; (B) if requested by the
managing underwriters of the Piggyback Registration, obtain an opinion of
outside counsel to Allscripts in customary form and covering matters of the type
customarily covered by such an opinion, addressed to such underwriters named in
the underwriting agreement and dated the date of the closing of the sale of the
shares covered by the Piggyback Registration Statement; (C) if requested by the
managing underwriters of the Piggyback Registration, obtain a "comfort" letter
(or, if a "comfort" letter may not be delivered under applicable accounting
pronouncements or standards, a single "procedures" letter) and a single update
thereof from each of the independent certified public accountants who have
certified the most recent audited financial statements that are incorporated by
reference in the Piggyback Registration Statement, which letters shall be
addressed to the underwriters of the Piggyback Registration, such letter or
letters to be in customary form and covering such matters of the type
customarily covered by "comfort" letters of such type; (D) deliver such
documents and certificates as may be reasonably requested by IDX and the
underwriters of the Piggyback Registration to evidence compliance with any
conditions contained in the underwriting agreement or other agreements entered
into by Allscripts; and (E) undertake such obligations relating to expense
reimbursement as provided in Section 2.4(j)(v) and indemnification and
contribution obligations for the benefit of IDX of the type customarily
undertaken by issuers in connection with "piggyback" registrations.
(v) In connection with any Piggyback Registration,
Allscripts agrees to bear and to pay, or cause to be paid, promptly upon request
being made therefor, all expenses incident to Allscripts's performance of, or
compliance with, this Section 2.4(j), including, without limitation: (A) all SEC
and any National Association of Securities Dealers registration and filing fees
and expenses, (B) all fees and expenses in connection with the qualification of
the shares covered by any Piggyback Registration Statement for offering and sale
under state securities or "blue sky" laws, including reasonable fees and
disbursements of counsel for any underwriter in connection with such
qualifications, (C) all expenses relating to the preparation, printing,
distribution and reproduction of any Piggyback Registration Statement, each
prospectus included therein or prepared for distribution pursuant thereto, each
amendment or supplement to the foregoing, the certificates representing the
shares covered by such Piggyback Registration Statement and all other documents
relating hereto, (D) internal expenses of Allscripts, including, without
limitation, all salaries and expenses of Allscripts's officers and employees
performing legal or accounting duties, (E) fees, disbursements and expenses of
Allscripts's counsel and its other advisors and experts and independent
certified public accountants of Allscripts (including the expenses of any
opinions or "comfort" letters required by or incident to such performance and
compliance) and (F) the fees and expenses incurred in connection with the
listing of the shares covered by the Piggyback Registration Statement on the
Nasdaq Stock Market, Inc. or any other stock exchange or dealer quotation system
on which the Allscripts Common Stock shall at such time be listed or traded
(collectively, the "Expenses"). To the extent that any Expenses are incurred,
assumed or paid by IDX or any underwriter of shares covered by the Piggyback
14
Registration Statement, Allscripts shall reimburse IDX for the full amount of
the Expenses so incurred, assumed or paid promptly after receipt of a written
request therefor, which shall specify in reasonable detail the nature and amount
of the Expenses. Notwithstanding the foregoing, IDX shall pay, or cause to be
paid, as appropriate, (A) all underwriting discounts and commissions
attributable to the sale of the shares covered by the Piggyback Registration
Statement by or on behalf of IDX, (B) the fees, disbursements and expenses of
its counsel in connection with the offering and sale of such shares and (C) all
transfer taxes applicable to the sale of such shares.
2.5 VOTING OF IDX SHARES. Except as provided below, during
the term of this Agreement, IDX and its Affiliates shall be entitled to vote on
all matters all of its or their IDX Shares in its or their complete discretion.
Notwithstanding the foregoing, IDX and its Affiliates shall vote all such shares
in accordance with the recommendation of the majority of the Allscripts
Continuing Directors on any matter that (i) constitutes a Allscripts Business
Combination Transaction, (ii) would involve a change of control of Allscripts
(for purposes of this section a change in control shall mean the acquisition by
a Person other than IDX or its Affiliates of Beneficial Ownership of more than
50% of the then outstanding Allscripts Voting Shares), (iii) involves the
issuance by Allscripts of securities for its own account for cash, or (iv)
involves any acquisition by Allscripts, whether through merger, share exchange,
purchase of assets or otherwise unless (A) the average of the Per Share Market
Value for Allscripts's Common Stock for the 90 Trading Days immediately
preceding (and excluding) the date on which the matter is voted upon is less
than $_____ per share (such amount to be appropriately adjusted to give effect
to stock splits, reverse splits, stock dividends, reclassifications and share
exchanges since the date hereof) and (B) there shall exist no continuing and
uncured default by IDX of any of its obligations under this Agreement, the
Merger Agreement, [the Strategic Alliance Agreement or the Cross License
Agreement (as such terms are defined in the Merger Agreement)], which default
shall have resulted in a material adverse effect on the business, properties,
results of operations, prospects, condition (financial or otherwise) or Per
Share Market Value of Allscripts's Common Stock in which case, if both
conditions described in subclauses (A) and (B) are satisfied, IDX and its
Affiliates shall be entitled to vote on each matter described in the foregoing
clauses (i) through (iv) all of its or their IDX Shares in its or their complete
discretion.
2.6 RIGHT TO PARTICIPATE IN CERTAIN ISSUANCES BY
ALLSCRIPTS.
(a) If, when, and for so long as, IDX and its Affiliates
Beneficially Own shares of Allscripts Common Stock that would constitute, after
giving effect to the proposed transaction (but not prior to the proposed
transaction), less than the Applicable Percentage of the then outstanding shares
of Allscripts Common Stock, Allscripts shall not issue any shares of Allscripts
Common Stock or any Allscripts Exchangeable Securities, for any consideration or
in any type of transaction, unless Allscripts shall have first complied with, in
the case of an issuance other than pursuant to Public Offering, the provisions
of Section 2.6(b) or, in the case of a Public Offering, the provisions of
Section 2.6(c).
(b) If Allscripts determines to issue any shares of
Allscripts Common Stock or any Allscripts Exchangeable Security, other than in a
Public Offering, then Allscripts shall provide written notice of such
determination to IDX, which notice shall include all the terms of such issuance
15
and shall offer to IDX the right to purchase, at the same price and on the same
terms as Allscripts proposes to issue such shares of Allscripts Common Stock or
Allscripts Exchangeable Security to others (or, if Allscripts proposes to issue
such shares of Allscripts Common Stock or any Allscripts Exchangeable Security
other than for cash, at a cash price equal to the current market price of the
Allscripts Common Stock or if a Allscripts Exchangeable Security, such value to
be determined by agreement between Allscripts or IDX, or if the parties are
unable to agree, by an investment banking firm or other asset valuation firm of
national reputation selected by IDX from Schedule I attached hereto (as such
Schedule I may be amended in writing from time to time by both Allscripts and
IDX) with the consent of a majority of the Allscripts Continuing Directors,
which consent shall not be unreasonably withheld, the cost of which shall be
borne by Allscripts) a number or amount of the shares of Allscripts Common Stock
or Allscripts Exchangeable Securities proposed to be issued determined by
dividing the aggregate number of outstanding shares of Allscripts Common Stock
then Beneficially Owned by IDX by the total number of shares of Allscripts
Common Stock then outstanding (the "Offer Notice"). If IDX determines to accept
the offer contained in the Offer Notice, IDX shall deliver a written notice to
Allscripts indicating its acceptance within 10 days after its receipt of the
Offer Notice, which notice shall indicate whether IDX has accepted such offer in
whole or in part, and, if accepted in part, the number or amount of shares of
Allscripts Common Stock or Allscripts Exchangeable Securities as to which such
offer has been accepted (an "Acceptance Notice"). Any acceptance of the offer
contained in an Offer Notice by delivery of an Acceptance Notice shall be
irrevocable and shall constitute a commitment by IDX to purchase from
Allscripts, and by Allscripts to sell to IDX, the number or amount of shares of
Allscripts Common Stock or Allscripts Exchangeable Securities covered by such
Acceptance Notice upon the terms contained in the Offer Notice.
1. If at any time and from time to time, (i) Allscripts determines to
issue any Allscripts Voting Shares or any Allscripts Exchangeable
Security in a Public Offering, and (ii) as a result thereof IDX and its
Affiliates would Beneficially Own less than the Applicable Percentage
of the then to be outstanding Allscripts Voting Shares, then (A)
Allscripts shall provide written notice of such determination to IDX,
which notice shall include the proposed size and other terms of such
issuance, to the extent then known, the name or names of any managing
underwriter or placement agent(s) and the date when it is proposed that
any such issuance will be made, and (B) Allscripts shall either sell
directly or cause the underwriters or placement agent(s) to offer to
IDX the right to purchase from Allscripts directly or from the
underwriters or placement agent(s), at the applicable offering price, a
number or amount of the Allscripts Voting Shares, Allscripts
Exchangeable Securities or other securities proposed to be issued that,
if purchased by IDX, would permit IDX and its Affiliates to
Beneficially Own a number of Voting Shares determined by dividing the
aggregate number of outstanding shares of Allscripts Common Stock then
Beneficially Owned by IDX by the total number of shares of Allscripts
Common Stock then outstanding.
16
3. RESTRICTIONS ON TRANSFER. From and after the date of
Closing and until the expiration of the six month period following the Closing,
R.E.T. shall not Transfer any shares of Common Stock Beneficially Owned by
R.E.T. in his individual capacity, unless and until such time as Glen E. Tullman
("G.E.T.") shall Transfer any shares of Common Stock Beneficially Owned by
G.E.T. in his individual capacity.
4. STOCK CERTIFICATES AND OTHER RESTRICTIONS.
4.1 ENDORSEMENT OF CERTIFICATES.
(a) All certificates representing IDX Shares shall, subject
to Section 4.1(c), bear the following legend:
"THIS CERTIFICATE IS SUBJECT TO THE PROVISIONS OF A STOCK
RIGHTS AND RESTRICTIONS AGREEMENT BETWEEN ALLSCRIPTS
HOLDING, INC. AND IDX SYSTEMS CORPORATION DATED AS OF
__________, 2000. A COPY OF SUCH AGREEMENT IS ON FILE AT
THE PRINCIPAL BUSINESS OFFICE OF ALLSCRIPTS."
(b) After such time as the legend set forth in Section
4.1(a) is no longer required hereunder (including without limitation as a result
of the termination of this Agreement in accordance with its terms) or if the
securities represented by a certificate have been registered under the
Securities Act pursuant to an effective registration statement or are to be sold
pursuant to Rule 144, or if Allscripts shall have been furnished with an opinion
of counsel, which opinion shall be reasonably satisfactory to counsel for
Allscripts, that registration under the Securities Act is not required, as the
case may be, then, in any such event, upon the request of IDX, Allscripts shall
cause such certificate or certificates to be exchanged for a certificate or
certificates that do not bear any legend.
4.2 IMPROPER TRANSFER. Any attempt by IDX or its Affiliates
to Transfer any IDX Shares other than in accordance with this Agreement shall be
null and void and neither Allscripts nor any transfer agent for such securities
shall be required to give any effect to such attempted Transfer in its stock
records.
5. GENERAL PROVISIONS.
5.1 REPRESENTATIONS AND WARRANTIES.
(a) Allscripts represents and warrants to IDX that (i)
Allscripts is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder, (ii) the execution and delivery of this Agreement by Allscripts and
the consummation by Allscripts of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Allscripts and
no other corporate proceedings on the part of Allscripts are necessary to
authorize this Agreement or any of the transactions contemplated hereby, and
(iii) this Agreement has been duly executed and delivered by Allscripts and
constitutes a valid and binding obligation of Allscripts, and, assuming this
17
Agreement constitutes a valid and binding obligation of IDX, is enforceable
against Allscripts in accordance with its terms, subject to applicable
bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance and
similar laws affecting creditors' rights generally from time to time and to
general principles of equity.
(b) IDX represents and warrants to Allscripts that (i) IDX
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Vermont and has the corporate power and authority to enter
into this Agreement and to carry out its obligations hereunder, (ii) the
execution and delivery of this Agreement by IDX and the consummation by IDX of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of IDX and no other corporate proceedings on the
part of IDX are necessary to authorize this Agreement or any of the transactions
contemplated hereby, and (iii) this Agreement has been duly executed and
delivered by IDX and constitutes a valid and binding obligation of IDX, and,
assuming this Agreement constitutes a valid and binding obligation of
Allscripts, is enforceable against IDX in accordance with its terms, subject to
applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent
conveyance and similar laws affecting creditors' rights generally from time to
time and to general principles of equity.
5.2 AMENDMENT AND MODIFICATION; WAIVER OF COMPLIANCE. This
Agreement may be amended or waived only by written instrument duly executed by
the parties. In the event of the amendment or modification of this Agreement in
accordance with its terms, the Board of Directors of Allscripts shall adopt any
amendment to the Bylaws of Allscripts that may be required as a result of such
amendment or modification to this Agreement, and, if required, shall propose any
amendment to the Certificate of Incorporation that may be required as a result
of such amendment or modification to this Agreement to the Allscripts
stockholders entitled to vote thereon at a meeting duly called and held for such
purpose, and shall recommend that the Allscripts stockholders vote in favor of
such amendment to the Certificate of Incorporation.
5.3 INJUNCTIVE RELIEF. Each of the parties hereto hereby
acknowledges that in the event of a breach by any of them of any material
provision of this Agreement, the aggrieved party may be without an adequate
remedy of law. Each of the parties therefore agrees that in the event of a
breach of any material provision of this Agreement the aggrieved party may elect
to institute and prosecute proceedings in any court of competent jurisdiction to
enforce specific performance or to enjoin the continuing breach of such
provision, as well as to obtain damages for breach of this Agreement. By seeking
or obtaining any such relief, the aggrieved party will not be precluded from
seeking or obtaining any other relief to which it may be entitled in equity or
at law.
5.4 BYLAWS. At all times while this Agreement shall be in
effect, Allscripts shall cause its Bylaws to conform to the provisions of this
Agreement, including by causing its Bylaws to be amended.
5.5 NO ADOPTION OR AMENDMENT OF RIGHTS PLAN. During the
term of this Agreement, Allscripts's Board of Directors shall not adopt any
shareholder rights plan or amend any rights plan without the approval of the IDX
Designee then on the Board of Directors of Allscripts unless such plan exempts
IDX and its Affiliates from all effects thereof.
18
5.6 GOVERNING LAW. This Agreement and the legal relations
between the parties shall be governed by and construed in accordance with the
laws of the State of Delaware, without regard to the principles of conflicts of
law thereof.
5.7 TERMINATION.
(a) This Agreement may be terminated:
(i) by the mutual written consent of the parties hereto;
and
(ii) by IDX if (A) Allscripts shall seek relief under any
bankruptcy, insolvency, receivership, custodianship, trusteeship, liquidation,
reorganization, composition, readjustment, moratorium or similar law (an
"Insolvency Law"); or (B) a proceeding or case shall be commenced under an
Insolvency Law by a third party against Allscripts and such proceeding or case
shall continue undismissed or unstayed for 60 days; or (C) an order for relief
under an Insolvency Law shall be entered against Allscripts.
(b) Unless this Agreement shall have been earlier
terminated as provided in Section 5.7(a), this Agreement shall terminate on the
10th anniversary of the date of this Agreement.
5.8 NOTICES. All notices, requests, demands or other
communications required or permitted by this Agreement shall be in writing and
effective when received, and delivery shall be made personally or by registered
or certified mail, return receipt requested, postage prepaid, or overnight
courier or confirmed facsimile transmission, addressed as follows:
(a) If to Allscripts:
Allscripts, Inc.
2401 Commerce Drive
Libertyville, IL 60048
Telephone: (847) 680-3515
Facsimile: (847) 680-3573
Attention: President
with a copy to:
Weil, Gotshal & Manges LLP
700 Louisiana Street, Suite 1600
Houston, Texas 77002
Attention: James L. Rice III
Fax: (713) 224-9511
(b) If to IDX:
IDX Systems Incorporated
1400 Shelburne Road
South Burlington, VT 05403
Telephone: (802) 862-1022
Facsimile: (802) 865-3681
Attention: General Counsel
19
with a copy to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Attention: Virginia Kapner
Fax: (617) 526-5000
5.9 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the fullest extent
possible.
5.10 ENTIRE AGREEMENT. Except as otherwise expressly stated
herein, this Agreement constitutes the entire agreement among the parties with
respect to the subject matter hereof and supersedes all prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof. Except for the Permitted Transfers to IDX
and Affiliates of IDX and except as otherwise expressly permitted or
contemplated herein, the rights and obligations under this Agreement shall not
be assigned by operation of law or otherwise. Nothing in this Agreement shall be
construed as prohibiting Allscripts from effecting a merger, consolidation or
other similar transaction with another entity, provided that (i) the operative
terms of this Agreement shall be applied in respect of any such transaction and
(ii) under the express terms of such transaction this Agreement will be
continued in effect by Allscripts or any successor thereto.
5.11 PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto and to IDX and the
Affiliates of IDX if they receive permitted Transfers in accordance with this
Agreement. Nothing in this Agreement, express or implied, is intended to or
shall confer upon any other Person any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement, except as expressly
otherwise contemplated herein.
5.12 HEADINGS. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
5.13 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
20
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
ALLSCRIPTS HOLDING, INC.
By:
Name:
Title:
IDX SYSTEMS CORPORATION
By:
Name:
Title:
Richard E. Tarrant (solely with
respect to Section 3 of this Agreement)
21
SCHEDULE I
LIST OF ACCEPTABLE INVESTMENT BANKING FIRMS
1. Goldman Sachs & Co.
2. Credit Suisse First Boston Corporation
The above list may be revised from time to time by a written
instrument signed by both Allscripts and IDX.
22
SCHEDULE II
LIST OF ACCEPTABLE ALLSCRIPTS MARKET MAKERS
1. [ ]
2. [ ]
3. [ ]
The above list may be revised from time to time by Allscripts in its
sole discretion by a written instrument signed by Allscripts, a copy of which
will be furnished to IDX.
23
EXHIBIT F
FORM OF
AMENDED AND RESTATED CROSS LICENSE
AND
SOFTWARE MAINTENANCE AGREEMENT
THIS AGREEMENT is made and entered into as of the ____day of July
2000, by and between IDX SYSTEMS CORPORATION, a Vermont corporation, with
offices at 1400 Shelburne Road, South Burlington, Vermont 05403 ("IDX"), and
CHANNELHEALTH, INCORPORATED, a Delaware corporation with offices at 25 Green
Mountain Drive, South Burlington, Vermont 05403.
BACKGROUND
IDX and ChannelHealth entered into that certain Cross License and
Software Maintenance Agreement dated January 1, 2000.
ChannelHealth is in the business of, among other things, developing
and marketing products and services known as the "Physician Channel" to automate
the delivery of office-based clinical care, the "Patient Channel" to automate
communication between physicians and their patients, and the "eCommerce Channel"
to automate aspects of claims and payments for healthcare.
IDX is interested in retaining the eCommerce Channel business and
certain components of the Patient Channel business and in divesting the
Physician Channel business. Allscripts, Inc., a Delaware corporation
("Allscripts") is interested in acquiring the Physician Channel business of
ChannelHealth.
Concurrently herewith, (i) IDX and ChannelHealth have entered into
Asset Purchase Agreement whereby IDX shall acquire the assets and assume the
liabilities associated with the eCommerce Channel business and certain
components of the Patient Channel business, (ii) IDX and Allscripts have entered
into an agreement whereby ChannelHealth shall become a subsidiary of Allscripts
or a successor of Allscripts, and (iii) IDX and Allscripts have entered into a
Strategic Alliance Agreement whereby they shall cooperatively develop and market
integrated office practice management and clinical management systems.
IDX and ChannelHealth desire to restate and supersede the License
Agreement to reflect (i) the conveyance by ChannelHealth of the eCommerce
Channel business and certain components of the Patient Channel, and (ii) the
conveyance of certain intellectual properties related to the Physician Channel
by IDX to ChannelHealth.
IN CONSIDERATION of the premises, the mutual covenants and agreements
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. CONTINGENCY
This Agreement is contingent and shall become effective only at the
Effective Time and shall terminate in the event of the termination of the Merger
Agreement.
2. SCOPE AND EFFECT
From and after the Effective Time, each party shall be relieved from
all obligations to perform the License Agreement that shall have arisen from and
after the Effective Time, but this Agreement shall not relieve any party to the
License Agreement from any obligation that shall have arisen prior to the
Effective Time. Except for any such obligations, this Agreement shall supersede
the License Agreement.
3. DEFINITIONS
The capitalized terms used in this Agreement shall have the meanings
ascribed to them on Schedule 1 attached hereto.
4. IDX LICENSE GRANTS AND CONVEYANCE OF INTELLECTUAL PROPERTY
As of the Effective Time, IDX grants licenses to ChannelHealth and
makes conveyances of intellectual property to ChannelHealth as set forth in this
Section 4, all of which shall for the purposes of this Agreement be deemed
effective as of the Closing Date.
4.1 In General. IDX hereby grants to ChannelHealth a perpetual (except as
set forth in Section 4.2), non-exclusive, non-cancellable and
non-teminable, fully paid-up license (i) to copy, use, display,
perform, adapt, modify, create derivative works of, and maintain the
IDX Software, in whole or in part, solely for the purpose of Merging
the IDX Software into Allscripts Products, (ii) to market and
sublicense (including through one or more Distribution Partners), and
in connection therewith to copy, use, distribute, perform, and
display the IDX Software, in whole or in part, only as the IDX
Software may be Merged into Allscripts Products, and (iii) to use and
practice the IDX Licensed Technology to accomplish the purposes set
forth in clauses (i) and (ii) of this Section 4.1.
4.2 Subject to Section 4.4.3, IDX shall make no claim to any derivative
works developed by or on behalf of ChannelHealth pursuant to Section
4.1.
4.3 New Enabling Technologies. Upon the Termination and/or nonrenewal of
the Strategic Alliance Agreement, the licenses granted to
ChannelHealth shall terminate with respect to all New Enabling
Technologies, except for New Enabling Technologies embodied in the
Web FrameWork and ConnectR. From and after such termination,
ChannelHealth shall not use any New Enabling Technologies for any
purpose other than to create or maintain compatibility or
connectivity between Allscripts Products and IDX Products.
2
4.4 Ownership, Patent Prosecution and Enforcement.
4.4.1 IDX hereby transfers and assigns to ChannelHealth all of its
copyrights in and to the products known as CMS and the Physician
Channel. IDX shall execute an assignment in the form attached hereto
as Exhibit 4.4.1 to effectuate and confirm such assignment.
4.4.2 Except for the rights expressly granted herein to ChannelHealth, IDX
reserves and retains all right, title and interest (including without
limitation patents and copyrights) in, the IDX Licensed Technology,
the Virtual Office, Health Resources, the eCommerce Channel,
DietSite, and all customizations, additions, modifications, changes,
enhancements, improvements, and derivative works thereof made by IDX
or on behalf of IDX, and all rights therein and copies thereof.
4.4.3 IDX reserves and retains all right, title and interest to any and all
patentable inventions made, conceived, or reduced to practice by IDX,
including without limitation by IDX personnel, employees or
contractors, whether in whole or in part, both before and after the
Reference Date. ChannelHealth agrees to cooperate in every reasonable
way with IDX, at IDX's cost, to prosecute patent applications for
such inventions and to perfect IDX's right, title and interest in and
to such inventions and patent applications. The parties agree and
acknowledge that certain ChannelHealth personnel were IDX employees,
or were otherwise associated with IDX, before the Reference Date, and
ChannelHealth agrees to cooperate in every reasonable way with IDX to
prosecute patent applications for such inventions and to perfect
IDX's right, title and interest in and to such inventions and patent
applications.
4.4.4 ChannelHealth reserves and retains all right, title and interest to
any and all patentable inventions with claims in part or wholely
directed to inventions embodied in, or necessary to implement and
practice the Physician Channel alone, or in combination with any
other product or service made, conceived, or reduced to practice by
ChannelHealth, including without limitation by ChannelHealth
personnel, employees or contractors.
4.4.5 In the event IDX does not wish to prosecute a patent application for
an invention owned by IDX, and directed to, embodied in, or necessary
to implement and practice the Physician Channel, ChannelHealth may
elect to prosecute that application at its expense.
4.4.6 If IDX decides not to enforce any issued patent with claims claims in
part or wholely directed to inventions embodied in, or necessary to
implement and practice the Physician Channel alone, or in combination
with any other product or service, ChannelHealth may at its sole
expense request that either IDX, at its sole discretion, either bring
an action for infringement against the alleged infringing party or
parties,or, assign sufficient rights in the patent to ChannelHealth
to enable ChannelHealth to have standing to enforce the patent on its
own.
3
4.5 Limitations, Restrictions, and Conditions. The licenses granted to
ChannelHealth hereunder are subject to the following limitations,
restrictions, and conditions:
4.5.1 Distribution Pursuant to Strategic Alliance Agreement.
During the Initial Term of the Strategic Alliance
Agreement, ChannelHealth's use of the IDX Licensed
Technology or any part thereof, including as Merged into
Allscripts Products, is governed the Strategic Alliance
Agreement. This restriction shall not apply following the
Initial Term or the termination of the Strategic Alliance
Agreement.
4.5.2 ChannelHealth shall have the right to use internally IDX
Database Information only in connection with the
Integration Methods, so long as such use does not induce
disclosure of IDX Database Information to any Person not a
party to this Agreement. At no time shall ChannelHealth
license or authorize any Person to use any Integration
Method or to use any IDX Database Information to exchange
data between any IDX products and any products of any
Person not a party to this Agreement. The foregoing shall
not prohibit or restrict ChannelHealth from (i) providing
any Allscripts Products to any ChannelHealth Customer
using any Integration Method to provide installation
services with respect to such ChannelHealth Customer or
using IDX Database Information, in each case solely for
the benefit of such Customer in using Allscripts Products,
or (ii) using contractors as set forth in Section 4.5.4.
4.5.3 ChannelHealth may permit third parties to provide to
ChannelHealth or ChannelHealth Customers maintenance,
disaster recovery, facilities management, outsourcing or
other services involving access to the IDX Licensed
Technology only if such third parties in each instance
shall execute written nondisclosure and non-use agreements
with ChannelHealth, in form and substance reasonably
satisfactory to IDX and ChannelHealth, prior to using or
gaining access to the IDX Licensed Technology.
4.5.4 ChannelHealth may adapt, modify, merge, and maintain the
IDX Licensed Technology as permitted under this Agreement
through its own employees or through independent
contractors, provided each such independent contractor
shall in each instance execute a written nondisclosure and
non-use agreement with ChannelHealth, in form and
substance reasonably satisfactory to IDX and
ChannelHealth, prior to gaining access to the Source Code.
4.5.5 ChannelHealth may not indicate that any portion of the IDX
Licensed Technology originated from IDX, except with IDX's
prior written consent, except as may be otherwise
expressly set forth in the Strategic Alliance Agreement.
4.6 Certain Terms of Third Party Agreements for IDX Licensed Technology.
ChannelHealth shall not allow the use of or access to the IDX
Licensed Technology by any third party (including a Distribution
Partner) unless such party has signed and delivered to ChannelHealth
an agreement restricting use of such IDX Licensed Technology in a
4
manner consistent with this Agreement, and ChannelHealth shall use
reasonable efforts to include language substantially similar to the
following in any such third party agreements:
IN NO EVENT SHALL COMPANY'S [ChannelHealth's] SUPPLIERS AND
LICENSORS BE LIABLE FOR ANY DAMAGES OF ANY KIND OR NATURE,
INCLUDING DIRECT, INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL, ARISING OUT OF THE USE OF ANY
SOFTWARE SUPPLIED BY COMPANY, ITS SUPPLIERS OR LICENSORS. THE
LICENSEE UNDERSTANDS AND AGREES THAT THE SOFTWARE PROVIDED BY
COMPANY [ChannelHealth] TO LICENSEE CONTAINS SOFTWARE THAT IS
THE COPYRIGHTED PRODUCT AND A TRADE SECRET OF COMPANY
[ChannelHealth] OR ITS SUPPLIERS AND LICENSORS, AND THAT
LICENSEE WILL NOT USE ANY SUCH SOFTWARE IN VIOLATION OF THE
RESTRICTIONS CONTAINED IN THIS AGREEMENT AND WILL NOT DISCLOSE
THE SOFTWARE TO ANYONE OTHER THAN ITS EMPLOYEES OR AGENTS AS
REASONABLY NECESSARY FOR THE PURPOSE OF THIS AGREEMENT AND ON
THE CONDITION THAT IT ACCEPTS FULL RESPONSIBILITY FOR ANY BREACH
HEREOF BY ANY SUCH INDIVIDUAL. THE FOREGOING AGREEMENTS ARE FOR
THE EXPRESS BENEFIT OF COMPANY [ChannelHealth], ITS SUPPLIERS
AND LICENSORS, AND MAY BE ENFORCED BY COMPANY [ChannelHealth],
AND ITS SUPPLIERS AND LICENSORS.
4.7 Delivery. As of the Reference Date, IDX has delivered one copy (in
both object code and Source Code forms) of each component of the IDX
Licensed Technology.
4.8 IDX Names and Marks. ChannelHealth may not use any IDX Names or Marks
in connection with ChannelHealth's Business or otherwise, except as
may be expressly set forth in the Strategic Alliance Agreement.
4.9 Bankruptcy. All rights and licenses granted under or pursuant to this
Agreement by IDX to ChannelHealth are, and shall otherwise be deemed
to be, for purposes of Section 365(n) of the United States Bankruptcy
Code (the "Code"), licenses to rights to "intellectual property" as
defined in the Code. The parties agree that ChannelHealth, as
licensee of such rights under this Agreement, shall retain and may
fully exercise all of its rights and elections under the Code. The
parties further agree that, in the event of the commencement of
bankruptcy proceeding by or against IDX under the Code, ChannelHealth
shall be entitled to retain all of its rights under this Agreement.
5
5. LIMITED WARRANTIES OF IDX
Except for the Warranties made in the Merger Agreement, there are NO
WARRANTIES made by IDX in connection with the subject matter of this Agreement.
The warranties of IDX set forth below are made only to ChannelHealth and shall
be true as of the Reference Date. ChannelHealth acknowledges that, except for
the express warranties set forth in this Section 5, it has accepted the license
and delivery of the IDX Licensed Technology "AS IS" and "WITH ALL FAULTS." With
respect to Software Updates and Support Services the warranties are as follows:
5.1 Encumbrances. The IDX Software Updates shall be free and clear of all
liens, restrictions, claims, charges, security interests, or other
encumbrances of any nature whatsoever which might affect or adversely
impact on ChannelHealth's use of the IDX Software Updates as
permitted under this Agreement.
5.2 Ownership; Right to License. IDX owns or otherwise has adequate
rights to make the grants of the licenses to the IDX Software Updates
to ChannelHealth hereunder and possesses all rights and interests in
the IDX Software Updates necessary to enter into this Agreement.
5.3 No Infringement. IDX Software Updates and all components thereof do
not infringe upon the intellectual property rights, including without
limitation the patent, copyright, trademark or trade secret rights,
of any third parties. The sole and exclusive remedy for breach of
this warranty shall be as set forth in Section 9.1.
6. CHANNELHEALTH LICENSE GRANTS AND CONVEYANCE OF INTELLECTUAL PROPERTY
ChannelHealth grants licenses to IDX as set forth in this Section 6.
6.1 License to ChannelHealth Licensed Technology. ChannelHealth hereby
grants to IDX a perpetual, non-exclusive, non-cancellable and
non-terminable, fully paid-up license to copy, use, display, perform,
market, sublicense, transmit, create and own derivative works, and
distribute (including through one or more Distribution Partners) all
or any portion of the ChannelHealth Licensed Technology the use of
which is limited to use with the Patient Channel.
6.2 Delivery. ChannelHealth shall deliver one copy (in both object code
and Source Code forms) of each component of the ChannelHealth
Licensed Technology.
6.3 Bankruptcy. All rights and licenses granted under or pursuant to this
Agreement by ChannelHealth to IDX are, and shall otherwise be deemed
to be, for purposes of Section 365(n) of the United States Bankruptcy
Code (the "Code"), licenses to rights to "intellectual property" as
defined in the Code. The parties agree that IDX, as licensee of such
rights under this Agreement, shall retain and may fully exercise all
of its rights and elections under the Code. The parties further agree
6
that, in the event of the commencement of bankruptcy proceeding by or
against ChannelHealth under the Code, IDX shall be entitled to retain
all of its rights under this Agreement.
7. LIMITED WARRANTIES OF CHANNELHEALTH
Except for the warranties made in the Merger Agreement, there are NO
WARRANTIES made by ChannelHealth in connection with the subject matter of this
Agreement. The warranties of ChannelHealth set forth below are made only to IDX
and shall be true as of the Reference Date. IDX acknowledges that, except for
the express warranties set forth in this Section 7, it has accepted the license
and delivery of the ChannelHealth Licensed Technology "AS IS" and "WITH ALL
FAULTS." With respect to Software Updates and Support Services the warranties
are as follows:
7.1 Encumbrances. The ChannelHealth Software Updates shall be free and
clear of all liens, restrictions, claims, charges, security
interests, or other encumbrances of any nature whatsoever which might
affect or adversely impact on IDX's use of the ChannelHealth Software
Updates as permitted under this Agreement.Performance.
7.2 Ownership; Right to License. ChannelHealth owns or otherwise has
adequate rights to make the grants of the licenses to the
ChannelHealth Software Updates to IDX hereunder and possesses all
rights and interests in the ChannelHealth Software Updates necessary
to enter into this Agreement.
7.3 No Infringement. ChannelHealth Software Updates and all components
thereof do not infringe upon the intellectual property rights,
including without limitation the patent, copyright, trademark or
trade secret rights, of any third parties. The sole and exclusive
remedy for breach of this warranty shall be as set forth in Section
9.1.
8. SUPPORT AND SERVICES
8.1 IDX Support. During the IDX Support Term, IDX shall provide to
ChannelHealth IDX Software Maintenance and IDX Software Updates on a
timely basis. IDX shall have no obligation to provide any services to
support, maintain or update CMS.
8.2 ChannelHealth Support. During the ChannelHealth Support Term,
ChannelHealth shall provide ChannelHealth Maintenance and
ChannelHealth Updates on a timely basis.
8.3 Implementation and Consulting. Each party will provide services for
customer specific implementation work and consulting services to the
other party at the then current consulting rate for the party.
8.4 Level of Support. Each party will further provide the other with the
same level of support that is offered to its customers for the
specific product for which support is requested.
7
9. INDEMNIFICATION
9.1 IDX Indemnity.
9.1.1 Indemnification Obligations. IDX, at its own expense,
shall defend, hold harmless and indemnify ChannelHealth,
its officers, directors, employees, agents, successors,
affiliates, and assigns, from and against any and all
loss, damages, expenses (including attorneys' fees)
arising from claims of third parties: (a) that the IDX
Software Updates, or any component thereof, whether used
alone or in combination with any other item as intended,
designed, suggested or induced by IDX or its agents,
infringes or violates any patents, copyrights, trademarks,
trade secrets, licenses, or other proprietary rights of
any third party, ChannelHealth may, at its own expense,
assist in such defense if it so chooses, provided that IDX
shall control such defense and all negotiations relative
to the settlement of any such claim. IDX shall not settle
any claim that adversely affects any rights of
ChannelHealth without ChannelHealth's prior written
consent. ChannelHealth shall promptly provide IDX with
written notice of any claim that ChannelHealth believes
falls within the scope of this Section. At any time after
IDX becomes aware of any such claim under subsection (a)
herein, or in the event that the IDX Licensed Technology,
the IDX Software, or any portion thereof, is held to
constitute an infringement or its use is enjoined, IDX
shall have the option at its own expense to: (i) modify
the infringing item without impairing in any material
respect the functionality or performance, so that it is
non-infringing; (ii) procure for ChannelHealth the right
to continue to use the infringing item; or (iii) replace
the infringing item with an equally suitable,
non-infringing item.
9.1.2 Exceptions. IDX's obligations to indemnify as set forth in
this Section shall not apply to any claim to the extent
that it arises from (i) any modifications, changes,
additions, or enhancements to the IDX Software Updates
that have not been made directly by IDX or have not been
made at its express direction or under its direct
oversight, control or supervision, (ii) any such
modifications made by IDX at the request or to the
specification of ChannelHealth, ChannelHealth's Customers,
or any of their agents.
9.2 ChannelHealth Indemnity.
9.2.1 Indemnification Obligations. ChannelHealth, at its own
expense, shall defend, hold harmless and indemnify IDX,
its officers, directors, employees, agents, successors,
affiliates, and assigns, from and against any and all
loss, damages, expenses (including attorneys' fees)
arising from claims of third parties: (a) that the
ChannelHealth Updates, or any component thereof, whether
8
used alone or in combination with any other item as
intended, designed, suggested or induced by ChannelHealth
or its agents, infringes or violates any patents,
copyrights, trademarks, trade secrets, licenses, or other
proprietary rights of any third party,.
9.2.2 Exceptions. ChannelHealth's obligations to indemnify as
set forth in this Section shall not apply to any claim to
the extent that it arises from (i) any modifications,
changes, additions, or enhancements to the ChannelHealth
Updates that have not been made directly by ChannelHealth
or have not been made at its express direction or under
its direct oversight, control or supervision, (ii) any
such modifications made by ChannelHealth at the request or
to the specification of IDX or any of its agents, or (iii)
the use of the ChannelHealth Updates in combination with
any other item, or in any system or method adopted,
permitted, induced, contributed to, or otherwise used by
IDX or IDX Customers that is not marketed, recommended,
enabled, contributed to, or otherwise directly or
indirectly suggested by ChannelHealth.
10. LIMITATION OF LIABILITY.
NEITHER PARTY SHALL BE LIABLE TO THE OTHER EXCEPT FOR (I)
INDEMNIFICATION OBLIGATIONS PURSUANT TO SECTION 9 OF THIS AGREEMENT, (II)
THIRD-PARTY CLAIMS FOR PROPERTY DAMAGE, PERSONAL INJURY OR DEATH, AND OTHER
CLAIMS FOR WHICH EITHER PARTY MAY BE ENTITLED TO INDEMNIFICATION OR CONTRIBUTION
FROM THE OTHER PURSUANT TO THIS AGREEMENT OR AS A MATTER OF LAW, AND (III) ANY
MATERIAL BREACH BY EITHER PARTY OF ANY WARRANTY SET FORTH IN SECTIONS 5 AND 7 OF
THIS AGREEMENT.
11. TERMINATION.
This Agreement shall terminate and be of no force and effect
whatsoever upon the termination of the Merger Agreement.
12. CONFIDENTIALITY.
12.1 Confidentiality. IDX will receive or learn from ChannelHealth, and
ChannelHealth's parents, subsidiaries and affiliates, and
ChannelHealth will learn from IDX, and IDX's parents, subsidiaries
and affiliates, information, both orally and in writing, concerning
the business of ChannelHealth or IDX, respectively, including,
without limitation, financial, technical and marketing information,
data, and information related to the development of technology and
services relating to ChannelHealth's and IDX's business, as the case
may be, and the IDX Licensed Technology and Allscripts Products,
which information is, in the case of ChannelHealth, proprietary to
ChannelHealth and, in the case of IDX, proprietary to IDX. Both
parties hereby agree, as set forth below, to protect such
9
information, whether furnished before, on or after the date of this
Agreement, as it protects its own similar confidential information,
but never less than commercially reasonable efforts, and not to
disclose such information to anyone except as otherwise provided for
in this Agreement. Such information, in whole or in part, together
with analyses, compilations, programs, reports, proposals, studies or
any other documentation prepared by the parties, as the case may be,
which contain or otherwise reflect or make reference to such
information, is hereinafter referred to as "Confidential
Information". Both parties hereby agree that the Confidential
Information will be used solely for the purpose of this Agreement and
not for any other purpose. Both parties further agree that any
Confidential Information pertaining to the other party is the sole
and exclusive property of such other party, and that the receiving
party shall not have any right, title, or interest in or to such
Confidential Information except as expressly provided in this
Agreement. Both parties further agree to protect and not to disclose
to anyone (except as provided in this Agreement) for any reason
Confidential Information pertaining to the other party; provided,
however, that: (a) such Confidential Information may be disclosed to
the receiving party's respective officers, directors, employees,
agents, or representatives (collectively, our "Representatives") on a
"need to know" basis for the purpose of this Agreement on the
condition that (i) each such Representative will be informed by the
receiving party of the confidential nature of such Confidential
Information and will agree to be bound by the terms of this Agreement
and not to disclose the Confidential Information to any other person
and (ii) both parties agree to accept full responsibility for any
breach of this Section 9 by its respective Representatives; and (b)
Confidential Information pertaining to the other party may be
disclosed upon the prior written consent of the other party. Both
parties hereby agree, upon the request of the other party, to
promptly deliver to the other party at its cost the Confidential
Information pertaining to such other party, without retaining any
copies thereof. Specifically and without limitation, ChannelHealth
agree to (i) reproduce (and refrain from removing or destroying)
copyright and proprietary rights notices which are placed on the IDX
Licensed Technology or the Allscripts Products, (ii) erase or
otherwise destroy, prior to disposing of media, all portions of IDX
Licensed Technology or the Allscripts Products contained on such
media, and (iii) notify the other party promptly in writing upon any
officer or director learning of any unauthorized disclosure or use of
the IDX Licensed Technology or the Allscripts Products, and
reasonably cooperate with the other party to cure any unauthorized
disclosure or use of the IDX Licensed Technology or the Allscripts
Products. IDX agrees that ChannelHealth's use and distribution of the
IDX Licensed Technology pursuant to and in accordance with the terms
of this Agreement shall not be a violation of this Section 12.1.
12.1 Non-Confidential Information. The term "Confidential Information"
shall not include any information: (i) which at the time of
disclosure or thereafter is generally available to or known by the
public (other than as a result of a disclosure directly or indirectly
by the receiving party); (ii) is independently developed by the
receiving party, without reference to or use of, the Confidential
Information of the other party; (iii) was known by the receiving
party as of the time of disclosure without a breach of
10
confidentiality; (iv) is lawfully learned from a third party not
under obligation to the disclosing party; or (v) is required to be
disclosed pursuant to a subpoena, court order or other legal process,
whereupon the receiving party shall provide prompt written notice to
the other party prior to such disclosure.
13. GENERAL
13.1 Force Majeure. Except as expressly provided to the contrary in this
Agreement, neither party shall be liable to the other for any delay
or failure to perform due to causes beyond its reasonable control.
Performance times shall be considered extended for a period of time
equivalent to the time lost because of any such delay.
13.2 Non-revocation. The licenses, immunities, authorities and agreements
set forth in Sections 4 and 6 hereof, once effective, are not
terminable, cancelable, or revocable.
13.3 Notices. Wherever under this Agreement one party is required or
permitted to give notice to the other, such notice shall be deemed
given when delivered in hand, when telecopied or faxed and receipt
confirmed, when sent by overnight courier service to the address
specified below, or when mailed by United States mail, registered or
certified mail, return receipt requested, postage prepaid, and
addressed as follows: Either party hereto may from time to time
change its address for notification purposes by giving the other
written notice of the new address and the date upon which it will
become effective.
13.4 Governing Law. This Agreement shall be governed by, subject to, and
interpreted in accordance with the laws of the State of Delaware,
without regard to its conflicts of laws principles.
13.5 Severability. In the event any provision hereof shall be deemed
invalid or unenforceable by any court or governmental agency, such
provision shall be deemed severed from this Agreement and replaced by
a valid provision which approximates as closely as possible the
intent of the parties. All remaining provisions shall be afforded
full force and effect.
13.6 No Waiver. No delay or omission by either party hereto to exercise
any right or power hereunder shall impair such right or power or be
construed to be a waiver thereof. A waiver by either of the parties
hereto of any of the covenants to be performed by the other or any
breach thereof shall not be construed to be a waiver of any
succeeding breach thereof or of any other covenant herein contained.
13.7 Further Assurances and Documents. IDX and ChannelHealth shall take
all actions and do all things, including without limitation the
execution and delivery of instruments and documents, necessary to
effectuate the purposes and intent of this Agreement.
13.8 Independent Contractor. In performance of this Agreement, each party
is acting as an independent contractor. Personnel supplied by a party
hereunder are not the other party's personnel or agents, and each
11
party assumes full responsibility for their acts. Each party shall be
solely responsible for the payment of compensation to its employees
and subcontractors assigned to perform services hereunder, and such
employees and subcontractors shall be informed that they are not
entitled to the provision of any employee benefits of the other
party. Neither party shall be responsible for payment of workers'
compensation, disability benefits, unemployment insurance or for
withholding income taxes and social security for any employee or
subcontractor of the other.
13.9 Personnel Rules and Regulations. The personnel and subcontractors of
each party hereto shall comply with the other party's security
regulations particular to each work location, including any
procedures which such party's personnel and other consultants are
normally asked to follow. Personnel and subcontractors, when deemed
appropriate by a party, shall be issued visitor identification cards.
Each such card will be surrendered by such personnel and
subcontractors upon demand of a party. Unless otherwise agreed to by
the parties, the personnel and subcontractors of a party shall
observe the working hours, working rules and holiday schedules of the
other party while working on the other party's premises.
13.10 Assignment. This Agreement shall be binding upon the parties and
their respective successors, representatives and permitted assigns
and their Affiliates, respectively. Neither party may assign this
Agreement without the prior written consent of the other party,
except that either party hereto may assign its rights hereunder to an
Affiliate of such party and either party may, without the consent of
the other party, assign and delegate this Agreement and its rights
and obligations hereunder in connection with a merger, consolidation
or sale of substantially all of its assets (which sale shall include
the assignment and assumption of all rights and obligations under the
License Agreement); provided, however, that such assignee or
transferee shall assume all obligations of the assigning or
transferring party and any such assignment shall not relieve the
assigning or transferring party of its obligations hereunder.
13.11 Availability of Records. IDX and ChannelHealth agree that the
Secretary of the Department of Health and Human Services (the
"Secretary") and the Comptroller General of the United States, or the
designee or duly authorized representative of either of them, shall
have access to all books and records of each party pertaining to the
subject matter of this Agreement and the provisions of services under
it, in accordance with the criteria presently or hereafter developed
by the Department of Health and Human Services as provided in Section
952 of the Omnibus Reconciliation Act of 1980 (the "Act"). Upon
request of the Secretary, the Comptroller General, or the designee or
authorized representative of either of them, IDX and ChannelHealth
shall make available (at reasonable times and places during normal
business hours) this Agreement, and all books, documents and records
of IDX and ChannelHealth that are necessary to verify the nature and
extent of the costs of the services provided by IDX or ChannelHealth
furnished in connection with this Agreement. Notwithstanding the
foregoing provisions, the access to the books, records and documents
of IDX and ChannelHealth and any related organization provided for
herein shall be discontinued and become null and void upon a finding
by a court or quasi-judicial body of competent jurisdiction that this
12
Agreement is outside the scope of the regulatory or statutory
definition of those contracts and agreements included within the
purview of Section 952 of the Act or the rules and regulations
promulgated thereunder.
13.12 Survival. Section 12 shall survive the termination of this Agreement.
13.13 Entire Agreement. This Amended and Restated Cross License and
Software Maintenance Agreement constitutes the entire sum of changes
of any kind or nature to the Agreement, and there are no changes,
representatives, warranties, covenants or obligations of any kind
except as set forth herein. This Amended and Restated Cross License
and Software Maintenance Agreement supersedes all prior and
contemporaneous agreements, understanding, negotiations and
discussions, written or oral, of the parties hereto, relating to any
transaction contemplated by Amended and Restated Cross License and
Software Maintenance Agreement. There have been no changes to any
other agreement entered in to in connection therewith, unless reduced
to writing and made a part of an addendum to such other Agreement.
Except as otherwise especially provided herein, nothing in this
Amended and Restated Cross License and Software Maintenance Agreement
is intended or shall be construed to confer upon or to give any
person other than the parties hereto any rights or remedies under or
by reason of this Amended and Restated Cross License and Software
Maintenance Agreement.
13.14 Binding Effect. This Amended and Restated Cross License and Software
Maintenance Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and
permitted assigns.
13.15 Amendments. This Amended and Restated Cross License and Software
Maintenance Agreement may be amended only in writing executed by the
parties affected by such amendment.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement the
date and year first written above by their fully authorized representatives.
IDX SYSTEMS CORPORATION CHANNELHEALTH INCORPORATED
By:______________________________ By:_______________________________
[Signature of Authorized Agent] [Signature of Authorized Agent]
Print Name and Title: Print Name and Title:
13
SCHEDULE 1
TO
AMENDED AND RESTATED CROSS LICENSE AND SOFTWARE MAINTENANCE AGREEMENT
DEFINITIONS
"ALLSCRIPTS" means Allscripts, Inc., a Delaware corporation.
"AFFILIATE" means, with respect to any specified Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person.
"AGREEMENT" means this Amended and Restated Cross License and Software
Maintenance Agreement, including all schedules, exhibits another items attached
hereto and incorporated by reference herein.
"ALLSCRIPTS PRODUCTS" means the products and services (i) offered by Allscripts
as more fully described in the Development Plan, (ii) the Physician Channel
Products as of the Closing Date and (iii) all of the products and services to be
developed as set forth under the Development Plan.
"CHANNELHEALTH" means Channelhealth Incorporated, a Delaware corporation, its
successors and assigns, and any other entity which, as of the Closing, Controls,
is Controlled by, or is under common Control with ChannelHealth.
"CHANNELHEALTH LICENSED TECHNOLOGY" means (i) the object and Source Code for the
ChannelHealth Works, (ii) ChannelHealth Updates, (iii) the standard, published
editions of textual and graphical works, in whatever form, intended to instruct
users in the use of ChannelHealth Works, and published by ChannelHealth from
time to time during the ChannelHealth Support Term, and (iv) the intellectual
property rights of ChannelHealth, including without limitation patent rights,
copyrights, embodied or contained in the items named in clauses (i) through
(iii).
"CHANNELHEALTH MAINTENANCE" means services to correct errors found in the
ChannelHealth Works and delivered during the ChannelHealth Support Term.
"CHANNELHEALTH SUPPORT TERM" means the period commencing with the Effective Time
and ending on the expiration of the Initial Term of the Strategic Alliance
Agreement or later if renewed as set forth in this Agreement.
"CHANNELHEALTH UPDATES" means all additions, corrections, and modifications to
the ChannelHealth Works provided as part of ChannelHealth Maintenance and all
standard new releases, new versions, and updates to the ChannelHealth Works
delivered by ChannelHealth to its customers generally as part of the
ChannelHealth Works during the ChannelHealth Support Term.
i
"CHANNELHEALTH WORKS" the products and works of ChannelHealth known as "WebWorks
Task Engine", "Task Engine Database", "My Health" and "Patient Messaging (also
known as Secure Messaging)"
"CLINICAL MANAGEMENT SYSTEM" or "CMS" means the product formerly marketed by IDX
under the trademark of "CMS" or "Clinical Management System," including its
predecessor product known as "CRS."
"CLOSING" means the closing of the acquisition by Allscripts of all of the
issued and outstanding capital stock of ChannelHealth pursuant to the Merger
Agreement.
"CLOSING DATE" means the date on which the Closing occurs.
"CONNECTR" means the product currently marketed by IDX under the trademark
"ConnectR."
"CORE APPLICATION" means any software application expressly designed to automate
the business processes of physician billing, physician scheduling, managed care
contract administration, hospital clinical practice, hospital patient
administration, or hospital billing, including by way of example and not in
limitation, as embodied in the products currently marketed by IDX under the
trademarks "IDXtendR," "IDXSite" and "LastWord."
"DIETSITE" means the product consisting of the World Wide Web site on the
Internet at www.dietsite.com, and all content and services available therein,
and all future versions thereof.
"DIRECT COMPETITOR OF IDX" means any Person that develops or markets any Core
Application.
"DISTRIBUTION PARTNER" means any Person that has the right to distribute,
resell, sublicense, license, sell or otherwise provide a party's products or
services, including by way of example and not in limitation, any reseller,
distributor, licensee, customer, contractor, service provider, outsourcing
vendor or other information technology company.
"ECOMMERCE CHANNEL" means the service currently marketed by IDX under the
service mark "eCommerce Channel".
"EFFECTIVE TIME" means the time of completion of the Closing.
"ENTERPRISE INDEX" means the product currently marketed by IDX under the
trademark of "Enterprise Index."
"IDX DATABASE INFORMATION" means information concerning the file structure or
definition of any IDX Products that would be necessary or useful in using
Integration Methods.
ii
"IDX LICENSED TECHNOLOGY" means (i) the IDX Software, including the object and
Source Code therefor, as of the Reference Date, (ii) IDX Software Updates, (iii)
Integration Methods as of the Reference Date, and (iv) the intellectual property
rights of IDX, including without limitation patent rights (including patent
rights owned by IDX with claims in part or wholely directed to inventions
embodied in, or necessary to implement and practice the Physician Channel alone,
or in combination with any other product or service, invented by former IDX
employees that are now ChannelHealth employees), copyrights, and trade secrets
embodied or contained in the items named in clauses (i) through (iii).
"IDX NAMES AND MARKS" means trade names, trademarks, service names and service
marks used by IDX in marketing any of its products and services.
"IDX PRODUCTS" means all products and services offered by IDX from time to time
during the term of this Agreement, whether or not described in the License
Agreement or the Marketing Agreement, including without limitation all (i)
computer software and (ii) computerized or automated products, services,
processes, systems, and methods of any kind or nature.
"IDX SOFTWARE" means (i) the Web FrameWork, (ii) ConnectR, (iii) OutReach, (v)
CMS, (v) Enterprise Index, and (vi) the standard, published editions of textual
and graphical works, in whatever form, intended to instruct users in the use of
the software products named in clauses (i) through (vi) and published by IDX
from time to time during the IDX Support Term.
"IDX SOFTWARE MAINTENANCE" means services to correct errors found in the IDX
Software, except CMS and OutReach, and delivered during the IDX Support Term as
set forth in this Agreement.
"IDX SOFTWARE UPDATES" means all additions, corrections, and modifications to
the IDX Software provided as part of IDX Software Maintenance and all standard
new releases, new versions, and updates to the IDX Software delivered by IDX to
its customers generally as part of the IDX Software during the IDX Support Term.
IDX Software Updates include New Enabling Technologies only to the extent
necessary to achieve compatibility between IDX Products and ChannelHealth Works.
"IDX SUPPORT TERM" means the period commencing with the Effective Time and
ending on the expiration of the Initial Term of the Marketing Agreement or later
if renewed as set forth in this Agreement.
"INTEGRATION METHOD" means any method using any programmatic or computerized
means, such as a program or data interface (including without limitation
OutReach and ConnectR), for extracting or adding to any databases included in
any IDX Product or exchanging any data between any IDX Product and any
ChannelHealth Product.
"MERGE" means the process of merging all or a portion of existing software or
documentation into other software or documentation or adding to existing
software or documentation so that the resulting software or documentation
contains functionality that is substantially more or different from that of the
iii
existing software or documentation. For purposes of illustration, the IDX
Software shall be deemed to have been Merged into the ChannelHealth Division
Works.
"MERGER AGREEMENT" means the agreement by and between Allscripts, ChannelHealth
and IDX executed or intended to be executed concurrently with this Agreement and
the Strategic Alliance Agreement
"NEW ENABLING TECHNOLOGIES" means tools and other means for building products
and integration methods (similar to the Integration Methods) developed by IDX
and incorporated by IDX into IDX Software Updates after the Effective Time.
Examples of New Enabling Technologies that may at IDX's election be embodied in
IDX Software Updates are the items currently referred to by IDX as "IDX
Objects," "IDXml," and "Tabasco."
"OUTREACH" means the product currently marketed by IDX under the trademark
"OutReach."
"PATIENT CHANNEL" means the service currently marketed by ChannelHealth under
the service mark "Patient Channel".
"PERSON" means any individual, partnership, firm, corporation, association,
trust, limited liability company, limited liability partnership, unincorporated
organization or other entity, as well as any syndicate or group that would be
deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of
1934, as amended.
"PHYSICIAN CHANNEL" means the service currently marketed by ChannelHealth under
the service mark "Physician Channel" and the technical components consisting of
CMS, EdiXpress, ChangeWorks, DocWorks, ResultWorks, WebWorks, OrderWorks,
NoteWorks, MedWorks, Physician Homebase and "Project PotatoHead".
"REFERENCE DATE" means January 1, 2000.
"SOURCE CODE" means the human readable programming statements comprising
software, together with such available programmer notes, specifications,
schematics, file definitions (including without limitation IDX Database
Information) and other documentation that would be necessary for a programmer of
ordinary skill to understand, use and Merge the IDX Software.
"STRATEGIC ALLIANCE AGREEMENT" means that certain agreement entitled "Strategic
Alliance Agreement" by and between Allscripts, IDX and ChannelHealth executed or
intended to be executed on the Closing Date.
"WEB FRAMEWORK" means the product currently marketed by IDX under the trademark
"IDX Web FrameWork" and as more fully described in the Development Plan.
iv
EXHIBIT G
Transition Services Term Sheet
IDX-ALLSCRIPTS
- -------------------------------- -----------------------------------------------
Intent 1. Allscripts and IDX want to ensure a
smooth transition and merger of
ChannelHealth with Allscripts.
2. ChannelHealth and IDX wish to
purchase certain services or share
contracts as part of this
transition.
- -------------------------------- -----------------------------------------------
Effective Date 1. The Transition Services Agreement
reflecting these terms shall
commence upon the Closing Date (as
defined in the Merger Agreement)
- -------------------------------- -----------------------------------------------
IDX services to ChannelHealth
at ChannelHealth's election 2. Phone/fax and copy services support
for three months post closing
3. Mail room
4. Receptionist
5. Accounting
6. IS support telecommunications and
network services
- -------------------------------- -----------------------------------------------
IDX Services from ChannelHealth 1. Indy will need to share the Qwest
data center services for Patient
Channel and MyHealth implementations
under way or begun pre-closing.
- -------------------------------- -----------------------------------------------
Financial Terms 1. For services IDX supplies to Charlie
IDX will be paid according to the
existing Administrative Services
Agreement at Fair Market Value,
provided that if the Transition
Services Agreement goes into effect
prior to January 1, 2001. Until
December 31, 2000 IDX will be paid
the full allocation currently paid
by Charlie minus the amount of the
current allocation attributable to
Charlie's usage of IDX's office
space.
2. IDX cost for QWEST services would be
determined on a proportional usage
basis
- -------------------------------- -----------------------------------------------
Term 1. IDX services to ChannelHealth will
continue for not more than three (3)
months after December 31,2000
without agreement of the parties.
2. QWEST services from ChannelHealth to
IDX shall continue as long as
necessary but not to exceed one (1)
year
- -------------------------------- -----------------------------------------------
EXHIBIT H
FORM OF
===============================================================================
LEASE AGREEMENT
BETWEEN
IDX SYSTEMS CORPORATION
AND
ALLSCRIPTS, INC.
DATED AS OF _______ __, 2000
===============================================================================
TABLE OF CONTENTS
Page
----
Section 1.....................................................................5
Section 2.....................................................................6
TERM OF LEASE.................................................................6
- -------------
Section 3. USE OF PREMISES.............................................6
---------------
Section 4. MINIMUM RENT................................................6
------------
Section 5. TENANT'S TAXES...................................................7
--------------
Section 6. REAL ESTATE TAXES AND UTILITIES...................................7
-------------------------------
Section 7. CASUALTY INSURANCE................................................7
------------------
Section 8. LIABILITY INSURANCE.........................................8
-------------------
Section 9. ALTERATIONS.................................................8
-----------
Section 10. REPAIRS, REPLACEMENTS.......................................9
---------------------
Section 11. TENANT TO COMPLY WITH LAWS, ETC............................10
-------------------------------
Section 12. NO WAIVER.......................................................10
---------
Section 13. LANDLORD'S RIGHT OF ACCESS.................................10
--------------------------
Section 14. PRIORITY OF MORTGAGES......................................11
---------------------
Section 15. ASSIGNMENT, SUBLETTING.....................................11
----------------------
Section 16. DAMAGE OR DESTRUCTION......................................11
---------------------
Section 17. EMINENT DOMAIN..................................................12
--------------
Section 18. INDEMNITY.......................................................12
---------
Section 19. EVENTS OF DEFAULT, REMEDIES, DAMAGES............................13
------------------------------------
Section 20. SIGNS...........................................................14
-----
Section 21. BROKER COMMISSIONS..............................................15
------------------
Section 22. ENVIRONMENTAL COVENANTS.........................................15
-----------------------
Section 23. LEASE NOT TO BE RECORDED........................................15
------------------------
Section 24. QUIET ENJOYMENT.................................................15
---------------
Section 25. NOTICES.........................................................16
-------
Section 26. WAIVER OF RULE OF CONSTRUCTION..................................16
------------------------------
Section 27. DELINQUENT RENT AND ADDITIONAL RENT.............................17
-----------------------------------
Section 28. HOLDING OVER....................................................17
------------
Section 29. FORCE MAJEURE...................................................17
-------------
Section 30. SUCCESSORS AND ASSIGNS..........................................17
----------------------
Section 31. TERMINATION.....................................................17
-----------
Section 32. AUTHORIZATION AND BINDING EFFECT OF AGREEMENT...................17
---------------------------------------------
Section 34. ENTIRE AGREEMENT, APPLICABLE LAW................................18
--------------------------------
Section 35. MANDATORY EXPANSIONS............................................18
--------------------
Section 36. RIGHT OF FIRST REFUSAL ON SECOND FLOOR SPACE....................19
--------------------------------------------
Section 35. MANDATORY EXPANSIONS............................................12
--------------------
Section 36. RIGHT OF FIRST REFUSAL ON SECOND FLOOR SPACE....................12
--------------------------------------------
Section 37. LANDLORD'S RIGHT TO RELOCATE....................................12
----------------------------
Exhibits:
- --------
Exhibit "A" - Description of Landlord's Lot
2
LEASE AGREEMENT
This Lease Agreement (the "Lease" or "Lease Agreement") is by and
between IDX SYSTEMS CORPORATION, a Vermont corporation with a place of business
in South Burlington, Vermont ("Landlord") and ALLSCRIPTS, INC., a Delaware
corporation with a place of business in South Burlington, Vermont ("Tenant").
Background
1. Landlord owns a parcel of land with a building thereon located at
25 Green Mountain Drive in South Burlington, Vermont.
2. Landlord wishes to rent to Tenant and Tenant wishes to lease from
Landlord a portion of Landlord's building on the parcel of land (the
"Building").
3. Landlord and Tenant enter into this Lease Agreement to set forth
the terms and conditions for the leasing of space in the Building.
N O W , T H E R E F O R E ,
In consideration of the premises and the mutual covenants and
agreements herein set forth, and in reliance on the representations and
warranties contained herein, the parties hereby agree as follows:
Section 1.LEASE OF PREMISES. Tenant hereby leases from Landlord, the
following described property (hereinafter referred to as the "Premises" or
"Leased Premises"):
Being a portion of the ground floor of the Building located at 25
Green Mountain Drive, containing 2,000 square feet of floor space,
more or less (the "Ground Floor Space"), and a portion of the first
floor of the Building, containing 13,000 square feet of floor space,
more or less (the "First Floor Space"). The lot upon which the
Premises are located are described in Exhibit "A" attached hereto
(the "Lot").
The Premises include the right of Tenant and its employees, in common
with Landlord and its employees, to use the lobbies, doorways,
stairways and hallways in the Building to access the Leased Premises;
the right to cross and recross the driveways, parking lots and open
lands located on the Lot for the purpose of ingress and egress; and
the right to park up to 61 motor vehicles in the parking lot on the
Lot.
The Leased Premises are subject to: (i) leases, covenants,
restrictions and easements of record; and (ii) zoning regulations,
ordinances, building restrictions, regulations and permits of any
municipal, county, state or federal department having jurisdiction
over the Leased Premises.
3
Landlord shall fit-up the Premises as necessary to secure and
separate the Premises from all other tenants' space at the Building.
Landlord shall pay the costs incurred by Landlord in connection with
such fit-up work.
Section 2.TERM OF LEASE. The Premises are hereby leased to Tenant
subject to all of the terms and conditions herein contained, for a term (the
"Term") which shall commence on [Closing], 2000 (the "Commencement Date") and
shall expire five (5) years from the date of [Closing]. For purposes hereof, the
first Lease year under this Lease (a "Lease Year") shall be deemed to expire one
(1) year from the [Closing] date, and each Lease Year thereafter shall expire on
the anniversary of such date. Tenant shall have a one-time right to extend the
Term of this Lease for an additional five (5) year period by notifying Landlord
in writing no later than the end of the fourth Lease Year. Minimum Rent (as
defined in Section 4 below) during such extension Term will be the greater of
(i) ninety-five percent (95%) of the then fair market rental rate, or (ii) 103%
of the Minimum Rent in effect under this Lease during the immediately preceding
Lease Year. Landlord will notify Tenant of the effective rental rate no later
than three (3) months prior to the commencement of the extension Term.
Section 3.USE OF PREMISES. Tenant shall use the Premises for
commercial office, sales and administrative purposes, together with other
incidental uses, and for no other purpose without the Landlord's consent, which
consent shall not be unreasonably withheld or delayed. Tenant shall not use the
Premises for the storage, manufacture, inspection, or packaging of acids,
flammables, or hazardous materials of any kind (other than the use of cleaning
materials in normal quantities that are consistent with the uses of the Premises
for office/sales/administrative and similar uses, provided all such actions are
in accordance with all federal, state and local statutes, rules, regulations and
laws.) Tenant shall have access to the Premises seven (7) days per week,
twenty-four (24) hours per day.
Tenant will operate the Premises in a manner consistent with the
character and quality of the Building. Tenant shall keep the Premises in a neat,
clean and safe condition. Tenant shall be responsible for providing its own
janitorial services with respect to the Premises. In occupying the Premises,
Tenant shall not overburden or exceed the capacity of the utility services
installed in the Building.
Section 4.MINIMUM RENT. During the Term, Tenant agrees to pay to
Landlord, without demand or set off, in lawful money of the United States, at
the address specified in Section 25, or at such other location as Landlord may
hereafter designate in writing, Minimum Rent for the Leased Premises which shall
be the product computed by multiplying the area of the Premises in square feet
(e.g., during the first Lease Year, 15,000 square feet) by the amount of $13.00
triple net per square foot per annum.)
For the convenience of the Landlord, the Minimum Rent shall be paid
in monthly installments of Sixteen Thousand Two Hundred Fifty Dollars ($16,250).
Each installment of Minimum Rent shall be due and payable in advance, on the
first day of each month. The first payment of Minimum Rent shall be due and
payable on or before the Commencement Date. Minimum Rent shall be pro rated for
any partial month of the Term.
4
Notwithstanding the above, at the end of the first Lease Year
(i.e.,365 days from [Closing]), and at the end of every Lease Year thereafter,
the Minimum Rent rate shall be adjusted according to the Consumer Price Index
(CPI) published by the Bureau of Labor Statistics of the United States
Department of Labor, using the "Consumer Price Index - All Items" (1982-1984 =
100) figure as of the Commencement Date for a base, and adjusting the annual
Minimum Rent rate to be paid hereunder in direct proportion to the change in the
said CPI; provided, however, that annual Minimum Rent rate (multiplied by the
square footage demised by this Lease) shall not increase more than three percent
(3%) in any given Lease Year. In the event that the adjusted rent, according to
the CPI, shall be less than the Minimum Rent stated above for the prior Lease
Year, then the rent shall be the amount of the Minimum Rent for such prior Lease
Year.
The Minimum Rent and all other sums payable under the Lease shall be
paid without notice, demand, counterclaim, set off, deduction, or defense and
without abatement, suspension, diminution, or reduction, and the obligations and
liabilities of Tenant under the Lease shall in no way be released, discharged or
otherwise affected (except as otherwise expressly provided in the Lease herein)
by reason of any occurrence whatsoever.
Section 5. TENANT'S TAXES. Tenant shall pay when due all taxes
assessed against Tenant on account of Tenant's personal property on the
Premises, and Tenant's use and occupancy of the Premises under this Lease. The
term "when due" as used in this Lease means on or before the date Tenant will
incur penalties for the failure to pay such taxes.
Section 6. REAL ESTATE TAXES AND UTILITIES. Tenant shall pay its pro
rata share of (i) all real estate taxes assessed against Landlord's Lot and the
Building, and (ii) all charges for water, sewer, gas, electricity, and all other
utilities serving the Building and the Leased Premises. During the first Lease
Year, Tenant's pro rata share shall be 32%. Pursuant to the terms of Section 36,
during the second Lease Year, Tenant's pro rata share shall be 39% and during
the third Lease Year, Tenant's pro rata share shall be 47%. In the event Tenant
leases any additional space in the Building during the Term or any extension
Term pursuant to Section 36 or otherwise, its pro rata share shall be adjusted
accordingly.
Section 7. CASUALTY INSURANCE. Landlord will insure the Building
against loss by fire, in such amounts as Landlord may consider reasonable, by a
policy which shall include standard extended coverage endorsements. Tenant shall
pay its pro rata share of the cost of the premiums for such insurance. Tenant
shall be responsible for maintaining any and all insurance upon Tenant's
property in and upon the Leased Premises. Neither Tenant nor Landlord, nor their
respective agents, employees or guests, shall be liable to the other for any
loss or damage to the Leased Premises by fire or any other cause within the
scope of such fire and extended coverage insurance, it being understood that the
parties shall look solely to the insurer for reimbursement for such loss or
damage.
5
Section 8.LIABILITY INSURANCE. Tenant, at Tenant's own cost and
expense, will maintain a policy or policies of liability insurance insuring
Landlord and Tenant against all claims or demands for personal injuries to or
death of any person, and damage to or destruction or loss of property, which may
or may be claimed to have occurred on the Leased Premises or in the vicinity of
the same. Such policies shall cover such risks and be in such amounts as
Landlord from time to time may reasonably request, but in any event in an amount
not less than $1,000,000.00 per occurrence, $3,000,000.00 aggregate, for injury
to or death of any one person, and not less than $1,000,000.00 per occurrence,
$3,000,000.00 aggregate, for damage to or destruction or loss of property.
Tenant shall deliver to Landlord certificates of such insurance coverage upon
request by Landlord, which certificates shall name Landlord as an additional
insured.Tenant may provide such coverage by Umbrella policies.
Landlord, at Landlord's own cost and expense, will maintain a policy
or policies of liability insurance insuring Landlord and Tenant against all
claims or demands for personal injuries to or death of any person, and damage to
or destruction or loss of property, which may or may be claimed to have occurred
in the common areas of the Building (e.g., lobbies, doorways, stairways,
hallways, driveways, parking lots and open lands). Such policies shall cover
such risks and be in such amounts as Landlord shall deem reasonable. Landlord
shall deliver to Tenant certificates of such insurance coverage upon request by
Tenant, which certificates shall name Tenant as an additional insured.
Section 9.ALTERATIONS.
-----------
a. Except as hereinafter expressly provided, Tenant shall not
make or permit to be made any alterations, additions,
changes or improvements in or to the Leased Premises or any
part thereof without first obtaining the written consent of
Landlord thereto (which consent Landlord agrees not to
unreasonably withhold with respect to nnn-structural
alterations, additions, changes or improvements, provided
Tenant has fully complied with each and every term,
covenant and condition in this Lease Agreement and, with
respect to such alterations, additions, changes or
improvements, has provided Landlord with such liability
insurance policies and/or surety bonds as Landlord may
reasonably request).
b. Before requesting Landlord's consent, Tenant shall submit
to Landlord detailed plans and specifications in duplicate
of such proposed alterations, changes, additions or
improvements, one of which copies may be retained by
Landlord. Landlord shall be entitled to withhold its
consent to any such alterations, additions, changes, or
improvements, until such time as Tenant provides Landlord
with reasonable evidence of the approval of such
alterations, additions, changes or improvements by any and
all municipal, state, federal or other governmental or
other authorities, offices and departments now existing or
hereafter created having jurisdiction over the Premises,
and of the Board of Fire Underwriters or other like body,
which approvals Tenant shall obtain at its own cost and
expense.
6
c. Landlord, its architect, agents and employees, shall have
the right to enter upon the Leased Premises in a reasonable
manner and at all reasonable times during the course of any
such alterations, additions, changes or improvements for
the purpose of inspection and of finding out whether such
work conforms to the approved plans and specifications and
with the agreements herein contained.
d. Any and all alterations, additions, improvements and
changes made by Tenant at any time and all governmental
approvals therefor shall immediately be and become the
property of Landlord without any payment therefor by
Landlord; provided, however, that it is expressly
understood and agreed that any trade fixtures or other
fixtures added by Tenant shall remain the property of
Tenant and may be removed by Tenant, at Tenant's expense,
upon the expiration or earlier termination of the Lease,
provided that any damage caused thereby is immediately
repaired by Tenant.
e. Tenant, at its own cost and expense, will cause any and all
mechanics' liens and perfections of the same which may be
filed against the Leased Premises to be paid and satisfied
of record within thirty (30) days after Landlord shall send
to Tenant written notice by registered mail of the filing
of any notice thereof against the Premises or the owner,
for or purporting to be for labor or materials alleged to
be furnished or to be charged by or for Tenant at the
Leased Premises, or will bond such mechanics' liens and use
its best efforts to have such liens discharged by an order
of a court of competent jurisdiction within said thirty
(30) day period.
f. Any alterations, improvements or other work once begun must
be prosecuted with reasonable diligence to completion and,
subject to the provisions of Subsection 9(e), above, be
paid for by Tenant in full, free and clear of liens or
encumbrances against the Leased Premises or Landlord, and
must be performed in all respects in accordance with law.
Section 10. REPAIRS, REPLACEMENTS. Tenant has inspected and is
familiar with the condition of the Leased Premises, and Tenant shall take and
accept the same "as is," with no representations or warranties of any kind with
respect to the quality of the Premises or the suitability of the Premises for
Tenant's intended use. Landlord represents and warrants that it has no knowledge
of any current violation of any law, rule, code, or ordinance with respect to
the Leased Premises. Tenant shall make all non-structural, maintenance, repairs
and replacements to the interior portions of the Leased Premises as may be
reasonably required to place, keep and maintain the same in good order and state
of repair, including repairs to any glass which may become broken, and any
repairs to other portions of Landlord's building which are necessitated by the
actions or negligence of Tenant, its employees and agents.
Landlord shall be responsible for all structural repairs to the
Premises and all maintenance and repairs to the Building, the systems within and
serving the Building, and the landscaping and other amenities located on the
Lot, including, without limitation, the removal of snow from the walkways and
7
parking lot located on the Lot. In the event Landlord fails to comply with its
obligations hereunder for a period of thirty (30) days after written notice of
such failure from Tenant, or such longer period as may be reasonably necessary
to remedy such failure provided that Landlord has commenced such remedy within
such thirty (30) day period and is diligently prosecuting the same to
completion, then Tenant may undertake to perform such repairs or maintenance,
and Landlord shall promptly reimburse Tenant for its out of pocket expenses in
connection therewith. If Landlord fails to reimburse Tenant as aforesaid, then
Tenant may offset the Minimum Rent due hereunder in the amount of such expenses
provided Tenant provides Landlord with a written summary of such offset and
copies of invoices supporting its offset amounts.
Section 11. TENANT TO COMPLY WITH LAWS, ETC. Tenant shall and will at
its own cost and expense promptly execute and comply with any and all
requirements at any time affecting the Leased Premises imposed by any present or
future, foreseen or unforeseen, law, statute, or governmental authority now
existing or hereafter created, whether the same or any of them relate to changes
or requirements incidental to or the result of any use or occupation thereof or
otherwise. Tenant shall further so comply with each and every rule, order and
requirement of any federal, state, municipal, legislative, executive, judicial
or other governmental body, commissioner or officer or of any bureau or
department thereof, whether now existing or hereafter created, having
jurisdiction over the Leased Premises or any part thereof, or exercising any
power relative thereto or to the owners, tenants or occupants thereof. Landlord
shall cure, or shall reimburse Tenant for the cost of curing, any violation of
any such rule, order or requirement provided (i) such violation did not arise as
a result of Tenant's use in a manner not permitted under this lease of the
Premises, and (ii) Tenant's alteration, repair or other work at the Leased
Premises did not jeopardize or eliminate any so-called grandfather status under
which such violation would have been otherwise exempt from such cure
requirement.
Section 12. NO WAIVER. The failure of Landlord to insist in any one
or more instances upon the strict performance of any of the terms, covenants,
conditions and agreements of this Lease Agreement, or to exercise any option
herein conferred, shall not be considered as waiving or relinquishing for the
future any such terms, covenants or conditions, agreements or options, but the
same shall continue and shall remain in full force and effect; and the receipt
of any rent or any part thereof, whether the rent be that specifically reserved
or that which may become payable under any of the covenants herein contained,
and whether the same be received from Tenant or from any one claiming under or
through Tenant or otherwise shall not be deemed to operate as a waiver of the
rights of Landlord to enforce the payment of rent or charges of any kind
previously due or which may thereafter become due, or the right to terminate
this Lease Agreement and to recover possession of the Premises by summary
proceedings or otherwise, as Landlord may deem proper, or to exercise any of the
rights or remedies reserved to Landlord hereunder or which Landlord may have at
law, in equity or otherwise.
Section 13. LANDLORD'S RIGHT OF ACCESS. Landlord or Landlord's agents
shall have the right to enter the Premises in a reasonable manner upon
twenty-four (24) hours advance notice to Tenant to examine the same, and to show
them to prospective purchasers, mortgagees, or lessees. Nothing herein
contained, however, shall be deemed or construed to impose upon Landlord any
8
obligations, responsibility or liability whatsoever, for the care, supervision
or repair, of the Leased Premises or any part thereof, other than as herein
expressly provided.
Section 14. PRIORITY OF MORTGAGES. This Lease Agreement shall
automatically and without further act or deed be and remain subject and
subordinate to any existing mortgage and any mortgage or mortgages that may
hereafter be placed against the Leased Premises, and to all renewals,
modifications, consolidations, replacements and extensions thereof. Tenant will
execute any estoppel certificates and Subordination and Non-Disturbance
Agreements which Landlord may request, provided that the same are in reasonable
form.
Section 15. ASSIGNMENT, SUBLETTING. Without the prior written consent
of Landlord (which consent Landlord shall not unreasonably withhold or delay,
due consideration being given to the experience of the proposed assignee or
subtenant in the conduct of businesses permitted by this Lease Agreement and
also to the financial stature of such proposed assignee or subtenant), neither
Tenant, nor Tenant's legal representatives or successors in interest shall
assign this Lease Agreement, by operation of law or otherwise, or sublet the
whole or any part of the Leased Premises. If Tenant sublets the Premises, then
Landlord shall be entitled to receive fifty percent (50%) of all amounts paid
pursuant to such sublease in excess of the full amount otherwise due from Tenant
under this Lease net of the costs of such subletting (e.g., brokers' fees,
attorneys' fees and expenses and fit-up costs).
Section 16. DAMAGE OR DESTRUCTION. If the Premises are damaged by
fire or by any other cause, the following provisions shall apply:
a. If the damage is to such extent that the cost of
restoration, as reasonably estimated by Landlord, will
equal or exceed $50,000.00, Landlord may, no later than
sixty (60) days following the damage, give Tenant a notice
stating that Landlord elects to terminate this Lease
Agreement. If such notice shall be given: (i) this Lease
Agreement shall terminate on the third day after the giving
of said notice; (ii) Tenant shall surrender possession of
the Premises within a reasonable time thereafter; and (iii)
all rent shall be apportioned to the date of such
surrender, and any rent paid for any period beyond the date
of such surrender shall be repaid to Tenant.
b. If the cost of restoration, as reasonably estimated by
Landlord, shall amount to less than $50,000.00, or if
despite the cost Landlord does not give notice to Tenant of
its election to terminate in accordance with Subsection
16(a), above, Landlord shall restore the Premises with
reasonable promptness, subject to delays beyond Landlord's
control and delays in making of insurance adjustments by
Landlord, and Tenant shall not have the right to terminate
this Lease Agreement on account of such damage (unless such
restoration cannot be completed within sixty (60) days, in
which event Tenant will have the right to terminate this
Lease Agreement forthwith, by written notice to Landlord).
In the case of either clause (a) or clause (b) above, if which the
use of the Premises is affected by any such damage, there shall be either an
9
abatement or a reduction in rent during the period for which the Premises are
not reasonably usable for the purposes for which they are leased hereunder, the
amount of such abatement or reduction to fairly and appropriately reflect the
degree to which Tenant is thereby prevented from using the Premises for such
purposes. The words "restoration" and "restore" as used in this Section shall
include repairs.
Section 17. EMINENT DOMAIN. If, at any time during the term of this
Lease Agreement, title to a substantial portion of the Premises (meaning thereby
so much as shall render the remaining portion substantially unusable by the
Tenant for the purposes set forth in Section 3 shall be taken by exercise of the
right to condemnation or eminent domain or by agreement between Landlord and
those authorized to exercise such right (all such proceedings being collectively
referred to as a "Taking"), this Lease shall terminate and expire on the date of
such Taking and rent shall be apportioned and paid to the date of such Taking.
Except as expressly set forth below, any award for the value of the Premises,
land, buildings and improvements, and loss of rent from Tenant, shall belong to
Landlord, and Tenant shall not be entitled to share in any such award. To the
extent such compensation award or recovery to Tenant does not diminish the
amount of the compensation award or recovery otherwise awardable to Landlord,
Tenant shall have the right to claim and recover from the condemning authority,
but not from the Landlord, such compensation as may be separately awarded or
recoverable by the Tenant in Tenant's own right on account of any and all damage
to Tenant's business by reason of any condemnation, for and on account of any
cost or loss to which Tenant might be put in relocating its equipment or
removing Tenant's furniture, fixtures and equipment from the Premises, for any
cost or loss to Tenant's improvements, or for loss of the value, if any, of
Tenant's leasehold interest at the time of the Taking.
If the title to less than a "substantial portion" of the Premises
shall be taken in condemnation so that the business conducted on said Premises
can be continued without material diminution, this Lease shall continue in full
force and effect. If the Taking does not amount to a substantial portion but
does materially adversely affect the Tenant's ability to conduct its business,
the rent from and after the date of the vesting of title in the condemnor shall
be equitably adjusted to reflect the diminished value of the Premises to the
Tenant as a direct result of the condemnation.
Section 18. INDEMNITY.
---------
a. Tenant shall indemnify and save harmless Landlord from and
against any and all liability, claims, demands, damages,
expenses, fees, fines, penalties, suits, proceedings,
actions and causes of action of every kind and nature,
including Landlord's costs and reasonable attorneys' fees,
suffered or incurred as a result of any breach by Tenant,
its agents, servants, employees, visitors or licensees of
any covenant or condition of this Lease, or as a result of
Tenant's use or occupancy of the Leased Premises, or the
carelessness, negligence or improper conduct of Tenant,
its agents, servants, employees, visitors or licensees;
provided, however, that it is understood and agreed that
the obligations of Tenant hereunder shall not extend to
the negligence or willful misconduct of Landlord, its
employees, agents or representatives.
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b. Landlord shall indemnify and save harmless Tenant from and
against any and all liability, claims, demands, damages,
expenses, fees, fines, penalties, suits, proceedings,
actions and causes of action of every kind and nature,
including Tenant's costs and reasonable attorneys' fees,
suffered or incurred by Tenant as a result of any breach
by Landlord, its agents, servants, employees, visitors or
licensees of any covenant or condition of this Lease, or
the carelessness, negligence or improper conduct of
Landlord, its agents, servants, employees, visitors or
licensees; provided, however, that it is understood and
agreed that the obligations of Landlord hereunder shall
not extend to the negligence or willful misconduct of
Tenant its employees, agents or representatives.
Section 19. EVENTS OF DEFAULT, REMEDIES, DAMAGES.
------------------------------------
a. Each of the following shall constitute an Event of Default:
(i) Tenant shall fail to pay when and as due any
Minimum Rent payable under this Lease
Agreement, and, provided no such default has
occurred more than two times within the
previous twelve (12) months, such default shall
continue for a period of ten (10) days after
written notice of such default from Landlord to
Tenant; or
(ii) Tenant shall fail to perform or comply with any
of the agreements, terms, covenants or
conditions in this Lease Agreement, other than
those referred to in Subsection 19(a)(i), for a
period of thirty (30) days after notice from
Landlord to Tenant specifying the items in
default, or in the case of a default or
contingency which cannot with due diligence be
cured within said thirty (30) day period,
Tenant shall fail to commence within said
thirty (30) day period the steps necessary to
cure the same and thereafter to prosecute the
curing of such default with due diligence (it
being understood that the time of Tenant within
which to cure shall be extended for such period
as may be reasonably necessary to complete the
same with all due diligence); or
(iii) Tenant shall file a voluntary petition in
bankruptcy or shall have a petition in
bankruptcy filed against it which is not
removed within thirty (30) days after filing,
or shall be adjudicated insolvent, or a
receiver or trustee shall be appointed of all
or substantially all of the property of Tenant
or Tenant shall make any assignment for the
benefit of Tenant's creditors, or Tenant shall
vacate the Premises.
b. For so long as an Event of Default shall exist and be
continuing, Landlord may give written notice to Tenant
specifying the Event of Default and stating that Tenant's
rights to the possession, use and occupancy of the Premises
under this Lease Agreement shall expire and terminate on
the date specified in such notice, which date shall be at
least ten (10) days after the giving of notice, and upon
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the date so specified, all rights of Tenant under this
Lease Agreement shall so expire and terminate.
c. Upon termination of Tenant's rights to possession, use and
occupancy of the Premises under this Lease Agreement in
accordance with the provisions of Subsection 19(b), above,
Tenant shall pay Landlord an amount equal to any Minimum
Rent and any damages which shall have been due or sustained
prior to such termination, together with all reasonable
costs, fees and expenses (including, but not limited to,
reasonable attorneys' fees) incurred by Landlord in pursuit
of its remedies hereunder.
d. Upon any termination of this Lease Agreement pursuant to
this Section 19, Tenant shall immediately vacate the
Premises and surrender the same to Landlord restored to
the same condition as received, reasonable wear and tear
excepted. In the event Tenant fails to so vacate and
surrender the Premises, Tenant shall pay all costs
reasonably incurred by Landlord in requiring Tenant to
vacate, including reasonable attorneys' fees and
disbursements and, further, will pay Landlord a daily
occupancy charge equal to two hundred percent (200%) of
the average daily rental payable by Tenant during the most
recent Lease Agreement year until Tenant vacates the
Premises as provided in the terms of this Lease Agreement.
Tenant expressly agrees that, for so long as any Event of
Default shall exist and be continuing, Landlord shall have
the right to immediately regain possession of the Premises
and to exclude Tenant from further use, occupancy and
enjoyment thereof, and Tenant waives any and all claims
which it may have against Landlord, regardless of when the
same arise, on account of such regaining of possession by
Landlord or such exclusion. Upon the termination of this
Lease Agreement, Tenant will remove all goods and effects
not the property of Landlord, at Tenant's expense. Any
damage thereby caused to the Premises shall be promptly
repaired by Tenant, at Tenant's expense. At Landlord's
option, any goods and effects not so removed shall be
deemed abandoned by Tenant and thereupon shall become the
sole property of Landlord. In the event Tenant shall fail
or refuse to vacate the Premises without breach of the
peace after termination, Landlord may obtain a court order
for the payment of rent into court in accordance with the
terms of 12 V.S.A.ss. 4853a. Landlord shall also have all
other rights and remedies as may be available under
applicable law at the time of the occurrence of the Event
of Default.
Section 20. SIGNS. Tenant shall not install or display any sign, logo
or advertising medium on or outside of the Premises unless Landlord shall have
given its prior written consent to the sign, display or advertising medium,
which consent shall not be unreasonably withheld or delayed, and Tenant shall
have obtained from such others including government authorities and agencies
with or claiming jurisdiction over the Premises all necessary permits and
approvals for the proposed sign, display or advertising medium. Tenant shall be
allowed to install a sign on the exterior of the building, in the parking lot
and in the inside of the Building subject to Landlord's approval which approval
shall not be unreasonably withheld or delayed.
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Section 21. BROKER COMMISSIONS. Landlord and Tenant each warrant and
represent to each other that they have no knowledge of any real estate broker or
agent to whom a commission may be payable as a result of this transaction or any
such knowledge of any finder's fees or commissions related thereto. Each party
agrees to indemnify and hold harmless the other for all claims or demands of any
real estate agent or broker claiming by, through, or under such party. This
indemnification shall also include payment of costs and attorneys' fees incurred
by a party in defense of a claim for such real estate commissions or fees.
Section 22. ENVIRONMENTAL COVENANTS. Tenant shall comply with all
environmental laws, rules, regulations, statutes and ordinances, including,
without limitation, those applicable to "hazardous substances." Tenant shall
indemnify, defend and hold harmless Landlord and its officers, employees,
agents, and contractors, from and against and to pay in full on demand by
Landlord all loss, cost and expense (including, without limitation, attorneys'
fees and disbursements and fees of other professionals advising Landlord) of
whatever nature suffered or incurred by Landlord on account of the existence on
the Leased Premises, or the release or discharge from the Leased Premises, of
"hazardous substances," including, without limitation, any claims, costs,
losses, liabilities and expenses arising from the violation (or claimed
violation) of any environmental laws or the institution of any action by any
party against Tenant, Landlord or the Leased Premises based upon nuisance,
negligence or other tort theory alleging liability due to the improper
generation, storage, disposal, removal, transportation or treatment of hazardous
substances or the imposition of a lien on any part of the Leased Premises under
the Comprehensive Environmental Response Compensation and Liability Act of 1980,
42 U.S.C. 9601, et seq., as amended ("CERCLA"), and the Vermont Waste Management
Statutes, Vt. Stat. Ann. Title 10, Ch. 159, or any other laws pursuant to which
a lien or liability may be imposed on Landlord (together, the "Hazardous Waste
Liabilities") due to the existence of hazardous substances, caused by Tenant or
its employees, agents, licensees, subtenants, and subcontractors.
Landlord shall indemnify, defend and hold harmless Tenant and its
officers, employees, agents, and contractors, from and against any Hazardous
Waste Liabilities suffered by Tenant which are caused by Landlord, or Landlord's
employees, agents, licensees or subcontractors.
Section 23. LEASE NOT TO BE RECORDED. If this Lease Agreement shall
be recorded by or on behalf of Tenant, except at the express request of
Landlord, at the option of Landlord, it thereupon shall be and become null, void
and of no further force or effect, and all rights of Tenant hereunder shall
cease; provided, however, that the parties expressly agree that a short-form
notice of lease containing the information required by 27 V.S.A.ss.341(c) and
signed by both Landlord and Tenant, may be recorded by either Landlord or
Tenant.
Section 24. QUIET ENJOYMENT. Landlord covenants that the said Tenant,
on paying all rent required to be paid by Tenant, and observing and performing
all covenants and undertakings by Tenant to be performed hereunder, shall and
may peaceably have and enjoy said Premises for the term aforesaid in accordance
with the terms of this Lease Agreement.
13
Section 25. NOTICES. Any notice or other communication to be given
hereunder shall be in writing and mailed or telecopied to such party at the
address or number set forth below:
If to Landlord: IDX Systems Corporation
Attention: John Kane
1400 Shelburne Road
South Burlington, VT 05403
Telephone No.: (802) 864-1758
Telecopier No.: (802) ________
With a copy to: Robert Baker, Esq.
IDX Systems Corporation
1400 Shelburne Road
South Burlington, VT 05403
Telephone No.: (802) 864-1758
Telecopier No.: (802) 864-6351
If to Tenant Allscripts, Inc.
Attention: ____________
Telephone No.: (___) _____________
Telecopier No.: (___) _____________
With a copy to: _____________________
Telephone No.: (___) _____________
Telecopier No.: (___) _____________
or to such other person, address or number as the party entitled to such notice
or communication shall have specified by notice to the other party given in
accordance with the provisions of this Section. Any such notice or other
communication shall be deemed given: (i) if mailed, when deposited in the mail,
properly addressed and with postage prepaid; or (ii) if sent by telecopy, when
transmitted.
Section 26. WAIVER OF RULE OF CONSTRUCTION. The parties waive the
benefit of any rule that this Lease Agreement is to be construed strictly
against one party or the other.
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Section 27. DELINQUENT RENT AND ADDITIONAL RENT. If Tenant shall fail
to pay any Minimum Rent within ten (10) days of when the same is due and payable
hereunder, the unpaid amount shall bear interest from the due date thereof to
the date of payment at the rate of 1-1/2% per month; provided, however, that if
such rate is higher than the maximum rate of interest allowed under applicable
law, the interest payable hereunder shall be the maximum rate allowed.
Section 28. HOLDING OVER. Any holding over after the expiration of
the term hereof shall be construed to be a tenancy from day to day only, at the
rate of two hundred percent (200%) of the rent in effect immediately prior to
such expiration (prorated on a daily basis) and otherwise on the terms and
conditions herein specified so far as applicable.
Section 29. FORCE MAJEURE. In the event that Landlord or Tenant shall
be delayed, hindered in or prevented from the performance of any act required
hereunder, by reason of strikes, lock-outs, labor troubles, inability to procure
materials, failure of power, restrictive governmental laws or regulations,
riots, insurrection, the act, failure to act or default of the other party, war
or other reason beyond its control, then performance of such act shall be
excused for the period of the delay and the period for the performance of any
such act shall be extended for a period equivalent to the period of such delay.
Section 30. SUCCESSORS AND ASSIGNS. All the terms and conditions of
this Lease Agreement shall be binding upon and shall inure to the benefit of the
legal representatives, successors and permitted assigns of the parties hereto.
The term "Landlord" means only the owner of the Leased Premises for the time,
and upon any transfer of title to the Leased Premises, the transferor shall
automatically be relieved of all further liability under this Lease Agreement,
and the transferee shall automatically be and become responsible for all
obligations of Landlord hereunder.
Section 31. TERMINATION. On the termination date of the Term, or such
earlier termination of this Lease Agreement, Tenant shall: (a) immediately
vacate the Premises and surrender the same to Landlord; and (b) repair all
damage to the Premises and the fixtures and personal property of Landlord
located on the Premises caused by Tenant's removal of its equipment and trade
fixtures from the Premises, and restore the Premises to the same condition which
existed on the Commencement Date, reasonable wear and tear and any alterations
previously approved by Landlord excepted. In addition, in the event Tenant fails
to vacate and restore the Premises as set forth herein, Landlord shall be
entitled to all remedies set forth in Section 19(d) of this Lease Agreement.
Landlord's and Tenant's indemnity obligation under Section 18 and
Landlord's and Tenant's Environmental Covenants under Section 22 shall survive
the termination or expiration of this Lease Agreement.
Section 32. AUTHORIZATION AND BINDING EFFECT OF AGREEMENT. The
execution, delivery and performance of this Lease and each other document or
instrument required to be delivered pursuant hereto by Landlord and Tenant have
been duly authorized by their respective Boards of Directors, and this Lease and
each other document or instrument required to be delivered pursuant hereto is
the legal, valid and binding obligation of Landlord and Tenant and is
15
enforceable against Landlord and Tenant in accordance with its respective terms;
subject, as to enforcement only, to bankruptcy, insolvency, reorganization,
moratorium or similar laws at the time in effect affecting the enforceability of
the rights of creditors generally.
Section 33. COUNTERPARTS. This Lease Agreement may be executed in
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall be deemed to constitute one document.
Section 34. ENTIRE AGREEMENT, APPLICABLE LAW. This Lease Agreement
with any exhibits and riders attached hereto contains the entire agreement of
the parties and no representations, inducements, promises or agreements not
embodied herein shall be of any force or effect, unless the same are in writing
and signed by or on behalf of the party to be charged. The captions of
particular Sections are inserted as a matter of convenience only and are in no
way to affect or define the scope or intent of this Lease Agreement or any
provision thereof. This Lease Agreement shall be governed by and interpreted in
accordance with the laws of the State of Vermont.
Section 35. MANDATORY EXPANSIONS. Tenant shall be obligated to lease
from Landlord, and Landlord hereby agrees to rent to Tenant the following
additional space at the following times (collectively, the "Expansion Premises")
without any additional notice or amendment to this Lease:
a. Being a portion of the ground floor of the Building
containing approximately 3,000 additional square feet of
space, more or less (the "Initial Ground Floor Expansion
Space") commencing on the first day of the second Lease
Year. Tenant shall have the right to park an additional 14
motor vehicles (for a total of 75) in the parking lot on
the Lot in connection with the Initial Ground Floor
Expansion Space.
b. Being a portion of the ground floor of the Building
containing approximately 3,750 additional square feet of
space, more or less (the "Additional Ground Floor Expansion
Space") commencing on the first day of the third Lease
Year. Tenant shall have the right to park an additional 15
motor vehicles (for a total of 90) in the parking lot on
the Lot in connection with the Additional Ground Floor
Expansion Space.
The terms, provisions and conditions set forth in this Lease,
including the rental provisions and expiration date, shall govern the Expansion
Premises.
Section 36. RIGHT OF FIRST REFUSAL ON SECOND FLOOR SPACE. After the
end of the third Lease Year, Landlord grants Tenant a one time right of first
refusal to lease all, but not part, of the second floor of the Building under
the following terms and conditions.
a. If Landlord determines to lease the space on the second
floor of the Building after the third Lease Year, Landlord
shall notify Tenant in writing of the terms on which it
would be willing to lease all, but not part, of the second
16
floor space ("Landlord's Offer"). Tenant shall accept or
reject Landlord's Offer within ten (10) days after receipt
thereof. If Tenant accepts Landlord's Offer, Landlord shall
lease the second floor to Tenant on the terms of Landlord's
Offer and a new lease, or an amendment to this Lease, on
terms acceptable to Landlord and Tenant shall be signed
within thirty (30) days after Tenant accepts Landlord's
Offer.
b. If Tenant does not accept Landlord's Offer within ten (10)
days after receipt thereof, Tenant's right of first refusal
under this Section shall terminate and Landlord may lease
all or any part of the second floor space to any third
party on any terms acceptable to Landlord.
Section 37. LANDLORD'S RIGHT TO RELOCATE. During the Term of this
Lease, Landlord shall have the right to relocate Tenant to separate, contiguous
space of approximately the same square footage as then in effect under this
Lease (except for the 35 GMD Expansion Space) in the building currently occupied
by Landlord located on a parcel of land located at 1400/1500 Shelburne Road (the
"Relocation Space"). Such right to relocate may only be exercised by Landlord's
delivering written notice to Tenant of its exercise of such right (the
"Relocation Notice") no later than one hundred eighty (180) days before the date
of such relocation. The terms, provisions and conditions set forth in this
Lease, including the rental provisions and expiration date, shall govern the
Relocation Space, except that the 35 GMD Expansion Space shall not be affected
by such relocation. Landlord shall pay all out of pocket costs incurred in
connection with such relocation. Such Relocation Space shall be appropriately
segregated from Landlord's space and Tenant shall be entitled to signage, at
Landlord's expense, comparable to the signage permitted at the Premises.
Landlord shall not be entitled to exercise this relocation right during the last
Lease Year of the original Term of this Lease unless Tenant has exercised its
right to extend the Term of the Lease in accordance with Section 2. In the event
Tenant exercises such right to extend the Term of the Lease, Landlord shall not
be entitled to exercise this relocation right during the last Lease Year of the
extended Term.
IN WITNESS WHEREOF, the parties have executed or caused this Lease
Agreement to be executed as of the ____ day of _______________, 2000.
LANDLORD
IN PRESENCE OF: IDX SYSTEMS CORPORATION
__________________________________ By:____________________________________
Witness Duly Authorized Agent
17
STATE OF VERMONT
COUNTY OF CHITTENDEN, SS.
At ____________________, in said County and State, this _____ day of
____________, 2000, personally appeared ________________________, Duly
Authorized Agent of IDX SYSTEMS CORPORATION, to me known, and he/she
acknowledged this instrument, by him/her signed, to be his/her free act and deed
and the free act and deed of IDX SYSTEMS CORPORATION.
Before me,_____________________________________
Notary Public
Notary commission issued in Chittenden County
My commission expires: 2/10/2003
(signatures continued on next page)
18
TENANT
------
ALLSCRIPTS, INC.
______________________________________ By: _________________________________
Witness Duly Authorized Agent
STATE OF _______________
COUNTY OF _____________, SS.
At ____________________, in said County and State, this _____ day of
____________, 2000, personally appeared ___________________ Duly Authorized
Agent of ALLSCRIPTS, INC., to me known, and he/she acknowledged this instrument,
by him/her signed, to be his/her free act and deed and the free act and deed of
ALLSCRIPTS, INC.
Before me,_____________________________________
Notary Public
Notary commission
issued in
____________
County My
commission
expires:
________________
[add notary seal if signed outside Vermont]
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EXHIBIT "A"
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Description of Landlord's Lot
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A certain piece or parcel of land, with the improvements thereon and
appurtenances thereto, located in South Burlington, County of Chittenden, State
of Vermont, and more particularly described as follows:
A parcel of land with appurtenances thereto and improvements thereon,
being known as 25 Green Mountain Drive, and designated as Lot 17 as
depicted on a plan entitled: "National Life Insurance Company,
Shelburne Road, South Burlington, Vermont" by Webster-Martin, Inc.
dated June 12, 1973 and recorded in Volume 105 at Page 21 of the City
of South Burlington Land Records. Reference is made to Notice of
Recording dated March 12, 1998 and recorded in Volume 424 at Page 67
of the City of South Burlington Land Records.
Being all and the same land and improvements conveyed to IDX Systems
Corporation by Warranty Deed of Green Mountain Power Corporation
dated April 28, 1999, recorded in Volume 453, Page 286 of the City of
South Burlington Land Records.
Reference is hereby made to the above-referenced documents, the
instruments therein described, and the references therein contained
in further aid of this description.
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20