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ASSET PURCHASE AGREEMENT

Asset Purchase Agreement

ASSET PURCHASE AGREEMENT | Document Parties: CPM Resource Center, Inc | Eclipsys Corporation | Eclipsys Solutions Corporation You are currently viewing:
This Asset Purchase Agreement involves

CPM Resource Center, Inc | Eclipsys Corporation | Eclipsys Solutions Corporation

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Title: ASSET PURCHASE AGREEMENT
Governing Law: Delaware     Date: 2/29/2008
Industry: Software and Programming     Law Firm: Brown Raysman;Thelen Reid;Baker McKenzie     Sector: Technology

ASSET PURCHASE AGREEMENT, Parties: cpm resource center  inc , eclipsys corporation , eclipsys solutions corporation
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Exhibit 2.1

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “ Agreement ”) is entered into as of December 19, 2007, by and among Elsevier Inc., a New York corporation (the “ Purchaser ”), Eclipsys Corporation, a Delaware corporation (“ Eclipsys ”), Eclipsys Solutions Corporation, a Delaware corporation and wholly-owned subsidiary of Eclipsys (“ Solutions ”), and CPM Resource Center, Inc., a Delaware corporation (the “ Company ”). Eclipsys, the Company and Solutions are sometimes referred to herein as a “ Seller ,” and collectively as the “ Sellers .” Certain capitalized terms used in this Agreement are defined in the attached Exhibit A .

The Sellers own and operate the CPMRC Business and the Sellers have agreed to sell to Purchaser and Purchaser has agreed to buy from Sellers, the Transferred Assets, on the terms and conditions set forth in this Agreement (such sale and purchase, the “ Transaction ”).

In consideration of the foregoing recitals, the mutual representations, warranties and covenants set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which the parties acknowledge, the parties agree as follows:

ARTICLE 1

PURCHASE AND SALE OF THE TRANSFERRED ASSETS

1.1 Sale of Transferred Assets . Subject to the terms, provisions and conditions contained in this Agreement, at the Closing, Sellers agree to sell, assign, transfer, convey and deliver to Purchaser, and Purchaser agrees to purchase and acquire from Sellers, all right, title and interest in the Transferred Assets, free and clear of all Claims. The “ Transferred Assets ” shall mean the following items owned or leased by the Sellers or any of them:

(a) all CPMRC Content;

(b) subject to Section 4.2(b) , all of Sellers’ rights under license to the Licensed Intellectual Property, including the Licensed Intellectual Property set forth in Section 1.1(b) of the Seller Disclosure Schedule;

(c) all Proprietary Intellectual Property, including the Proprietary Intellectual Property set forth in Section 1.1(c) of the Seller Disclosure Schedule;

(d) all Customer Deliverables, including the Customer Deliverables set forth in Section  1.1(d) of the Seller Disclosure Schedule;

(e) the Internal Systems;

(f) all Business Marks, including the Business Marks set forth in Section 2.13(h) of the Seller Disclosure Schedule;

(g) all items listed in Section 2.13(a) of Seller Disclosure Schedule;

(h) all Domain Names;

(i) copies of portions of the books and records of each Seller relating primarily to the operation of the CPMRC Business and the Transferred Assets, including copies of the Transferring Contracts and all correspondence and memoranda relating thereto applicable to the CPMRC Business;

 


(j) the agreements listed in Section 1.1(j) of the Seller Disclosure Schedule;

(k) the rights as assignee or subcontractor under the Transferring Contracts pursuant to this Agreement or the Consulting and Subcontracting Agreement;

(l) the Tangible Transferred Assets; and

(m) all other Seller CPMRC Assets.

1.2 Excluded Assets . Notwithstanding anything set forth in this Agreement to the contrary, the Sellers are not selling to the Purchaser and the Purchaser is not purchasing from the Sellers any Excluded Assets. For this purpose, “ Excluded Assets ” means all assets not expressly provided in Section 1.1 . For the avoidance of doubt, Excluded Assets include, but are not limited to, the following assets:

(a) cash or cash equivalents;

(b) bank accounts;

(c) insurance policies;

(d) Tax credits and Tax refunds with respect to the Transferred Assets and the CPMRC Business for Pre-Closing Periods;

(e) Accounts Receivable;

(f) any assets of any Employee Benefit Plan or interest in any Employee Benefit Plan;

(g) all rights under any agreement of any Seller that are not being assigned or subcontracted pursuant to this Agreement or the Consulting and Subcontracting Agreement;

(h) any personnel records or business records of any Seller, including such records that any Seller is required by law to retain in its possession;

(i) all assets used in connection with any of the matters referred to in Section 1.2(i) of the Seller Disclosure Schedule, even if used, but not primarily used, in the CPMRC Business;

(j) Eclipsys Software;

(k) Eclipsys Services Methodologies; and

(l) all other assets, properties, privileges, rights, interests and claims, real and personal, tangible and intangible, of every type and description, of Eclipsys not used primarily in connection with the CPMRC Business.

1.3 Purchase Price and Earnout .

(a) Purchase Price . Subject to the terms and conditions of this Agreement, the aggregate purchase price payable for the Transferred Assets will be Twenty-Seven Million Dollars ($27,000,000), plus any amounts payable by Purchaser pursuant to Section 1.3(b) and Section 1.3(c) hereof, less the Deferred Revenue Amount (the “ Purchase Price ”). At the Closing, the Purchaser will pay to the Sellers Twenty-Five Million Dollars ($25,000,000) less the Estimated Deferred Revenue Amount

 

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by wire transfer of immediately available funds to an account designated by Eclipsys no later than two (2) business days prior to the Closing Date, and at the times specified in and subject to Section 4.2(d) , the Purchaser will pay to the Sellers Two Million Dollars ($2,000,000) (the “ CICC Update Payment ”).

(b) Earnout .

(i) As additional consideration for the Transferred Assets, subject to the provisions of Section 1.3(b)(ii) , the Purchaser shall pay to the Sellers an amount, if any, determined in accordance with this Section 1.3(b) (the “ Earnout Amount ”).

(A) Earnout Year 1 . In the event that CPMRC Content Orders for the period from the Closing Date to the end of the Purchaser’s fiscal year ending December 31, 2008 (“ Earnout Year 1 ”) is at least $2,700,000 (the “ Earnout Year 1 Target ”), the Purchaser shall pay to the Sellers an aggregate amount of $1,500,000 (“ Year 1 Earnout Amount ”) in accordance with the terms of this Agreement. In the event that the CPMRC Content Orders during Earnout Year 1 is less than $2,700,000, the Purchaser shall pay to the Sellers a proportional amount of the Year 1 Earnout Amount that is equal to the product of (1) the Year 1 Earnout Amount multiplied by (2) a fraction, the numerator of which is the amount of CPMRC Content Orders during Earnout Year 1 and the denominator of which is the Earnout Year 1 Target. For example, if CPMRC Content Orders during Earnout Year 1 is $1,800,000, the Purchaser would pay to the Sellers 66.667% of the Year 1 Earnout Amount, or $1,000,000.

(B) Earnout Year 2 . In the event that CPMRC Content Orders during the Purchaser’s fiscal year ending December 31, 2009 (“ Earnout Year 2 ”, and together with Earnout Year 1, each, an “ Earnout Year ”) of at least $3,600,000 (the “ Earnout Year 2 Target ”), the Purchaser shall pay to the Sellers an aggregate amount of $1,500,000 (“ Year 2 Earnout Amount ”) in accordance with the terms of this Agreement. In the event that the CPMRC Content Orders during Earnout Year 2 is less than $3,600,000, the Purchaser shall pay to the Sellers a proportional amount of the Year 2 Earnout Amount that is equal to the product of (1) the Year 2 Earnout Amount multiplied by (2) a fraction, the numerator of which is the amount of CPMRC Content Orders during Earnout Year 2 and the denominator of which is the Earnout Year 2 Target.

(C) Earnout Cumulative . Notwithstanding the provisions of Sections 1.3(b)(i)(A) and (B) :

(1) in the event that the CPMRC Content Orders during Earnout Year 1 is less than the Earnout Year 1 Target, but the aggregate amount of CPMRC Content Orders reported by CPMRC during Earnout Year 1 and Earnout Year 2 (the “ Aggregate CPMRC Content Orders ”) is equal to at least $6,300,000, then in addition to the Year 2 Earnout Amount, the Purchaser shall pay to the Sellers, on the date on which the Year 2 Earnout Amount is to be paid by the Purchaser to the Sellers, an additional amount equal to the difference between (1) the Year 1 Earnout Amount minus (2) the amount paid by the Purchaser to the Sellers pursuant to Section 1.3(b)(i)(A) ; and

(2) in the event that the CPMRC Content Orders during Earnout Year 2 is less than the Earnout Year 2 Target, but the Aggregate CPMRC Content Orders is equal to at least $6,300,000, then in lieu of, and without duplication of, the amount to be paid by the Purchaser to the Sellers pursuant to Section 1.3(b)(i)(B) , the Purchaser shall pay to the Sellers the Year 2 Earnout Amount.

 

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(D) Additional Earnout . In the event that the Aggregate CPMRC Content Orders is greater than $6,300,000, the Purchaser shall pay to the Sellers, on the date on which the Earnout Amount for Earnout Year 2 would be paid by the Purchaser, in addition to the amounts paid by Purchaser to Sellers pursuant to Sections 1.3(b)(i)(B) and/or (C) , an amount equal to the product of (1) the difference between the Aggregate CPMRC Content Orders minus $6,300,000 multiplied by (2) 0.50; provided , that in no event shall the aggregate Earnout Amount to be paid to the Sellers pursuant to this Agreement exceed $4,000,000.

(ii) Within thirty (30) days following the completion of the applicable Earnout Year, the Sellers shall deliver to the Purchaser a statement for the Earnout Amount to which it is entitled under this Section 1.3(b) , together with the calculation of the applicable Earnout Amount (the “ Calculation ”). The Calculation shall be determined in good faith by the Sellers and shall include sufficient detail to enable the Purchaser to review the factors included in the Calculation. The Purchaser shall have the later of (a) sixty (60) days following the receipt of the invoice from the Sellers and (b) until March 31, 2007 to review the Calculation (the “ Review Period ”). During the Review Period, the Purchaser, its independent auditors and other representatives shall, upon two (2) business days’ prior notice, at the Purchaser’s sole cost and expense, be permitted full access during normal working hours to review the books and records of the Sellers for the sole purpose of reviewing the Calculation (including the working papers of the Sellers relating thereto) and shall be permitted to discuss the Calculation with the senior officers and financial management of the Sellers; provided, however, that such access and discussions shall be conducted in a manner that will not unreasonably disrupt the operation of Sellers’ business. In the event that the Purchaser concurs with the Calculation, the Purchaser shall provide the Sellers with written notice of such concurrence (“ Earnout Concurrence Notice ”), and the Purchaser shall pay to the Sellers the applicable Earnout Amount not later than three (3) business days following the expiration of the Review Period. In the event that the Purchaser disputes all or any portion of the Calculation, the Purchaser shall provide the Sellers with written notice of such dispute (“ Earnout Dispute Notice ”) not later than the expiration of the Review Period, which Earnout Dispute Notice shall set forth the Purchaser’s proposed calculation of the applicable Earnout Amount. Subject to the terms of this Agreement, the Purchaser shall pay the Sellers the non-disputed amount within three (3) business days of the receipt by the Sellers of the Earnout Dispute Notice, and the parties shall, during the thirty (30) days following the delivery by the Purchaser of such Earnout Dispute Notice (the “ Earnout Negotiation Period ”), use commercially reasonable efforts to reach agreement as to the disputed amount. If, during such period, the parties are unable to reach agreement, they shall promptly thereafter (but in no event later than thirty (30) days from the end of the Earnout Negotiation Period) engage a firm of independent accountants of national recognized standing, reasonably satisfactory to the Sellers and the Purchaser, to resolve the disagreement, provided, that if the Sellers and the Purchaser are unable to agree upon such firm of independent accountants, such firm shall be any of Ernst & Young, KPMG or Grant Thornton, in that order of priority, provided that such firm does not serve at such time, and has not served during each of the prior two fiscal years, as the independent accountants of either the Purchaser or Eclipsys, and does not have at such time, and has not had during each of the prior two fiscal years, any other significant business relationship with either the Purchaser or Eclipsys. Such independent accountants shall promptly review this Agreement and the Calculation and such other documents and workpapers and shall have access to such personnel as they reasonably deem necessary. Such independent accountants shall, as promptly as practicable, deliver to the Sellers and the Purchaser a report setting forth the amount of the disputed portion of the applicable Earnout Amount. Such report shall be final, conclusive and binding upon the parties hereto, absent fraud or manifest error, and, if applicable, the Purchaser shall pay the Sellers the portion of the applicable Earnout Amount set forth on such report within ten (10) business days of the receipt by the Purchaser of such report. The fees and expenses of the independent accountants referred to in this Section 1.3(b)(ii) shall be apportioned between the Sellers, on the one hand, and the Purchaser, on the other hand, in proportions based upon the relative success of each party’s claims as reflected in the determinations made by the independent accountants pursuant to this Section 1.3(b)(ii) .

 

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(iii) The parties hereto agree that all Earnout Amounts payable pursuant to this Section 1.3(b) are intended to be treated as additional purchase price consideration for the purchase and sale of the Transferred Assets and neither the Sellers nor the Purchaser, nor any of their respective Affiliates, shall take any position in Tax Return or Tax Contest that is inconsistent with such agreement without the consent (not to be unreasonably withheld) of the other party unless required to do so by applicable law.

(c) Additional Purchase Price . If the conditions set forth in Project Schedule D of the Consulting and Subcontracting Agreement are satisfied requiring a payment of additional purchase price by the Purchaser to the Sellers, then not later than five (5) business days following the satisfaction of such conditions, the Purchaser shall pay to the Sellers the amount specified in accordance with the terms of Project Schedule D to the Consulting and Subcontracting Agreement by wire transfer of immediately available funds to the account designated by Eclipsys pursuant to Section 1.3(a) herein.

1.4 Assumption of Liabilities . Except as expressly provided in this Section 1.4 , the Purchaser shall assume none of any Sellers’ liabilities or obligations relating to the CPMRC Business, the Transferred Assets or otherwise. In connection with the purchase and sale of the Transferred Assets pursuant to this Agreement, at the Closing, the Purchaser shall assume and agrees to pay, discharge, perform or otherwise satisfy only the following liabilities and obligations relating to the CPMRC Business and the Transferred Assets (the “ Assumed Liabilities ”): (i) the liabilities and obligations as assignee or subcontractor under the Transferring Contracts, as agreed to by the Purchaser, pursuant to this Agreement or the Consulting and Subcontracting Agreement, but only to the extent such liabilities or obligations (a) relate to any period following the Closing Date and (b) do not otherwise arise out of any breach or alleged breach by any Seller, and (ii) the liabilities arising out of or resulting from the operation of the CPMRC Business and ownership of the Transferred Assets by the Purchaser from and after the Closing Date.

1.5 Excluded Liabilities . Except for assumption at the Closing of the Assumed Liabilities, the Purchaser does not assume (either expressly or implicitly) and shall not be responsible or liable for any of the debts, claims, obligations, expenses, litigation, violations, penalties, assessments, losses, damages or other liabilities of any of the Sellers or any of their Affiliates, of any kind, character or description whatsoever, whether presently in existence or arising hereafter, direct, indirect, known or unknown, absolute or contingent and regardless of any disclosure to the Purchaser, including (i) any accounts payable (including all invoices for the September Consortium that have not yet been received as of the Closing Date) and any intercompany payables arising prior to the Closing, (ii) any indebtedness of the Sellers, (iii) any Taxes of the Sellers for Pre-Closing Periods, (iv) any liabilities or obligations other than the Assumed Liabilities as to which a third party might assert that Purchaser has transferee liability, (v) any liabilities or obligations of the Sellers or any Affiliate of the Sellers to any of their consultants or employees, including liabilities or obligations for overtime, severance, accrued but unused vacation as of the Closing Date, bonuses under the Employee Benefit Plans attributable to the Pre-Closing Periods, (vi) any and all liabilities under any of the Sellers’ Employee Benefits Plans or under any employment agreements with any of the Employees, and (vii) liabilities or expenses relating to, arising out of or resulting from the operation of the CPMRC Business or ownership of the Transferred Assets prior to Closing, including those liabilities set forth in Section 2.8 of the Seller Disclosure Schedule and any amounts payable by Eclipsys to Bonnie L. Wesorick pursuant to the Eclipsys/CPMRC Merger Agreement, including Section 1.5 thereof (collectively, “ Excluded Liabilities ”).

1.6 Closing . The parties agree to conduct the closing of the Transaction (“ Closing ”) at the offices of Baker & McKenzie LLP, 130 East Randolph Street, Suite 3900, Chicago, Illinois, on the date hereof (such date of the Closing, the “ Closing Date ”).

 

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1.7 Closing Deliveries . At the Closing:

(a) the Sellers will deliver, or will cause to be delivered, to the Purchaser (i) the License Agreement, (ii) the Consulting and Subcontracting Agreement, (iii) the Reseller Agreement, (iv) the Transition Services Agreement, (vi) the Bill of Sale, (vii) the Transferred Assets to the extent tangible and deliverable and (viii) a certification from each Seller stating, under penalty of perjury, such Seller’s U.S. taxpayer identification number and address and that such Seller is not a “foreign person” as defined in Section 1445 of the Code; and

(b) the Purchaser will deliver to the Sellers (i) the License Agreement, (ii) the Consulting and Subcontracting Agreement, (iii) the Reseller Agreement, (iv) the Transition Services Agreement, (v) the Bill of Sale and (vi) that portion of the Purchase Price set forth in the second sentence of Section 1.3(a) .

1.8 Deferred Revenue Purchase Price Adjustment . The Purchase Price shall be subject to adjustment as follows:

(a) Not later than sixty (60) days following the Closing, the Sellers will deliver to the Purchaser an unaudited statement of the Deferred Revenue of the CPMRC Business as of the Closing Date (the “ Deferred Revenue Statement ”), which will show the Deferred Revenue Amount as of the Closing Date. Section 1.8(a) of the Seller Disclosure Schedule sets forth an example of how the Deferred Revenue Amount would be calculated. For the avoidance of doubt, “Deferred Revenue” will be calculated as revenue billed or received but not yet recognized under GAAP. As examples, maintenance revenue received but not yet recognized and prepayments received for consulting services not yet rendered shall be considered “Deferred Revenue.”

(b) Review by the Purchaser . Promptly after delivery to the Purchaser of the Deferred Revenue Statement, the Purchaser shall review the same, and within thirty (30) days after delivery of the Deferred Revenue Statement, deliver a notice to the Sellers either: (i) concurring with the Deferred Revenue Amount as set forth in the Deferred Revenue Statement (“ Notice of Concurrence ”); or (ii) disagreeing therewith (“ Notice of Disagreement ”). If the Purchaser shall deliver a Notice of Disagreement, it shall concurrently deliver to the Sellers a statement setting forth its proposed revisions to the Deferred Revenue Statement. Failure by the Purchaser to deliver a Notice of Disagreement and proposed revisions within such 30-day period shall be deemed to constitute a Notice of Concurrence.

(c) Resolution of Disagreements . If a Notice of Disagreement is delivered pursuant to subsection 1.8(b), the parties shall, during the thirty (30) days following such delivery (“ Negotiation Period ”), use commercially reasonable efforts to reach agreement as to the Deferred Revenue Amount. If, during such period, the parties are unable to reach agreement, they shall promptly thereafter (but in no event later than thirty (30) days from the end of the Negotiation Period) engage a firm of independent accountants of national recognized standing, reasonably satisfactory to Eclipsys and the Purchaser, to resolve the disagreement; provided, that if Eclipsys and the Purchaser are unable to agree upon such firm of independent accountants, such firm shall be any of Ernst & Young, KPMG or Grant Thornton, in that order of priority, provided that such firm does not serve at such time, and has not served during each of the prior two fiscal years, as the independent accountants of either the Purchaser or Eclipsys, and does not have at such time, and has not had during each of the prior two fiscal years, any other significant business relationship with either the Purchaser or Eclipsys. Such independent accountants shall promptly review this Agreement, the Deferred Revenue Statement and the statement accompanying the Notice of Disagreement and such other documents and workpapers and shall have access to such personnel as they reasonably deem necessary. Such independent accountants shall, as promptly as practicable, deliver to Eclipsys and the Purchaser a report setting forth the Deferred Revenue Amount prepared in accordance with the terms of this Agreement. Such report shall be final, conclusive and binding upon the parties hereto, absent fraud or manifest error.

 

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(d) The date on which the Deferred Revenue Amount is finally determined shall hereinafter be referred to as the “ Settlement Date .” In the event the Deferred Revenue Amount is greater than the Estimated Deferred Revenue Amount, the Sellers shall pay to the Purchaser within ten (10) business days after the Settlement Date an amount equal to such excess. In the event the Deferred Revenue Amount is less than the Estimated Deferred Revenue Amount, the Purchaser shall pay to the Sellers within ten (10) business days after the Settlement Date an amount equal to such deficiency. Any amounts that remain unpaid after the time periods set forth for payment in this Section 1.8(d) shall accrue interest at a per annum rate equal to the prime rate as reported in The Wall Street Journal from time to time. Any payment required pursuant to this Section 1.8(d) shall be deemed to be an adjustment to the Purchase Price for all purposes, and shall be made by the wire transfer of immediately available funds for credit to the recipient, to the account designated by such recipient in writing.

(e) Expenses . The out-of-pocket fees and expenses of the preparation of the Deferred Revenue Statement shall be split equally between the Purchaser and the Sellers and the fees and expenses of the independent accountants referred to in Section 1.8(c) shall be apportioned between the Sellers, on the one hand, and the Purchaser, on the other hand, in proportions based upon the relative success of each party’s claims as reflected in the determinations made by the independent accountants pursuant to Section 1.8(c) .

1.9 Allocation of Purchase Price . The Sellers and the Purchaser agree that the Purchase Price shall be allocated among the Transferred Assets in accordance with Section 1060 of the Code, as set forth in Section 1.9 of the Seller Disclosure Schedule. Sellers and Purchaser agree (i) to file all Tax Returns and forms (including IRS Form 8594 or any successor form) in accordance with such allocation, (ii) to update such Tax Returns and forms in accordance with Section 1060 of the Code to the extent necessary to reflect adjustments to the Purchase Price and (iii) not to take any position before any Tax authority that is inconsistent with such allocation, unless otherwise required by law.

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

Each Seller, jointly and severally, hereby makes to the Purchaser the representations and warranties set forth in this Article 2 , as qualified by the section of the Seller Disclosure Schedule that relates thereto. All references to the “Seller Disclosure Schedule” shall mean the disclosure schedule attached as Exhibit B to this Agreement. For the avoidance of doubt, the representations and warranties of the Sellers contained herein are made by the Sellers with respect to the Sellers and the CPMRC Business, as the case may be, and include, with respect to the Company, the predecessor company to the Company, CPM Resource Center, Ltd., a Michigan corporation, which was merged with and into the Company on March 5, 2004. The Seller Disclosure Schedule shall be arranged in sections and subsections corresponding to the numbered and lettered sections and subsections contained in this Article 2 . For purposes of the representations and warranties of Sellers contained herein: (i) any information disclosed in a section of the Seller Disclosure Schedule (including any exhibits and attachments incorporated therein by reference) shall be deemed to be disclosed with respect to any other section of the Seller Disclosure Schedule if there is a cross-reference in such Seller Disclosure Schedule to another section of such Seller Disclosure Schedule or otherwise it is readily apparent that such information also qualifies or applies to another section of the Seller Disclosure Schedule; and (ii) the inclusion of any information in any section of the Seller Disclosure Schedule or other document delivered by the Sellers pursuant to this Agreement shall not be deemed to be an admission or evidence of the materiality of such item, nor shall it establish a standard of materiality for any purpose whatsoever.

 

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2.1 Organization, Qualification and Corporate Power . Each of the Sellers is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Each of the Sellers is duly qualified to conduct business and is in good standing under the laws of each jurisdiction listed in Section 2.1 of the Seller Disclosure Schedule, which jurisdictions constitute the only jurisdictions in which the CPMRC Business or the ownership or leasing of the Transferred Assets requires such qualification, except for those jurisdictions in which the failure to be so qualified or in good standing, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect. The Sellers collectively have all requisite corporate power and authority to carry on the CPMRC Business that they have conducted and to own and use the Transferred Assets they have owned and used.

2.2 Authorization of Transaction . Each Seller has all requisite power and authority to execute and deliver this Agreement and the Transaction Agreements to which it is a party and to perform its obligations hereunder and thereunder. The execution and delivery by each Seller of this Agreement and the Transaction Agreements to which it is a party and the consummation by each Seller of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action on the part of each Seller, and no other corporate action on the part of any Seller is necessary to authorize each Seller’s execution and delivery of this Agreement and the other Transaction Agreements to which it is a party. This Agreement and the Transaction Agreements to which it is a party have been duly and validly executed and delivered by each Seller and constitute valid and binding obligations of each Seller, enforceable against each Seller in accordance with their respective terms, subject to (a) laws of general application relating to bankruptcy, insolvency and the relief of debtors, and (b) rules of law governing specific performance, injunctive relief and other equitable remedies.

2.3 Noncontravention . Neither the execution and delivery by each Seller of this Agreement and the Transaction Agreements to which it is a party, nor the consummation by each Seller of the transactions contemplated hereby or thereby, will (a) conflict with or violate any provision of the Certificate of Incorporation or By-laws of any Seller, (b) require on the part of any Seller any notice to or filing with, or any permit, authorization, consent or approval of, any Governmental Entity, (c) conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of obligations under, create in any party the right to terminate, modify or cancel, or require any notice, consent or waiver under, any contract or instrument to which any Seller is a party or by which any Seller is bound or to which any of their respective assets are subject, except for (i) any conflict, breach, default, acceleration, termination, modification or cancellation which, individually or in the aggregate, would not be material to the CPMRC Business or adversely affect the consummation of the transactions contemplated hereby, (ii) any notice, consent or waiver the absence of which, individually or in the aggregate, would not be material to the CPMRC Business or adversely affect the consummation of the transactions contemplated hereby or (iii) notices, consents or waivers required to transfer or subcontract the Transferring Contracts, (d) result in the imposition of any Security Interest upon any of the Transferred Assets or (e) violate any order, writ, injunction, decree, statute, rule or regulation applicable to any Seller or any of the Transferred Assets or the CPMRC Business.

2.4 Brokers’ Fees . With the exception of the fees and expenses payable to Robert Miller or MTW Studios, Inc., which fees and expenses will be paid by Eclipsys, no Seller has any liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the Contemplated Transactions.

2.5 Projections . The projections set forth in Section 2.5 of the Seller Disclosure Schedule that are part of the Future Business Information (the “ Projections ”) were prepared by Eclipsys in good faith using the same type of information used by the management of Eclipsys in preparing its own projections.

 

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2.6 Financial Information . Eclipsys has provided to the Purchaser the Financial Information. Except as set forth in Section 2.6(b) of the Seller Disclosure Schedule, the Financial Information fairly presents the financial condition and results of operations of the CPMRC Business as of the respective dates thereof and for the periods referred to therein and is true and correct in all material respects. Except as set forth in Section 2.6(b) of the Seller Disclosure Schedule, the Financial Information is consistent with the books and records of the Sellers, which records are true and correct.

2.7 Absence of Certain Changes . Since the Most Recent Balance Sheet Date, (a) there has not been any event or occurrence, or development which, individually or in the aggregate, has had, or could reasonably be expected to have in the future, a Material Adverse Effect on the CPMRC Business, (b) the Sellers have carried on the CPMRC Business in the Ordinary Course of Business and (c) except for amounts as reflected in the Most Recent Balance Sheet, as any of such items listed in clauses (i)-(xii) relate to the CPMRC Business, no Seller has:

(i) borrowed any money which borrowings are in excess of $100,000 in the aggregate;

(ii) voluntarily incurred any Liability outside the Ordinary Course of Business;

(iii) suffered any damage, destruction or loss of physical property or goods resulting in costs or expenses to the Company in excess of $50,000 whether or not covered by insurance;

(iv) incurred or committed to incur any capital expenditures in excess of $100,000;

(v) leased, licensed, sold, transferred, encumbered or permitted to be encumbered any asset, Intellectual Property or other property (including sales or transfers to Affiliates of the Company but excluding licensing by the Company or Eclipsys of CPMRC Content in the Ordinary Course of Business) or canceled or compromised any of its debts, except in the Ordinary Course of Business;

(vi) entered into or accelerated, terminated, modified or cancelled any material agreement, contract, lease or license (or series of related material agreements, contracts, leases or licenses);

(vii) waived or released any right or claim in excess of $50,000 relating to the CPMRC Business;

(viii) granted any general or specific increase in compensation (including bonuses, profit sharing or deferred compensation) payable to or to become payable to any Employees or Consultants, except as required by law or under existing contractual obligations, or adopted any benefit plan, or granted, increased, augmented or improved the benefits granted to or for the benefit of any Employee of Consultant under any Employee Benefit Plan, except in the Ordinary Course of Business or as required by law;

(ix) failed to maintain their accounts, books and records in the usual, regular and ordinary manner on a basis consistently applied;

(x) changed any of its subscription policies (including subscriber acquisition and retention policies) or materially reduced any of the services provided to subscribers;

 

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(xi) settled or compromised any Tax liability or agreed to any adjustment of any Tax attribute or made any material election with respect to its Taxes; or

(xii) entered into any transaction or taken any action or failed to enter into any transaction or failed to take any action that would reasonably be expected to have a Material Adverse Effect on the CPMRC Business.

2.8 Undisclosed Liabilities . The Sellers do not have any liabilities with respect to the CPMRC Business, whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated and whether due or to become due, except for (a) liabilities shown on the Most Recent Balance Sheet of the CPMRC Business, (b) liabilities which have arisen since the Most Recent Balance Sheet Date of the CPMRC Business in the Ordinary Course of Business, which liabilities primarily relate to deferred revenue paid annually by clients in advance for maintenance services and which do not in the aggregate exceed $500,000, and (c) liabilities incurred since the Most Recent Balance Sheet Date of the CPMRC Business outside the Ordinary Course of Business set forth in Section 2.8 of the Seller Disclosure Schedule.

2.9 Tax Matters .

(a) Each Seller has filed (or has caused to be filed) on a timely basis all material Tax Returns that it was required to file with respect to the Transferred Assets. Each Seller has paid (or has caused to be paid) on a timely basis all Taxes that were due and payable with respect to the Transferred Assets, whether or not shown on any Tax Return. All material Taxes that each Seller is or was required by law to withhold or collect with respect to the Transferred Assets have been duly withheld or collected and, to the extent required, have been paid to the proper Governmental Entity.

(b) No examination or audit of any Tax Return of the Sellers by any Governmental Entity, as such Tax Return relates to the Transferred Assets, is currently in progress or, to the knowledge of the Sellers, threatened or contemplated. No deficiencies for any Taxes with respect to the Transferred Assets have been proposed, asserted or assessed against the Sellers which have not been resolved and paid in full.

(c) There are no liens or other encumbrances with respect to Taxes upon the Transferred Assets, other than with respect to Taxes not yet due and payable.

(d) No Seller is a “foreign person” within the meaning of Section 1445 of the Code, and each Seller will furnish Purchaser with an affidavit that satisfies the requirements of Section 1445 of the Code.

2.10 Assets .

(a) Eclipsys, the Company or Solutions is the true and lawful owner, and has good and marketable title to, or a valid leasehold interest in, or a valid license to, all right, title and interest in and to all of the Transferred Assets, free and clear of all Claims, and upon consummation of the Contemplated Transactions, the Sellers shall have conveyed, assigned and transferred to the Purchaser title to all of the Transferred Assets, free and clear of all Claims. The Transferred Assets, together with the rights made available to the Purchaser pursuant to the Transaction Agreements, are sufficient for the operation of the CPMRC Business by the Purchaser after Closing in substantially the same manner as conducted prior to the Closing. Without limiting the foregoing, the Transferred Assets, together with the rights made available to the Purchaser pursuant to the Transaction Agreements, include all of the tools and applications necessary to render, manage and deliver the CPMRC Content in paper form or in CICC

 

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format and the Restricted Services to the customers of the CPMRC Business as of the date hereof and immediately following Closing. All of the Transferred Assets are free from material defects, have been maintained in accordance with normal industry practice, are in good operating condition and repair (subject to normal wear and tear), are operated in conformity in all material respects with all applicable laws and regulations. For the avoidance of doubt, the Transferred Assets do not include the assets described in Section 1.2 .

(b) Section 2.10(b) of the Seller Disclosure Schedule lists individually (i) all fixed assets (within the meaning of GAAP) that are part of the Transferred Assets having a book value greater than $25,000 and (ii) all other assets of a tangible nature (other than inventories) that are part of the Transferred Assets whose book value exceeds $25,000.

(c) Each item of equipment, motor vehicle and other asset that are part of the Transferred Assets that is pursuant to a lease agreement or other contractual arrangement is in such condition that, upon its return to its lessor or owner under the applicable lease or contract, the obligations of any Seller, as applicable, to such lessor or owner will have been discharged in full.

2.11 Real Property . No Seller owns or has ever owned any real property used or held for use in the operation of the CPMRC Business.

2.12 Real Property Leases . Section 2.12 of the Seller Disclosure Schedule lists all Leases. The Sellers have delivered to the Purchaser complete and accurate copies of the Leases. With respect to each Lease:

(a) such Lease is a legal, valid and binding obligation of Eclipsys, the Company or Solutions, as applicable, and based on Sellers’ reading of such Lease and to the actual knowledge of the Seller Knowledge Persons without further inquiry, the other parties thereto;

(b) no Seller has received any written notice of a dispute with respect to such Lease;

(c) no Seller or, to the Knowledge of the Sellers, any other party, is in material breach or violation of, or default under, any such Lease, and no event has occurred, is pending or, to the Knowledge of the Sellers, is threatened, which, after the giving of notice, with lapse of time, or otherwise, would constitute a material breach or default by the Company under such Lease;

(d) the transactions contemplated by this Agreement do not require the consent of any party to such Lease, will not result in a material breach or default under such Lease, and will not otherwise cause such Lease to cease to be legal, valid and binding obligations of the Seller that is party thereto, as applicable, following the Closing;

(e) no security deposit or portion thereof deposited with respect to such Lease has been applied in respect of a breach or default under such Lease;

(f) no Seller owes and, under such Lease, has any obligation to pay, any brokerage commissions or finder’s fees with respect to such Lease;

(g) no Seller or any Affiliate thereof has sublicensed, licensed, assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in the leasehold or subleasehold of any Lease;

 

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(h) to the Knowledge of the Sellers, all facilities leased or subleased under each Lease is supplied with utilities and other services adequate for the operation of said facilities; and

(i) to the Knowledge of the Sellers, there is no Security Interest, easement, covenant or other restriction applicable to the real property subject to such Lease which would (or could reasonably be expected to) materially impair the current uses or the occupancy by any Seller of the property subject thereto.

2.13 Intellectual Property .

(a) Section 2.13(a) of the Seller Disclosure Schedule lists each patent, patent application, copyright registration or application therefor, mask work registration or application therefor, and trademark, service mark and domain name registration or application therefor of the Company or related primarily to the CPMRC Business.

(b) Section 2.13(b) of the Seller Disclosure Schedule identifies each license or other agreement pursuant to which any Seller has licensed, distributed or otherwise granted any rights to any third party with respect to any Business-Related Intellectual Property.

(c) Section 2.13(c) of the Seller Disclosure Schedule identifies each license or other agreement (other than licenses for “off-the-shelf” software in an amount representing license, maintenance and other fees less than $10,000, which in the aggregate do not exceed $50,000) pursuant to which any Seller in connection with the CPMRC Business has the right to use Licensed Intellectual Property (each a “ Business License Agreement ” and collectively, the “ Business License Agreements ”). Each Business License Agreement is a legal, valid and binding agreement of the Seller that is party thereto, as applicable, and based on Sellers’ reading of such Business License Agreement and to the actual knowledge of the Seller Knowledge Persons without further inquiry, the other party thereto. The Sellers have not received any written notice of any termination of any Business License Agreement as a result of the Contemplated Transactions or otherwise.

(d) All current employees, contractors, consultants and personnel of any Seller who have performed services related to the CPMRC Business have executed written contracts with such Seller, as applicable, that assign all rights to inventions, discoveries, improvements, works of authorship or information relating to the Proprietary Intellectual Property to such Seller, as the case may be. No Seller has received any written notice of a claim by any former employee of any Seller that such person has ownership rights to the Proprietary Intellectual Property except for such matters that have been settled for less than $10,000.

(e) With respect to the Proprietary Intellectual Property, the Sellers collectively are the sole and exclusive owner of the entire right, title and interest in the Proprietary Intellectual Property, free and clear of any Claims. The Business-Related Intellectual Property and all components thereof do not and the use of any of the foregoing by the Purchaser as specified in the Transaction Agreements will not, upon the Closing, infringe upon the Intellectual Property of any third parties located anywhere in the world. None of the Business-Related Intellectual Property is or has been involved in any interference, reissue, reexamination, opposition, invalidation or cancellation action, claim or proceeding and, to the Knowledge of the Sellers, no such action, claim or proceeding has been threatened against the Sellers. No other claim, action, suit, proceeding or investigation with respect to the Business-Related Intellectual Property has ever been instituted, is pending, or to the Knowledge of the Sellers, threatened.

(f) There exists no actual or, to the Knowledge of the Sellers, threatened infringement or misappropriation proceeding by any third party of any Business-Related Intellectual Property or, to the Knowledge of the Sellers, any event that would reasonably be expected to constitute such an infringement or misappropriation.

 

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(g) Section 2.13(g) of the Seller Disclosure Schedule lists all domain names that are owned by any Seller and used primarily in connection with the CPMRC Business other than those owned by or referencing Eclipsys or Eclipsys’ trademarks or service marks (the “ Domain Names ”) registered anywhere in the world. The Sellers represent and warrant that the Company or Eclipsys is the owner of all of the Domain Names (including all goodwill attached thereto) and that the Sellers have all rights necessary to transfer the Domain Names hereunder as part of the Transferred Assets.

(h) Section 2.13(h) of the Seller Disclosure Schedule sets forth all of the names, trademarks, designs and logos owned by the Company and all of the names, trademarks, designs and logos previously or currently used by any Seller as it relates primarily to the CPMRC Business (collectively, the “ Business Marks ”). The Sellers represent and warrant that the Company or Eclipsys is the owner of all of the Business Marks (including all goodwill attached thereto) and that the Sellers have all rights necessary to transfer the Business Marks hereunder as part of the Transferred Assets.

(i) As of the Closing Date, the CPRMC Content (i) has been recently updated to reflect current standards of clinical practice, (ii) conforms with all published specifications therefor, and (iii) is compliant with all laws, rules and regulations that impose requirements or restrictions on the CPMRC Content. As of the Closing Date, the CICC has not been updated to reflect changes made to the Clinical Practice Guidelines since June 2007, but when the CICC Updates described in Section 4.2(d) have been completed, the CICC expression of the Clinical Practice Guidelines will be as current and complete as the expression of the Clinical Practice Guidelines in the current version of KBC released on or about September 30, 2007, as such version has been updated as of the Closing Date.

(j) Each Seller has all rights necessary to use the Business Related Intellectual Property it uses and has all rights necessary to transfer such rights in and to the Business Related Intellectual Property to Purchaser as part of the Transferred Assets. Except for any Business Related Intellectual Property that is Licensed Intellectual Property, the Sellers (or any of them) is/are the sole and exclusive owners(s) of, the entire right, title and interest in the Business Related Intellectual Property, free and clear of any Claims.

(k) No federal, state, local or other government funding or university or college facilities were used in the development of any Proprietary Intellectual Property (including any CPMRC Content). For the avoidance of doubt, the information in Section 2.13(k) of the Seller Disclosure Schedule does not affect the representations and warranties being made by the Sellers in Section 2.13(e) of this Agreement.

(l) To the Knowledge of the Sellers, the Internal Systems are free from significant defects or programming errors and conform in all material respects to the written documentation and specifications therefor.

2.14 Contracts .

(a) Section 2.14(a) of the Seller Disclosure Schedule lists the following agreements (written or oral) (i) to which any Seller is a party and that are material to the CPMRC Business or (ii) to which the Purchaser will have rights specifically provided under any of the Transaction Agreements:

(i) all agreements with customers that include the provision of Customer Deliverables for which payments are or may become due or payable after the Closing;

 

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(ii) any agreement (or group of related agreements) for the lease of personal property from or to third parties providing for lease payments in excess of $25,000 per annum or having a remaining term longer than twelve months;

(iii) any agreement (or group of related agreements) for the purchase or sale of products or for the furnishing or receipt of services (A) which calls for performance over a period of more than one year or (B) which involves more than the sum of $25,000 in the aggregate;

(iv) any agreement relating to the Business-Related Intellectual Property;

(v) any agreement with distributors, resellers, independent suppliers, contractors, vendors, manufacturers and outsourcers which involves more than the sum of $25,000 in the aggregate;

(vi) any agreement concerning the establishment or operation of a partnership, joint venture or limited liability company;

(vii) any agreement (or group of related agreements) under which any Seller has created, incurred, assumed or guaranteed (or may create, incur, assume or guarantee) indebtedness (including capitalized lease obligations) involving more than $25,000 or under which any Seller has imposed (or may impose) a Security Interest on any of the Transferred Assets;

(viii) any agreement for the disposition of any assets or business (other than sales licenses to the CPMRC Content made in the Ordinary Course of Business), any agreement for the grant to any person of any preferential rights to purchase any of the Transferred Assets or portion of the CPMRC Business, or any agreement for the acquisition of the Transferred Assets or the CPMRC Business (other than purchases of inventory or components in the Ordinary Course of Business);

(ix) any note, bond, indenture, credit facility, mortgage, security agreement or other instrument or document relating to or evidencing indebtedness for money borrowed (all of which indebtedness is prepayable currently at the option of the Company without premium or penalty) or a security interest or mortgage in the Transferred Assets;

(x) any agreement under which any warranty, indemnity or guaranty is issued (other than customary product warranties, indemnities and guaranties provided in the Ordinary Course of Business);

(xi) any agreement concerning non-disclosure, confidentiality, trade secret, invention assignment or other assignment of Intellectual Property provisions;

(xii) any agreement involving any of the Employees;

(xiii) any agreement relating to money advanced or loaned (i) to any of the Employees, or (ii) in an amount exceeding $25,000 in the aggregate to any other person;

(xiv) any agreement under which the consequences of a default or termination would reasonably be expected to have a Material Adverse Effect on the CPMRC Business; and

(xv) any other agreement (or group of related agreements) either involving more than $25,000 or not entered into in the Ordinary Course of Business.

 

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(b) The Sellers have delivered or made available to the Purchaser a complete and accurate copy of each agreement listed in Section 2.14(a) of the Seller Disclosure Schedule and a written summary setting forth the terms and conditions of each oral agreement referred to in Section 2.14(a) of the Seller Disclosure Schedule. With respect to each such agreement that is part of the Transferred Assets or to which the Purchaser will have rights specifically provided under any of the Transaction Agreements, (i) the agreement is a legal, valid and binding obligation of the Seller that is party thereto, as the case may be, and based on Sellers’ reading of such agreement and to the actual knowledge of the Seller Knowledge Persons without further inquiry, the other parties thereto; and (ii) no Seller, as the case may be, or, to the Knowledge of the Sellers, any other party, is in material breach or violation of, or default under, any such agreement, and no event has occurred, is pending or, to the Knowledge of the Sellers, is threatened, which, after the giving of notice, with lapse of time, or otherwise, would constitute a material breach or default by any Seller, as the case may be, or, to the Knowledge of the Sellers, any other party under such agreement; (iii) there are no material disputes or material disagreements between any Seller, as the case may be and any other party with respect to any such agreement; (iv) no Seller, as the case may be, nor any other party has sent a written notice of termination or non-renewal or claim with respect to any such agreement and (v)(i) each agreement set forth in Section 1.1(j) of the Seller Disclosure Agreement and (ii) each other Transferring Contract shall remain in full force and effect immediately following the consummation of the Contemplated Transactions, subject in the case of clause (v)(ii) to any consent required to be obtained with respect to such Transferring Contract under this Agreement or the Consulting and Subcontracting Agreement.

2.15 Books and Records . The minute books and stock ledger of the Company are true and correct in all material respects. The books and records of each Seller as they relate to the CPMRC Business accurately reflect in all material respects the portions of the assets, liabilities, financial condition and results of operations of the CPMRC Business that they purport to depict.

2.16 Powers of Attorney . There are no outstanding powers of attorney executed on behalf of any Seller with respect to the CPMRC Business.

2.17 Insurance . The Seller maintains insurance policies (including fire, theft, casualty, comprehensive general liability, workers compensation, business interruption, environmental, product liability and automobile insurance policies and bond and surety arrangements) that provide coverage for the CPMRC Business, all of which are in full force and effect. The insurance policies maintained by the Seller (taken together) are of such types and in such amounts and for such risks, casualties and contingencies as is reasonably adequate to insure the CPMRC Business against insurable losses, damages and claims to its business, properties, assets and operations for risks normally insured against by a person carrying on a similar business to the CPMRC Business. There is no claim pending under any such policy as to which coverage has been questioned, denied or disputed by the underwriter of such policy. All premiums due and payable under all such policies on or prior to the date of this Agreement have been paid, and to the Knowledge of the Sellers, no event has occurred that is reasonably likely to give rise to a claim for retroactive premiums by the insurer. The Sellers have no Knowledge of any threatened termination of, or premium increase with respect to, any such policy.

2.18 Litigation . As of the date of this Agreement, there is no Legal Proceeding pending or that has been threatened in writing (a) against any Seller relating to the CPMRC Business that seeks either damages in excess of $25,000 or equitable relief or (b) against any Seller in any manner that challenges or seeks to prevent, enjoin, alter or delay the transactions contemplated by this Agreement. There are no judgments, orders or decrees outstanding that relate to the CPMRC Business.

 

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2.19 Warranties . No Customer Deliverables manufactured, sold, leased, licensed or delivered by any Seller is subject to any guaranty, warranty, right of return, right of credit or other indemnity other than the applicable standard terms and conditions of sale or license of the Customer Deliverables, which are set forth in Section 2.19 of the Seller Disclosure Schedule. To Sellers’ Knowledge, there are no claims from a third party that the Customer Deliverables violate the terms of any agreements to which they are subject.

2.20 Employees .

(a) Section 2.20(a)(i) of the Seller Disclosure Schedule contains a complete list of all employees of any Seller primarily or exclusively engaged in the CPMRC Business (the “ Employees ”), including, (1) their titles/positions; (2) their dates of hire; and (3) their current salaries or wages and all bonuses, commissions and incentives paid at any time during the past twelve (12) months; and (4) their target bonus for 2007. Section 2.20(a)(ii) of the Seller Disclosure Schedule contains a list of all consultants and independent contractors of any Seller primarily or exclusively engaged in the CPMRC Business (the “ Consultants ”), along with the per-hour consulting rate paid to each such person.

(b) The Sellers have provided the Purchaser with copies of all standard forms of employee trade secret, non-compete, non-disclosure and invention assignment agreements applicable to the Employees.

(c) Except for any employment, termination, severance and/or change of control agreement or severance plan or policy set forth in Section 2.20(a)(i) of the Seller Disclosure Schedule, all Employees may be terminated at any time with or without cause and without any severance or other liability. Except as provided in Section 2.20(a)(i) of the Seller Disclosure Schedule, all Consultants may be terminated at any time without liability.

(d) The Sellers have delivered to Purchaser accurate and complete copies of all Company written manuals, handbooks, and policies relating to the employment of the Employees.

(e) To the Knowledge of the Sellers, except as set forth in Section 2.20(e) of the Seller Disclosure Schedule, no Employee or significant group of Employees has informed any Seller of his, her or their current intent to terminate employment with Eclipsys. No Seller has implemented any layoff of Employees that could implicate the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar foreign, state or local law, regulation or ordinance (collectively, the “ WARN Act ”). Sellers shall be solely responsible for complying with the WARN Act, including issuing any notices required thereunder, to the extent required on or before the Closing Date.

(f) No Seller as it relates to the CPMRC Business is a party to or bound by any collective bargaining agreement and none of the Employees are represented by any labor union or organization, nor has any Seller experienced any strikes, grievances, claims of unfair labor practices or other collective bargaining disputes in connection with the operation of the CPMRC Business. No Seller has Knowledge of any organizational effort made or threatened, either currently or within the past two years, by or on behalf of any labor union with respect to any of the Employees. There is no unfair labor practice charge or complaint by any Employee against any Seller pending before the National Labor Relations Board.

(g) As to the Employees, each Seller is in compliance in all material respects with all federal and state laws respecting employment and employment practices, terms and conditions of employment and employment practices, immigration, wage and hour, occupational health and safety.

 

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(h) As to the Employees and the Consultants, there are no claims pending or, to the Sellers’ Knowledge, threatened against any Seller or any of their respective officers or directors, including any unlawful employment practice discrimination charge involving any Employees pending or threatened before the Equal Employment Opportunity Commission (“ EEOC ”), EEOC recognized state “referral agency” or any other governmental agency and no investigation is pending or, to the Knowledge of the Sellers, threatened by the EEOC or any governmental agency with respect to the Employees and the Consultants.

(i) As to the Employees, each Seller has paid in full all wages, salaries, commissions, bonuses, benefits, compensation, fees and severance due and payable prior to the date of termination of employment. As to the Consultants, each Seller has paid in full all commissions, bonuses and fees due and payable prior to the date of this Agreement.

(j) To the Sellers’ Knowledge, no Employee is a party to or bound by any confidentiality agreement, non-competition agreement or other agreement (with any other person or entity) that restricts the performance by such person of any of his duties or responsibilities as an employee of the Purchaser.

2.21 Employee Benefits .

(a) Section 2.21(a) of the Seller Disclosure Schedule contains a complete and accurate list of all Employee Benefit Plans. Complete and accurate copies of (i) all Employee Benefit Plans which have been reduced to writing, (ii) written summaries of all unwritten Employee Benefit Plans, (iii) all related trust or other funding agreements, insurance contracts and summary plan descriptions, the most recent determination letters with respect to each Employee Benefit Plan that is intended to be tax-qualified under section 401(a) of the Code and (iv) all annual reports filed on IRS Form 5500, 5500C or 5500R and (for all funded plans) all plan financial statements for the last five plan years for each Employee Benefit Plan, have been made available to the Purchaser.

(b) Each Employee Benefit Plan has been operated and administered in all material respects in accordance with its terms and with ERISA, the Code and all other applicable laws. Each Seller and each ERISA Affiliate has in all material respects met their obligations with respect to each Employee Benefit Plan and at or before the time when due have made all required contributions thereto.

(c) All the Employee Benefit Plans that are intended to be qualified under Section 401(a) of the Code have received determination letters from the Internal Revenue Service to the effect that such Employee Benefit Plans are qualified and the plans and the trusts related thereto are exempt from federal income taxes under Sections 401(a) and 501(a), respectively, of the Code, no such determination letter has been revoked and revocation has not been threatened, and to the Knowledge of the Sellers, no act or omission has occurred, that would adversely affect its qualification.

(d) Notwithstanding anything to contrary provided in this Agreement, except as required by law, the Purchaser shall not assume, or have any direct or indirect responsibility, liability or obligation whatsoever with respect to, any Employee Benefit Plan. No event has occurred or is reasonably likely to occur that has resulted or would reasonably be expected to result in any current, pending, or to Sellers’ Knowledge, threatened lien or Liability on any of the Transferred Assets pursuant to Section 412(n) of the Code or Sections 4068 or 4201 of ERISA.

2.22 Environmental Matters .

(a) In connection with the operation of the CPMRC Business and the ownership and use of the Transferred Assets, each Seller has complied with all applicable Environmental Laws, except for violations of Environmental Laws that, individually or in the aggregate, have not had and would not

 

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reasonably be expected to have a Material Adverse Effect. There is no pending or, to the Knowledge of the Sellers, threatened civil or criminal litigation, written notice of violation, formal administrative proceeding, or investigation, inquiry or information request by any Governmental Entity, relating to any Environmental Law involving the operation of the CPMRC Business or the ownership or use of the Transferred Assets.

(b) In connection with the operation of the CPMRC Business or the ownership or use of the Transferred Assets, no Seller has any liabilities or obligations arising from the release of any Materials of Environmental Concern into the environment.

(c) In connection with the operation of the CPMRC Business or the ownership or use of the Transferred Assets, no Seller is a party to or bound by any court order, administrative order, consent order or other agreement with any Governmental Entity entered into in connection with any legal obligation or liability arising under any Environmental Law.

(d) Set forth in Section 2.22(d) of the Seller Disclosure Schedule is a list of all documents (whether in hard copy or electronic form) that contain any environmental reports, investigations and audits relating to premises currently or previously owned or operated in connection with the CPMRC Business by any Seller (whether conducted by or on behalf of Eclipsys, the Company or Solutions or a third party, and whether done at the initiative of Eclipsys, the Company or directed by a Governmental Entity or other third party) which any Seller has possession of or access to. A complete and accurate copy of each such document has been provided to the Purchaser.

(e) No Seller is aware of any material environmental liability of any solid or hazardous waste transporter or treatment, storage or disposal facility that has been used in the operation of the CPMRC Business.

2.23 Legal Compliance . Each Seller is currently conducting, and has at all times since November 1, 2004 conducted, the CPMRC Business in compliance in all material respects with each applicable law (including rules and regulations thereunder) of any federal, state, local or foreign government, or any Governmental Entity. No Seller has received any written notice from any Governmental Entity alleging, as it relates to the CPMRC Business, noncompliance by any Seller, with any applicable law, rule or regulation and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand or notice has been filed or commenced or, to the Knowledge of the Sellers, is threatened as it relates to the CPMRC Business, against any Seller.

2.24 Illicit or Illegal Payments . As it relates to the CPMRC Business, no Seller, nor any Affiliate of the Sellers, has used any corporate funds for any unlawful contribution, gift, entertainment or other expense relating to political activity or made any direct, or indirect, unlawful payment to any United States, federal, state, local or foreign government official or employee from corporate funds or paid or made any bribe, rebate, payoff, influence payment, kickback, or other unlawful payment.

2.25 Customers and Suppliers . Section 2.25 of the Seller Disclosure Schedule sets forth a list of (a) each customer or licensee of the CPMRC Business (including the particular customers of Eclipsys for which services are being subcontracted pursuant to the Consulting and Subcontracting Agreement) that accounted for more than $50,000 in revenue reflected in the Financial Information during the last full fiscal year or the interim period through the Most Recent Balance Sheet Date and the amount of revenues accounted for by such customer during each such period; (b) customers of the CPMRC Business that the Sellers anticipate, based upon revenue to date, shall account for more than $50,000 in revenue for the CPMRC Business for the current fiscal year, and for the fiscal years ending December 31, 2008 and December 31, 2009, provided , however , that Sellers are not making, and nothing in this Section 2.25 shall

 

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be construed to mean that Sellers are making, any guarantees, or except to the limited extent set forth in Section 2.5 and this Section 2.25 , any representations or warranties, with respect to any future business, revenue or projections for the CPMRC Business or attributable to any of the customers or licensees of the CPMRC Business for any period following the Most Recent Balance Sheet Date, and (c) each supplier that is a material supplier of any significant product or service to the CPMRC Business. No such customer or supplier has indicated within the past year that it will stop, or decrease the rate of, buying products or supplying products, as applicable, to the CPMRC Business. No purchase order or commitment of the CPMRC Business is in excess of normal requirements.

2.26 Permits . Section 2.26 of the Seller Disclosure Schedule sets forth a list of all Permits issued to or held by the Company or used primarily in the CPMRC Business. Such listed Permits are the only Permits that are required to conduct the CPMRC Business as presently conducted or as proposed to be conducted, except for those the absence of which, individually or in the aggregate, is not and would not reasonably be expected to be material to the CPMRC Business. Each such Permit is in full force and effect. The Sellers, as the case may be, are in material compliance with the terms of each such Permit. To the Knowledge of the Sellers, no suspension or cancellation of such Permit is threatened and there is no reasonable basis for believing that such Permit will not be renewable upon expiration.

2.27 Certain CPMRC Business Relationships With Affiliates . Except as set forth in Section 2.27 of the Seller Disclosure Schedule, no Affiliate of any Seller (a) owns any property or right, tangible or intangible, which is used primarily in the CPMRC Business, (b) has any claim or cause of action against any Seller, as it relates to the CPMRC Business, or (c) owes any money to, or is owed any money by, any Seller as it relates to the CPMRC Business. Section 2.27 of the Seller Disclosure Schedule describes any transactions or relationships involving amounts in excess of $100,000 per annum related to the CPMRC Business between (i) any Seller and (ii) any Seller and any of their Affiliates that occurred or have existed since the beginning of the time period covered by the Financial Information.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

The Purchaser represents and warrants to the Sellers the following:

3.1 Organization, Qualification and Corporate Power . The Purchaser is a corporation duly organized and validly existing under the laws of the State of New York and has all requisite corporate power and authority to carry on the business in which it is engaged.

3.2 Authorization of Transaction . The Purchaser has all requisite power and authority to execute and deliver this Agreement and the Transaction Agreements to which it is a party and to perform its obligations hereunder and thereunder. The execution and delivery by the Purchaser of this Agreement and the Transaction Agreements to which it is a party and the consummation by the Purchaser of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action on the part of the Purchaser. This Agreement and the Transaction Agreements to which it is a party have been duly and validly executed and delivered by the Purchaser and constitute valid and binding obligations of the Purchaser, enforceable against the Purchaser in accordance with their respective terms, subject to (a) laws of general application relating to bankruptcy, insolvency and the relief of debtors, and (b) rules of law governing specific performance, injunctive relief and other equitable remedies.

3.3 Noncontravention . Neither the execution and delivery by the Purchaser of this Agreement and the Transaction Agreements to which it is a party, nor the consummation by the Purchaser of the transactions contemplated hereby or thereby, will (a) conflict with or violate any provision of the

 

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Articles of Incorporation or bylaws of the Purchaser, (b) require on the part of the Purchaser any notice to or filing with, or any permit, authorization, consent or approval of, any Governmental Entity, (c) conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of obligations under, create in any party the right to terminate, modify or cancel, or require any notice, consent or waiver under, any contract or instrument to which the Purchaser is a party or by which the Purchaser is bound or to which any of its assets is subject, except for (i) any conflict, breach, default, acceleration, termination, modification or cancellation which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect and would not adversely affect the consummation of the transactions contemplated hereby or (ii) any notice, consent or waiver the absence of which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect and would not adversely affect the consummation of the transactions contemplated hereby, or (d) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Purchaser or any of its properties or assets.

3.4 Litigation . As of the date of this Agreement, there is no Legal Proceeding which is pending or has been threatened in writing against the Purchaser which in any manner challenges or seeks to prevent, enjoin, alter or delay the transactions contemplated by this Agreement.

3.5 Brokers’ Fees . The Purchaser does not have any liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the Contemplated Transactions.

3.6 Projections . The Purchaser acknowledges and agrees that (i) except as specifically provided in Section 2.5 herein, the Sellers are not making any guarantees of any kind, or except to the limited extent set forth in Section 2.5 and Section 2.25 , any representations or warranties, with respect to the Projections, the Future Business Information or any likely operating results of the CPMRC Business, or parts thereof, following the Closing, and (ii) the Purchaser has conducted its own due diligence investigation with respect to the Projections and the Future Business Information.

3.7 Adequacy of Funds . The Purchaser has and will maintain during the period in which any amounts may be payable hereunder adequate financial resources to satisfy its monetary and other obligations under this Agreement, including the payment of the Purchase Price in accordance herewith.

ARTICLE 4

ADDITIONAL COVENANTS

4.1 Covenants of the Sellers .

(a) Collection of Proceeds . Following the Closing, (i) to the extent any Seller receives or otherwise comes into possession of cash receipts attributable to the operation of the CPMRC Business due for products and services provided after the Closing (other than products or services that the Sellers are permitted t


 
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