-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AQGyoe8n8CpY3oJS1Akk31WvGMjoFWewpbPC4TVSoBe5yCNBgfouZkjzoZ5iTlZA iJ8EZap46rOM4IrcPT52oA== 0000950133-00-003417.txt : 20030113 0000950133-00-003417.hdr.sgml : 20030113 20000814112500 ACCESSION NUMBER: 0000950133-00-003417 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 DATE AS OF CHANGE: 20020325 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ECLIPSYS CORP CENTRAL INDEX KEY: 0001034088 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 650632092 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-24539 FILM NUMBER: 00696842 BUSINESS ADDRESS: STREET 1: 777 E ATLANTIC AVE STE 200 CITY: DELRAY BEACH STATE: FL ZIP: 33483 BUSINESS PHONE: 5612431440 MAIL ADDRESS: STREET 1: 777 EAST ATLANTIC AVE SUITE 200 CITY: DELRAY BEACH STATE: FL ZIP: 33483 10-Q 1 e10-q.txt FORM 10-Q 1 =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 10-Q ---------------- QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 2000 COMMISSION FILE NUMBER: 000-24539 ECLIPSYS CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 65-0632092 (State of Incorporation) (IRS Employer Identification Number) 777 East Atlantic Avenue Suite 200 Delray Beach, Florida 33483 (Address of principal executive offices) (561)-243-1440 (Telephone number of registrant) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing for the past 90 days. Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. CLASS SHARES OUTSTANDING AS OF JULY 15, 2000 ----- -------------------------------------- Common Stock, $.01 par value 36,735,297. ----------- =============================================================================== 2 ECLIPSYS CORPORATION FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2000 INDEX
PART I. Financial Information Item 1. Condensed Consolidated Balance Sheets - As of June 30, 2000 (unaudited) and December 31, 1999 Condensed Consolidated Statements of Operations (unaudited) - For the Three and Six Months ended June 30, 2000 and 1999 Condensed Consolidated Statements of Cash Flows (unaudited) - For the Six Months ended June 30, 2000 and 1999 Notes to Condensed Consolidated Financial Statements (unaudited) - For the Three and Six Months ended June 30, 2000 and 1999 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. Other Information Item 1. Legal Proceedings Item 2. Changes in Securities Item 6. Exhibits and Reports on Form 8-K
2 3 PART I. ITEM 1. ECLISPSYS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2000 (UNAUDITED) AND DECEMBER 31, 1999 (IN THOUSANDS)
JUNE 30, 2000 DECEMBER 31, 1999 ----------------------------- ----------------------- ASSETS Current assets: Cash and cash equivalents $ 23,084 $ 33,956 Accounts receivable, net 76,941 77,254 Inventory 526 660 Other current assets 11,914 11,800 ------------- ------------- TOTAL CURRENT ASSETS 112,465 123,670 Fixed assets, net 15,536 14,522 Capitalized software development costs, net 10,005 7,944 Acquired technology, net 28,273 33,161 Intangible assets, net 12,354 16,858 Other assets 5,493 6,780 ------------- ------------- TOTAL ASSETS $ 184,126 $ 202,935 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Deferred revenue $ 43,759 $ 49,279 Current portion of long-term debt 790 - Other current liabilities 36,078 41,288 ------------- ------------- TOTAL CURRENT LIABILITIES 80,627 90,567 Deferred revenue 6,265 8,803 Long-term debt 1,090 - Other long-term liabilities 2,264 2,264 STOCKHOLDERS' EQUITY Common stock 367 363 Unearned stock compensation (248) (320) Additional paid-in capital 256,709 254,085 Accumulated other comprehensive loss (206) (327) Accumulated deficit (162,742) (152,500) -------------- -------------- Total stockholders' equity 93,880 101,301 ------------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 184,126 $ 202,935 ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 3 4 ECLIPSYS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (IN THOUSANDS EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------------------------- ------------------------------ 2000 1999 2000 1999 ---- ---- ---- ---- REVENUES Systems and services $ 45,174 $ 57,856 $105,814 $109,736 Hardware 1,955 3,970 6,005 9,468 ------------------ ------------------ -------------- --------------- TOTAL REVENUES 47,129 61,826 111,819 119,204 COSTS AND EXPENSES Cost of systems and services revenues 35,818 32,380 68,095 61,142 Cost of hardware revenues 1,525 3,343 4,801 8,013 Marketing and sales 9,920 8,798 19,195 16,563 Research and development 9,119 14,205 18,893 24,094 General and administrative 2,593 3,040 4,919 6,105 Depreciation and amortization 3,668 3,887 7,322 7,731 Stock compensation charge - 1,005 - 1,005 Restructuring charge - 3,359 - 3,359 Pooling and transaction costs - 1,034 3,100 1,648 ------------------ ------------------ -------------- --------------- TOTAL COSTS AND EXPENSES 62,643 71,051 126,325 129,660 ------------------ ------------------ -------------- --------------- LOSS FROM OPERATIONS (15,514) (9,225) (14,506) (10,456) Interest income, net 283 165 668 608 Other income, net - - 3,596 - ------------------ ------------------ -------------- --------------- NET LOSS $(15,231) $ (9,060) $(10,242) $ (9,848) ------------------ ------------------ -------------- --------------- BASIC AND DILUTED NET LOSS PER COMMON SHARE $ (0.42) $ (0.26) $ (0.28) $ (0.29) ------------------ ------------------ -------------- --------------- BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 36,715 34,984 36,608 34,337 ------------------ ------------------ -------------- ---------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 4 5 ECLIPSYS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (IN THOUSANDS) (UNAUDITED)
SIX MONTHS ENDED JUNE 30, --------------------------------------------- 2000 1999 ---------------------- ---------------------- OPERATING ACTIVITIES Net Loss $(10,242) $ (9,848) Adjustments to reconcile net loss to net cash Provided by (used in) operating activities: Depreciation and amortization 17,772 20,984 Provision for bad debts 1,720 1,576 Gain on sale of investment (4,462) - Write down of investments 836 - Write off of capitalized software development costs - 2,790 Stock compensation expense 72 1,232 Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (2,555) (7,124) Inventory (16) 11 Other current assets 1,414 (1,218) Other assets 350 116 Deferred revenue (9,115) (5,934) Other current liabilities (8,465) (7,365) Other liabilities - (4) ---------------------- ---------------------- Total adjustments to reconcile net loss to net cash provided by (used in) operating activities (2,449) 5,064 ---------------------- ---------------------- NET CASH USED IN OPERATING ACTIVITIES (12,691) (4,784) ---------------------- ---------------------- INVESTING ACTIVITIES Purchase of fixed assets (3,935) (4,339) Purchase of investments (7,905) - Sale of investments 12,432 - Capitalized software development costs (3,402) (3,047) Acquisitions, net of cash acquired - (25,000) ---------------------- ---------------------- NET CASH USED IN INVESTING ACTIVITIES (2,810) (32,386) ---------------------- ---------------------- FINANCING ACTIVITIES Borrowings 2,012 20,000 Payments on borrowings (132) (20,000) Exercise of stock options 1,132 4,344 Employee stock purchase plan 1,492 1,192 Distributions - (377) Exercise of warrants 4 - ---------------------- ---------------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 4,508 5,159 ---------------------- ---------------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 121 136 ---------------------- ---------------------- NET DECREASE IN CASH AND CASH EQUIVALENTS (10,872) (31,875) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 33,956 54,986 ---------------------- ---------------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 23,084 $ 23,111
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART TO THESE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 5 6 ECLIPSYS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (UNAUDITED) 1. BASIS OF PRESENTATION The condensed consolidated financial statements include all adjustments that, in the opinion of management, are necessary for a fair presentation of the results for the periods presented. All such adjustments are considered of a normal recurring nature. Quarterly results of operations are not necessarily indicative of annual results. Certain financial information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K dated March 29, 2000 and as amended April 28, 2000. 2. ACQUISITIONS Effective March 31, 1999, the Company acquired the common stock of Intelus Corporation ("Intelus") and Med Data Systems, Inc. ("Med Data"), both wholly owned subsidiaries of Sungard Data Systems, Inc. for total consideration of $25.0 million in cash. The acquired entities both provide document imaging technology and workflow solutions to entities throughout the healthcare industry. The acquisition was accounted for as a purchase and, accordingly, the purchase price was allocated based on the fair value of the net assets acquired. The purchase price is composed of and allocated as follows (in thousands): Cash $25,000 Liabilities assumed 4,306 ------------ 29,306 Current assets 9,830 Fixed assets 778 ------------ 10,608 ------------ Identifiable intangible assets (acquired technology) $18,698
As of March 31, 1999 the Company intended to dispose of Med Data. Effective July 1, 1999, the Company sold Med Data for total a sales price of $5.0 million in cash. The Company reduced the acquired technology originally recorded above in the purchase by $4.4 million, which represented the difference between the sales price and the net assets sold. No gain or loss was recorded. During the quarter ended March 31, 2000, the Company finalized the purchase price of Intelus. An increase of $3.3 million was recorded to acquired technology. Unaudited pro forma results of operations as if the aforementioned acquisitions had occurred on January 1, 1999 is as follows (in thousands except per share data):
SIX MONTHS ENDED JUNE 30, 1999 -------------------- Revenues $122,695 Net loss $(10,287) Basic and diluted net loss per share $(0.30)
3. UNBILLED ACCOUNTS RECEIVABLE The current portion of unbilled accounts receivable were $19.1 million and $18.2 million as of June 30, 2000 and 1999, respectively, and are included in accounts receivable in the accompanying condensed consolidated balance sheet. The non-current portion of unbilled accounts receivable were $1.7 and $1.1 million as of June 30, 2000 and 1999, respectively, and are included in other assets in the accompanying condensed consolidated balance sheet. 6 7 4. INVESTMENTS During the six months ended June 30, 2000, the Company recorded a gain on its investment in Shared Medical Systems Corp (SMS) of approximately $4.5 million. The investment was made in connection with a proposed merger with SMS. The Company recorded transaction costs of approximately $50,000 related to the proposed merger with SMS, which was not consummated. Additionally, during first quarter 2000, the Company recorded a charge of approximately $802,000 to write down an equity investment to its net realizable value, unrelated to the SMS investment. 5. TERMINATION OF MERGER On March 30, 2000, the Company signed a merger agreement to be acquired by Neoforma.com Inc., (Neoforma) a California based, business-to-business e-commerce services provider in the medical products, supplies and equipment industry. The merger was subject to the approval of stockholders of both the Company and Neoforma and certain other transactions. In connection with the proposed merger, the Company recorded transaction costs of approximately $3.1million during the quarter ended March 31, 2000. During the second quarter of 2000, the Company and Neoforma agreed to terminate the Merger Agreement without the payment of a termination fee. 6. NEW ACCOUNTING PRONOUNCEMENTS In March 2000, the Financial Accounting Standards Board issued Interpretation No. 44 "Accounting for Certain Transactions Involving Stock Compensation, an interpretation of APB Opinion No. 25" (FIN No.44). The interpretation provides guidance for certain issues relating to stock compensation, involving employees that arose in applying APB Opinion No. 25. The provisions of FIN No. 44 are effective July 1, 2000. Adoption of FIN 44 will have no effect on the Company's financial statements. In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements" (SAB No. 101). SAB No. 101 summarizes certain of the SEC staff's view in applying generally accepted accounting principles to revenue recognition in financial statements. On June 26, 2000, the SEC staff issues SAB No. 101-B to provide registrants with additional time to implement guidance contained in SAB No. 101. SAB 101-B delays the implementation date of SAB No. 101 until no later than the fourth fiscal quarter of fiscal years beginning after December 15, 1999. The Company believes its revenue recognition policies are compliant with the Staff Accounting Bulletin. 7 8 PART I. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This report contains forward-looking statements. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words "believes," "anticipates," "plans," "expects," "intends," and similar expressions are intended to identify forward-looking statements. The important factors discussed under the caption "Certain Factors that May Affect Future Operating Results/Risk Factors," presented from time to time in the Company's filings with the Securities and Exchange Commission, among others, could cause actual results to differ materially from those indicated by forward-looking statements made herein. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. OVERVIEW Eclipsys Corporation ("Eclipsys" or "the Company") is a healthcare information technology company delivering solutions that enable healthcare providers to achieve improved clinical, financial and administrative outcomes. The Company offers an integrated suite of core products in seven functional areas - clinical management, access management, patient financial management, health information management, strategic decision support, resource planning management and enterprise application integration. These products can be purchased in combination to provide an enterprise-wide solution or individually to address specific needs. Eclipsys' products have been designed specifically to deliver a measurable impact on outcomes, enabling Eclipsys' customers to quantify clinical benefits and return on investment in a precise and timely manner. Eclipsys' products can be integrated with a customer's existing information systems, which Eclipsys believes reduces overall cost of ownership and increases the attractiveness of its products. Eclipsys also provides outsourcing, remote hosting and networking services to assist customers in meeting their healthcare information technology requirements. Eclipsys markets its products primarily to large hospitals, academic medical centers and integrated health networks. To provide direct and sustained customer contact, Eclipsys maintains decentralized sales, implementation and customer support teams in each of its eight North American regions. The Company was formed in December 1995 and has grown primarily through a series of strategic acquisitions as follows:
METHOD OF TRANSACTION DATE ACCOUNTING ----------- ------- ---------- ALLTEL Healthcare Information Services, Inc. 1/24/97 Purchase ("Alltel") SDK Medical Computer Services Corporation 6/26/97 Purchase ("SDK") Emtek Healthcare Systems 1/30/98 Purchase ("Emtek") a division of Motorola, Inc. HealthVISION, Inc. (acquired by Transition) 12/1/98 Purchase ("HealthVISION") Transition Systems, Inc. 12/31/98 Pooling ("Transition") PowerCenter Systems, Inc. 2/17/99 Pooling ("PCS") Intelus Corporation and Med Data Systems, Inc. 3/31/99 Purchase ("Intelus" and "Med Data") wholly owned subsidiaries of Sungard Data Systems, Inc. MSI Solutions, Inc. and MSI Integrated 6/17/99 Pooling Services, Inc. (collectively, "MSI")
The condensed consolidated financial statements of the Company reflect the financial results of the purchased entities from the respective dates of the purchase. For all transactions accounted for using the pooling of interests method, the Company's condensed consolidated financial statements have been retroactively restated as if the transactions had occurred as of the beginning of the earliest period presented. 8 9 RESULTS OF OPERATIONS SUMMARY Total revenues for the quarter ended June 30, 2000 decreased 23.8% to $47.1 million compared with $61.8 million for the second quarter 1999. For the six months ended June 30, 2000, total revenues decreased 6.2% to $111.8 million compared to $119.2 million for the same period in 1999. Total costs and expenses for the quarter ended June 30, 2000 decreased 11.8% compared to the same period in 1999. For the six months ended June 30, 2000, total costs and expenses decreased 2.6% compared to the same period in 1999. These changes in revenues and expenses combined to increase net loss for the quarter ended June 30, 2000 by 68.1% to $(15.2) million compared to the same period in 1999. Included in the reported quarterly results were acquisition related amortization of intangible assets and certain non-recurring charges of $6.5 million and $16.9 million for the quarter ended June 30, 2000 and 1999, respectively. Year to date changes in revenues and expenses combined to increase net loss for the six months ended June 30, 2000 by 4.0% to $(10.2) million compared to the same period in 1999. Included in the reported six month net losses were acquisition related amortization of intangible assets and certain non-recurring charges recorded in connection with the acquisitions of $12.1 million and $25.0 million for the six months ended June 30, 2000 and 1999, respectively. REVENUES System and services revenues decreased 21.9% to $45.2 million for the second quarter of 2000 compared to the same period in 1999 and 3.6% to $105.8 million for the six months ended June 30, 2000 compared to the same period in 1999. The decrease was primarily due to the completion of certain projects that were in process during 1999 and recognized using the percentage of completion method over the implementation period. Implementation periods generally range from 12 to 24 months. Hardware revenues decreased 50.8% to $2.0 million for the second quarter of 2000 compared to the same period in 1999 and 36.6% to $6.0 million for the six months ended June 30, 2000 compared to the same period in 1999. The decrease was primarily due to decreased volume as a result of less hardware-intensive transactions. EXPENSES Total cost of revenues increased 4.5% for the second quarter of 2000 compared to the same period in 1999 and 5.4% for the six months ended June 30, 2000 compared to the same period in 1999. Increased costs of system and services were partially offset by a decrease in hardware costs associated with the decrease in hardware sales. System and services costs increased primarily due to increased third party royalties associated with revenue recognized during the period. Marketing and sales expenses increased 12.8% for the second quarter of 2000 compared to the same period in 1999 and 15.9% for the six months ended June 30, 2000 compared to the same period in 1999. The increase was primarily due to an increase in commissions as the result of new contracted business for the quarter and the six months ended June 30, 2000. Total expenditures for research and development, including both capitalized and non-capitalized expenses decreased 33.1% to $10.7 million for the second quarter 2000 compared to the same period in 1999 and 17.9% to $22.3 million for the six months ended June 30, 2000 compared to the same period in 1999. The decrease was due primarily to a write-off of $2.8 million of capitalized software development costs related to duplicate products with no alternative future use due to the acquisition of MSI in 1999 and the realization of integration synergies. Research and development expenses capitalized for the second quarter of 2000 decreased $212,000 compared to the same period in 1999 and increased $355,000 for the six months ended June 30, 2000 compared to the same period in 1999. The changes in capitalization were primarily the result of the completion of certain projects related to the development of an enterprise-wide, web enabled, client server platform solution at the end of the first quarter of 2000. General and administrative expenses decreased 14.7% for the second quarter of 2000 compared to the same period in 1999 and 19.4% for the six months ended June 30, 2000 compared to the same period in 1999. The decrease was primarily due to the reduction of administrative and finance personnel following the Company's restructuring that commenced in the second quarter of 1999. 9 10 Depreciation and amortization decreased 5.6% for the second quarter of 2000 compared to the same period in 1999 and 5.3% for the six months ended June 30, 2000 compared to the same period in 1999. The decrease is primarily the result of the full depreciation of fixed assets and a decrease in the purchase of fixed assets during the quarter and six months ended June 30, 2000. Stock compensation and restructuring charges incurred during the second quarter of 1999 were non-recurring in nature. Pooling and transaction costs decreased 100% for the second quarter of 2000 compared to the same period in 1999 and increased 88.0% for the six months ended June 30, 2000 compared to the same period in 1999. Pooling and transaction costs incurred during the quarter and six months ended June 30, 1999 were related to the poolings of PowerCenter and MSI. The increase during the six months ended June 30, 2000, is primarily the result of costs associated with proposed transactions with Shared Medical Systems Corp (SMS) and Neoforma.com, Inc. (Neoforma). Other income recorded during the six months ended June 30, 2000 related to a gain on the Company's investment in SMS during the first quarter of 2000. See notes to the unaudited condensed consolidated financial statements. ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT In connection with the Alltel, SDK and HealthVISION acquisitions, the Company wrote off acquired in-process research and development totaling $92.2 million and $7.0 million in 1997 and $2.4 million in 1998, respectively. These amounts were expensed as non-recurring charges on the respective acquisition dates. The Company continues to believe that the acquired in-process research and development will be successfully developed, but there can be no assurance that commercial viability of these products will be achieved. The value of the acquired in-process research and development was determined by estimating the projected net cash flows related to such products, including costs to complete the development of the technology and the future revenues to be earned upon commercialization of the products. These cash flows were discounted back to their net present value. The resulting projected net cash flows from such projects were based on management's estimates of revenues and operating profits related to such projects. Through June 30, 2000, revenues and operating profit attributable to the acquired in-process technology have not materially differed from the projections used in determining its value. Throughout 1999 and during the first six months of 2000, the Company has continued the development of the in-process technology that was acquired in the transactions. To date, the Company is installing modules derived from the acquired in-process technology in various field trial sites and activated certain sites by the end of 1999. Additionally, the Company has begun to successfully market certain aspects of the technology to new and existing customers. The Company expects to continue releasing products derived from the technology through 2001. Management continues to believe the projections used reasonably estimate the future benefits attributable to the in-process technology. However, no assurance can be given that deviations from these projections will not occur. If these projects to develop commercial products based on the acquired in-process technology are not successfully completed, the sales and profitability of the Company may be adversely affected in future periods. Additionally, the value of other intangible assets may become impaired. BALANCE SHEET CAPITALIZED SOFTWARE DEVELOPMENT COSTS Capitalized software development costs increased during the six months ended June 30, 2000 primarily due to the continued development of an enterprise-wide, web enabled, client server platform solution that had reached technological feasibility. ACQUIRED TECHNOLOGY Acquired technology decreased during the six months ended June 30, 2000 primarily due to amortization partially offset by the final purchase price adjustment for Intelus. INTANGIBLE ASSETS Intangible assets decreased during the six months ended June 30, 2000 due to amortization. 10 11 OTHER ASSETS Other assets decreased during the six months ended June 30, 2000 primarily due to a write-down of an equity investment to its net realizable value. DEFERRED REVENUE Deferred revenue decreased during the six months ended June 30, 2000 primarily due to the completion of certain implementations and milestones of various software license fee contracts and the timing of software maintenance billings. OTHER CURRENT LIABILITIES Other current liabilities decreased during the six months ended June 30, 2000 primarily due to the timing of certain employee compensation related expenses. LIQUIDITY AND CAPITAL RESOURCES During the six months ended June 30, 2000, the Company used $12.7 million in operations. Included in operations is approximately $10.5 million of annual employee compensation related liabilities paid during the first quarter and $3.1 million related to transaction costs paid during the second quarter. Investing activities used $2.8 million for the purchase of fixed assets and the funding of development costs partially offset by the sale of investments. Financing activities provided $4.5 million, due to the assumption of a note payable, exercise of stock options and the employee stock purchase plan. As of June 30, 2000, the Company had no amounts outstanding under its $50.0 million revolving credit facility. As of June 30, 2000, the Company had $23.1 million in cash and cash equivalents. Management believes that its available cash and cash equivalents, anticipated cash generated from its future operations and amounts available under the existing revolving credit facility will be sufficient to meet the Company's operating requirements for at least the next twelve months. 11 12 PART II. ITEM 1. LEGAL PROCEEDINGS In April 2000, the Company and the members of its Board of Directors were named as defendants in three shareholder lawsuits filed in the Court of Chancery of the state of Delaware, Ilene Silberman v. Eclipsys Corporation, et al; Paul Minch v. Eclipsys Corporation, et al; and William York v. Eclipsys Corporation, et al. Each of the lawsuits seeks to enjoin or rescind the proposed merger with Neoforma.com, Inc. or to collect an unspecified amount of damages. Each of the lawsuits in general alleged that the members of the Company's Board of Directors had breached their fiduciary duties by approving the transaction with Neoforma.com, Inc. and that the consideration received by the Company's shareholders in connection with the transaction would be inadequate. The Company believes that the members of its Board of Directors properly exercised their fiduciary duties. During the second quarter of 2000, the Company and Neoforma agreed to terminate the merger agreement without the payment of a termination fee. In July 2000, the plaintiffs in each of these cases voluntarily dismissed these stockholder lawsuits. ITEM 2. CHANGES IN SECURITIES On July 26, 2000, the Board of Directors of the Company declared a dividend of one Right for each outstanding share of the Company's Common Stock to stockholders of record at the close of business on August 9, 2000. Each Right entitles the registered holder to purchase from the Company one one-thousandth of a share of Series A Junior Participating Preferred Stock, $.01 par value per share, at a Purchase Price of $65.00 in cash, subject to adjustment. The Rights will initially trade together with the Eclipsys Common Stock and will not be exercisable. If a person or group (other than an exempt person) acquires 15% or more of the outstanding shares of Eclipsys Common Stock, the Rights generally will become exercisable and allow the holder (other than the 15% purchaser) to purchase shares of Eclipsys Common Stock at a 50% discount to the market price. The effect will be to discourage acquisitions of 15% or more of Eclipsys Common Stock without negotiations with the Board. The terms of the Rights are set forth in a Rights Agreement dated as of July 26, 2000 (the "Rights Agreement") between the Company and Fleet National Bank, as Rights Agent. A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as an Exhibit to the Company's Current Report on Form 8-K dated August 8, 2000. This summary does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: See Index to exhibits. (b) Reports on Form 8-K: Filed with the Securities and Exchange Commission on April 3, 2000 12 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ECLIPSYS CORPORATION Date: August 14, 2000 /s/ Gregory L.Wilson --------------------------------------------------- Gregory L. Wilson Senior Vice President, Chief Financial Officer and Treasurer 13 14 ECLIPSYS CORPORATION EXHIBIT INDEX EXHIBIT NO. DESCRIPTION -- ----------- 10 2000 Stock Incentive Plan 27 Financial Data Schedule (for SEC use only) 14 EX-10 2 ex10.txt 2000 STOCK INCENTIVE PLAN 1 ECLIPSYS CORPORATION 2000 STOCK INCENTIVE PLAN 1. Purpose The purpose of this 2000 Stock Incentive Plan (the "Plan") of Eclipsys Corporation, a Delaware corporation (the "Company"), is to advance the interests of the Company's stockholders by enhancing the Company's ability to attract, retain and motivate persons who make (or are expected to make) important contributions to the Company by providing such persons with equity ownership opportunities and performance-based incentives and thereby better aligning the interests of such persons with those of the Company's stockholders. Except where the context otherwise requires, the term "Company" shall include any of the Company's present or future subsidiary corporations as defined in Section 424(f) of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the "Code") and any other business venture (including, without limitation, a joint venture or limited liability company) in which the Company has a significant interest, as determined by the Board of Directors of the Company (the "Board"). 2. Eligibility All of the Company's employees, officers, directors, consultants and advisors ( and any individuals who have accepted an offer for employment) are eligible to be granted options, restricted stock, or other stock-based awards (each, an "Award") under the Plan. Any person who has been granted an Award under the Plan shall be deemed a "Participant". 3. Administration, Delegation (a) Administration by Board of Directors. The Plan will be administered by the Board. The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency. All decisions by the Board shall be made in the Board's sole discretion and shall be final and binding on all persons having or claiming any interest in the Plan or in any Award. No director or person acting pursuant to the authority delegated by the Board shall be liable for any action or determination relating to or under the Plan made in good faith. (b) Appointment of Committees. To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to one or more committees or subcommittees of the Board (a "Committee"). All references in the Plan to the "Board" shall mean the Board or a Committee of the Board to the extent that the Board's powers or authority under the Plan have been delegated to such Committee. 2 4. Stock Available for Awards (a) Number of Shares. Subject to adjustment under Section 4(c), Awards may be made under the Plan for up to an aggregate number of shares of Common Stock equal to (i) 12,000,000 less (ii) the sum of (W) the number of shares as to which "Awards" have previously been made or shares issued under the Company's 1999 Stock Incentive Plan, as amended (the "1999 Plan") , as such number shall be reduced to the extent shares become reavailable for issuance under the 1999 Plan pursuant to Section 4(a) thereof, (X) the number of shares as to which options are then outstanding under the Company's Amended and Restated 1998 Employee Stock Purchase Plan, as amended (the "Purchase Plan") and the number of shares previously sold under the Purchase Plan, (Y) the number of shares as to which options are then outstanding under the Company's 1996 Stock Plan, as amended (the "1996 Plan") and the number of shares previously issued upon the exercise of options granted under the 1996 Plan and the number of shares of restricted or unrestricted stock granted under the 1996 Plan then outstanding and (Z) the number of shares as to which "Awards" have previously been made or shares issued under the Company's 1998 Stock Incentive Plan, as amended (the "1998 Plan"), as such number shall be reduced to the extent shares become reavailable for issuance under the 1998 Plan pursuant to Section 4(a) thereof. If any Award expires or is terminated, surrendered or canceled without having been fully exercised or is forfeited in whole or in part or results in any Common Stock not being issued, the unused Common Stock covered by such Award shall again be available for the grant of Awards under the Plan, subject, however, in the case of Incentive Stock Options (as hereinafter defined), to any limitation required under the Code. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares. (b) Per-Participant Limit. Subject to adjustment under Section 4(c), for Awards granted after the Common Stock is registered under the Securities Exchange Act of 1934 (the "Exchange Act"), the maximum number of shares of Common Stock with respect to which an Award may be granted to any Participant under the Plan shall be 2,000,000 per calendar year. The per-Participant limit described in this Section 4(b) shall be construed and applied consistently with Section 162(m) of the Code. 5. Stock Options (a) General. The Board may grant options to purchase Common Stock (each, an "Option") and determine the number of shares of Common Stock to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable. An Option which is not intended to be an Incentive Stock Option (as hereinafter defined) shall be designated a "Nonstatutory Stock Option". (b) Incentive Stock Options. An Option that the Board intends to be an "incentive stock option" as defined in Section 422 of the Code (an "Incentive Stock Option") shall only be granted to employees of the Company and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code. The Company shall have no liability to a Participant, or any other party, if an Option (or any part thereof) which is intended to be an Incentive Stock Option is not an Incentive Stock Option. -2- 3 (c) Exercise Price. The Board shall establish the exercise price at the time each Option is granted and specify it in the applicable option agreement; provided, however, that the exercise price of Incentive Stock Options shall not be less than 100% of the fair market value of the Common Stock, as determined by the Board, at the time the Option is granted. (d) Duration of Options. Each Option shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable option agreement; provided, however, that no Option will be granted for a term in excess of 10 years. (e) Exercise of Option. Options may be exercised only by delivery to the Company of a written notice of exercise signed by the proper person or by any other form of notice (including electronic notice) approved by the Board together with payment in full as specified in Section 5(f) for the number of shares for which the Option is exercised. (f) Payment Upon Exercise. Common Stock purchased upon the exercise of an Option granted under the Plan shall be paid for as follows: (1) in cash or by check, payable to the order of the Company; (2) except as the Board may, in its sole discretion, otherwise provide in an option agreement, by (i) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price or (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price; (3) to the extent permitted by the Board and explicitly provided in an option agreement (i) by delivery of shares of Common Stock owned by the Participant valued at their fair market value as determined by ( or in a ,manner approved by) the Board in good faith ("Fair Market Value"), provided (i) such method of payment is then permitted under applicable law and (ii) such Common Stock was owned by the Participant at least six months prior to such delivery, or (iii) by payment of such other lawful consideration as the Board may determine; or (4) by any combination of the above permitted forms of payment 6. Restricted Stock (a) Grants. The Board may grant Awards entitling recipients to acquire shares of Common Stock, subject to the right of the Company to repurchase all or part of such shares at their issue price or other stated or formula price (or to require forfeiture of such shares if issued at no cost) from the recipient in the event that conditions specified by the Board in the applicable Award are not satisfied prior to the end of the applicable restriction period or periods established by the Board for such Award (each, a "Restricted Stock Award"). (b) Terms and Conditions. The Board shall determine the terms and conditions of any such Restricted Stock Award, including the conditions for repurchase (or forfeiture) and the issue price, if any. Any stock certificates issued in respect of a Restricted Stock Award shall be registered in the name of the Participant and, unless otherwise determined by the Board, -3- 4 deposited by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the applicable restriction periods, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the Participant or if the Participant has died, to the beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant's death (the "Designated Beneficiary"). In the absence of an effective designation by a Participant, Designated Beneficiary shall mean the Participant's estate. 7. Other Stock-Based Awards The Board shall have the right to grant other Awards based upon the Common Stock having such terms and conditions as the Board may determine, including the grant of shares based upon certain conditions, the grant of securities convertible into Common Stock and the grant of stock appreciation rights. 8. Adjustments for Changes in Common Stock and Certain Other Events (a) Changes in Capitalization. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any distribution to holders of Common Stock, other than a normal cash dividend, (i) the number and class of securities available under this Plan, (ii) the per-participant limit set forth in Section 4(b), (iii) the number and class of security and exercise price per share subject to each outstanding Option, (iv) the repurchase price per security subject to each outstanding Restricted Stock Award, and (v) the terms of each other outstanding stock-based Award shall be appropriately adjusted by the Company (or substituted Awards may be made, if applicable) to the extent the Board shall determine, in good faith, that such an adjustment (or substitution) is necessary and appropriate. If this Section 8(a) applies and Section 8(c) also applies to any event, Section 8(c) shall be applicable to such event, and this Section 8(a) shall not be applicable. (b) Liquidation or Dissolution. In the event of a proposed liquidation or dissolution of the Company, the Board shall upon written notice to the Participants provide that all then unexercised Options will (i) become exercisable in full as of a specified time at least 10 business days prior to the effective date of such liquidation or dissolution and (ii) terminate effective upon such liquidation or dissolution, except to the extent exercised before such effective date. The Board may specify the effect of a liquidation or dissolution on any Restricted Stock Award or other Award granted under the Plan at the time of the grant of such Award. (c) Acquisition and Change in Control Events (1) Definitions (a) An "Acquisition Event" shall mean: (i) any merger or consolidation of the Company with or into another entity as a result of which the Common Stock is converted into or exchanged for the right to receive cash, securities or other property; or -4- 5 (ii) any exchange of shares of the Company for cash, securities or other property pursuant to a statutory share exchange transaction. (b) A "Change in Control Event" shall mean: (i) the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")(a "Person") of beneficial ownership of any capital stock of the Company if, after such acquisition, such Person beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) more than 30% of either (x) the then-outstanding shares of Common Stock of the Company (the "Outstanding Company Common Stock") or (y) the combined voting power of the then-outstanding securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control Event: (A) any acquisition directly from the Company (excluding an acquisition pursuant to the exercise, conversion or exchange of any security exercisable for, convertible into or exchangeable for Common Stock or voting securities of the Company, unless the Person exercising, converting or exchanging such security acquired such security directly from the Company or an underwriter or agent of the Company), (B) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, (C) any acquisition by any corporation pursuant to a Business Combination (as defined below) which complies with clauses (x) and (y) of subsection (iii) of this definition or (D) any acquisition by General Atlantic Partners 28, L.P., General Atlantic Partners 38, L.P., General Atlantic Partners 47, L.P., GAP Coinvestment Partners, L.P. and any other entities controlled by or under common control with any of the foregoing entities, within the meaning of the Exchange Act (each such party is referred to herein as an "Exempt Person"); (ii) such time as the Continuing Directors (as defined below) do not constitute a majority of the Board (or, if applicable, the Board of Directors of a successor corporation to the Company), where the term "Continuing Director" means at any date a member of the Board (x) who was a member of -5- 6 the Board on the date of the initial adoption of this Plan by the Board or (y) who was nominated or elected subsequent to such date by at least a majority of the directors who were Continuing Directors at the time of such nomination or election or whose election to the Board was recommended or endorsed by at least a majority of the directors who were Continuing Directors at the time of such nomination or election; provided, however, that there shall be excluded from this clause (y) any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board; or (iii) the consummation of a merger, consolidation, reorganization, recapitalization or statutory share exchange involving the Company or a sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), unless, immediately following such Business Combination, each of the following two conditions is satisfied: (x) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors, respectively, of the resulting or acquiring corporation in such Business Combination (which shall include, without limitation, a corporation which as a result of such transaction owns the Company or substantially all of the Company's assets either directly or through one or more subsidiaries) (such resulting or acquiring corporation is referred to herein as the "Acquiring Corporation") in substantially the same proportions as their ownership of the Outstanding Company Common Stock and Outstanding Company Voting Securities, respectively, immediately prior to such Business Combination and (y) no Person (excluding Exempt Persons, the Acquiring Corporation or any employee benefit plan (or related trust) maintained or sponsored by the Company or by the Acquiring Corporation) beneficially owns, directly or indirectly, 30% or more of the then-outstanding shares of common stock of the Acquiring Corporation, or of the combined voting -6- 7 power of the then-outstanding securities of such corporation entitled to vote generally in the election of directors (except to the extent that such ownership existed prior to the Business Combination). c) "Good Reason" shall mean any significant diminution in the Participant's title, authority, or responsibilities from and after such Acquisition Event or Change in Control Event, as the case may be, or any reduction in the annual cash compensation payable to the Participant from and after such Acquisition Event or Change in Control Event, as the case may be, or the relocation of the place of business at which the Participant is principally located to a location that is greater than 50 miles from the current site. (d) "Cause" shall mean any (i) willful failure by the Participant, which failure is not cured within 30 days of written notice to the Participant from the Company, to perform his or her material responsibilities to the Company or (ii) willful misconduct by the Participant which affects the business reputation of the Company. The Participant shall be considered to have been discharged for "Cause" if the Company determines, within 30 days after the Participant's resignation, that discharge for Cause was warranted. (2) Effect on Options (a) Acquisition Event. Upon the occurrence of an Acquisition Event (regardless of whether such event also constitutes a Change in Control Event), or the execution by the Company of any agreement with respect to an Acquisition Event (regardless of whether such event will result in a Change in Control Event), the Board shall provide that all outstanding Options shall be assumed, or equivalent options shall be substituted for, by the acquiring or succeeding corporation (or an affiliate thereof); provided that if such Acquisition Event also constitutes a Change in Control Event, except to the extent specifically provided to the contrary in the instrument evidencing any Option or any other agreement between a Participant and the Company, such assumed or substituted options shall become immediately exercisable in full if, on or prior to the first anniversary of the date of the consummation of the Acquisition Event, the Participant's employment with the Company or the acquiring or succeeding corporation is terminated for Good Reason by the Participant or is terminated without Cause by the Company or the acquiring or succeeding corporation. For purposes hereof, an Option shall be considered to be assumed if, following consummation of the Acquisition Event, the Option confers the right to purchase, for each share of Common Stock subject to the Option immediately prior to the consummation of the Acquisition Event, the consideration (whether cash, securities or other property) received as a result of the Acquisition Event by holders of Common Stock for each share of Common Stock held immediately prior to the consummation of the -7- 8 Acquisition Event (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if the consideration received as a result of the Acquisition Event is not solely common stock of the acquiring or succeeding corporation (or an affiliate thereof), the Company may, with the consent of the acquiring or succeeding corporation, provide for the consideration to be received upon the exercise of Options to consist solely of common stock of the acquiring or succeeding corporation (or an affiliate thereof) equivalent in fair market value to the per share consideration received by holders of outstanding shares of Common Stock as a result of the Acquisition Event. Notwithstanding the foregoing, if the acquiring or succeeding corporation (or an affiliate thereof) does not agree to assume, or substitute for, such Options, then the Board shall, upon written notice to the Participants, provide that all then unexercised Options will become exercisable in full as of a specified time prior to the Acquisition Event and will terminate immediately prior to the consummation of such Acquisition Event, except to the extent exercised by the Participants before the consummation of such Acquisition Event; provided, however, that in the event of an Acquisition Event under the terms of which holders of Common Stock will receive upon consummation thereof a cash payment for each share of Common Stock surrendered pursuant to such Acquisition Event (the "Acquisition Price"), then the Board may instead provide that all outstanding Options shall terminate upon consummation of such Acquisition Event and that each Participant shall receive, in exchange therefor, a cash payment equal to the amount (if any) by which (A) the Acquisition Price multiplied by the number of shares of Common Stock subject to such outstanding Options (whether or not then exercisable) exceeds (B) the aggregate exercise price of such Options. (b) Change in Control Event that is not an Acquisition Event. Following the occurrence of a Change in Control Event that does not also constitute an Acquisition Event, except to the extent specifically provided to the contrary in the instrument evidencing any Option or any other agreement between a Participant and the Company, each such Option shall be immediately exercisable in full if, on or prior to the first anniversary of the date of the consummation of the Change in Control Event, the Participant's employment with the Company or the acquiring or succeeding -8- 9 corporation is terminated for Good Reason by the Participant or is terminated without Cause by the Company or the acquiring or succeeding corporation. (3) Effect on Restricted Stock Awards (a) Acquisition Event that is not a Change in Control Event. Upon the occurrence of an Acquisition Event that is not a Change in Control Event, the repurchase and other rights of the Company under each outstanding Restricted Stock Award shall inure to the benefit of the Company's successor and shall apply to the cash, securities or other property which the Common Stock was converted into or exchanged for pursuant to such Acquisition Event in the same manner and to the same extent as they applied to the Common Stock subject to such Restricted Stock Award. (b) Change in Control Event. Following the occurrence of a Change in Control Event (regardless of whether such event also constitutes an Acquisition Event), except to the extent specifically provided to the contrary in the instrument evidencing any Restricted Stock Award or any other agreement between a Participant and the Company, each such Restricted Stock Award shall immediately become free from all conditions or restrictions if, on or prior to the first anniversary of the date of the consummation of the Change in Control Event, the Participant's employment with the Company or the acquiring or succeeding corporation is terminated for Good Reason by the Participant or is terminated without Cause by the Company or the acquiring or succeeding corporation. (4) Effect on Other Awards (a) Acquisition Event that is not a Change in Control Event. The Board shall specify the effect of an Acquisition Event that is not a Change in Control Event on any other Award granted under the Plan at the time of the grant of such Award. (b) Change in Control Event. Following the occurrence of a Change in Control Event (regardless of whether such event also constitutes an Acquisition Event), except to the extent specifically provided to the contrary in the instrument evidencing any Award or any other agreement between a Participant and the Company, each such Award shall immediately become fully exercisable, realizable, vested or free from conditions or restrictions if, on or prior to the first anniversary of the date of the consummation of the Change in Control Event, the Participant's employment with the Company or the acquiring or succeeding corporation is terminated for Good -9- 10 Reason by the Participant or is terminated without Cause by the Company or the acquiring or succeeding corporation. (5) Limitations. Notwithstanding the foregoing provisions of this Section 8(c), if the Change in Control Event is intended to be accounted for as a "pooling of interests" for financial accounting purposes, and if the acceleration to be effected by the foregoing provisions of this Section 8(c) would preclude accounting for the Change in Control Event as a "pooling of interests" for financial accounting purposes, then no such acceleration shall occur upon the Change in Control Event. 9. General Provisions Applicable to Awards (a) Transferability of Awards. Except as the Board may otherwise determine or provide in an Award, Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the life of the Participant, shall be exercisable only by the Participant. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees. (b) Documentation. Each Award shall be evidenced by a written instrument in such form as the Board shall determine. Each Award may contain terms and conditions in addition to those set forth in the Plan. (c) Board Discretion. Except as otherwise provided by the Plan, each Award may be made alone or in addition to or in relation to any other Award. The terms of each Award need not be identical, and the Board need not treat Participants uniformly. (d) Termination of Status. The Board shall determine the effect on an Award of the disability, death, retirement, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, the Participant's legal representative, conservator, guardian or Designated Beneficiary may exercise rights under the Award. (e) Withholding. Each Participant shall pay to the Company, or make provision satisfactory to the Board for payment of, any taxes required by law to be withheld in connection with Awards to such Participant no later than the date of the event creating the tax liability. Except as the Board may otherwise provide in an Award, when the Common Stock is registered under the Exchange Act, Participants may, to the extent then permitted under applicable law, satisfy such tax obligations in whole or in part by delivery of shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their Fair Market Value. The Company may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to a Participant. (f) Amendment of Award. The Board may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option, provided that the Participant's consent to such -10- 11 action shall be required unless the Board determines that the action, taking into account any related action, would not materially and adversely affect the Participant. (g) Conditions on Delivery of Stock. The Company will not be obligated to deliver any shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company's counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations. (h) Acceleration. The Board may at any time provide that any Options shall become immediately exercisable in full or in part, that any Restricted Stock Awards shall be free of restrictions in full or in part or that any other Awards may become exercisable in full or in part or free of some or all restrictions or conditions, or otherwise realizable in full or in part, as the case may be. 9. Miscellaneous (a) No Right To Employment or Other Status. No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award. (b) No Rights As Stockholder. Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be distributed with respect to an Award until becoming the record holder of such shares. Notwithstanding the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to such Option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then an optionee who exercises an Option between the record date and the distribution date for such stock dividend shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such Option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend. (c) Effective Date and Term of Plan. The Plan shall become effective on the date on which it is adopted by the Board, but no Award granted to a Participant designated by the Board as subject to Section 162(m) of the Code by the Board shall become exercisable, vested or realizable, as applicable to such Award, unless and until the Plan has been approved by the Company's stockholders to the extent stockholder approval is required by Section 162(m) in the manner required under Section 162(m) (including the vote required under Section 162(m)). No Awards shall be granted under the Plan after the completion of ten years from the earlier of (i) -11- 12 the date on which the Plan was adopted by the Board or (ii) the date the Plan was approved by the Company's stockholders, but Awards previously granted may extend beyond that date. (d) Amendment of Plan. The Board may amend, suspend or terminate the Plan or any portion thereof at any time, provided that to the extent required by Section 162(m) of the Code, no Award granted to a Participant designated as subject to Section 162(m) by the Board after the date of such amendment shall become exercisable, realizable or vested, as applicable to such Award (to the extent that such amendment to the Plan was required to grant such Award to a particular Participant), unless and until such amendment shall have been approved by the Company's stockholders as required by Section 162(m) (including the vote required under Section 162(m)). (e) Governing Law. The provisions of the Plan and all Awards made hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, without regard to any applicable conflicts of law. Adopted by the Board of Directors on May 22, 2000 -12- EX-27 3 ex27.txt FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 23,084 0 84,733 (7,792) 526 112,465 35,825 (20,289) 184,126 (80,627) (1,090) 0 0 (367) (93,513) (184,126) 47,129 47,129 (37,343) (37,343) (25,300) 0 0 (15,231) 0 (15,231) 0 0 0 (15,231) (0.42) (0.42)
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