10-Q

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 September 30, 2008

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)

Three Ravinia Drive

Atlanta, GA

30346

(Address of principal executive offices)

(404) 847-5000

(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 requirements for the past 90 days.

Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ¨    No  x

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 November 6, 2008
Common Stock, $.01 par value	54,654,799

ECLIPSYS CORPORATION AND SUBSIDIARIES

FORM 10-Q

For the period ended September 30, 2008

Table of Contents

Part I.	Financial Information	3
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets - As of September 30, 2008 (unaudited) and December 31, 2007	3
	Condensed Consolidated Statements of Operations (unaudited) - For the Three and Nine Months Ended September  30, 2008 and September 30, 2007	4
	Condensed Consolidated Statements of Cash Flows (unaudited) - For the Nine Months Ended September  30, 2008 and September 30, 2007	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	30
Part II.	Other Information	30
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 6.	Exhibits	43
Signatures		44

2

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ECLIPSYS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except per share amounts)

	September 30, 2008			December 31, 2007
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	89,376		$	22,510
Marketable securities		149			168,925
Accounts receivable, net of allowance for doubtful accounts of $5,061 and $4,240, respectively		118,888			99,260
Prepaid expenses		23,724			27,289
Deferred tax asset		25,629			7,524
Other current assets		7,051			1,759
Total current assets		264,817			327,267
Long-term investments		111,083			—
Property and equipment, net		52,666			45,657
Capitalized software development costs, net		36,802			38,206
Acquired technology, net		11,620			594
Intangible assets, net		5,874			1,376
Deferred tax asset		116,783			31,187
Goodwill		39,055			7,772
Other assets		12,546			13,374
Total assets	$	651,246		$	465,433
Liabilities and Stockholders’ Equity
Current liabilities:
Deferred revenue	$	104,025		$	105,115
Accounts payable		20,398			11,679
Accrued compensation costs		19,869			24,473
Deferred tax liability		2,196			1,777
Other current liabilities		18,975			19,381
Total current liabilities		165,463			162,425
Deferred revenue		5,959			9,860
Deferred tax liability		40,115			31,235
Long-term debt		51,000			—
Other long-term liabilities		20,210			3,899
Total liabilities		282,747			207,419
Stockholders’ Equity:
Common stock, $0.01 par value, 200,000,000 shares authorized; 54,559,163 and 53,806,742 issued and outstanding, respectively		546			538
Additional paid-in capital		537,934			519,112
Accumulated deficit		(168,025	)		(264,218	)
Accumulated other comprehensive income		(1,956	)		2,582
Total stockholders’ equity		368,499			258,014
Total liabilities and stockholders’ equity	$	651,246		$	465,433

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

ECLIPSYS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share amounts)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2008			2007		2008			2007
Revenues:
Systems and services	$	127,575		$	117,530	$	373,021		$	340,979
Hardware		4,849			3,550		15,925			12,150
Total revenues		132,424			121,080		388,946			353,129
Costs and expenses:
Cost of systems and services (exclusive of depreciation and amortization shown below)		73,166			65,454		210,042			197,502
Cost of hardware		5,457			2,685		13,408			9,336
Sales and marketing		19,498			17,896		63,150			54,215
Research and development		14,195			14,079		47,102			42,136
General and administrative		8,202			8,743		26,877			23,951
In-process research and development charge		—			—		850			—
Depreciation and amortization		5,145			4,710		15,651			13,445
Total costs and expenses		125,663			113,567		377,080			340,585
Income from operations		6,761			7,513		11,866			12,544
Gain on sale of assets		685			—		4,200			—
Interest income, net		634			1,814		3,581			4,916
Income before taxes		8,080			9,327		19,647			17,460
Provision for income taxes		(79,316	)		463		(76,549	)		501
Net income	$	87,396		$	8,864	$	96,196		$	16,959
Income per common share:
Basic income per common share	$	1.62		$	0.17	$	1.79		$	0.32
Diluted income per common share	$	1.59		$	0.16	$	1.76		$	0.31
Weighted average shares outstanding:
Basic		53,860			53,100		53,684			52,594
Diluted		54,814			54,380		54,677			53,843

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

ECLIPSYS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

	Nine Months Ended September 30,
	2008			2007
Operating activities:
Net income	$	96,196		$	16,959
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		29,818			27,390
Provision for bad debt		2,655			1,378
In-process research and development		850			—
Stock compensation expense		13,093			8,261
Gain (loss) on sale of marketable securities		(30	)		16
Gain on sale of assets		(4,168	)		—
Deferred provision for income taxes		(78,184	)		329
Changes in operating assets and liabilities:
Accounts receivable		(21,611	)		(5,008	)
Prepaid expenses and other current assets		755			(6,197	)
Inventory		—			849
Other assets		(289	)		337
Deferred revenue		(3,378	)		(6,287	)
Accrued compensation		(5,029	)		9,663
Accounts payable and other current liabilities		5,936			(9,658	)
Other long-term liabilities		3,971			1,076
Other reconciling items		963			—
Total adjustments		(54,648	)		22,149
Net cash provided by operating activities		41,548			39,108
Investing activities:
Purchases of property and equipment		(20,432	)		(13,065	)
Purchase of marketable securities		(102,000	)		(107,950	)
Proceeds from sales of marketable securities		153,641			72,519
Capitalized software development costs		(12,417	)		(15,278	)
Proceeds from sale of assets		698			—
Restricted cash		1,963			(1,969	)
Earnout on disposition		3,578			—
Cash paid for acquisitions, net of cash acquired		(54,593	)		(1,153	)
Net cash used in investing activities		(29,562	)		(66,896	)
Financing activities:
Proceeds from stock options exercised		5,283			10,333
Proceeds from employee stock purchase plan		615			—
Cash paid for debt issuance costs		(1,430	)		—
Repayment of secured financings		(95,000	)		—
Proceeds from secured financing		146,000			—
Net cash provided by financing activities		55,468			10,333
Effect of exchange rates on cash and cash equivalents		(588	)		703
Net increase (decrease) in cash and cash equivalents		66,866			(16,752	)
Cash and cash equivalents — beginning of period		22,510			41,264
Cash and cash equivalents — end of period	$	89,376		$	24,512

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

ECLIPSYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE A – PREPARATION OF INTERIM FINANCIAL STATEMENTS

In this report, Eclipsys Corporation and its subsidiaries are referred to as “we,” “the Company,” or “Eclipsys.”

The accompanying unaudited condensed consolidated financial statements have been prepared based upon Securities and Exchange Commission (“SEC”) rules that permit reduced disclosure for interim periods. In our opinion, these statements include all adjustments necessary for a fair presentation of the results of the interim periods presented. All adjustments are of a normal recurring nature. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by United States generally accepted accounting principles (“GAAP”).

Revenues, expenses, assets, and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be indicative of annual results. For a more complete discussion of our significant accounting policies and other information, you should read this report in conjunction with the consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2007 that was filed with the SEC on February 29, 2008.

The Company manages its business as one reportable segment. Prior period reclassifications were made to expense line items to conform to current period presentation.

NOTE B – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Recently Issued Standards

In March 2008, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 161, “Disclosures about Derivative Instruments and Hedging Activities – An Amendment of SFAS No. 133” (“SFAS 161”). SFAS 161 seeks to improve financial reporting for derivative instruments and hedging activities by requiring enhanced disclosures regarding the impact on financial position, financial performance, and cash flows. SFAS 161 requires: (1) the disclosure of the fair value of derivative instruments and gains and losses in a tabular format; (2) the disclosure of derivative features that are credit risk-related; and (3) cross-referencing within the footnotes. SFAS 161 is effective for the Company on January 1, 2009. We currently do not believe this standard will have a material impact on our condensed consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business Combinations” (“SFAS 141R”). SFAS 141R continues to require the purchase method of accounting to be applied to all business combinations, but it significantly changes the accounting for certain aspects of business combinations. Under SFAS 141R, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS 141R will change the accounting treatment for certain specific acquisition related items including: (1) expensing acquisition related costs as incurred; (2) valuing noncontrolling interests at fair value at the acquisition date; and (3) expensing restructuring costs associated with an acquired business. SFAS 141R also includes a substantial number of new disclosure requirements. SFAS 141R is to be applied prospectively to business combinations for which the acquisition date is on or after January 1, 2009.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“SFAS 160”). SFAS 160 establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary (minority interest) is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements and separate from the parent company’s equity. This statement is effective for us on January 1, 2009. We currently do not believe this standard will have a material impact on our condensed consolidated financial statements.

6

ECLIPSYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In April 2008, the FASB issued FASB Staff Position (“FSP”) FAS 142-3, “Determination of the Useful Life of Intangible Assets.” This FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, “Goodwill and Other Intangible Assets.” The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under Statement 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141R and other United States generally accepted accounting principles. This FSP shall be effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. We currently do not believe that this FSP will have a material impact on our condensed consolidated financial statements.

In June 2008, the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities.” FSP EITF 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share (EPS) under the two-class method. This FSP shall be effective for financial statements issued for fiscal years beginning after December 15, 2008 and interim periods within those years. The share-based payment awards that are granted by the Company contain dividend rights that are forfeitable on unvested shares; therefore, we do not expect this FSP to have a material impact on our calculation of EPS.

Recently Adopted Standards

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (“fair value option”). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, SFAS 159 specifies that unrealized gains and losses for that instrument be reported in earnings at each subsequent reporting date. SFAS 159 was effective for us on January 1, 2008. We did not apply the fair value option to any of our outstanding instruments and, therefore, SFAS 159 did not have an impact on our condensed consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”), which defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods of those fiscal years. We adopted SFAS 157 on January 1, 2008. Our most significant asset that is adjusted to fair value on a recurring basis is our long-term investments.

In February 2008, the FASB issued FSP FAS 157-2, “Effective Date of FASB Statement No. 157” which delays the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually) to fiscal years beginning after November 15, 2008. Therefore, in accordance with the aforementioned FSP, we have only partially applied FAS 157. Beginning January 1, 2009 we will also apply FAS 157 to all nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis as required by FAS 157. We currently do not believe this standard will have a material impact on our condensed consolidated financial statements. See Note K – Fair Value Measurement.

In October 2008, the FASB issued FSP FAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active” which clarifies the application of SFAS 157 in a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. Some of the key principles illustrated include:

• determining fair value in a dislocated market depends on facts and circumstances, and may require the use of significant judgment about whether individual market transactions are forced liquidations or distressed sales and therefore poor indicators of fair value;

• when relevant observable market data is not available, the use of assumptions about future cash flows and discount rates may be appropriate in determining fair value; and

• the value of broker quotes in determining fair value depends on facts and circumstances, particularly when an active market does not exist.

FSP 157-3 is effective immediately, including with respect to prior periods for which financial statements have not been issued. As of January 2008, the Company has consistently used the methodology described in this FSP in calculating the fair value of its auction rate securities.

7

ECLIPSYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE C – EARNINGS PER SHARE

For all periods presented, basic and diluted earnings per common share is presented in accordance with SFAS 128, “Earnings per Share,” which provides for the accounting principles used in the calculation of earnings per share. Basic earnings per common share is calculated by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Non-vested restricted stock carries dividend and voting rights and, in accordance with GAAP, is not included in the weighted-average number of common shares outstanding used to compute basic earnings per share. Diluted earnings per common share reflect the potential dilution from assumed conversion of all dilutive securities, such as stock options and unvested restricted stock, using the treasury stock method. When the effect of the outstanding equity securities is anti-dilutive, they are not included in the calculation of diluted earnings per common share. For the three months ended September 30, 2008 and 2007, 2,947,706 and 2,526,094 anti-dilutive shares were excluded from the calculation of diluted earnings per common share, respectively. For the nine months ended September 30, 2008 and 2007, 3,510,089 and 2,485,859 anti-dilutive shares were excluded from the calculation of diluted earnings per common share, respectively. The earnings amounts used for per-share calculations are the same for both the basic and diluted methods.

The computation of basic and diluted income per common share is as follows (in thousands, except per share data):

	Three Months Ended September 30,
	2008					2007
	Net Income		Shares	Per Share Amount		Net Income		Shares	Per Share Amount
Basic earnings per share	$	87,396	53,860	$	1.62	$	8,864	53,100	$	0.17
Effect of dilutive securities:
Incremental shares			954					1,245
Shares issuable pursuant to earn-out agreement								35
Diluted earnings per share	$	87,396	54,814	$	1.59	$	8,864	54,380	$	0.16

8

ECLIPSYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

	Nine Months Ended September 30,
	2008					2007
	Net Income		Shares	Per Share Amount		Net Income		Shares	Per Share Amount
Basic earnings per share	$	96,196	53,684	$	1.79	$	16,959	52,594	$	0.32
Effect of dilutive securities:
Incremental shares			993					1,214
Shares issuable pursuant to earn-out agreement								35
Diluted earnings per share	$	96,196	54,677	$	1.76	$	16,959	53,843	$	0.31

NOTE D – ACCOUNTS RECEIVABLE

Accounts receivable, net of an allowance for doubtful accounts, is comprised of the following (in thousands):

	Septebmer 30, 2008		December 31, 2007
Accounts Receivable:
Billed accounts receivable, net	$	91,810	$	75,164
Unbilled accounts receivable, net		27,078		24,096
Total accounts receivable, net	$	118,888	$	99,260

NOTE E – INVESTMENTS

Investment balances consist of the following (in thousands):

	September 30, 2008		December 31, 2007
Security Type:
Auction rate securities		111,083		166,217
Other securities (1)		149		2,708
Total	$	111,232	$	168,925
(1)      As of September 30, 2008 the maturity date of other securities is less than one year.

As of September 30, 2008, the Company held approximately $116.6 million par value of investments in auction-rate securities (“ARS”). Our ARS are comprised of “AAA” rated pools of student loans. These investments have long-term nominal maturities for which the interest rates are reset through a Dutch auction each month. The monthly auctions historically have provided a liquid market for these securities. However, in February 2008, the broker-dealers managing the Company’s ARS portfolio experienced failed auctions of certain of these securities where the amount of securities submitted for sale exceeded the amount of purchase orders. Our ARS continued to fail to settle at auctions through the third quarter of 2008. This indicates the estimated fair value of these ARS may no longer approximate their par value. As of September 30, 2008, the Company has recorded these investments at their estimated fair value of $111.1 million and recorded a temporary loss on these securities of $5.5 million in accumulated other comprehensive income, reflecting the decline in the fair value of these securities. The Company has concluded that no other-than-temporary impairment losses occurred in the nine months ended September 30, 2008 because the Company believes that the declines in fair value that have occurred during 2008 are due to recent market liquidity conditions.

9

ECLIPSYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

We believe these investments continue to be of high credit quality, and we currently plan to hold the ARS until such time as successful auctions occur or the secondary market allows for a sufficient price to recover substantially all of our par value. There can be no assurance this will occur. Accordingly, we have classified these securities as long-term investments in our condensed consolidated balance sheet. The Company will continue to analyze its ARS each reporting period for impairment, and we may be required to record an impairment charge in the consolidated statement of operations if the decline in fair value is determined to be other-than-temporary. The fair value of these securities has been estimated by management based on the assumptions that market participants would use in pricing the asset in a current transaction in accordance with SFAS 157 “Fair Value Measurements.” The estimates of the fair value of the ARS we hold could change significantly based on market conditions.

The Company continues to earn interest on these investments at the contractual rate, and the ARS the Company holds have not been downgraded or placed on credit watch by credit rating agencies. In April 2008, a partial call transaction was closed related to one of our ARS, as a result of which we received proceeds of $4.6 million. In May 2008, a call transaction was closed related to another one of our ARS securities, as a result of which we received proceeds of $14.3 million. Each of these two transactions resulted in a recovery of the full par value of the securities. As of September 30, 2008, no calls were outstanding on our ARS. On October 7, 2008 UBS Financial Services (“UBS”) issued a public statement outlining a program in which UBS would enter into agreements with UBS clients, holding ARS purchased through UBS, to purchase the ARS held by such clients at par value at a prescribed future date. As of September 30, 2008, the Company holds $36.3 million par value of ARS that we purchased through UBS. We are currently evaluating our options under this program; the offer expires on November 14, 2008.

NOTE F – ACQUIRED TECHNOLOGY AND INTANGIBLE ASSETS, INCLUDING GOODWILL

On February 25, 2008, the Company acquired all of the outstanding capital stock of Enterprise Performance Systems, Inc. (“EPSi”), a private company. The aggregate purchase price was $56.1 million ($53.0 million net of cash acquired and transaction costs) and is subject to certain holdback arrangements and working capital adjustments.

The changes in the carrying amount of goodwill for the nine month period ended September 30, 2008 were as follows:

Beginning Balance December 31, 2007	$	7,772
EPSi acquistion		31,263
Earnouts		378
Other		(358	)
Ending Balance September 30, 2008	$	39,055

10

ECLIPSYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The gross and net amounts for acquired technology, ongoing customer relationships and goodwill consist of the following (in thousands):

	September 30, 2008							December 31, 2007
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Amortization			Net Book Value		Estimated Life
Intangibles subject to amortization
Acquired technology	$	15,227	$	(3,607	)	$	11,620	$	1,967	$	(1,373	)	$	594	3-4 years
Ongoing customer relationships		5,909		(1,005	)		4,904		2,404		(1,028	)		1,376	5-6 years
Other		1,210		(240	)		970		—		—			—	3 years
Total	$	22,346	$	(4,852	)	$	17,494	$	4,371	$	(2,401	)	$	1,970
Intangibles not subject to amortization:
Goodwill						$	39,055						$	7,772

The estimated aggregate amortization expense for each of the five fiscal years is as follows (in thousands):

	2008		2009		2010		2011		2012		Total
Total amortization expense	$	4,400	$	4,989	$	4,747	$	4,315	$	1,282	$	19,733

NOTE G – LONG-TERM FINANCING

On August 26, 2008, we entered into a credit agreement pursuant to which we received a senior secured revolving credit facility in the aggregate principal amount of $125.0 million. The credit facility includes a letter of credit subfacility of up to $10.0 million and a swingline loan subfacility of up to $5.0 million. We borrowed $51.0 million under the credit facility at closing. The interest rate applicable to the borrowed amount is based on 1-month LIBOR plus an applicable margin which is based on our leverage ratio, as defined in the credit agreement. As of September 30, 2008, the interest rate was calculated at 5.46%. We have also collateralized a letter of credit with $1.9 million of available principal and are incurring interest expense on the outstanding letter of credit amount based on the applicable rate of 1.75% plus a 0.25% facing fee. We also incur interest on the unused principal balance based on an applicable rate of 0.30%.

Of the $51.0 million borrowed at closing, $50.3 million was used to repay all borrowings plus interest under our prior $50.0 million credit facility dated as of May 9, 2008 and $0.7 million was used to pay transaction costs.

On October 1, 2008 we borrowed an additional $16.0 million against our senior secured revolving credit facility for our acquisition of MediNotes. See Note N – Subsequent Events.

NOTE H – STOCK COMPENSATION PLANS

2008 Omnibus Incentive Plan

At our Annual Meeting of Stockholders held June 11, 2008, our stockholders approved the 2008 Omnibus Incentive Plan, or the 2008 Plan. The maximum number of shares of common stock that may be issued under the 2008 Plan (subject to adjustment in the event of stock splits and other similar events) is 5,000,000 shares, less one share of common stock for every share that was subject to a stock option granted after December 31, 2007 under our 2005 Stock Incentive Plan (together with its predecessor incentive plans, collectively, the Prior Plans) and 1.6 shares of common stock for every share that was subject to an award other than options granted after December 31, 2007 under the Prior Plans. Any shares of common stock that are subject to options or stock appreciation rights (“SARs”) granted under the 2008 Plan shall be counted against this limit as one share of common stock for every share granted, and in the amount of 1.6 shares of common stock for every share that is subject to awards other than options or SARs. Under the 2008 Plan, no further awards will be granted under the Prior Plans. However, if any shares of common stock subject to an award under the 2008 Plan, or after December 31, 2007, any shares of

11

ECLIPSYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

common stock subject to an award under the Prior Plans, are forfeited, expire or are settled for cash, the shares subject to the award may be used again for awards under the 2008 Plan, in the amount of one share of common stock for every share that was subject to options or SARs and in the amount of 1.6 shares of common stock for every share that was subject to awards other than options or SARs.

We expect to satisfy option exercises by issuing the Company’s common stock. As of September 30, 2008, there were approximately 4,358,212 shares available for future awards under the 2008 Plan.

2005 Inducement Grant Stock Incentive Plan

In October 2005, our Board of Directors approved the 2005 Inducement Grant Stock Incentive Plan (the “Inducement Grant Plan”) for use in making inducement grants of stock options and restricted stock to new employees pursuant to the NASDAQ Marketplace Rules. This Inducement Grant Plan is substantially similar to our 2008 Omnibus Incentive Plan as approved by stockholders, except that eligible recipients are limited to prospective and newly hired employees of the Company, consistent with its purpose as an employment inducement tool.

During the nine months ended September 30, 2008, we issued 106,800 stock options and 200,270 shares of restricted stock as inducement grants under the Inducement Grant Plan to founders and employees of EPSi associated with their continued employment with the Company.

Awards granted under the 2008 Plan, the Prior Plans and the Inducement Grant Plan generally have a contractual life of 7 to 10 years and generally vest over a 4 to 5 year period.

Stock Option Awards

Stock option awards granted by the Company entitle recipients to purchase shares of Eclipsys common stock within prescribed periods at a price equal to the fair market value on the date of grant. A summary of stock option transactions is as follows:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2007	5,254,121		$	16.58
Options granted	830,800		$	22.17
Options exercised	(435,557	)	$	13.52
Options canceled	(375,506	)	$	21.86
Outstanding at September 30, 2008	5,273,858		$	17.37	5.79	$	21,528
Vested and expected to vest at September 30, 2008	4,949,533		$	17.13	5.70	$	21,251
Exercisable at September 30, 2008	2,899,195		$	14.69	4.69	$	18,801

As of September 30, 2008, $24.2 million of total unrecognized compensation costs related to stock options is expected to be recognized over a weighted average period of 3.0 years.

12

ECLIPSYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The weighted average fair value of outstanding stock options is estimated at the date of grant using a Black-Scholes option pricing model. The following are significant weighted average assumptions used for estimating the fair value of the options granted in the following periods:

	Nine Months Ended September 30,
	2008		2007
Expected term (in years)	4.58		6.50
Risk free interest rate	2.64	%	4.38	%
Expected volatility	49.59	%	62.42	%
Dividend yield	0	%	0	%

We use the simplified method for estimating our expected term equal to the midpoint between the vesting period and the contractual term as allowed by Staff Accounting Bulletin 107, “Share-Based Payment.”

Staff Accounting Bulletin 110, “Year-End Help for Expensing Employee Stock Options,” for options granted after December 31, 2007 requires the use of historical data to estimate an expected term unless the company significantly changes the terms of its share-option grants. The grants the Company issued after December 31, 2007 have a contractual term of 7 years, which differs from the contractual term of the historical grants (generally 10 years). Therefore, we do not have sufficient historical data to estimate the expected term for current option issuances. Accordingly, we continue to use the simplified method. Additionally, this reduction in contractual term has lowered our assumption of our expected term.

We currently estimate volatility by using the historical volatility of our common stock.

The risk-free interest rate is the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term input to the Black-Scholes model.

We estimate forfeitures using a historical forfeiture rate. Our estimate of forfeitures will be adjusted over the requisite service period based on the extent to which actual forfeitures differ, or are expected to differ, from our estimate. During the third quarter of 2008, the Company elected to change the application of the forfeiture rate used in the calculation of stock-based compensation expense which resulted in an incremental expense of $1.5 million. In previous quarters, the Company applied a weighted average forfeiture rate which allocated or weighted the impact of vested shares over the vesting period of the entire grant. Beginning with the third quarter of 2008, the Company will apply the forfeiture rate calculated for each respective vesting tranche which applies the impact of the vested shares to the respective vested tranche.

Non-Vested Restricted Stock

Non-vested restricted stock is sometimes granted by the Company. The restrictions lapse on a pro rata basis over a specified period of time, generally four to five years. The grant date fair value per share of non-vested restricted stock, which is the stock price on the grant date, is expensed on a straight-line basis over the period during which the restrictions lapse. The shares represented by restricted stock awards are considered outstanding at the grant date, as the recipients are entitled to dividends and voting rights. A summary of restricted stock award activity for the period is presented below:

	Non-vested Number of Shares		Weighted Average Grant- Date Fair Value
Nonvested balance at December 31, 2007	382,230		$	18.28
Awarded	400,840			22.82
Vested	(102,100	)		18.67
Forfeited	(72,468	)		20.94
Nonvested balance at September 30, 2008	608,502		$	20.89

As of September 30, 2008, $9.6 million of total unrecognized compensation costs related to non-vested stock awards is expected to be recognized over a weighted average period of 2.3 years.

13

ECLIPSYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Stock-Based Compensation Expense

Our stock-based compensation expense, as included in each respective expense category, was as follows (in thousands):

	Three Months Ended September 30,
	2008		2007
Cost of systems & services	$	2,434	$	1,158
Sales and marketing		1,897		698
Research and development		401		500
General and administrative		895		358
Total stock-based compensation expense	$	5,627	$	2,714

	Nine Months Ended September 30,
	2008		2007
Cost of systems & services	$	5,818	$	3,333
Sales and marketing		4,481		2,378
Research and development		992		1,602
General and administrative		1,802		948
Total stock-based compensation expense	$	13,093	$	8,261

NOTE I – TOTAL COMPREHENSIVE INCOME

The components of total comprehensive income were as follows (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2008			2007		2008			2007
Net income	$	87,396		$	8,864	$	96,196		$	16,959
Net change in foreign currency translation adjustment		(613	)		1,003		(1,232	)		2,080
Net change in unrealized gain on investments		1,922			26		(3,306	)		11
Total comprehensive income	$	88,705		$	9,893	$	91,658		$	19,050

NOTE J – RESTRUCTURING

In October 2007, the Company initiated a restructuring plan to relocate its corporate headquarters from Boca Raton, Florida to Atlanta, Georgia. The intent of the restructuring plan was to consolidate more of the Company’s operations in one location, reduce overhead costs, and provide a more accessible location for existing and potential clients as well as employees. The charges related to this plan primarily consist of severance-related expenses associated with the termination of impacted employees and include one-time employee-related benefits.

14

ECLIPSYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

A summary of the restructuring activity related to the relocation of our corporate headquarters is as follows (in thousands):

	One-time Employee- Related Benefits
Balance at December 31, 2007	$	977
Payments	$	(1,044	)
Other	$	161
Balance at September 30, 2008	$	94

In January 2006, we effected a restructuring of our operations which included a reduction in headcount of approximately 100 individuals and the reorganization of our Company. In December 2006, we realigned certain management resources and consolidated some facilities to eliminate excess office space. A summary of the restructuring activity related to our 2006 initiatives for the nine month period ended September 30, 2008 is as follows (in thousands):

	One-time Employee- Related Benefits			Facility Closures			Total
Balance at December 31, 2007	$	278		$	899		$	1,177
Payments		(261	)		(475	)		(736	)
Balance at September 30, 2008	$	17		$	424		$	441

The remaining liability as of September 30, 2008 is expected to be paid out through 2009.

NOTE K – FAIR VALUE MEASUREMENT

We measure our financial assets at fair value in accordance with SFAS 157. The fair value framework prescribed in SFAS 157 requires the categorization of assets into three levels based upon the assumptions (inputs) used to determine the estimated fair value of the assets. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

• Level 1: Unadjusted quoted prices in active markets for identical assets.

• Level 2: Observable inputs other than those included in Level 1. For example, quoted prices for similar assets in active markets or quoted prices for identical assets in inactive markets.

• Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in estimating the value of the asset.

15

ECLIPSYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table summarizes our financial assets measured at fair value on a recurring basis in accordance with SFAS 157 as of September 30, 2008 (in thousands):

	Balance as of September 30, 2008		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Cash equivalents:
Money market funds	$	79,180	$	79,180
Marketable securities:
Treasuries		149		149
Long-term investments:
Auction rate securities (1)		111,083						111,083
	$	190,412	$	79,329	$	—	$	111,083

⁽¹⁾ Our auction rate securities, categorized as level 3, were $111.4 million as of June 30, 2008. In the three months ended September 30, 2008, we recorded additional temporary impairment on the investment of $0.3 million. This temporary impairment has been recorded on the balance sheet as a component of other comprehensive income.

The fair value of our ARS has been estimated by management based on its assumptions of what market participants would use in pricing the asset in a current transaction, or level 3 - unobservable inputs in accordance with SFAS 157, and represents $111.1 million or 58.3% of total assets measured at fair value in accordance with SFAS 157. Management used a model to estimate the fair value of these securities that included certain level 2 inputs as well as assumptions, including a liquidity discount, based on management’s judgment, which are highly subjective and therefore considered level 3 inputs in the fair value hierarchy. Accordingly, we categorized $111.1 million of our ARS in the level 3 category; the lowest level of significant valuation input. The estimate of the fair value of the ARS we hold could change significantly based on future market conditions. For additional information on our investments, see Note E- Investments.

NOTE L – INCOME TAXES

The Company accounts for income taxes under SFAS 109, Accounting for Income Taxes (“SFAS 109”). Under the asset and liability method of SFAS 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

The Company regularly reviews its deferred tax assets for recoverability taking into consideration such factors as historical losses, projected future taxable income and the expected timing of the reversals of existing temporary differences. SFAS 109 requires the Company to record a valuation allowance when it is “more likely than not that some portion or all of the deferred tax assets will not be realized.” It further states that “forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative losses in recent years.” Since inception, the Company has maintained a 100% valuation allowance equal to the deferred U.S. tax assets after considering the U.S. deferred tax assets that can be realized through offsets to existing taxable temporary differences.

Based upon the Company’s results of operations in recent years, and its expected profitability in this and future years, the Company has concluded, effective September 30, 2008, that it is more likely than not that substantially all of its net U.S. deferred tax assets will be realized. As a result, in accordance with SFAS 109, substantially all of the valuation allowance applied to such net deferred tax assets has been reversed in the third quarter of 2008. Reversal of the valuation allowance resulted in a non-cash income tax benefit in the third quarter of 2008 totaling $85.2 million. This benefit represents the Company’s estimated realizable U.S. deferred tax assets.

In the third quarter of 2008, the Company completed its analysis of research and development expenditures for eligibility to qualify for a research and development (“R&D”) tax credit. Accordingly, the Company recorded a deferred tax asset for this tax benefit, net of a reduction of a portion of its deferred tax asset for net operating loss carryforwards, for $8.7 million.

16

ECLIPSYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

As a result of our quarterly review of uncertain tax positions under the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), we recorded an increase in the liability for unrecognized tax benefits of $12.9 million. Of the $12.9 million increase, $7.4 million was recorded to income tax expense, while the remainder of the amount relates to deferred tax assets upon which valuation allowance was previously recorded. As of September 30, 2008, our FIN 48 income tax liability was $15.7 million.

For the quarter ended September 30, 2008, the Company recorded an income tax benefit of $79.3 million as compared to income tax expense of $0.5 million for the third quarter of 2007. The change in income taxes was primarily related to the benefit of the release of valuation allowance. Beginning with the first quarter of 2009, the Company expects to begin providing for an income tax provision at a rate on income before taxes equal to the combined federal and state effective tax rates, currently estimated to be 40 percent.

NOTE M – CONTINGENCIES

In July and August of 2007, four purported stockholder derivative complaints were filed in the United States District Court for the Southern District of Florida against certain current and former directors and officers of Eclipsys and Eclipsys as a nominal defendant, alleging that during the period from at least 1999 until 2006 certain of Eclipsys’ option grants were backdated and that as a result of this alleged backdating the Company’s financial statements were misstated, and stock sales by the named defendants constituted improper insider selling. These complaints were consolidated in November 2007. On May 27, 2008, the parties to the derivative litigation entered into a stipulation of settlement setting forth the terms of an agreement to settle and resolve all claims. The settlement would involve both payments to and recoveries by Eclipsys, with a net settlement cost to the Company of approximately $0.3 million. The settlement was preliminarily approved by the court on June 11, 2008.

On September 12, 2008, the court gave its final approval to the previously disclosed settlement of the stockholder derivative litigation that followed the Company’s announcement in May 2007 of the results of its voluntary review of its historical stock option practices. This effectively ends the derivative litigation.

As previously disclosed, The McKenna System (“TMS”) has filed a complaint against the Company stemming from an agreement between the Company and McKenna Health System (“McKenna”) pursuant to which McKenna agreed to acquire software and services from the Company. McKenna terminated that agreement on April 18, 2007. The complaint alleges various causes of action essentially amounting to breach of contract for failing to meet contractual obligations related to the software sold and the timeliness of implementation, and intentionally or negligently misleading McKenna. TMS has asserted damages of approximately $7.5 million, and seeks multiple damages under various theories. This case is in the early stages of discovery, and the outcome of this case and its impact on the Company’s results of operations depend upon questions of fact and law that are disputed or not clear and cannot be predicted with confidence at this time. The Company intends to contest this matter vigorously, including defending the allegations and pursuing McKenna’s unfulfilled obligations to Eclipsys.

17

ECLIPSYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In addition to the foregoing, the Company and its subsidiaries are from time to time parties to other legal proceedings, lawsuits and other claims incident to their business activities. Such matters may include, among other things, assertions of contract breach or intellectual property infringement, claims for indemnity arising in the course of our business and claims by persons whose employment with us has been terminated. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. Consequently, management is unable to ascertain the ultimate aggregate amount of monetary liability, amounts which may be covered by insurance or recoverable from third parties, or the financial impact with respect to these other matters as of September 30, 2008. However, based on our knowledge as of September 30, 2008, management believes that the final resolution of such other matters pending at the time of this report, individually and in the aggregate, will not have a material adverse effect upon our consolidated financial position, results of operations or cash flows.

NOTE N – SUBSEQUENT EVENTS

On October 2, 2008, the Company acquired MediNotes Corporation (“MediNotes”), a provider in physician practice information solutions. In connection with the transaction, the Company was obligated to pay a total of approximately $45 million (net of certain closing balance sheet adjustments) in exchange for the acquisition of MediNotes and the cancellation of a previous MediNotes’ royalty arrangement. All of the consideration for the cancellation of the royalty arrangement and 61% of the consideration for the acquisition of MediNotes was payable in the form of Eclipsys common stock, and the balance of the consideration for the acquisition of MediNotes was payable in cash.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report contains forward-looking statements that are based on our current expectations, assumptions, estimates and projections about our company and our industry. These statements are not guarantees of future performance and actual outcomes may differ materially from what is expressed or forecasted. When used in this report, the words “may,” “will,” “should,” “predict,” “continue,” “plans,” “expects,” “anticipates,” “estimates,” “intends,” “believe,” “could,” and similar expressions are intended to identify forward-looking statements. These statements may include, but are not limited to, statements concerning our anticipated performance, including revenue, margin, cash flow, balance sheet and profit expectations; development and implementation of our software; duration, size, scope and revenue expectations associated with client contracts; business mix; sales and growth in our client base; market opportunities; industry conditions; and our accounting, including its effects and potential changes in accounting.

Actual results might differ materially from the results projected or implied by the forward-looking statements due to a number of risks and uncertainties, including those described in this report under the heading “Risk Factors” and in other filings we make from time to time with the U.S. Securities and Exchange Commission. Except as required by law, we assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

Throughout this report we refer to Eclipsys Corporation and its consolidated subsidiaries as “Eclipsys,” “the Company,” “we,” “us,” and “our.”

This discussion and analysis should be read in conjunction with our condensed consolidated financial statements, including the notes thereto, which are included elsewhere in this report.

EXECUTIVE OVERVIEW

About the Company

Eclipsys is a leading provider of advanced integrated clinical, revenue cycle and access management software, and professional services that help healthcare organizations improve their clinical, financial, operational and client satisfaction outcomes. We develop and license proprietary software and content that is designed for use in connection with many of the key clinical, financial and operational functions that healthcare organizations require. Among other things, our software:

• enables physicians, nurses and other clinicians to coordinate care through shared electronic medical records, place orders and access and share information about patients;

• helps our clients optimize the healthcare revenue cycle, including patient admissions, scheduling, invoicing, inventory control and cost accounting;

• supports records maintenance and provides assessment of the profitability of specific medical procedures and personnel; and

• provides evidence-based practice guidelines for use by physicians, nurses and other clinicians through clinical content, which is integrated with our software.

We also provide professional services related to our software. These services include software implementation and maintenance, outsourcing, remote hosting of our software, as well as third-party healthcare information technology applications, technical and user training and consulting.

With the exception of hardware revenues, we classify our revenues in one caption (systems and services) in our statement of operations since the amount of license revenue related to traditional software contracts is less than 10% of total revenues and the remaining revenue types included in this caption relate to bundled subscription arrangements and other services arrangements that have similar attribution patterns for revenue recognition. Our income statement items of revenue are as follows:

19

• Systems and services revenues include revenues derived from a variety of sources, including software licenses and contractual software maintenance (under which fees are recognized ratably over the term of the contract), and professional services, which include implementation, training and consulting services. Our systems and services revenues include both “subscription” software license revenues (which are recognized ratably over the contractual term) and license revenues related to “traditional” software contracts (which are generally recognized upon delivery of the software and represents less than 10% of our total revenues). For some clients, we host the software applications licensed from us remotely on our own servers, which saves such clients the cost of procuring and maintaining hardware and related facilities. For other clients, we offer an outsourced solution in which we assume partial to total responsibility for a healthcare organization’s information technology operations using our employees. Margins on the license and maintenance revenues are generally significantly higher than those on the professional services revenues.

• Hardware revenues result from our sale of computer hardware to our clients in connection with their implementation of our software. We purchase this hardware from suppliers and resell it to our clients. As clients elect more remote-hosted solutions, clients’ need for hardware is reduced and future hardware revenues may be negatively impacted. The amount of hardware revenues, and the proportion of our total revenues that they represent, can vary significantly from period to period. Margins on hardware revenues are generally significantly lower than those on systems and services revenues.

We market our software to healthcare providers of many different sizes and specialties, including community hospitals, large multi-entity healthcare systems, academic medical centers, outpatient clinics and physician practices. Most of the top-ranked U.S. hospitals named in U.S. News & World Report’s Honor Roll use one or more of our solutions.

We expanded our operations to India in 2006 through an acquisition of a small producer of laboratory software. By September 2008, our India operations, now named Eclipsys (India) Private Limited, have expanded to include two offices and approximately 550 employees. We believe that India provides access to educated professionals to work on software research, development and support, as well as other functions, at an economically effective cost.

In 2007 we exited our networking services business as well as sold our Clinical Practice Model Resource Center (CPMRC) business. These actions resulted in loss of revenue sources that generated an aggregate of approximately $20 million in 2007. We expect to more than offset this loss of revenue with growth in other areas of the business.

Business Environment

Our industry, healthcare information technology, is highly competitive and subject to numerous government regulations and industry standards. Sales of Eclipsys’ solutions can be affected significantly by many competitive factors, including the features and cost of such solutions as compared to the offerings of our competitors, our marketing effectiveness, and the success of our research and development of new solutions. We anticipate that the healthcare information technology industry will continue to grow and be seen as a way to curb growing healthcare costs while also improving the quality of healthcare.

Economic Environment

The recent economic events that have occurred in September and October 2008, including the substantial decline in the global capital markets, as well as the lack of liquidity in the credit markets, could impact our clients’ ability to obtain financing. In addition, many of our clients’ budgets rely in part on endowment earnings, which have suffered given recent declines in portfolio investment values. Although market conditions have deteriorated, we believe healthcare institutions will continue to invest in technologies. However, we may see a deferral in large solutions sales as well as entities looking to negotiate longer payment terms. Thus, while these matters may impact the timing of when bookings occur or revenue is recognized, we do not expect a decline in the overall market for healthcare information technology. In addition, these recent events, to date, have not materially impacted the quality of our accounts receivable balances or our ability to access our credit facility as evidenced by our October 2008 borrowing of $16.0 million to fund the cash portion of the MediNotes Corporation acquisition price and related transaction fees.

20

Consolidated Results of Operations

Key financial and operating data for Eclipsys Corporation and subsidiaries are as follows (in thousands, except per share amounts):

	For The Three Months Ended September 30,					Change ($)			Change (%)		For The Nine Months Ended September 30,					Change ($)			Change (%)
	2008			2007							2008			2007
Revenues:
Systems and services	$	127,575		$	117,530	$	10,045		8.5	%	$	373,021		$	340,979	$	32,042		9.4	%
Hardware		4,849			3,550		1,299		36.6	%		15,925			12,150		3,775		31.1	%
Total revenues		132,424			121,080		11,344		9.4	%		388,946			353,129		35,817		10.1	%
Costs and expenses:
Cost of systems and services		73,166			65,454		7,712		11.8	%		210,042			197,502		12,540		6.3	%
Cost of hardware		5,457			2,685		2,772		103.2	%		13,408			9,336		4,072		43.6	%
Sales and marketing		19,498			17,896		1,602		9.0	%		63,150			54,215		8,935		16.5	%
Research and development		14,195			14,079		116		0.8	%		47,102			42,136		4,966		11.8	%
General and administrative		8,202			8,743		(541	)	-6.2	%		26,877			23,951		2,926		12.2	%
In-process research and development charge		—			—		—		—			850			—		850		*
Depreciation and amortization		5,145			4,710		435		9.2	%		15,651			13,445		2,206		16.4	%
Total costs and expenses		125,663			113,567		12,096		10.7	%		377,080			340,585		36,495		10.7	%
Income from operations		6,761			7,513		(752	)	-10.0	%		11,866			12,544		(678	)	-5.4	%
Gain on sale of assets		685			—		685		*			4,200			—		4,200		*
Interest income, net		634			1,814		(1,180	)	-65.0	%		3,581			4,916		(1,335	)	-27.2	%
Income before taxes		8,080			9,327		(1,247	)	-13.4	%		19,647			17,460		2,187		12.5	%
Provision for income taxes		(79,316	)		463		(79,779	)	*			(76,549	)		501		(77,050	)	*
Net income	$	87,396		$	8,864	$	78,532		886.0	%	$	96,196		$	16,959	$	79,237		467.2	%
Basic net income per common share	$	1.62		$	0.17	$	1.45				$	1.79		$	0.32	$	1.47
Diluted net income per common share	$	1.59		$	0.16	$	1.43				$	1.76		$	0.31	$	1.45

* Not meaningful

Revenues

Total revenues increased by $11.3 million, or 9.4%, for the three months ended September 30, 2008 as compared to the three months ended September 30, 2007 and $35.8 million, or 10.1%, for the nine months ended September 30, 2008 as compared to the nine months ended September 30, 2007. The acquisition of EPSi in February 2008 accounted for $3.5 million of the increase for the three months ended September 30, 2008 and $7.5 million for the nine months ended September 30, 2008.

Systems and Services Revenues

Systems and services revenues increased by $10.0 million, or 8.5%, for the three months ended September 30, 2008, as compared to the three months ended September 30, 2007 and $32.0 million, or 9.4%, for the nine months ended September 30, 2008, as compared to the nine months ended September 30, 2007. The overall increase for the three months ended September 30, 2008 resulted from increases of $8.1 million in revenues recognized on a ratable basis, $1.8 million in professional services revenues, and $0.2 million in periodic revenues. The increase for the nine months ended September 30, 2008 resulted from an increase of $24.7 million in revenues recognized on a ratable basis, $5.2 million in professional services revenues, and $2.3 million in periodic revenues.

21

Revenues Recognized Ratably - Revenues recognized ratably from software, maintenance, outsourcing and remote hosting were $84.8 million for the three months ended September 30, 2008, an increase of $8.1 million, or 10.5%, as compared to the three months ended September 30, 2007 and $249.0 million for the nine months ended September 30, 2008, an increase of $24.7 million, or 10.99%, as compared to the nine months ended September 30, 2007. The increase was due to new sales bookings in previous periods for our solutions, remote hosting related services, and outsourcing, in previous periods, resulting in growth in our recurring revenue base. Future growth in these revenues depends upon future bookings in excess of previous levels. In addition, the acquisition of EPSi in February 2008 added $0.5 million to our revenues recognized ratably for the three months ended September 30, 2008 and $1.0 million for the nine months ended September 30, 2008.

Periodic Revenues - Periodic revenues for software related fees, third party software related fees and networking services (only 2007) were $8.8 million for the three months ended September 30, 2008, as compared to $8.6 million for the three months ended September 30, 2007 and $28.1 million for the nine months ended September 30, 2008, as compared to $25.8 million for the nine months ended September 30, 2007. The table below summarizes the components of periodic revenues (in thousands):

	For The Three Months Ended September 30,							For The Nine Months Ended September 30,
	2008		2007		Change			2008		2007		Change
Eclipsys software related fees	$	6,605	$	4,292	$	2,313		$	22,452	$	12,360	$	10,092
Third party software related fees		2,204		2,065		139			5,664		5,653		11
Networking services		—		2,230		(2,230	)		—		7,758		(7,758	)
Total periodic revenues	$	8,809	$	8,587	$	222		$	28,116	$	25,771	$	2,345

In any period, some software revenues can be considered one time in nature for that period, and we do not recognize these revenues on a ratable basis. These revenues include traditional license fees associated with new contracts signed in the period, including add-on licenses to existing clients and new client transactions, as well as revenues from contract backlog that had not previously been recognized pending contract performance that occurred or was completed during the period, and certain other activities during the period associated with client relationships. In the aggregate, these periodic revenues can contribute significantly to earnings in the period because relatively little in-period costs are associated with such revenues (other than those costs associated with networking services – only in 2007). We expect these periodic revenues to continue to fluctuate on a quarterly and annual basis as a result of significant variations in the type and magnitude of sales and other contract and client activity in any period, and these variations make it difficult to predict the nature and amount of these periodic revenues. The acquisition of EPSi in February 2008 increased software related fees revenues by $2.5 million for the three months ended September 30, 2008 and $5.5 million for the nine months ended September 30, 2008.

During 2007, we exited our networking services business and shifted any residual client network hardware needs to third party hardware providers. The related revenues are included in hardware revenues for the three and nine month periods ended September 30, 2008.

Professional Services Revenues - Professional services revenues, which include implementation, training and consulting related services, were $34.0 million for the three month period ended September 30, 2008, an increase of $1.8 million, or 5.5%, as compared to the three month period ended September 30, 2007 and $95.9 million, for the nine month period ended September 30, 2008, an increase of $5.2 million, or 5.7%, as compared to the nine month period ended September 30, 2007. The increase in both periods resulted primarily from higher utilization of our professional services team and increased activity associated with implementation of our software following increases in previous period software sales. In addition, the acquisition of EPSi in February 2008 added $0.4 million to our professional services revenues for the three months ended September 30, 2008 and $1.0 million for the nine months ended September 30, 2008. These increases were offset by a decrease of $1.4 million and $3.8 million in revenues for the three and nine month periods ended September 30, 2008, respectively, as a result of the sale of our Clinical Practice Model Resource Center (CPMRC) business in late 2007.

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Hardware Revenues

Hardware revenues increased $1.3 million, or 36.6%, for the three months ended September 30, 2008, as compared to the three month period ended September 30, 2007 and $3.8 million, or 31.1%, for the nine months ended September 30, 2008, as compared to the nine months ended September 30, 2007. During 2007, we exited our networking services business and shifted any residual client network hardware needs to third party hardware providers resulting in a shift from periodic revenues to hardware revenues. This shift increased hardware revenues by $1.1 million and $5.2 million for the three and nine month periods ended September 30, 2008, respectively.

Operating Expenses

Stock-based compensation - Stock-based compensation expense is included in cost of systems and services, sales and marketing, general and administrative, and research and development expenses. During the third quarter 2008 total stock-based compensation was $5.6 million or $1.5 million higher than reported in the previous quarter. This increase is primarily due to a change of the forfeiture rate application used in the calculation of stock-based compensation expense. Beginning with the third quarter of 2008, we elected to change the application of the forfeiture rate used in the calculation of stock-based compensation expense which resulted in a non-recurring incremental expense of $1.5 million. We expect total stock-based compensation expense in the fourth quarter 2008 to be approximately $4.2 to $4.7 million.

Cost of systems and services - Our cost of systems and services increased $7.7 million, or 11.8%, for the three months ended September 30, 2008 as compared to the three months ended September 30, 2007 and $12.5 million, or 6.3%, for the nine months ended September 30, 2008 as compared to the nine months ended September 30, 2007. The increase for the three months ended September 30, 2008 reflects:

• Higher labor related costs of $0.8 million, which includes higher wages and benefits of $1.7 million, higher stock-based compensation of $1.3 million, higher severance expenses of $1.1 million, partially offset by lower annual incentive compensation expense of $3.0 million caused primarily by a reduction in the expected payouts for the 2008 annual incentive plan reflecting third quarter and year-to-date operating results. The increase in wages reflects higher headcount consistent with previous quarters. Higher stock-based compensation was primarily due to a change in the forfeiture rate application previously discussed. Our reorganization of the services organization drove the increase in severance expense.

• Higher third party software cost of services of $4.4 million primarily as a result of amounts recognized in the quarter related to nonrecurring adjustments from prior periods and more contract activity requiring third party services as a result of exiting our network business.

• Higher amortization of capitalized software of $1.8 million impacted by the release of SunriseXA 5.0 in December of 2007.

The $12.5 million increase in cost of systems and services for the nine months ended September 30, 2008 as compared to the nine months ended September 30, 2007 is due to higher labor related costs of $7.7 million, higher third party software costs of $2.6 million primarily related to amounts recognized in the third quarter related to nonrecurring adjustments from prior periods, higher capitalized software amortization of $2.0 million, and higher travel related costs of $0.9 million. Higher labor related costs for the nine months ended September 30, 2008 included increased headcount, higher wage rates, and higher stock-based compensation, partially offset by lower annual incentive compensation expense due to reasons described in the three month comparison above. The higher labor related costs also included abnormally high employee medical claim expenses in the first quarter of 2008. The increase in the first nine months of 2008 also included a $0.5 million increase in bad debt expense related to a reserve for a specific customer in the first quarter of 2008 and $0.4 million increase in rent expense resulting from our headquarter transition from Boca Raton, Florida to Atlanta, Georgia and leasing of additional space to support our growth.

Cost of hardware - Cost of hardware increased $2.8 million or 103.2% for the three months ended September 30, 2008 as compared to the three months ended September 30, 2007 impacted by higher hardware sales and an incremental adjustment of $1.7 million to correctly record certain third-party embedded software costs which were previously deferred. Hardware margins, excluding the incremental adjustment, in the third quarter 2008 were approximately 24%. Our cost of hardware increased $4.0 million, or 43.6%, for the first nine months of 2008 as compared to the first nine months of 2007 driven by the $1.7 million adjustment previously discussed and the result of exiting our networking services business during 2007, which shifted any residual network hardware activity to third party hardware providers. This shift created additional hardware costs related to increased third party hardware activity. The first nine months of 2008 were also impacted by higher software costs for reasons previously discussed for the three months ended September 30, 2008.

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Sales and marketing - Our sales and marketing expenses increased $1.6 million, or 9.0%, in the three months ended September 30, 2008 as compared to the three months ended September 30, 2007 and $8.9 million, or 16.5%, for the nine months ended September 30, 2008 as compared to the nine months ended September 30, 2007. The increase in sales and marketing expenses for the three months ended September 30, 2008 as compared to the three months ended September 30, 2007 included higher labor related compensation and higher travel, sales trade shows, and other miscellaneous expenses in efforts to continue to grow the business. Higher labor related costs included higher stock-based compensation of $1.2 million, higher basic wages and related benefits of $1.5 million, partially offset by lower annual incentive compensation expense of $1.5 million reflecting third quarter and year-to-date operating results and lower sales commissions of $0.6 million. The increase in stock-based compensation was primarily due to a change in the application of our forfeiture rate as previously discussed.

The increase in the nine months ended September 30, 2008 as compared to the nine months ended September 30, 2007 includes labor related increases of $5.9 million for similar reasons previously described for the quarter. The remaining increases in sales and marketing expenses for the nine month period include slightly higher travel, sales trade shows, higher incremental rent expense in the first quarter of 2008, and other expenses reflecting continued growth in our business.

Research and Development - Our research and development expenses increased $0.1 million, or 0.8%, in the three months ended September 30, 2008, as compared to the three months ended September 30, 2007 and $5.0 million, or 11.8%, for the nine months ended September 30, 2008 as compared to the nine months ended September 30, 2007. For the three months ended September 30, 2008, labor related costs increased $0.3 million impacted by higher wages and related benefits of $0.7 million due to higher headcount in India, partially offset by a $0.5 million decrease in annual incentive compensation expense reflecting third quarter and year-to-date operating results. The three months ended September 30, 2008 compared to the three months ended September 30, 2007 include increased expenses of $0.3 million due to a decrease in internal labor cost capitalization associated with development work related to SunriseXA 5.0, which we released in December of 2007, and the timing of project work on release 5.5 scheduled for December 2009. These increases were partially offset by decreases in consulting and certain administrative support functions for research and development.

The $5.0 million increase for the nine months ended September 30, 2008 as compared to the nine months ended September 30, 2007 reflects lower software capitalization of $2.8 million and higher labor related costs of $2.8 million for reasons similar to the three months ended September 30, 2008, as described above.

Our gross research and development spending, which consists of research and development expenses and capitalized software development costs of $19.5 million in the third quarter of 2008, decreased $0.2 million compared to $19.7 million in the third quarter of 2007, while the gross spending for the nine months ended September 30, 2008 as compared to the nine months ended September 30, 2007 increased $2.1 million to $59.5 million. This increase was due primarily to our continued expansion of research and development activities in India.

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In summary, research and development expense for the three and nine months ended September 30 was as follows (in thousands):

	For The Three Months Ended September 30,				Change (%)		For The Nine Months Ended September 30,				Change (%)
	2008		2007				2008		2007
Research and development expenses	$	14,195	$	14,079	0.8	%	$	47,102	$	42,136	11.8	%
Capitalized software and development costs	$	5,281	$	5,598	-5.7	%	$	12,417	$	15,278	-18.7	%
Gross research and development expenditures	$	19,476	$	19,677	-1.0	%	$	59,519	$	57,414	3.7	%

General and administrative - Our general and administrative expenses decreased $0.5 million, or 6.2%, in the three months ended September 30, 2008 as compared to the three months ended September 30, 2007 and increased $2.9 million, or 12.2%, for the nine months ended September 30, 2008 as compared to the nine months ended September 30, 2007. Labor costs for the three months ended September 30, 2008 compared to the three months ended September 30, 2007 decreased $0.4 million as higher stock-based compensation expense of $0.5 million was more than offset by lower annual incentive compensation expense of $1.3 million reflecting third quarter and year-to-date operating results. The quarter was also impacted by lower legal expense of $1.0 million substantially offset by higher bad-debt expense of $0.7 million. The reduction in legal and consulting fees reflects higher costs in the three months ended September 30, 2007 due to the voluntary stock-option review that was completed in 2007 and to a lesser extent insurance recoveries associated with our derivative lawsuit recorded as a reduction in legal expense in the third quarter of 2008.

The $2.9 million increase in our general and administrative expenses for the nine months ended September 30, 2008 as compared to the nine months ended September 30, 2007 was driven by increased labor related costs of $2.3 million impacted by higher wages and incremental headquarter labor costs and $0.7 million higher bad debt expense. These increases were partially offset by $0.8 million of lower legal fees impacted by the voluntary stock-option review that was completed in 2007.

Depreciation and amortization - Depreciation and amortization expense increased $0.4 million, or 9.2%, in the three months ended September 30, 2008 as compared to the three months ended September 30, 2007 and $2.2 million, or 16.4%, for the nine months ended September 30, 2008 as compared to the nine months ended September 30, 2007. The increase in depreciation and amortization is attributable primarily to amortization related to intangible assets acquired in the EPSi acquisition and to a lesser extent an increased asset base to support our growing operations.

Gain on Sale of Assets

During 2008 we recorded additional gain on sale of assets of $0.7 million and $4.2 million for the three and nine months ended September 30, 2008, respectively, resulting from the completion of post-closing milestones associated with the fourth quarter 2007 sale of our CPMRC business.

Interest Income, Net

Net interest income decreased by $1.2 million for the three months ended September 30, 2008 as compared to the three months ended September 30, 2007 and $1.3 million for the nine months ended September 30, 2008 as compared to the nine months ended September 30, 2007.

We incurred interest expense of $0.5 million and $1.2 million for the three and nine month periods ended September 30, 2008, respectively, on borrowings under the $45.0 million short-term financing arrangement we entered into in February 2008 and repaid in May 2008, the $50.0 million short-term financing arrangement we entered into in May 2008 and repaid in August 2008, and the $51.0 million borrowed under the $125.0 million long-term financing arrangement we entered into in August 2008. The interest rate applicable to the borrowed amount is based on 1-month LIBOR plus an applicable margin which is based on our leverage ratio, as defined in the long-term financing credit agreement. As of September 30, 2008, the interest rate was calculated at 5.46%.

Interest income decreased $0.7 million, or 37.8%, for the three months ended September 30, 2008 as compared to the three months ended September 30, 2007 and decreased $0.1 million for the nine months ended September 30, 2008, or 2.8%, as compared to the nine months ended September 30, 2007. Interest rates on ARS increased in the first quarter of 2008 after the Dutch auctions failed in February 2008, and penalty rates were applied. These penalty rates remained in effect for various time periods from 28 days to three months depending on the indenture agreements resulting in increased interest income in the period after the failed auctions. As the penalty rates expired, the resulting interest rates were reset consistent with the indenture agreements to maintain the annual interest limit. In some instances, the interest rates were reset at 0%. Interest income will continue to be negatively impacted by lower interest rates in 2008. Interest income in 2008 is expected to continue to be offset in part by interest obligations on borrowings under our financing arrangements.

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Provision for Income Taxes

For the quarter ended September 30, 2008, the Company recorded an income tax benefit of $79.3 million as compared to income tax expense of $0.5 million for the third quarter of 2007. The change in income taxes was primarily related to the benefit of the release of valuation allowance. Beginning with the first quarter of 2009, the Company expects to begin providing for an income tax provision at a rate on income before taxes equal to the combined federal and state effective tax rates, currently estimated to be 40 percent.

LIQUIDITY AND CAPITAL RESOURCES

Overview

The recent economic events that have occurred in September and October 2008, including the substantial decline in the global capital markets, as well as the lack of liquidity in the credit markets, could impact our clients’ ability to obtain financing. In addition, many of our clients’ budgets rely in part on endowment earnings, which have suffered given recent declines in portfolio investment values. These recent events, to date, have not materially impacted the quality of our accounts receivable balances or our ability to access our credit facility as evidenced by our October 2008 borrowing of $16.0 million to fund the cash portion of the MediNotes Corporation acquisition price and related transaction fees. However, if challenging economic conditions persist, our clients’ future ability to pay for our software and services, for which they have contracted, may be impaired. As a result, reserves for doubtful accounts and write-offs of accounts receivable may increase.

Cash and marketable securities at September 30, 2008 were $89.5 million representing a $101.9 million decrease from December 31, 2007. This decrease primarily reflects the reclassification of $111.1 million of our ARS from marketable securities to non-current assets. The decrease also includes $53.7 million of net cash used for the EPSi acquisition, substantially offset by net proceeds of $51 million from our secured financing described further below. Additional decreases in cash also include payouts under the 2007 incentive plan, paid in March of 2008, and capital expenditures, which include investment in our facilities in Pune, India, investments related to the relocation of our corporate headquarters, and investments in computer equipment to support our growing operations. Additionally, our temporary decline in value adjustment related to our ARS reduced the carrying amount of our marketable securities in the nine months ended September 30, 2008 by $5.5 million.

2008

During the nine month period ended September 30, 2008, operating activities provided $41.5 million of cash. Cash flow from operating activities reflected income generated from operations of $59.2 million, after adjusting for non cash items of $37.0 million, which included depreciation and amortization, in-process research and development charge, stock compensation, provision for bad debt, non cash deferred tax provision, gain on sale of assets and gain on sale of investments. This was offset in part by a decrease in net working capital of $18.6 million due primarily to the negative impact of collection activity, changes in accrued compensation expenses driven by payouts under the 2007 incentive plan, paid in March 2008, and increases in prepaid assets negatively impacted by the timing of annual maintenance payments.

Investing activities used $29.6 million of cash which included $53.7 million, net of cash acquired, for our EPSi acquisition, $20.4 million of capital expenditures and $12.4 million for investment in software, partially offset by net sales of marketable securities of $51.6 million and $3.6 million received on the sale of our CPMRC business. Capital expenditures included leasehold improvements for our new corporate headquarters facility in Atlanta, Georgia and our facility in British Columbia, Canada and investment in our facilities in Pune, India.

Financing activities provided cash inflow of $55.5 million, primarily consisting of net proceeds of $51.0 million from our secured financing described below. We also received $5.3 million from stock option exercises. The amount of cash that will be provided by future stock option exercises is uncertain.

Future Capital Requirements

As of September 30, 2008, our principal source of liquidity is our cash and cash equivalents balances and marketable securities of $89.5 million. We believe that our current cash and cash equivalents and marketable securities combined with our anticipated cash flows from operations will be sufficient to fund our current operations for the next twelve months.

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The Company held approximately $116.6 million par value of ARS as of September 30, 2008. Our ARS are comprised of certain “AAA” rated pools of student loans. These investments have historically have been be sold via Dutch auctions every 7, 14, 21, 28, or 35 days creating a short-term instrument. In February 2008, the broker-dealers managing the Company’s ARS portfolio experienced failed auctions of certain of these securities where the amount of securities submitted for sale exceeded the amount of purchase orders. Our ARS continued to fail to settle at auctions through the third quarter of 2008. This indicates the estimated fair value of these ARS may no longer approximate their par value. As of September 30, 2008, the Company has recorded these securities as long-term investments at an estimated fair value of $111.1 million and recorded a temporary loss on these securities of $5.5 million in accumulated other comprehensive income, reflecting the decline in the fair value of these securities.

We currently plan to hold the ARS until such time as successful auctions occur or a secondary market develops that provides sufficient liquidity to recover substantially all of our par value. There can be no assurance that this will occur. In April 2008, a partial call transaction was closed related to one of our ARS securities, as a result of which we received proceeds of $4.6 million. In May 2008, a call transaction was closed related to another one of our ARS securities, as a result of which we received proceeds of $14.3 million. Each of these two transactions resulted in a recovery of the full par value of the securities. As of September 30, 2008, no calls were outstanding on our ARS. On October 7, 2008 UBS Financial Services (“UBS”) issued a public statement outlining a program in which UBS would enter into agreements with UBS clients, holding ARS purchased through UBS, to purchase the ARS held by such clients at par value at a prescribed future date. As of September 30, 2008, the Company holds $36.3 million par value of ARS that we purchased through UBS. We are currently evaluating our options under this program; the offer expires on November 14, 2008.

In February 2008 we entered into a secured financing agreement with an investment bank, pursuant to which we received $45.0 million in exchange for a transfer to the bank (as a form of collateral) of ARS with a nominal value of $90.0 million in the aggregate. The Company entered into this arrangement to provide funds to close our February 2008 acquisition of EPSi. On May 9, 2008, we entered into a credit agreement, pursuant to which the Company received a senior secured revolving credit facility in the aggregate principal amount of $50.0 million. We entered into this arrangement to obtain funds to repay the $45.0 million short-term financing agreement. On August 26, 2008, Eclipsys entered into a credit agreement pursuant to which Eclipsys received a senior secured revolving credit facility in the aggregate principal amount of $125.0 million. The credit facility includes a letter of credit subfacility of up to $10.0 million and a swingline loan subfacility of up to $5 million. Borrowings under the credit facility may be used to pay transaction expenses, to refinance debt, for potential acquisitions and capital investments, and for working capital and other general corporate purposes. At the closing, Eclipsys borrowed $51.0 million under the credit facility of which $50.3 million was used to repay all borrowings plus interest under Eclipsys’ prior $50.0 million credit facility and $0.7 million was used to pay transaction costs. As of September 30, 2008, Eclipsys has $51.0 million outstanding under the $125.0 million credit facility.

On October 2, 2008, the Company acquired MediNotes for approximately $45.0 million consisting of cash and Eclipsys common stock. The cash portion of the acquisition price and related transaction fees were financed with $16.0 million of borrowed from our $125.0 million credit facility.

Our future cash requirements will depend on a number of factors including, among other things, the timing and level of our new sales volumes, the cost of our development efforts, the success and market acceptance of our future product releases, and other related items. The Company also periodically evaluates business expansion opportunities that fit its strategic plans, such as our February 2008 acquisition of EPSi and our October 2008 acquisition of MediNotes. If an opportunity requiring significant capital investment were to arise, the Company may seek to finance the opportunity through available cash on hand, existing financings, issuance of additional shares of its stock or additional sources of financing, as circumstances warrant. However, there can be no assurance that adequate liquidity would be available to finance extraordinary business opportunities. In addition, we may not be able to draw on the full available balance of our $125.0 million credit facility if one or more of the financial institutions that have extended credit commitments to us become unwilling or unable to fund such borrowings. In the current economic environment, the chance of a syndicate bank failing to meet a funding commitment is less unlikely than under more normal circumstances, and our ability to replace a non-funding bank in the syndicate is uncertain. There can also be no assurance that our credit facility will be renewed or replaced upon the expiration of our current credit facility on August 26, 2011. Our ability to renew such credit facility or to enter into a new financing arrangement to replace the existing facility could be impaired if the current disruptions in U.S. and international financial markets continue or worsen.

The recent disruptions in the financial markets can also reduce access to cash by our clients and potential clients. In addition, many of our clients’ budgets rely in part on endowment earnings, which have suffered given recent declines in portfolio investment values. If healthcare information technology spending declines or increases more slowly than we anticipate, demand for our software could be adversely affected and our revenue could decline. Challenging economic conditions also may impair the ability of our clients to pay for our software and services for which they have contacted. As a result, reserves for doubtful accounts and write-offs of accounts receivable may increase.

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SFAS 157 “Fair Value Measurements”

The fair value of our ARS has been estimated by management based on its assumptions of what market participants would use in pricing the asset in a current transaction, or level 3—unobservable inputs in accordance with SFAS 157 “Fair Value Measurements,” and represents 58.3% of total assets measured at fair value in accordance with SFAS 157. Management used a model to estimate the fair value of these securities that included certain level 2 inputs as well as assumptions, including a liquidity discount, based on management’s judgment, which are highly subjective and therefore considered level 3 inputs in the fair value hierarchy. Accordingly, we categorized $111.1 million of our ARS in the level 3 category; the lowest level of significant valuation input. The estimate of the fair value of the ARS we hold could change significantly based on market conditions. For additional information on our investments, see Note E- Investments.

CRITICAL ACCOUNTING POLICIES

There were no material changes to our critical accounting policies as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2007 filed with the SEC on February 29, 2008.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We do not currently use derivative financial instruments or enter into foreign currency hedge transactions. Foreign currency fluctuations through September 30, 2008 have not had a material impact on our financial position or results of operations. We continually monitor our exposure to foreign currency fluctuations and may use derivative financial instruments and hedging transactions in the future if, in our judgment, the circumstances warrant their use. Generally, our expenses are denominated in the same currency as our revenue and the exposure to rate changes is minimal. We believe most of our international operations are naturally hedged for foreign currency risk as our foreign subsidiaries invoice their customers and satisfy their obligations primarily in their local currencies with the exception of our development center in India. Our development center in India is not naturally hedged for foreign currency risk since their obligations are paid in their local currency but are funded in U.S. dollars. There can be no guarantee that foreign currency fluctuations in the future will not be significant.

We hold investments in auction-rate securities (“ARS”). These ARS are debt instruments with long-term nominal maturities that previously could be sold via Dutch auctions every 7, 14, 21, 28, or 35 days creating a short-term instrument. In February 2008, broker-dealers holding the Company’s ARS portfolio experienced failed auctions of certain ARS where the amount of securities submitted for sale exceeded the amount of related purchase orders. Our ARS continued to fail to settle at auctions through the third quarter of 2008. The Company continues to earn interest on these investments at the contractual rate, and the ARS that the Company holds have not been downgraded or placed on credit watch by credit rating agencies. During the nine months ended September 30, 2008, we adjusted the carrying amount of our ARS to estimated fair market value. The adjustment was recorded in other comprehensive income. If uncertainties in the credit and capital markets continue and these markets deteriorate further or the Company experiences any rating downgrades on any investments in its portfolio, the Company may incur further temporary impairments or other-than-temporary impairments, which could negatively affect the Company’s financial condition, cash flow and reported earnings.

Investments in both fixed rate and floating rate interest earning instruments carry a degree of interest rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fall short of expectations due to changes in interest rates or we may suffer losses in principal if forced to sell securities that have seen a decline in market value due to changes in interest rates.

The following table illustrates potential fluctuation in annualized interest income based upon hypothetical values for blended interest rates for hypothetical ARS balances (we currently earn interest on $116.6 million par value of ARS):

Hypothetical Interest Rate	ARS balances (in thousands)
	$	95,000	$	105,000	$	115,000
3.0%		2,850		3,150		3,450
3.5%		3,325		3,675		4,025
4.0%		3,800		4,200		4,600
4.5%		4,275		4,725		5,175
5.0%		4,750		5,250		5,750
5.5%		5,225		5,775		6,325

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We estimate that a one-percentage point decrease in interest rates for our investment securities portfolio as of September 30, 2008 would have resulted in a decrease in interest income of $0.3 million for a three month period or $1.2 million for a 12 month period. This sensitivity analysis contains certain simplifying assumptions, including a constant level and rate of debt securities and an immediate across-the-board increase or decrease in the level of interest rates with no other subsequent changes for the remainder of the period, and it does not consider the impact of changes in the portfolio as a result of our business needs or as a response to changes in the market. Therefore, although it gives an indication of our exposure to changes in interest rates, it is not intended to predict future results, and our actual results will likely vary.

On August 26, 2008, we entered into a credit agreement pursuant to which we received a senior secured revolving credit facility in the aggregate principal amount of $125.0 million. We borrowed $51.0 million under the credit facility at closing. The interest rate applicable to the borrowed amount is based on 1-month LIBOR plus an applicable margin which is based on our leverage ratio, as defined in the credit agreement. As of September 30, 2008, the interest rate was calculated at 5.46%. For each percentage point increase in the interest rate, annual interest expense would increase $0.5 million.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act as of September 30, 2008. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives of ensuring that information we are required to disclose in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures, and is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. There is no assurance that our disclosure controls and procedures will operate effectively under all circumstances. Based upon the evaluation described above our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2008, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter-ended September  30, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth under Note M - Contingencies to the unaudited condensed consolidated financial statements of this quarterly report on Form 10-Q is incorporated herein by reference.

ITEM 1A. RISK FACTORS

Many risks affect our business. These risks include, but are not limited to, those described below, each of which may be relevant to decisions regarding an investment in or ownership of our stock. We have attempted to organize the description of these risks into logical groupings to enhance readability, but many of the risks interrelate or could be grouped or ordered in other ways, so no special significance should be attributed to these groupings or order. Any of these risks could have a significant adverse effect on our reputation, business, financial condition or results of operations.

We have added to the risk factors set forth in set forth in our annual report on Form 10-K for the year ended December 31, 2007 the following risk factors titled: (i) “Our commercial credit facility subjects us to operating restrictions and risks of default,” due to our entry into a new commercial borrowing arrangement in August 2008, which replaced our previous credit facility; and (ii) “The conditions of the U.S. and international capital markets may adversely affect our ability to draw on Eclipsys’ current credit facility,” due to the recent disruptions in U.S. and international capital markets.

In addition, we have added risks and uncertainties related to recent disruptions in U.S. and international financial markets to the following previously disclosed risk factors: (i) “The healthcare industry faces financial constraints that could adversely affect the demand for our software and services;” (ii) “Our operating results may fluctuate significantly and may cause our stock price to decline;” and (iii) “Inability to obtain other financing could limit our ability to conduct necessary development activities and make strategic investments.”

The risk factors below also reflect the following previously disclosed updates to the risk factors set forth in our annual report on Form 10-K for the year ended December 31, 2007: (i) the increasing importance of U.S, federal, state, and foreign government standards and industry trends applicable to our software, including interoperability requirements, in our risk factor titled “Changes in standards applicable to our software could require us to incur substantial additional development costs;” (ii) the settlement of the derivative litigation, in our risk factor titled “Our past stock option practices and related accounting issues have caused costly derivative litigation and may result in additional litigation, regulatory proceedings and governmental enforcement actions;” (iii) the ongoing auction failures and temporary loss related to our auction rate securities, in our risk factor titled “Funds associated with certain of our investments in auction rate securities may not be liquid or accessible for in excess of 12 months, and our auction rate securities may experience further temporary or other-than-temporary decline in value, which would adversely affect our financial condition, cash flow and reported earnings;” and (iv) the termination of our stockholder rights agreement, or “poison pill,” as part of our ongoing review and improvement of Eclipsys’ corporate governance, and not in connection with any pending or anticipated transaction, in our risk factor titled “Provisions of our charter documents and Delaware law may inhibit potential acquisition bids that a stockholder may believe is desirable, and the market price of our common stock may be lower as a result.”

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RISKS RELATING TO DEVELOPMENT AND OPERATION OF OUR SOFTWARE

Our software may not operate properly, which could damage our reputation and impair our sales.

Software development is time consuming, expensive and complex. Unforeseen difficulties can arise. We may encounter technical obstacles, and it is possible that we could discover additional problems that prevent our software from operating properly. If our software contains errors or does not function consistent with software specifications or client expectations, clients could assert liability claims against us and/or attempt to cancel their contracts with us. These risks are generally more significant for newer software, until it has been used for enough time in enough client locations for us to have addressed issues that are discovered through use in disparate circumstances and environments. Due to our development efforts, we generally have significant software that could be considered relatively new and therefore more vulnerable to these risks, including at present our medication management and ambulatory software, among others. It is also possible that future releases of our software, which would typically include additional features, may be delayed or may require additional work to address issues that may be discovered as the software comes into use in our client base. If we fail to deliver software with the features and functionality promised to our clients, we could be subject to significant contractual damages and face serious harm to our reputation, and our results of operations could be negatively impacted.

Our software development efforts may be inefficient or ineffective, which could adversely affect our results of operations.

We strive to develop new software, and improve our existing software to add new or enhanced features and functionality. We schedule and prioritize these development efforts according to a variety of factors, including our perceptions of market trends, client requirements, and resource availability. Our software is complex and requires a significant investment of time and resources to develop, test, and introduce into use. Sometimes this takes longer than we expect. Sometimes we encounter unanticipated difficulties that require us to re-direct or scale-back our efforts. Sometimes we change our plans in response to changes in client requirements, market demands, resource availability, regulatory requirements, or other factors. All of this can result in acceleration of some initiatives and delay of others. These factors place significant demands upon our software development organization and require complex planning and decision making. If we make the wrong choices or do not manage our development efforts well, we may fail to produce software that responds appropriately to our clients’ needs, or we may fail to meet client expectations regarding new or enhanced features and functionality.

Market changes or mistaken development decisions could decrease the demand for our software, which could harm our business and decrease our revenues.

The healthcare information technology market is characterized by rapidly changing technologies, evolving industry standards and new software introductions and enhancements that may render existing software obsolete or less competitive. Our position in the market could erode rapidly due to the development of regulatory or industry standards that our software may not fully meet, or due to changes in the features and functions of competing software, as well as the pricing models for such software. Our future success will depend in part upon our ability to enhance our existing software and services, and to timely develop and introduce competing new software and services with features and pricing that meet changing client and market requirements. As we evolve our offering in an attempt to anticipate and meet market demand, clients and potential clients may find our software and services less appealing. If software development for the healthcare information technology market becomes significantly more expensive due to changes in regulatory requirements or healthcare industry practices, or other factors, we may find ourselves at a disadvantage to larger competitors with more financial resources to devote to development. If we are unable to enhance our existing software or develop new software to meet changing client requirements in a timely manner, demand for our software could suffer.

Our software strategy is dependent on the continued development and support by Microsoft of its .NET Framework and other technologies.

Our software strategy is substantially dependent upon Microsoft’s .NET Framework and other Microsoft technologies. If Microsoft were to cease actively supporting .NET or other technologies, fail to update and enhance them to keep pace with changing industry standards, encounter technical difficulties in the continuing development of these technologies or make them unavailable to us, we could be required to invest significant resources in re-engineering our software. This could lead to lost or delayed sales, client costs associated with platform changes, unanticipated development expenses and harm to our reputation, and would cause our financial results and business to suffer.

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Any failure by us to protect our intellectual property, or any misappropriation of it, could enable our competitors to market software with similar features, which could reduce demand for our software.

We are dependent upon our proprietary information and technology. Our means of protecting our proprietary rights may not be adequate to prevent misappropriation. In addition, the laws of some foreign countries may not enable us to protect our proprietary rights in those jurisdictions. Also, despite the steps we have taken to protect our proprietary rights, it may be possible for unauthorized third parties to copy aspects of our software, reverse engineer our software or otherwise obtain and use information that we regard as proprietary. In some limited instances, clients can access source-code versions of our software, subject to contractual limitations on the permitted use of the source code. Furthermore, it may be possible for our competitors to copy or gain access to our content. Although our license agreements with clients attempt to prevent misuse of the source code or trade secrets, the possession of our source code or trade secrets by third parties increases the ease and likelihood of potential misappropriation of our software. Furthermore, others could independently develop technologies similar or superior to our technology or design around our proprietary rights.

Failure of security features of our software could expose us to significant expense and harm our reputation.

Clients use our systems to store and transmit highly confidential patient health information. Because of the sensitivity of this information, security features of our software are very important. If, notwithstanding our efforts, our software security features do not function properly, or client systems using our software are compromised, we could face claims for contract breach, penalties for violation of applicable laws or regulations, significant costs for remediation and re-engineering to prevent future occurrences, and serious harm to our reputation.

RISKS RELATED TO SALES AND IMPLEMENTATION OF OUR SOFTWARE

The length of our sales and implementation cycles may adversely affect our future operating results.

We have experienced long sales and implementation cycles. How and when to implement, replace, expand or substantially modify an information system, or modify or add business processes, are major decisions for healthcare organizations, our target client market. Furthermore, our software generally requires significant capital expenditures by our clients. The sales cycle for our software ranges from 6 to 18 months or more from initial contact to contract execution. Our implementation cycle has generally ranged from 6 to 36 months from contract execution to completion of implementation. During the sales and implementation cycles, we will expend substantial time, effort and resources preparing contract proposals, negotiating the contract and implementing the software. We may not realize any revenues to offset these expenditures and, if we do, accounting principles may not allow us to recognize the revenues during corresponding periods. Additionally, any decision by our clients to delay purchasing or implementing our software would likely adversely affect our revenues.

We may experience implementation delays that could harm our reputation and violate contractual commitments.

Some of our software is complex and requires a lengthy and expensive implementation process. Each client’s situation is different, and unanticipated difficulties and delays may arise as a result of failures by us or the client to meet our respective implementation responsibilities or other factors. Because of the complexity of the implementation process, delays are sometimes difficult to attribute solely to us or the client. Implementation delays could motivate clients to delay payments or attempt to cancel their contracts with us or seek other remedies from us. Any inability or perceived inability to implement our software consistent with a client’s schedule could harm our reputation and be a competitive disadvantage for us as we pursue new business. Our ability to improve sales depends upon many factors, including completion of implementation and successful use of our new software releases in live environments for clients who achieve success and are willing to become reference sites for us. Implementation also requires our clients to make a substantial commitment of their own time and resources and to make significant organizational and process changes, and if our clients are unable to fulfill their implementation responsibilities in a timely fashion, our projects may be delayed or become less profitable.

Implementation costs may exceed expectations, which can negatively affect our operating results.

Each client’s circumstances may include unforeseen issues that make it more difficult or costly than anticipated to implement our software. We may fail to project, price or manage our implementation services correctly. If we do not have sufficient qualified personnel to fulfill our implementation commitments in a timely fashion, related revenue may be delayed, and if we must supplement our capabilities with third-party consultants, which are generally more expensive, our costs will increase.

Our earnings can vary significantly depending on periodic software revenues.

Periodic software revenues includes traditional license fees associated with new contracts signed in the financial reporting period, add-on licenses to existing clients and new client transactions, as well as revenues from contract backlog that had not previously been recognized pending contract performance that occurred or was completed during the period, and certain other activities during the period associated with existing client relationships. These periodic revenues generally have high margins

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given that there are relatively little in-period costs associated with such revenues, and we therefore rely upon these revenues as an important element of our earnings in any period. These periodic revenues can fluctuate as a result of significant variations in the type and magnitude of sales and other contract and client activity in any period, and these variations make it difficult to predict the nature and amount of these periodic revenues. If periodic software revenues in any period decline from prior periods or fall short of our expectations, our earnings in that period will be adversely affected.

RISKS RELATED TO OUR INFORMATION TECHNOLOGY (“IT”) OR TECHNOLOGY SERVICES

Various risks could interrupt clients’ access to their data residing in our service center, exposing us to significant costs.

We provide remote hosting services that involve running our software and third-party vendor’s software for clients in our Technology Solutions Center. The ability to access the systems and the data that the Technology Solution Center hosts and supports on demand is critical to our clients. Our operations and facilities are vulnerable to interruption and/or damage from a number of sources, many of which are beyond our control, including, without limitation: (i) power loss and telecommunications failures; (ii) fire, flood, hurricane and other natural disasters; (iii) software and hardware errors, failures or crashes; and (iv) computer viruses, hacking and similar disruptive problems. We attempt to mitigate these risks through various means including redundant infrastructure, disaster recovery plans, separate test systems and change control and system security measures, but our precautions may not protect against all problems. If clients’ access is interrupted because of problems in the operation of our facilities, we could be exposed to significant claims by clients or their patients, particularly if the access interruption is associated with problems in the timely delivery of medical care. We must maintain disaster recovery and business continuity plans that rely upon third-party providers of related services, and if those vendors fail us at a time that our center is not operating correctly, we could incur a loss of revenue and liability for failure to fulfill our contractual service commitments. Any significant instances of system downtime could negatively affect our reputation and ability to sell our remote hosting services.

Any breach of confidentiality of client or patient data in our possession could expose us to significant expense and harm our reputation.

We must maintain facility and systems security measures to preserve the confidentiality of data belonging to our clients and their patients that resides on computer equipment in our Technology Solution Center or that is otherwise in our possession. Notwithstanding the efforts we undertake to protect data, our measures can be vulnerable to infiltration as well as unintentional lapse, and if confidential information is compromised, we could face claims for contract breach, penalties for violation of applicable laws or regulations, significant costs for remediation and re-engineering to prevent future occurrences, and serious harm to our reputation.

Recruiting challenges and higher than anticipated costs in outsourcing our clients’ IT operations may adversely affect our profitability.

We provide outsourcing services that involve operating clients’ IT departments using our employees. At the initiation of these relationships, clients often require us to hire, at substantially the same compensation, the entire IT staff that had been performing the services we take on. In these circumstances, our costs may be higher than we target unless and until we are able to transition the workforce, methods and systems to a more scalable model. Various factors can make this difficult, including geographic dispersion of client facilities and variation in client needs, IT environments, and system configurations. Also, under some circumstances, we may incur unanticipated costs as a successor employer by inheriting obligations of that client. Further, facilities management contracts require us to provide the IT services specified by contract, and in some places it can be difficult to recruit qualified IT personnel. Changes in circumstances or failure to assess the client’s environment and scope our services accurately can mean we must hire more staff than we anticipated in order to meet our responsibilities. If we have to increase salaries or relocate personnel, or hire more people than we anticipated, our costs may increase under fixed fee contracts.

Inability to obtain consents needed from third parties could impair our ability to provide remote IT or technology services.

We and our clients need consent from some third-party software providers as a condition to running the providers’ software in our service center, or to allow our employees who work in client locations under facilities management arrangements to have access to their software. Vendors’ refusal to give such consents, or insistence upon unreasonable conditions to such consents, could reduce our revenue opportunities and make our IT or technology services less viable for some clients.

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RISKS RELATED TO THE HEALTHCARE IT INDUSTRY AND MARKET

We operate in an intensely competitive market that includes companies that have greater financial, technical and marketing resources than we do.

We face intense competition in the marketplace. We are confronted by rapidly changing technology, evolving user needs and the frequent introduction by our competitors of new software. Our principal competitors in our software business include Cerner Corporation, Epic Systems Corporation, Medical Information Technology, Inc., GE Healthcare, McKesson Corporation, and Siemens AG. Other software competitors include providers of practice management, general decision support and database systems, as well as segment-specific applications and healthcare technology consultants. Our services business competes with large consulting firms, as well as independent providers of technology implementation and other services. Our outsourcing business competes with large national providers of technology solutions such as IBM Corporation, Computer Sciences Corp., Perot Systems Corporation, as well as smaller firms. Several of our existing and potential competitors are better established, benefit from greater name recognition and have significantly more financial, technical and marketing resources than we do. Some competitors, particularly those with a more diversified revenue base or that are privately held, may have greater flexibility than we do to compete aggressively on the basis of price. Vigorous and evolving competition could lead to a loss of our market share or pressure on our prices and could make it more difficult to grow our business profitably.

The principal factors that affect competition within our market include software functionality, performance, flexibility and features, use of open industry standards, speed and quality of implementation and client service and support, company reputation, price and total cost of ownership. We anticipate continued consolidation in both the information technology and healthcare industries and large integrated technology companies may become more active in our markets, both through acquisition and internal investment. There is a finite number of hospitals and other healthcare providers in our target market. As costs fall, technology improves, and market factors continue to compel investment by healthcare organizations in software and services like ours, market saturation may change the competitive landscape in favor of larger competitors with greater scale.

Clients that use our legacy software are vulnerable to sales efforts of our competitors.

A significant part of our revenue comes from relatively high-margin legacy software that was installed by our clients many years ago. We attempt to convert these clients to our newer generation software, but such conversions may require significant investments of time and resources by clients. Our competitors also aggressively target these clients. If we are not successful in retaining a large portion of these clients by continuing to support legacy software—which is increasingly expensive to maintain—or by converting them to our newer software, our results of operations will be negatively affected.

The healthcare industry faces financial constraints that could adversely affect the demand for our software and services.

The healthcare industry faces significant financial constraints. For example, managed healthcare puts pressure on healthcare organizations to reduce costs, and regulatory changes have reduced Medicare reimbursement to healthcare organizations. In addition, the Fiscal Year 2008 Inpatient Prospective Payment System Final Rule, published by the Centers for Medicare & Medicaid in the U.S., identified several “hospital-acquired conditions” the treatment for which will no longer be reimbursed by Medicare, starting in October 2008. Our software often involves a significant financial commitment by our clients. Our ability to grow our business is largely dependent on our clients’ information technology budgets, which in part depends on the client’s cash generation and access to other sources of liquidity. Recent disruptions in U.S. and international financial markets have adversely affected the availability of external financing, and led to tighter lending standards and volatile interest rates. These factors can reduce access to cash by our clients and potential clients. In addition, many of our clients’ budgets rely in part on endowment earnings, which may suffer reductions given recent declines in portfolio investment values. If healthcare information technology spending declines or increases more slowly than we anticipate, demand for our software could be adversely affected and our revenue could decline. Challenging economic conditions also may impair the ability of our clients to pay for our software and services for which they have contacted. As a result, reserves for doubtful accounts and write-offs of accounts receivable may increase.

Healthcare industry consolidation could put pressure on our software prices, reduce our potential client base and reduce demand for our software.

Many healthcare organizations have consolidated to create larger healthcare enterprises with greater market power. If this consolidation trend continues, it could reduce the size of our target market and give the resulting enterprises greater bargaining power, which may lead to erosion of the prices for our software. In addition, when healthcare organizations combine they often consolidate infrastructure including IT systems, and acquisitions of our clients could erode our revenue base.

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Changes in standards applicable to our software could require us to incur substantial additional development costs.

Integration and interoperability of the software and systems provided by various vendors are important issues in the healthcare industry. Market forces, regulatory authorities and industry organizations are causing the emergence of standards for software features and performance that are applicable to us. Healthcare delivery and ultimately the functionality demands of the electronic health record are now expanding to support community health, public health, public policy and population health initiatives. In addition, interoperability and health information exchange features that support emerging and enabling technologies are becoming increasingly important to our clients and require large scale product enhancements and redesign.

For example, the Certification Commission for Healthcare Information Technology, or CCHIT, is developing comprehensive sets of criteria for the functionality, interoperability, and security of healthcare software in the U.S. Achieving CCHIT certification is evolving as a de facto competitive requirement, resulting in increased research and development and administrative expense to conform to these requirements. Similar dynamics are evolving in international markets. CCHIT requirements may diverge from our software’s characteristics and our development direction. We may choose not to apply for CCHIT certification of certain modules of our software or to delay applying for certification. The CCHIT application process requires conformity with 100% of all criteria applicable to each module in order to achieve certification and there is no assurance that we will receive or retain certification for any particular module notwithstanding application. Certification for a software module lasts for two years and must then be re-secured, and certification requirements evolve, so even certifications we receive may be lost. If our software is not consistent with emerging standards our market position and sales could be impaired and we will have to upgrade our software to remain competitive in the market.

U.S. government initiatives and related industry trends are resulting in comprehensive and evolving standards related to interoperability, privacy, and other features that are becoming mandatory for systems purchased by governmental healthcare providers and other providers receiving governmental payments. Various state and foreign governments are also developing similar standards which may be different and even more demanding than CCHIT and U.S. government standards.

Our software does not conform to all of these standards, and conforming to these standards is expected to consume a substantial and increasing portion of our development resources. We expect compliance with these kinds of standards to become increasingly important to clients and therefore to our ability to sell our software. If we make the wrong decisions about compliance with these standards, or are late in conforming our software to these standards, or if despite our efforts our software fails standards compliance testing, our reputation, business, financial condition and results of operations could be adversely affected.

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RISKS RELATED TO OUR BUSINESS STRATEGY

Our business strategy includes expansion into markets outside North America, which will require increased expenditures and if our international operations are not successfully implemented, such expansion may cause our operating results and reputation to suffer.

We are working to further expand operations in markets outside North America. There is no assurance that these efforts will be successful. We have limited experience in marketing, selling, implementing and supporting our software abroad. Expansion of our international sales and operations will require a significant amount of attention from our management, establishment of service delivery and support capabilities to handle that business and commensurate financial resources, and will subject us to risks and challenges that we would not face if we conducted our business only in the United States. We may not generate sufficient revenues from international business to cover these expenses.

The risks and challenges associated with operations outside the United States may include: the need to modify our software to satisfy local requirements, including associated expenses and time delays; laws and business practices favoring local competitors; compliance with multiple, conflicting and changing governmental laws and regulations, including healthcare, employment, tax, privacy, healthcare information technology, and data and intellectual property protection laws and regulations; laws regulating exports of technology products from the United States and foreign government restrictions on acquisitions of U.S.-origin products; fluctuations in foreign currency exchange rates; difficulties in setting up foreign operations, including recruiting staff and management; and longer accounts receivable payment cycles and other collection difficulties. One or more of these requirements and risks may preclude us from operating in some markets and may cause our operating results and reputation to suffer.

Foreign sales subject us to numerous stringent U.S. and foreign laws, including the Foreign Corrupt Practices Act, or FCPA, and comparable foreign laws and regulations which prohibit improper payments or offers of payments to foreign governments and their officials and political parties by U.S. and other business entities for the purpose of obtaining or retaining business. As we expand our international operations, there is some risk of unauthorized payments or offers of payments by one of our employees, consultants, sales agents or distributors, which could constitute a violation by Eclipsys of various laws including the FCPA, even though such parties are not always subject to our control. Safeguards we implement to discourage these practices may prove to be less than effective and violations of the FCPA and other laws may result in severe criminal or civil sanctions, or other liabilities or proceedings against us, including class action law suits and enforcement actions from the SEC, Department of Justice and overseas regulators, which could adversely affect our reputation, business, financial condition or results of operations.

RISKS RELATED TO OUR OPERATING RESULTS, ACCOUNTING CONTROLS AND FINANCES

Our past stock option practices and related accounting issues have caused costly derivative litigation and may result in additional litigation, regulatory proceedings and governmental enforcement actions.

As a result of the voluntary review of historical stock option practices we undertook from February to May 2007, we concluded that incorrect measurement dates were used for accounting for certain prior stock option grants. As a result, we recorded additional non-cash stock-based compensation expense, and related tax effects, with regard to certain past stock option grants, and we restated certain previously filed financial statements. We believe these restatements reflect appropriate judgments in determining the correct measurement dates for our stock option grants, and to date those judgments have not been challenged. However, as with other aspects of our financial statements, the results of our stock option review are subject to regulatory review and there is a risk that we may have to further restate prior period results as a result of such a review.

In July and August of 2007, four purported stockholder derivative complaints were filed in the United States District Court for the Southern District of Florida against certain current and former directors and officers of Eclipsys and Eclipsys as a nominal defendant, alleging that during the period from at least 1999 until 2006 certain of Eclipsys’ option grants were backdated and that as a result of this alleged backdating our financial statements were misstated, and stock sales by the named defendants constituted improper insider selling. These complaints were consolidated in November 2007. These complaints sought monetary damages, disgorgement, repricing of certain stock options, governance reforms, and other relief. On May 27, 2008, the parties to the derivative litigation entered into a stipulation of settlement setting forth the terms of an agreement to settle and resolve all claims. On September 12, 2008, the court gave its final approval to the settlement. Dealing with this litigation has required us to incur substantial legal expenses, which affected our financial results for 2007 and the first half of 2008. Derivative litigation also can result in management distraction and adverse publicity and resulting reputational harm, which could impair our sales and marketing efforts.

The option review and conclusions and related litigation may result in additional claims by stockholders or employees, regulatory proceedings, government enforcement actions and related investigations and litigation. Any of these could result in significant expenses, management distraction and potential damages, penalties, other remedies, or adverse findings, which could harm our business, financial condition, results of operations and cash flows.

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We have a history of operating losses and we cannot predict future profitability.

We experienced operating losses in the years ended December 31, 2003 through 2006. Although we reported operating income for the year ended December 31, 2007, we may incur losses in the future, and it is not certain that we will sustain or increase our recent profitability.

Our operating results may fluctuate significantly and may cause our stock price to decline.

We have experienced significant variations in revenues and operating results from quarter to quarter. Our operating results may continue to fluctuate due to a number of factors, including:

• the performance of our software and our ability to promptly and efficiently address software performance shortcomings or warranty issues;

• the cost, timeliness and outcomes of our software development and implementation efforts, including expansion of our presence in India;

• the timing, size and complexity of our software sales and implementations;

• healthcare industry conditions and the overall demand for healthcare information technology;

• the financial condition of our clients and potential clients;

• market acceptance of new services, software and software enhancements introduced by us or our competitors;

• client decisions regarding renewal or termination of their contracts;

• software and price competition;

• personnel changes and other organizational changes and related expenses;

• significant judgments and estimates made by management in the application of generally accepted accounting principles;

• healthcare reform measures and healthcare regulation in general;

• lower investment returns due to recent disruptions in U.S. and international financial markets; and

• fluctuations in general economic and financial market conditions, including interest rates.

It is difficult to predict the timing of revenues that we receive from software sales, because the sales cycle can vary depending upon several factors. These include the size and terms of the transaction, the changing business plans of the client, the effectiveness of the client’s management, general economic conditions and the regulatory environment. In addition, the timing of our revenue recognition could vary considerably depending upon whether our clients license our software under our subscription model or our traditional licensing arrangements. Because a significant percentage of our expenses are relatively fixed, a variation in the timing of sales and implementations could cause significant variations in operating results from quarter to quarter. We believe that period-to-period comparisons of our historical results of operations are not necessarily meaningful. Investors should not rely on these comparisons as indicators of future performance.

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Early termination of client contracts or contract penalties could adversely affect results of operations.

Client contracts can change or terminate early for a variety of reasons. Change of control, financial issues, or other changes in client circumstances may cause us or the client to seek to modify or terminate a contract. Further, either we or the client may generally terminate a contract for material uncured breach by the other. If we breach a contract or fail to perform in accordance with contractual service levels, we may be required to refund money previously paid to us by the client, or to pay penalties or other damages. Even if we have not breached, we may deal with various situations from time to time for the reasons described above which may result in the amendment or termination of a contract. These steps can result in significant current period charges and/or reductions in current or future revenue.

Because in many cases we recognize revenues for our software monthly over the term of a client contract, downturns or upturns in sales will not be fully reflected in our operating results until future periods.

We recognize a significant portion of our revenues from clients monthly over the terms of their agreements, which are typically 5-7 years and can be up to 10 years. As a result, much of the revenue that we report each quarter is attributable to agreements executed during prior quarters. Consequently, a decline in sales, client renewals, or market acceptance of our software in one quarter will not necessarily be reflected in lower revenues in that quarter, and may negatively affect our revenues and profitability in future quarters. In addition, we may be unable to adjust our cost structure to compensate for these reduced revenues. This monthly revenue recognition also makes it more difficult for us to rapidly increase our revenues through additional sales in any period, as a significant portion of revenues from new clients or new sales may be recognized over the applicable agreement term.

Loss of revenue from large clients could have significant negative impact on our results of operations and overall financial condition.

During the fiscal year ended December 31, 2007, approximately 40% of our revenues were attributable to our 20 largest clients. In addition, approximately 38% of our accounts receivable as of December 31, 2007 were attributable to 20 clients. One client represents 10% of our revenues. Loss of revenue from significant clients or failure to collect accounts receivable, whether as a result of client payment default, contract termination, or other factors could have a significant negative impact on our results of operation and overall financial condition.

Impairment of intangible assets could increase our expenses.

A significant portion of our assets consists of intangible assets, including capitalized development costs, goodwill and other intangibles acquired in connection with acquisitions. Current accounting standards require us to evaluate goodwill on an annual basis and other intangibles if certain triggering events occur, and adjust the carrying value of these assets to net realizable value when such testing reveals impairment of the assets. Various factors, including regulatory or competitive changes, could affect the value of our intangible assets. If we are required to write-down the value of our intangible assets due to impairment, our reported expenses will increase, resulting in a corresponding decrease in our reported profit.

Failure to maintain effective internal controls could adversely affect our operating results and the market price of our common stock.

Section 404 of the Sarbanes-Oxley Act of 2002 requires that we maintain internal control over financial reporting that meets applicable standards. If we are unable, or are perceived as unable, to produce reliable financial reports due to internal control deficiencies, investors could lose confidence in our reported financial information and operating results, which could result in a negative market reaction.

Funds associated with certain of our investments in auction rate securities may not be liquid or accessible for in excess of 12 months, and our auction rate securities may experience further temporary or other-than-temporary decline in value, which would adversely affect our financial condition, cash flow and reported earnings.

A substantial portion of our short-term investment portfolio is invested in auction rate securities, or ARS. Beginning in February 2008, negative conditions in the credit and capital markets resulted in failed auctions of our ARS because the amount of securities submitted for sale exceeded the amount of related purchase orders. Our ARS continued to fail to settle at auctions through the date of this report. As of September 30, 2008 we recorded a temporary loss on these securities of $5.5 million in accumulated other comprehensive income, reflecting a decline in the estimated fair value of these securities. See Note E – Investments for further information. If uncertainties in the credit and capital markets continue, these markets deteriorate further or we experience any rating downgrades on any investments in our portfolio (including on ARS), funds associated with these securities may not be liquid or available to fund current operations for in excess of 12 months, causing us to classify our ARS as noncurrent assets and/or incur further temporary or other-than-temporary impairments in the carrying value of our investments, which could negatively affect our financial condition, cash flow and reported earnings.

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Our commercial credit facility subjects us to operating restrictions and risks of default.

On August 26, 2008, we entered into a credit agreement with certain lenders and Wachovia Bank, as Administrative Agent, pursuant to which Eclipsys received a senior secured revolving credit facility in the aggregate principal amount of $125 million, from which we repaid all amounts outstanding under our previous credit facility entered into in May 2008. This new credit facility is subject to certain financial ratio and other covenants. These covenants could restrict our ability to conduct business as we might otherwise deem to be in the Company’s best interests, and breach of these covenants could cause the debt to become immediately due. In such an event, our liquid assets might not be sufficient to repay in full the debt outstanding under the credit facility. Such an acceleration also would expose us to the risk of liquidation of collateral assets at unfavorable prices.

The conditions of the U.S. and international financial markets may adversely affect our ability to draw on Eclipsys’ current credit facility.

The U.S. and international credit markets have contracted significantly during the second half of 2008. If one or more of the financial institutions that have extended credit commitments to us under our current credit facility are adversely affected by the conditions of the U.S. and international capital markets, they may become unwilling or unable to fund borrowings under their credit commitments to us. In such a case we might not be able to locate replacement lenders or other sources of financing, which could have a material and adverse impact on our ability to fund working capital, capital expenditures, acquisitions, research and development and other corporate needs.

Inability to obtain other financing could limit our ability to conduct necessary development activities and make strategic investments.

While we believe at this time that our available cash and cash equivalents and the cash we anticipate generating from operations will be adequate to meet our foreseeable needs, we could incur significant expenses or shortfalls in anticipated cash generated as a result of unanticipated events in our business or competitive, regulatory, or other changes in our market. As a result, we may in the future need to obtain other financing. The availability of such financing is limited by the tightening of the global credit markets. In addition, the commitment under our current credit facility expires on August 26, 2011. Our ability to renew such credit facility or to enter into a new credit facility to replace the existing facility could be impaired if current market conditions continue or worsen. Lenders may seek more restrictive lending provisions and higher interest rates that may reduce our borrowing capacity and increase our costs, which could have a material adverse effect on our business.

If other financing is not available on acceptable terms, or at all, we may not be able to respond adequately to these changes or maintain our business, which could adversely affect our operating results and the market price of our common stock.

RISKS OF LIABILITY TO THIRD PARTIES

Our software and content are used to assist clinical decision-making and provide information about patient medical histories and treatment plans. If our software fails to provide accurate and timely information or is associated with faulty clinical decisions or treatment, clients, clinicians or their patients could assert claims against us that could result in substantial cost to us, harm our reputation in the industry and cause demand for our software to decline.

We provide software and content that provides practice guidelines and potential treatment methodologies, and other information and tools for use in clinical decision-making, provides access to patient medical histories and assists in creating patient treatment plans. If our software fails to provide accurate and timely information, or if our content or any other element of our software is associated with faulty clinical decisions or treatment, we could have liability to clients, clinicians or their patients. The assertion of such claims, whether or not valid, and ensuing litigation, regardless of its outcome, could result in substantial cost to us, divert management’s attention from operations and decrease market acceptance of our software. We attempt to limit by contract our liability for damages and to require that our clients assume responsibility for medical care and approve all system rules and protocols. Despite these precautions, the allocations of responsibility and limitations of liability set forth in our contracts may not be enforceable, may not be binding upon our client’s patients, or may not otherwise protect us from liability for damages. We maintain general liability and errors and omissions insurance coverage, but this coverage may not continue to be available on acceptable terms or may not be available in sufficient amounts to cover one or more large claims against us. In addition, the insurer might disclaim coverage as to any future claim. One or more large claims could exceed our available insurance coverage.

Complex software such as ours may contain errors or failures that are not detected until after the software is introduced or updates and new versions are released. It is challenging for us to envision and test our software for all potential problems because it is difficult to simulate the wide variety of computing environments, medical circumstances or treatment methodologies that our clients may deploy or rely upon. Despite extensive testing by us and clients, from time to time we have discovered defects or errors in our software, and additional defects or errors can be expected to appear in the future.

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Defects and errors that are not timely detected and remedied could expose us to risk of liability to clients, clinicians and their patients and cause delays in software introductions and shipments, result in increased costs and diversion of development resources, require design modifications or decrease market acceptance or client satisfaction with our software.

Our software and software provided by third parties that we include in our offering could infringe third-party intellectual property rights, exposing us to costs that could be significant.

Infringement or invalidity claims or claims for indemnification resulting from infringement claims could be asserted or prosecuted against us based upon design or use of software we provide to clients, including software we develop as well as software provided to us by third parties. Regardless of the validity of any claims, defending against these claims could result in significant costs and diversion of our resources, and vendor indemnity might not be available. The assertion of infringement claims could result in injunctions preventing us from distributing our software, or require us to obtain a license to the disputed intellectual property rights, which might not be available on reasonable terms or at all. We might also be required to indemnify our clients at significant expense.

RISKS RELATED TO OUR STRATEGIC RELATIONSHIPS AND INITIATIVES

We depend on licenses from third parties for rights to some of the technology we use, and if we are unable to continue these relationships and maintain our rights to this technology, our business could suffer.

We depend upon licenses for some of the technology used in our software from a number of third-party vendors. Most of these licenses expire within one to five years, can be renewed only by mutual consent and may be terminated if we breach the terms of the license and fail to cure the breach within a specified period of time. We may not be able to continue using the technology made available to us under these licenses on commercially reasonable terms or at all. As a result, we may have to discontinue, delay or reduce software sales until we obtain equivalent technology, which could hurt our business. Most of our third-party licenses are non-exclusive. Our competitors may obtain the right to use any of the technology covered by these licenses and use the technology to compete directly with us. In addition, if our vendors choose to discontinue support of the licensed technology in the future or are unsuccessful in their continued research and development efforts, particularly with regard to Microsoft, we may not be able to modify or adapt our own software.

Our software offering often includes modules provided by third parties, and if these third parties do not meet their commitments, our relationships with our clients could be impaired.

Some of the software modules we offer to clients are provided by third parties. We often rely upon these third parties to produce software that meets our clients’ needs and to implement and maintain that software. If these third parties fail to fulfill their responsibilities, our relationships with affected clients could be impaired, and we could be responsible to clients for the failures. We might not be able to recover from these third parties for all of the costs we incur as a result of their failures.

Any acquisitions we undertake may be disruptive to our business and could have an adverse effect on our future operations and the market price of our common stock.

An important element of our business strategy has been expansion through acquisitions and while there is no assurance that we will complete any future acquisitions, any acquisitions would involve a number of risks, including the following:

• The anticipated benefits from the acquisition may not be achieved. The identification, acquisition and integration of acquired businesses requires substantial attention from management, and integration may require significant investment to harmonize product and service offerings, expand management capabilities and market presence, and improve or increase development efforts and software features and functions. The diversion of management’s attention and any difficulties encountered in the transition process could hurt our business.

• In future acquisitions, we could issue additional shares of our common stock, incur additional indebtedness or pay consideration in excess of book value, which could dilute future earnings.

• Acquisitions also expose us to the risk of assumed and unknown liabilities.

• New business acquisitions generate significant intangible assets that result in substantial related amortization charges to us and possible impairments.

RISKS RELATED TO INDUSTRY REGULATION

Potential regulation by the U.S. Food and Drug Administration of our software and content as medical devices could impose increased costs, delay the introduction of new software and hurt our business.

The U.S. Food and Drug Administration, or FDA, may become increasingly active in regulating computer software or content intended for use in the healthcare setting. The FDA has increasingly focused on the regulation of computer software

40

and computer-assisted products as medical devices under the Food, Drug, and Cosmetic Act, or the FDC Act. If the FDA chooses to regulate any of our software, or third party software that we resell, as medical devices, it could impose extensive requirements upon us, including requiring us to:

• seek FDA clearance of pre-market notification submission demonstrating substantial equivalence to a device already legally marketed, or to obtain FDA approval of a pre-market approval application establishing the safety and effectiveness of the software;

• comply with rigorous regulations governing the pre-clinical and clinical testing, manufacture, distribution, labeling and promotion of medical devices; and

• comply with the FDC Act regarding general controls, including establishment registration, device listing, compliance with good manufacturing practices, reporting of specified device malfunctions and adverse device events.

If we fail to comply with applicable requirements, the FDA could respond by imposing fines, injunctions or civil penalties, requiring recalls or software corrections, suspending production, refusing to grant pre-market clearance or approval of software, withdrawing clearances and approvals, and initiating criminal prosecution. Any FDA policy governing computer products or content may increase the cost and time to market of new or existing software or may prevent us from marketing our software.

Changes in federal and state regulations relating to patient data could depress the demand for our software and impose significant software redesign costs on us.

Clients use our systems to store and transmit highly confidential patient health information and data. State and federal laws and regulations and their foreign equivalents govern the collection, security, use, transmission and other disclosures of health information. These laws and regulations may change rapidly and may be unclear or difficult to apply.

Federal regulations under the Health Insurance Portability and Accountability Act of 1996, or HIPAA, impose national health data standards on healthcare providers that conduct electronic health transactions, healthcare clearinghouses that convert health data between HIPAA-compliant and non-compliant formats and health plans. Collectively, these groups are known as covered entities. The HIPAA standards prescribe transaction formats and code sets for electronic health transactions; protect individual privacy by limiting the uses and disclosures of individually identifiable health information; and require covered entities to implement administrative, physical and technological safeguards to ensure the confidentiality, integrity, availability and security of individually identifiable health information in electronic form. Though we are not a covered entity, most of our clients are and require that our software and services adhere to HIPAA standards. Any failure or perception of failure of our software or services to meet HIPAA standards could adversely affect demand for our software and services and force us to expend significant capital, research and development and other resources to modify our software or services to address the privacy and security requirements of our clients.

States and foreign jurisdictions in which we or our clients operate have adopted, or may adopt, privacy standards that are similar to or more stringent than the federal HIPAA privacy standards. This may lead to different restrictions for handling individually identifiable health information. As a result, our clients may demand information technology solutions and services that are adaptable to reflect different and changing regulatory requirements which could increase our development costs. In the future, federal, state or foreign governmental or regulatory authorities or industry bodies may impose new data security standards or additional restrictions on the collection, use, transmission and other disclosures of health information. We cannot predict the potential impact that these future rules may have on our business. However, the demand for our software and services may decrease if we are not able to develop and offer software and services that can address the regulatory challenges and compliance obligations facing our clients.

RISKS RELATED TO OUR PERSONNEL AND ORGANIZATION

Our growing operations in India expose us to risks that could have an adverse effect on our results of operations.

We now have a significant workforce employed in India engaged in a broad range of development, support and corporate infrastructure activities that are integral to our business and critical to our profitability. This involves significant challenges that are increased by our lack of prior experience managing operations in India. Further, while there are certain cost advantages to operating in India, significant growth in the technology sector in India has increased competition to attract and retain skilled employees with commensurate increases in compensation costs. We may not be able to hire and retain such personnel at compensation levels consistent with our existing compensation and salary structure. Many of the companies with which we compete for hiring experienced employees have greater resources than we have and may be able to offer more attractive terms of employment. In addition, our operations in India require ongoing capital investments and expose us to foreign currency fluctuations, which may significantly reduce or negate any cost benefit anticipated from such expansion. As a result of these and other factors there can be no assurance that we will successfully integrate our India operations, or that our expansion in India will advance our business strategy and provide a satisfactory return on this investment.

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In addition, our reliance on a workforce in India exposes us to disruptions in the business, political and economic environment in that region. Maintenance of a stable political environment is important to our operations, and terrorist attacks and acts of violence or war may directly affect our physical facilities and workforce or contribute to general instability. Our operations in India may also be affected by trade restrictions, such as tariffs or other trade controls, as well as other factors that may adversely affect our business and operating results.

If we fail to attract, motivate and retain highly qualified technical, marketing, sales and management personnel, our ability to execute our business strategy could be impaired.

Our success depends, in significant part, upon the continued services of our key technical, marketing, sales and management personnel, and on our ability to continue to attract, motivate and retain highly qualified employees. Competition for these employees is intense and we maintain at-will employment terms with our employees. In addition, the process of recruiting personnel with the combination of skills and attributes required to execute our business strategy can be difficult, time-consuming and expensive. We believe that our ability to implement our strategic goals depends to a considerable degree on our senior management team. The loss of any member of that team could hurt our business.

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RISKS RELATED TO OUR EQUITY STRUCTURE

Provisions of our charter documents and Delaware law may inhibit potential acquisition bids that stockholders may believe are desirable, and the market price of our common stock may be lower as a result.

Our board of directors has the authority to issue up to 5,000,000 shares of preferred stock. Our board of directors can fix the price, rights, preferences, privileges and restrictions of the preferred stock without any further vote or action by our stockholders. The issuance of shares of preferred stock may discourage, delay or prevent a merger or acquisition of our company. The issuance of preferred stock may result in the loss of voting control to other stockholders. We have no current plans to issue any shares of preferred stock and we terminated, effective as of May 8, 2008, our stockholder rights agreement, or “poison pill,” which used preferred stock purchase rights designed to enable our board of directors to better respond to any takeover efforts. However, we could implement a new poison pill in the future, or make other uses of preferred stock to inhibit a potential acquisition of the company.

Our charter documents contain additional anti-takeover devices, including:

• only one of the three classes of directors is elected each year;

• the ability of our stockholders to remove directors without cause is limited;

• the right of stockholders to act by written consent has been eliminated;

• the right of stockholders to call a special meeting of stockholders has been eliminated; and

• advance notice must be given to nominate directors or submit proposals for consideration at stockholders meetings.

ITEM 6. EXHIBITS

See Index to exhibits.

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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.

Date: November 10, 2008

/s/    Robert J. Colletti

Robert J. Colletti

Senior Vice President and Chief Financial Officer

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Exhibit Number		Incorporated by Reference
	Exhibit Description	Form	Exhibit	Filing Date
3.1	Third Amended and Restated Certificate of Incorporation of the Registrant	10-Q	3.1	September 21, 1998
3.2	Amended and Restated Bylaws of the Registrant	8-K	3.2	November 19, 2007
4.1	Specimen certificate for shares of Common Stock	S-1	4.1	April 23, 1998
10.1	Credit Agreement, dated August 26, 2008, by and among the Registrant, certain lenders and Wachovia Bank, National Association, as Administrative Agent			Filed herewith
10.2	Agreement and Plan of Merger, dated September 19, 2008, by and among the Registrant, a subsidiary of the Registrant formed for purposes of the acquisition, MediNotes Corporation, and certain shareholders of MediNotes			Filed herewith
10.3	First Amendment to the Agreement and Plan of Merger, dated October 2, 2008, by and among the Registrant, a subsidiary of the Registrant formed for purposes of the acquisition, MediNotes Corporation, and certain shareholders of MediNotes			Filed herewith
31.1	Certification of R. Andrew Eckert			Filed herewith
31.2	Certification of Robert J. Colletti			Filed herewith
32.1	Certification Pursuant to 18 U.S.C. Section 1350			Filed herewith
32.2	Certification Pursuant to 18 U.S.C. Section 1350			Filed herewith

* Indicates a management contract or compensatory arrangement

45

EX-10.1

Exhibit 10.1

Published CUSIP Number: 27885FAA7

$125,000,000

CREDIT AGREEMENT

among

ECLIPSYS CORPORATION,

as Borrower

CERTAIN DOMESTIC SUBSIDIARIES OF THE BORROWER

FROM TIME TO TIME PARTY HERETO,

as Guarantors,

THE LENDERS PARTY HERETO,

and

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent,

BANK OF AMERICA, N.A.,

as Co-Syndication Agent

and

SUNTRUST BANK,

as Co-Syndication Agent

Dated as of August 26, 2008

WACHOVIA CAPITAL MARKETS, LLC

as Sole Lead Arranger and Joint Bookrunner

and

BANC OF AMERICA SECURITIES LLC,

as Joint Bookrunner

Prepared by:

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS		6
Section 1.1	Defined Terms	6
Section 1.2	Other Definitional Provisions	37
Section 1.3	Accounting Terms	38
Section 1.4	Time References	39
Section 1.5	Execution of Documents	39
ARTICLE II THE LOANS; AMOUNT AND TERMS		39
Section 2.1	Revolving Loans	39
Section 2.2	Incremental Revolving Facility	41
Section 2.3	Letter of Credit Subfacility	42
Section 2.4	Swingline Loan Subfacility	46
Section 2.5	Fees	48
Section 2.6	Commitment Termination and Reductions	49
Section 2.7	Prepayments	50
Section 2.8	Default Rate and Payment Dates	51
Section 2.9	Conversion Options	52
Section 2.10	Computation of Interest and Fees; Usury	53
Section 2.11	Pro Rata Treatment and Payments	54
Section 2.12	Non-Receipt of Funds by the Administrative Agent	56
Section 2.13	Inability to Determine Interest Rate	57
Section 2.14	Yield Protection	58
Section 2.15	Indemnity	59
Section 2.16	Taxes	60
Section 2.17	Indemnification in Respect of Letters of Credit; Nature of Issuing Lender’s Duties	62
Section 2.18	Illegality	64
Section 2.19	Mitigation Obligations; Replacement of Lenders	64
ARTICLE III REPRESENTATIONS AND WARRANTIES		65
Section 3.1	Financial Condition	65
Section 3.2	No Material Adverse Effect	66
Section 3.3	Corporate Existence; Compliance with Law	66
Section 3.4	Corporate Power; Authorization; Enforceable Obligations	67
Section 3.5	No Legal Bar; No Default	67
Section 3.6	No Material Litigation	67
Section 3.7	Investment Company Act; etc.	68
Section 3.8	Margin Regulations	68
Section 3.9	ERISA	68
Section 3.10	Environmental Matters	69
Section 3.11	Use of Proceeds	70
Section 3.12	Subsidiaries; Joint Ventures; Partnerships	70
Section 3.13	Ownership	70
Section 3.14	Taxes	70
Section 3.15	Intellectual Property Rights	71

2

Section 3.16	Solvency	71
Section 3.17	Location of Offices	72
Section 3.18	No Burdensome Restrictions	72
Section 3.19	Brokers’ Fees	72
Section 3.20	Labor Matters	72
Section 3.21	Accuracy and Completeness of Information	72
Section 3.22	Insurance	73
Section 3.23	Security Documents	73
Section 3.24	Classification of Senior Indebtedness	73
Section 3.25	Anti-Terrorism Laws	73
Section 3.26	Compliance with OFAC Rules and Regulations	74
Section 3.27	Compliance with FCPA	74
Section 3.28	Consent; Governmental Authorizations	74
ARTICLE IV CONDITIONS PRECEDENT		74
Section 4.1	Conditions to Closing Date	74
Section 4.2	Conditions to All Extensions of Credit	79
ARTICLE V AFFIRMATIVE COVENANTS		80
Section 5.1	Financial Statements	80
Section 5.2	Certificates; Other Information	81
Section 5.3	Payment of Taxes and Other Obligations	82
Section 5.4	Conduct of Business and Maintenance of Existence	82
Section 5.5	Maintenance of Property; Insurance	83
Section 5.6	Inspection of Property; Books and Records; Discussions	83
Section 5.7	Notices	83
Section 5.8	Environmental Laws	85
Section 5.9	Financial Covenants	85
Section 5.10	Additional Guarantors	85
Section 5.11	Compliance with Law	86
Section 5.12	Pledged Assets	86
Section 5.13	Further Assurances	87
ARTICLE VI NEGATIVE COVENANTS		88
Section 6.1	Indebtedness	88
Section 6.2	Liens	89
Section 6.3	Nature of Business	89
Section 6.4	Consolidation, Merger, Sale or Purchase of Assets, etc.	89
Section 6.5	Advances, Investments and Loans	91
Section 6.6	Transactions with Affiliates	91
Section 6.8	Limitation on Restricted Actions	92
Section 6.9	Restricted Payments	92
Section 6.10	Amendment of Subordinated Debt	92
Section 6.11	No Further Negative Pledges	93
Section 6.12	Account Control Agreements; Additional Bank Accounts	93
ARTICLE VII EVENTS OF DEFAULT		94
Section 7.1	Events of Default	94
Section 7.2	Acceleration; Remedies	97

3

ARTICLE VIII THE ADMINISTRATIVE AGENT		97
Section 8.1	Appointment and Authority	97
Section 8.2	Nature of Duties	97
Section 8.3	Exculpatory Provisions	98
Section 8.4	Reliance by Administrative Agent	99
Section 8.5	Notice of Default	99
Section 8.6	Non-Reliance on Administrative Agent and Other Lenders	99
Section 8.7	Indemnification	100
Section 8.8	Administrative Agent in Its Individual Capacity	100
Section 8.9	Successor Administrative Agent	101
Section 8.10	Other Agents	101
Section 8.11	Collateral and Guaranty Matters	102
ARTICLE IX MISCELLANEOUS		102
Section 9.1	Amendments, Waivers and Release of Collateral	102
Section 9.2	Notices	105
Section 9.3	No Waiver; Cumulative Remedies	107
Section 9.4	Survival of Representations and Warranties	107
Section 9.5	Payment of Expenses and Taxes; Indemnity	107
Section 9.6	Successors and Assigns; Participations	109
Section 9.7	Right of Set-off; Sharing of Payments	113
Section 9.8	Table of Contents and Section Headings	114
Section 9.9	Counterparts; Integration; Effectiveness; Electronic Execution	114
Section 9.10	Severability	115
Section 9.11	Integration	115
Section 9.12	Governing Law	115
Section 9.13	Consent to Jurisdiction; Service of Process and Venue	115
Section 9.14	Confidentiality	116
Section 9.15	Acknowledgments	117
Section 9.16	Waivers of Jury Trial	117
Section 9.17	Patriot Act Notice	118
Section 9.18	Resolution of Drafting Ambiguities	118
Section 9.19	Continuing Agreement	118
ARTICLE X GUARANTY		119
Section 10.1	The Guaranty	119
Section 10.2	Bankruptcy	120
Section 10.3	Nature of Liability	120
Section 10.4	Independent Obligation	120
Section 10.5	Authorization	120
Section 10.6	Reliance	121
Section 10.7	Waiver	121
Section 10.8	Limitation on Enforcement	122
Section 10.9	Confirmation of Payment	123

4

Schedules

Schedule 1.1(a)	Investments
Schedule 1.1(b)	Liens
Schedule 1.1(c)	Existing Letters of Credit
Schedule 3.12	Subsidiaries
Schedule 3.14	Taxes
Schedule 3.15	Intellectual Property
Schedule 3.17	Chief Executive Offices
Schedule 3.20	Labor Matters
Schedule 3.22	Insurance
Schedule 6.1(b)	Indebtedness
Schedule 6.12	Accounts

Exhibits

Exhibit 1.1(a)	Form of Account Designation Notice
Exhibit 1.1(b)	Form of Assignment and Assumption
Exhibit 1.1(c)	Form of Deposit Account Control Agreement
Exhibit 1.1(d)	Form of Joinder Agreement
Exhibit 1.1(e)	Form of Notice of Borrowing
Exhibit 1.1(f)	Form of Notice of Conversion/Extension
Exhibit 1.1(g)	Form of Permitted Acquisition Certificate
Exhibit 1.1(h)	Form of Securities Account Control Agreement
Exhibit 2.1(a)	Form of Funding Indemnity Letter
Exhibit 2.1(e)	Form of Revolving Note
Exhibit 2.4(d)	Form of Swingline Note
Exhibit 4.1(b)	Form of Officer’s Certificate
Exhibit 4.1(f)	Form of Solvency Certificate
Exhibit 4.1(o)	Form of Financial Condition Certificate
Exhibit 4.1(p)	Form of Patriot Act Certificate
Exhibit 5.2(a)	Form of Officer’s Compliance Certificate

5

CREDIT AGREEMENT, dated as of August 26, 2008 among ECLIPSYS CORPORATION, a Delaware corporation (the “Borrower”), each of those Domestic Subsidiaries of the Borrower identified as a “Guarantor” on the signature pages hereto and such other Domestic Subsidiaries of the Borrower as may from time to time become a party hereto (such Subsidiaries, each a “Guarantor” and collectively, the “Guarantors”), the several banks and other financial institutions as are, or may from time to time become parties to this Agreement (each a “Lender” and, collectively, the “Lenders”), and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, as administrative agent for the Lenders hereunder (in such capacity, the “Administrative Agent”).

W I T N E S S E T H:

WHEREAS, the Credit Parties (as hereinafter defined) have requested that the Lenders make loans and other financial accommodations to the Credit Parties in an aggregate amount of up to $125,000,000, as more particularly described herein; and

WHEREAS, the Lenders have agreed to make such loans and other financial accommodations to the Credit Parties on the terms and conditions contained herein.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, such parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Defined Terms.

As used in this Agreement, terms defined in the preamble to this Agreement have the meanings therein indicated, and the following terms have the following meanings:

“Accessible Borrowing Availability” shall mean, as of any date of determination, the amount that the Borrower is able to borrow on such date under the Revolving Committed Amount.

“Account Designation Notice” shall mean the Account Designation Notice dated as of the Closing Date from the Borrower to the Administrative Agent in substantially the form attached hereto as Exhibit 1.1(a).

“Additional Credit Party” shall mean each Person that becomes a Guarantor by execution of a Joinder Agreement in accordance with Section 5.10.

“Additional Revolving Loan” shall have the meaning set forth in Section 2.2.

6

“Administrative Agent” or “Agent” shall have the meaning set forth in the first paragraph of this Agreement and shall include any successors in such capacity.

“Administrative Questionnaire” shall mean an Administrative Questionnaire in a form supplied by the Administrative Agent.

“Affiliate” shall mean, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

“Agreement” or “Credit Agreement” shall mean this Agreement, as amended, modified, extended, restated, replaced, or supplemented from time to time in accordance with its terms.

“Alternate Base Rate” shall mean, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof: “Prime Rate” shall mean, at any time, the rate of interest per annum publicly announced or otherwise identified from time to time by Wachovia at its principal office in Charlotte, North Carolina as its prime rate. Each change in the Prime Rate shall be effective as of the opening of business on the day such change in the Prime Rate occurs. The parties hereto acknowledge that the rate announced publicly by Wachovia as its Prime Rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks; and “Federal Funds Effective Rate” shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published on the next succeeding Business Day, the average of the quotations for the day of such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive in the absence of manifest error) that it is unable to ascertain the Federal Funds Effective Rate, for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms above, the Alternate Base Rate shall be determined without regard to clause (b) of the first sentence of this definition, as appropriate, until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the opening of business on the date of such change.

“Alternate Base Rate Loans” shall mean Loans that bear interest at an interest rate based on the Alternate Base Rate.

7

“Applicable Percentage” shall mean, for any day, the rate per annum set forth below opposite the applicable level then in effect (based on the Leverage Ratio), it being understood that the Applicable Percentage for (a) Revolving Loans that are Alternate Base Rate Loans shall be the percentage set forth under the column “Base Rate Margin”, (b) Revolving Loans that are LIBOR Rate Loans shall be the percentage set forth under the column “LIBOR Margin & L/C Fee”, (c) the Letter of Credit Fee shall be the percentage set forth under the column “LIBOR Margin & L/C Fee”, and (d) the Commitment Fee shall be the percentage set forth under the column “Commitment Fee”:

Applicable Percentage

Level	Leverage Ratio	LIBOR Margin & L/C Fee		Base Rate Margin		Commitment Fee
I	>1.50 to 1.00	2.000	%	1.000	%	0.325	%
II	³ 0.50 to 1.00 but £ 1.50 to 1.00	1.750	%	0.750	%	0.300	%
III	< 0.50 to 1.00	1.500	%	0.500	%	0.275	%

The Applicable Percentage shall, in each case, be determined and adjusted quarterly on the date five (5) Business Days after the date on which the Administrative Agent has received from the Borrower the quarterly financial information (in the case of the first three fiscal quarters of the Borrower’s fiscal year), the annual financial information (in the case of the fourth fiscal quarter of the Borrower’s fiscal year) and the certifications required to be delivered to the Administrative Agent and the Lenders in accordance with the provisions of Sections 5.1(a), 5.1(b) and 5.2(a) (each an “Interest Determination Date”). Such Applicable Percentage shall be effective from such Interest Determination Date until the next such Interest Determination Date. After the Closing Date, if the Credit Parties shall fail to provide the financial information or certifications in accordance with the provisions of Sections 5.1(a), 5.1(b) and 5.2(a), the Applicable Percentage shall, on the date five (5) Business Days after the date by which the Credit Parties were so required to provide such financial information or certifications to the Administrative Agent and the Lenders, be based on Level I until such time as such information or certifications or corrected information or corrected certificates are provided, whereupon the Level shall be determined by the then current Consolidated Leverage Ratio.

Notwithstanding the foregoing, the initial Applicable Percentages shall be set at Level II until the financial information and certificates required to be delivered pursuant to Section 5.1 and 5.2 for the first full fiscal quarter to occur following the Closing Date have been delivered to the Administrative Agent.

In the event that any financial statement or certification delivered pursuant to Sections 5.1 or 5.2(a) is shown to be inaccurate (regardless of whether this Agreement or the Commitments are in effect when such inaccuracy is discovered), and such inaccuracy, if corrected, would have led to the application of a higher Applicable Percentage for any period (an “Applicable Period”) than the Applicable Percentage applied for such Applicable Period, the Borrower shall immediately (a) deliver to the Administrative Agent a corrected compliance certificate for such Applicable Period, (b) determine the Applicable Percentage for such Applicable Period based upon the corrected compliance certificate, and (c) immediately pay to the Administrative Agent the accrued additional interest and the accrued additional Letter of Credit Fees and Commitment Fees, as applicable, owing as a result of such increased Applicable Percentage for such Applicable Period, which payment shall be promptly distributed by the Administrative Agent to the Lenders entitled thereto. It is acknowledged and agreed that nothing contained herein shall limit the rights of the Administrative Agent and the Lenders under the Credit Documents, including their rights under Sections 2.8 and 7.1.

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“Approved Bank” shall have the meaning set forth in the definition of “Cash Equivalents.”

“Approved Fund” shall mean any Fund that is administered, managed or underwritten by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“Arranger” shall mean WCM.

“Asset Disposition” shall mean the disposition of any or all of the assets (including, without limitation, the Capital Stock of a Subsidiary or any ownership interest in a Person) of any Credit Party or any Subsidiary whether by sale, lease, transfer or otherwise, in a single transaction or in a series of transactions. The term “Asset Disposition” shall not include (a) the sale, lease, transfer or other disposition of assets permitted by Subsections 6.4(a)(i) through (viii) or (b) any Equity Issuance.

“Assignment and Assumption” shall mean an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 9.6), and accepted by the Administrative Agent, in substantially the form of Exhibit 1.1(b) or any other form approved by the Administrative Agent.

“Bankruptcy Code” shall mean the Bankruptcy Code in Title 11 of the United States Code, as amended, modified, succeeded or replaced from time to time.

“Bankruptcy Event” shall mean any of the events described in Section 7.1(e).

“Bankruptcy Event of Default” shall mean an Event of Default specified in Section 7.1(e).

“Borrower” shall have the meaning set forth in the first paragraph of this Agreement.

“Borrowing Date” shall mean, in respect of any Loan, the date such Loan is made.

“Business” shall have the meaning set forth in Section 3.10.

“Business Day” shall mean any day other than a Saturday, Sunday or other day on which commercial banks in Charlotte, North Carolina or New York, New York are authorized or required by law to close; provided, however, that when used in connection with a rate determination, borrowing or payment in respect of a LIBOR Rate Loan, the term “Business Day” shall also exclude any day on which banks in London, England are not open for dealings in Dollar deposits in the London interbank market.

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“Capital Lease” shall mean any lease of property, real or personal, the obligations with respect to which are required to be capitalized on a balance sheet of the lessee in accordance with GAAP.

“Capital Lease Obligations” shall mean the capitalized lease obligations relating to a Capital Lease determined in accordance with GAAP.

“Capital Stock” shall mean (a) in the case of a corporation, capital stock, (b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (c) in the case of a partnership, partnership interests (whether general or limited), (d) in the case of a limited liability company, membership interests and (e) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

“Cash Equivalents” shall mean (a) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof) having maturities of not more than twelve months from the date of acquisition (“Government Obligations”), (b) Dollar denominated time deposits, certificates of deposit, Eurodollar time deposits and Eurodollar certificates of deposit of (i) any domestic commercial bank of recognized standing having capital and surplus in excess of $200,000,000 or (ii) any bank whose short-term commercial paper rating at the time of the acquisition thereof is at least A-1 or the equivalent thereof from S&P or from Moody’s is at least P-1 or the equivalent thereof from Moody’s (any such bank being an “Approved Bank”), in each case with maturities of not more than 364 days from the date of acquisition, (c) commercial paper issued by any Person incorporated under the laws of the United States of America or any state thereof at the time of acquisition rated at least A-1 (or the equivalent thereof) or better by S&P or at least P-1 (or the equivalent thereof) or better by Moody’s and maturing within six months of the date of acquisition, (d) commercial paper or notes issued by any Approved Bank (or by the parent company thereof) and maturing within six months of the date of acquisition, (e) notes issued by or guaranteed by any Person incorporated under the laws of the United States of America or any state thereof at the time of acquisition rated at least A-1 (or the equivalent thereof) or better by S&P or at least P-1 (or the equivalent thereof) or better by Moody’s and maturing within six months of the date of acquisition, (f) repurchase agreements with a bank or trust company (including a Lender) or a recognized securities dealer having capital and surplus in excess of $500,000,000 for direct obligations issued by or fully guaranteed by the United States of America, (g) obligations of any state of the United States or any political subdivision thereof for the payment of the principal and redemption price of and interest on which there shall have been irrevocably deposited Government Obligations maturing as to principal and interest at times and in amounts sufficient to provide such payment, (h) money market accounts subject to Rule 2a-7 of the Investment Company Act of 1940 (“SEC Rule 2a-7”) which consist primarily of cash and cash equivalents set forth in clauses (a) through (g) above and of which 85% shall at all times be comprised of First Tier Securities (as defined in SEC Rule 2a-7) and any remaining amount shall at all times be comprised of Second Tier Securities (as defined in SEC Rule 2a-7), (i) shares of any so-called “money market fund,” provided that such fund is registered under the Investment Company Act of 1940, has net assets of at least $100,000,000 and has an investment portfolio

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with an average maturity of 365 days or less and (j) instruments comparable to those referred to in clauses (a) through (i) above denominated in Euros or any other foreign currency comparable in credit quality and tenor to those referred to above and customarily used by corporations for short term cash management purposes in jurisdictions outside the United States of America.

“Change in Law” shall mean the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.

“Change of Control” shall mean at any time the occurrence of any of the following events: (a) any “person” or “group” (as such terms are used in Section 13(d) and 14(d) of the Exchange Act), is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of thirty-five percent (35%) or more of the then outstanding Voting Stock of the Borrower; or (b) the majority of the Board of Directors of the Borrower fails to consist of Continuing Directors.

“Closing Date” shall mean the date of this Agreement.

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

“Collateral” shall mean a collective reference to the collateral which is identified in and subject to a security interest under the Security Documents and any other property or assets of a Credit Party, whether tangible or intangible and whether real or personal, that may from time to time secure the Credit Party Obligations. For the avoidance of doubt, the term “Collateral” shall not include any property excluded by the terms of the Security Documents from the collateral set forth therein.

“Commitment” shall mean the Revolving Commitments, the LOC Commitment, and the Swingline Commitment, individually or collectively, as appropriate.

“Commitment Fee” shall have the meaning set forth in Section 2.5(a).

“Commitment Period” shall mean (a) with respect to Revolving Loans and Swingline Loans, the period from and including the Closing Date to but excluding the Maturity Date and (b) with respect to Letters of Credit, the period from and including the Closing Date to the Maturity Date.

“Commonly Controlled Entity” shall mean an entity, whether or not incorporated, which is under common control with the Borrower within the meaning of Section 4001(b)(1) of ERISA or is part of a group which includes the Borrower and which is treated as a single employer under Section 414(b) or 414(c) of the Code or, solely for purposes of Section 412 of the Code to the extent required by such section, Section 414(m) or 414(o) of the Code.

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“Consolidated” shall mean, when used with reference to financial statements or financial statement items of the Credit Parties and their Subsidiaries or any other Person, such statements or items on a consolidated basis in accordance with the consolidation principles of GAAP.

“Consolidated Assets” shall mean, as of any date of determination, the Consolidated assets of the Credit Parties and their Subsidiaries at such date, as determined in accordance with GAAP.

“Consolidated Capital Expenditures” shall mean, as of any date of determination for any period ending on such date, all expenditures of the Credit Parties and their Subsidiaries on a Consolidated basis for such period that in accordance with GAAP would be classified as capital expenditures, including, without limitation, Capital Lease Obligations; provided, however, that the term “Consolidated Capital Expenditures” shall not include (a) any Permitted Acquisition; (b) capital expenditures in respect of the reinvestment of proceeds from Recovery Events or (c) the reinvestment of proceeds of permitted Asset Dispositions.

“Consolidated Cash Taxes” shall mean, as of any date of determination for any period ending on such date, the aggregate of all federal, state, local and foreign income, value added and similar taxes actually paid by the Credit Parties and their Subsidiaries on a Consolidated basis during such period.

“Consolidated EBITDA” shall mean, with respect to the Credit Parties and their Subsidiaries on a Consolidated basis, as of any date of determination for any specified period ending on such date, without duplication, (a) Consolidated Net Income for such period plus (b) the sum of the following to the extent deducted in calculating Consolidated Net Income for such period: (i) Consolidated Interest Expense (net of any interest income) of the Credit Parties and their Subsidiaries on a Consolidated basis for such period, (ii) federal, state, local and foreign income, value added and similar tax expense (but net of any tax credits and rebates) of the Credit Parties and their Subsidiaries for such period, (iii) depreciation and amortization expense of the Credit Parties and their Subsidiaries for such period, (iv) other non-cash charges of the Credit Parties and their Subsidiaries for such period (including without limitation (x) stock-based awards compensation expense, including without limitation any such charges arising from stock options, restricted stock grants or other equity incentive grants and (y) any impairment charge or asset write-offs related to assets (including goodwill) and excluding any such non-cash charge that represents an accrual of or reserve for cash expenditures in any future period), (v) any non-recurring cash charges or losses of the Credit Parties and their Subsidiaries not to exceed (A) for any four fiscal quarter period ending on or before June 30, 2009, $15,000,000 and (B) for any four fiscal quarter period ending thereafter, the greater of (1) $10,000,000 and (2) 20% of Consolidated EBITDA for the previous four fiscal quarter period (which for the purposes of this clause (v)(B)(2), Consolidated EBITDA shall include addbacks of all non-recurring cash charges or losses of the Credit Parties and their Subsidiaries for such prior four fiscal quarter period) and (vi) one-time transaction related expenses incurred in connection with Permitted Acquisitions, asset dispositions, financing transactions and other strategic initiatives in an aggregate amount not to exceed $2,500,000 during any Fiscal Year minus (c) any other non-recurring cash gains during such period.

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“Consolidated Funded Debt” shall mean, as of any date of determination, Funded Debt of the Credit Parties and their Subsidiaries on a Consolidated basis.

“Consolidated Interest Expense” shall mean, as of any date of determination for any period ending on such date, all interest expense (excluding amortization of debt discount and premium to the extent not paid in cash, but including the interest component under Capital Leases and synthetic leases, tax retention operating leases, off-balance sheet loans and similar off-balance sheet financing products) for such period of the Credit Parties and their Subsidiaries on a Consolidated basis.

“Consolidated Net Income” shall mean, as of any date of determination for any specified period ending on such date, the net income (excluding extraordinary losses and gains) of the Credit Parties and their Subsidiaries on a Consolidated basis for such period, all as determined in accordance with GAAP.

“Continuing Director” shall mean, with respect to any Person as of any date of determination, any member of the board of directors of such Person who (a) was a member of such board of directors on the Closing Date, or (b) was nominated for election or elected to such board of directors with the approval of a majority of the Continuing Directors who were members of such board at the time of such nomination or election.

“Contractual Obligation” shall mean, as to any Person, any provision of any security issued by such Person or of any contract, agreement, instrument or undertaking to which such Person is a party or by which it or any of its property is bound.

“Control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

“Copyright License” shall mean any agreement, whether written or oral, providing for the grant by or to a Person of any right under any Copyright, including, without limitation, any thereof referred to in Schedule 3.15.

“Copyrights” shall mean all copyrights of the Credit Parties and their Subsidiaries in all Works, now existing or hereafter created or acquired, all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, registrations, recordings and applications in the United States Copyright Office or in any similar office or agency of the United States, any state thereof or any other country or any political subdivision thereof, or otherwise, including, without limitation, any thereof referred to in Schedule 3.15 and all renewals thereof.

“Credit Documents” shall mean this Agreement, each of the Notes, any Joinder Agreement, the Letters of Credit, LOC Documents and the Security Documents and all other agreements, documents, certificates and instruments delivered to the Administrative Agent or any Lender by any Credit Party in connection therewith (other than any agreement, document, certificate or instrument related to a Hedging Agreement).

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“Credit Party” shall mean any of the Borrower or the Guarantors.

“Credit Party Intellectual Property” shall mean, collectively, all Copyrights, Patents, Trademarks and all material Copyright Licenses, Patent Licenses and Trademark Licenses of the Credit Parties and their Subsidiaries, all goodwill associated therewith and all rights to sue for infringement thereof.

“Credit Party Obligations” shall mean, without duplication, (a) all of the obligations, indebtedness and liabilities of the Credit Parties to the Lenders (including the Issuing Lender) and the Administrative Agent, whenever arising, under this Agreement, the Notes or any of the other Credit Documents, including principal, interest, fees, reimbursements and indemnification obligations and other amounts (including, but not limited to, any interest accruing after the occurrence of a filing of a petition of bankruptcy under the Bankruptcy Code with respect to any Credit Party, regardless of whether such interest is an allowed claim under the Bankruptcy Code) and (b) all liabilities and obligations, whenever arising, owing from any Credit Party or any of their Subsidiaries to any Hedging Agreement Provider arising under any Secured Hedging Agreement.

“Default” shall mean any of the events specified in Section 7.1, whether or not any requirement for the giving of notice or the lapse of time, or both, or any other condition, has been satisfied.

“Default Rate” shall mean (a) when used with respect to the Obligations, other than Letter of Credit Fees, an interest rate equal to (i) for Alternate Base Rate Loans (A) the Alternate Base Rate plus (B) the Applicable Percentage, if any, applicable to Alternate Base Rate Loans plus (C) 2% per annum and (ii) for LIBOR Rate Loans, (A) the LIBOR Rate plus (B) the Applicable Percentage applicable to LIBOR Rate Loans plus (C) 2% per annum and (b) when used with respect to Letter of Credit Fees, a rate equal to the Applicable Percentage plus 2% per annum.

“Defaulting Lender” shall mean, at any time, any Lender that, at such time (a) has failed to make a Loan required pursuant to the terms of this Agreement or failed to fund a Participation Interest in accordance with the terms of this Agreement, (b) has failed to pay to the Administrative Agent or any Lender an amount owed by such Lender pursuant to the terms of this Agreement and such default remains uncured, or (c) has been deemed insolvent or has become subject to a bankruptcy or insolvency proceeding or to a receiver, trustee or similar official.

“Deposit Account Control Agreement” shall mean an agreement, among a Credit Party, a depository institution, and the Administrative Agent, which agreement is either substantially in the form of Exhibit 1.1(c) or in a form reasonably acceptable to the Administrative Agent and which provides the Administrative Agent with “control” (as such term is used in Article 9 of the UCC) over the deposit account(s) described therein, as the same may be amended, modified, extended, restated, replaced, or supplemented from time to time.

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“Dollars” and “$” shall mean dollars in lawful currency of the United States of America.

“Domestic Lending Office” shall mean, initially, the office of each Lender designated as such Lender’s Domestic Lending Office shown in such Lender’s Administrative Questionnaire, and thereafter, such other office of such Lender as such Lender may from time to time specify to the Administrative Agent and the Borrower as the office of such Lender at which Alternate Base Rate Loans of such Lender are to be made.

“Domestic Subsidiary” shall mean any Subsidiary that is not a Foreign Subsidiary.

“Eligible Assignee” shall mean (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund, and (d) any other Person (other than a natural person) approved by (i) the Administrative Agent, (ii) in the case of any assignment of a Revolving Commitment, the Issuing Lender, and (iii) unless an Event of Default has occurred and is continuing, the Borrower (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall not include the Borrower or any of the Borrower’s Affiliates or Subsidiaries.

“Engagement Letter” shall mean the letter agreement dated July 1, 2008, addressed to the Borrower from Wachovia and WCM, as amended, modified, extended, restated, replaced, or supplemented from time to time.

“Environmental Laws” shall mean any and all applicable foreign, federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority or other Requirement of Law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment, as now or may at any time be in effect during the term of this Agreement.

“EPSI Account” shall mean that certain deposit account numbered 0000312694 maintained at The Private Bank.

“Equity Issuance” shall mean any issuance by any Credit Party or any Subsidiary to any Person which is not a Credit Party or a Subsidiary of (a) shares or interests of its Capital Stock, (b) any shares or interests of its Capital Stock pursuant to the exercise of options or warrants or similar rights, (c) any shares or interests of its Capital Stock pursuant to the conversion of any debt securities to equity or (d) warrants or options or similar rights that are exercisable or convertible into shares or interests of its Capital Stock.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

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“Event of Default” shall mean any of the events specified in Section 7.1; provided, however, that any requirement for the giving of notice or the lapse of time, or both, or any other condition, has been satisfied.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Excluded Account” shall have the meaning set forth in Section 6.12(b).

“Excluded Subsidiary” shall mean (a) any Subsidiary (other than a Subsidiary described in clause (a) of the definition of “Foreign Subsidiary”) (i) substantially all the assets of which consist, directly or indirectly, of Subsidiaries described in clause (a) of the definition of “Foreign Subsidiary”, (ii) which engages in no material business operations other than in the ordinary course of its business as a holding company (which such permitted activities shall include the ownership of assets described in clause (a)(i) of this definition, the payment of required taxes, the receipt of Restricted Payments and Investments permitted under this Agreement, the declaration and making of Restricted Payments and Investments permitted under this Agreement, other activities required to maintain its separate corporate or other legal structure and such other business, operations and activities consented to by the Agent) and administrative functions related thereto and (iii) which has no Indebtedness at any time outstanding in excess of $100,000 (other than Indebtedness in respect of Credit Party Obligations or Indebtedness owed to a Credit Party) or (b) any entity disregarded as separate from its owner for United States federal income tax purposes that owns more than 65% of the Voting Stock of a Subsidiary described in either clause (a) of the definition of “Foreign Subsidiary” or clause (a) of this definition so long as such entity (i) engages in no material business operations other than in the ordinary course of its business as a holding company (which such permitted activities shall include the ownership of Capital Stock of its Subsidiaries, the payment of required taxes, the receipt of Restricted Payments and Investments permitted under this Agreement, the declaration and making of Restricted Payments and Investments permitted under this Agreement, other activities required to maintain its separate corporate or other legal structure and such other business, operations and activities consented to by the Agent) and administrative functions related thereto and (ii) has no Indebtedness at any time outstanding in excess of $100,000 (other than Indebtedness in respect of Credit Party Obligations or Indebtedness owed to a Credit Party).

“Excluded Taxes” shall mean, with respect to the Administrative Agent, any Lender, the Issuing Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by any jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower is located, (c) in the case of a Foreign Lender, any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party hereto (or designates a new lending office) or is attributable to such Foreign Lender’s failure or inability (other than as a result of a Change in Law) to comply with Section 2.16, except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or

16

assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.16 and (d) any additional withholding tax that is imposed on amounts payable as a result of such Lender’s specification of (i) a Domestic Lending Office other than the office specified in such Lender’s Administrative Questionnaire or (ii) a LIBOR Lending Office other than the office specified in such Lender’s Administrative Questionnaire, except to the extent that such Lender was entitled, at the time of designation of such other lending office, to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.16.

“Existing Letter of Credit” shall mean each of the letters of credit described by applicant, date of issuance, letter of credit number, amount, beneficiary and the date of expiry on Schedule 1.1(c) hereto.

“Extension of Credit” shall mean, as to any Lender, the making of a Loan by such Lender, any conversion of a Loan from one Type to another Type, any extension of any Loan or the issuance of, or participation in, a Letter of Credit or Swingline Loan by such Lender.

“Federal Funds Effective Rate” shall have the meaning set forth in the definition of “Alternate Base Rate”.

“Fiscal Year” shall mean any fiscal year of the Borrower.

“Fixed Charge Coverage Ratio” shall mean, as of the last day of any fiscal quarter of the Borrower, for the Credit Parties and their Subsidiaries on a Consolidated basis, determined for the four consecutive fiscal quarter period ending on such date, the ratio of (a) (i) Consolidated EBITDA for such period minus (ii) Consolidated Capital Expenditures for such period to the extent permitted hereunder and not financed with Funded Debt minus (iii) capitalized software expenses of the Credit Parties and their Subsidiaries on a Consolidated basis during such period to (b) the sum of (i) Consolidated Interest Expense paid in cash during such period, (ii) Consolidated Cash Taxes during such period and (iii) Scheduled Funded Debt Payments during such period (including the principal component of payments due on Capital Leases).

“Foreign Lender” shall mean any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

“Foreign Subsidiary” shall mean (a) any Subsidiary that is treated as a corporation for United States federal income tax purposes and that is formed or incorporated outside the United States and (b) any Excluded Subsidiary.

“Fund” shall mean any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

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“Funded Debt” shall mean, with respect to any Person, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business), (d) all obligations (including, without limitation, earnout obligations) of such Person incurred, issued or assumed as the deferred purchase price of property or services purchased by such Person (other than trade and other ordinary course payables and accrued expenses incurred in the ordinary course of business and due within six months of the incurrence thereof) which would appear as liabilities on a balance sheet of such Person prepared in accordance with GAAP, (e) the principal portion of all obligations of such Person under Capital Leases, (f) the unreimbursed amount of all letters of credit issued or bankers’ acceptances facilities created for the account of such Person, (g) all preferred Capital Stock (other than Qualified Preferred Stock) or other equity interests issued by such Person and which by the terms thereof could be (at the request of the holders thereof or otherwise) subject to mandatory sinking fund payments, redemption or other acceleration, (h) the principal balance outstanding under any Synthetic Lease, (i) all Indebtedness of others of the type described in clauses (a) through (h) hereof secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed (provided, that if such Indebtedness has not been so assumed, the amount of Indebtedness of any Person for purposes of this clause (i) shall be deemed to be equal to the lesser of (i) the aggregate unpaid amount of such Indebtedness and (ii) the fair market value of the property encumbered thereby as determined by such Person in good faith), (j) all Guaranty Obligations of such Person with respect to Indebtedness of another Person of the type described in clauses (a) through (h) hereof, and (k) all Indebtedness of any partnership in which such Person is a general partner to the extent such Indebtedness is recourse to such Person.

“GAAP” shall mean generally accepted accounting principles in effect in the United States of America (or, in the case of Foreign Subsidiaries with significant operations outside the United States of America, generally accepted accounting principles in effect from time to time in their respective jurisdictions of organization or formation) applied on a consistent basis, subject, however, in the case of determination of compliance with the financial covenants set out in Section 5.9 to the provisions of Section 1.3.

“Government Acts” shall have the meaning set forth in Section 2.17.

“Government Obligations” shall have the meaning set forth in the definition of “Cash Equivalents.”

“Governmental Authority” shall mean the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

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“Guarantor” shall have the meaning set forth in the first paragraph of this Agreement.

“Guaranty” shall mean the guaranty of the Guarantors set forth in Article X.

“Guaranty Obligations” shall mean, with respect to any Person, without duplication, any obligations of such Person (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) guaranteeing or intended to guarantee any Indebtedness of any other Person in any manner, whether direct or indirect, and including without limitation any obligation, whether or not contingent, (a) to purchase any such Indebtedness, (b) to advance or provide funds or other support for the payment or purchase of any such Indebtedness or to maintain working capital, solvency or other balance sheet condition of such other Person (including without limitation keep well agreements, maintenance agreements, comfort letters or similar agreements or arrangements) for the benefit of any holder of Indebtedness of such other Person, (c) to lease or purchase property, securities or services primarily for the purpose of assuring payment to the holder of such Indebtedness, or (d) to otherwise assure or hold harmless the holder of such Indebtedness against loss in respect thereof. The amount of any Guaranty Obligation hereunder shall (subject to any limitations set forth therein) be deemed to be an amount equal to the outstanding principal amount (or maximum principal amount, if larger) of the Indebtedness in respect of which such Guaranty Obligation is made.

“Hedging Agreement Provider” shall mean any Person that enters into a Hedging Agreement with a Credit Party or any of its Subsidiaries to the extent that (i) such Person is (A) a Lender, (B) an Affiliate of a Lender or (C) any other Person that was a Lender (or an Affiliate of a Lender) at the time it entered into the Hedging Agreement but has ceased to be a Lender (or whose Affiliate has ceased to be a Lender) under the Credit Agreement or (ii) such Person is a Lender or Affiliate of a Lender on the Closing Date and the Hedging Agreement was entered into on or prior to the Closing Date (even if such Person ceases to be a Lender or such Person’s Affiliate ceases to be a Lender); provided, in the case of a Secured Hedging Agreement with a Person who is no longer a Lender, such Person shall be considered a Hedging Agreement Provider only through the stated maturity date (without extension or renewal) of such Secured Hedging Agreement.

“Hedging Agreement” shall mean, with respect to any Person, any agreement entered into to protect such Person against fluctuations in interest rates, or currency or raw materials values, including, without limitation, any interest rate swap, cap or collar agreement or similar arrangement between such Person and one or more counterparties, any foreign currency exchange agreement, currency protection agreements, commodity purchase or option agreements or other interest or exchange rate hedging agreements.

“Incremental Revolving Facility” shall have the meaning set forth in Section 2.2.

“Indebtedness” shall mean, with respect to any Person, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under

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conditional sale or other title retention agreements relating to property purchased by such Person (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business), (d) all obligations (including, without limitation, earnout obligations) of such Person incurred, issued or assumed as the deferred purchase price of property or services purchased by such Person (other than trade and other ordinary course payables and accrued expenses incurred in the ordinary course of business and due within six months of the incurrence thereof) which, in each case, would appear as liabilities on a balance sheet of such Person prepared in accordance with GAAP, (e) all obligations of such Person under take-or-pay or similar arrangements, (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed by such Person (provided, that if such Indebtedness has not been so assumed, the amount of Indebtedness of any Person for purposes of this clause (f) shall be deemed to be equal to the lesser of (i) the aggregate unpaid amount of such Indebtedness and (ii) the fair market value of the property encumbered thereby as determined by such Person in good faith), (g) all Guaranty Obligations of such Person with respect to Indebtedness of another Person, (h) the principal portion of all Capital Lease Obligations, (i) all net obligations of such Person under Hedging Agreements (valued as the net termination value thereof computed in accordance with a method approved by the International Swap Dealers Association and agreed to by such Person in the applicable Hedging Agreement, if applicable), excluding any portion thereof which would be accounted for as interest expense under GAAP, (j) the unreimbursed amount of all letters of credit issued or bankers’ acceptances facilities created for the account of such Person, (k) all preferred Capital Stock (other than Qualified Preferred Stock) issued by such Person and which by the terms thereof could be (at the request of the holders thereof or otherwise) subject to mandatory sinking fund payments, redemption or other acceleration, (l) the principal balance outstanding under any Synthetic Lease, and (m) all indebtedness of the type described in clauses (a) through (i) of any partnership in which such Person is a general partner to the extent such Indebtedness is recourse to such Person.

“Indemnified Taxes” shall mean Taxes other than Excluded Taxes.

“Indemnitee” shall have the meaning set forth in Section 9.5(b).

“Insolvency” shall mean, with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of such term as used in Section 4245 of ERISA.

“Intellectual Property” shall mean, collectively, all Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses of the Credit Parties and their Subsidiaries, all goodwill associated therewith and all rights to sue for infringement thereof.

“Interest Determination Date” shall have the meaning specified in the definition of “Applicable Percentage”.

“Interest Payment Date” shall mean (a) as to any Alternate Base Rate Loan, the last Business Day of each March, June, September and December and on the Maturity Date, (b) as to any LIBOR Rate Loan having an Interest Period of three months or less, the last day of such

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Interest Period, (c) as to any LIBOR Rate Loan having an Interest Period longer than three months, (i) each three (3) month anniversary following the first day of such Interest Period and (ii) the last day of such Interest Period and (d) as to any Loan which is the subject of a mandatory prepayment required pursuant to Section 2.7(b), the date on which such mandatory prepayment is due.

“Interest Period” shall mean, with respect to any LIBOR Rate Loan,

(a) initially, the period commencing on the Borrowing Date or conversion date, as the case may be, with respect to such LIBOR Rate Loan and ending one, two, three, six, nine or twelve months thereafter, subject to availability to all applicable Lenders, as selected by the Borrower in the Notice of Borrowing or Notice of Conversion given with respect thereto; and

(b) thereafter, each period commencing on the last day of the immediately preceding Interest Period applicable to such LIBOR Rate Loan and ending one, two, three, six, nine or twelve months thereafter, subject to availability to all applicable Lenders, as selected by the Borrower by irrevocable notice to the Administrative Agent not less than three Business Days prior to the last day of the then current Interest Period with respect thereto; provided that the foregoing provisions are subject to the following:

(i) if any Interest Period pertaining to a LIBOR Rate Loan would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;

(ii) any Interest Period pertaining to a LIBOR Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the relevant calendar month;

(iii) if the Borrower shall fail to give notice as provided above, the Borrower shall be deemed to have selected an Alternate Base Rate Loan to replace the affected LIBOR Rate Loan;

(iv) no Interest Period in respect of any Loan shall extend beyond the applicable Maturity Date; and

(v) no more than six (6) LIBOR Rate Loans may be in effect at any time. For purposes hereof, LIBOR Rate Loans with different Interest Periods shall be considered as separate LIBOR Rate Loans, even if they shall begin on the same date and have the same duration, although borrowings, extensions and conversions may, in accordance with the provisions hereof, be combined at the end of existing Interest Periods to constitute a new LIBOR Rate Loan with a single Interest Period.

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“International Holding Company” shall mean a first tier Subsidiary of (a) a Credit Party or (b) an Excluded Subsidiary described in clause (b) of the definition of “Excluded Subsidiary”, in each case to which Offshore Rights are transferred.

“International Holding Company Note” shall have the meaning set forth in Section 6.1(h).

“Investment” shall mean, with respect to any Person, (a) the acquisition (whether for cash, property, services, assumption of Indebtedness, securities or otherwise) of shares of Capital Stock, other ownership interests or other securities of any other Person or bonds, notes, debentures or all or substantially all of the assets of any other Person, (b) any deposit with, or advance, loan or other extension of credit to, any other Person (other than deposits made in the ordinary course of business) or (c) any other capital contribution to or investment in any other Person, including, without limitation, any Guaranty Obligation (including any support for a letter of credit issued on behalf of such Person with respect to Indebtedness of such other Person; provided that, in the event that any Investment is made by the Borrower or any Subsidiary in any Person through substantially concurrent interim transfers through one or more other Subsidiaries, then such other substantially concurrent interim transfers shall be disregarded for purposes of Section 6.5. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment (other than adjustments for the repayment of, or the refund of capital with respect to, the original amount of any such Investment).

“Issuing Lender” shall mean Wachovia Bank, National Association, together with any successor.

“Issuing Lender Fees” shall have the meaning set forth in Section 2.3(c).

“Joinder Agreement” shall mean a Joinder Agreement in substantially the form of Exhibit 1.1(d), executed and delivered by an Additional Credit Party in accordance with the provisions of Section 5.10.

“Lender” shall have the meaning set forth in the first paragraph of this Agreement and shall include the Revolving Lenders and the Issuing Lender.

“Lender Commitment Letter” shall mean, with respect to any Lender, the letter (or other correspondence) to such Lender from the Administrative Agent notifying such Lender of its LOC Commitment or Revolving Commitment Percentage.

“Letter of Credit” shall mean (a) any letter of credit issued by the Issuing Lender pursuant to the terms hereof, as such letter of credit may be amended, modified, restated, extended, renewed, increased, replaced or supplemented from time to time and (b) any Existing Letter of Credit, in each case as such letter of credit may be amended, modified, extended, renewed or replaced from time to time.

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“Letter of Credit Facing Fee” shall have the meaning set forth in Section 2.3(c).

“Letter of Credit Fee” shall have the meaning set forth in Section 2.3(b).

“Leverage Ratio” shall mean, as of the last day of any fiscal quarter of the Borrower, for the Credit Parties and their Subsidiaries on a Consolidated basis, the ratio of (a) Consolidated Funded Debt of the Credit Parties and their Subsidiaries on such date to (b)(i) Consolidated EBITDA determined for the four consecutive fiscal quarter period ending on such date minus (ii) to the extent greater than $10,000,000 during any four (4) fiscal quarter period, capitalized software expenses of the Credit Parties and their Subsidiaries on a Consolidated basis determined for the four (4) consecutive fiscal quarter period.

“LIBOR Lending Office” shall mean, initially, the office(s) of each Lender designated as such Lender’s LIBOR Lending Office in such Lender’s Administrative Questionnaire; and thereafter, such other office of such Lender as such Lender may from time to time specify to the Administrative Agent and the Borrower as the office of such Lender at which the LIBOR Rate Loans of such Lender are to be made.

“LIBOR Rate” shall mean, for any LIBOR Rate Loan for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBOR01 Page (or any successor page) as the London interbank offered rate for deposits in Dollars at approximately 11:00 A.M. (London time) two (2) Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period. If for any reason such rate is not available, then “LIBOR Rate” shall mean the rate per annum at which, as determined by the Administrative Agent in accordance with its customary practices, Dollars in an amount comparable to the Loans then requested are being offered to leading banks at approximately 11:00 A.M. London time, two (2) Business Days prior to the commencement of the applicable Interest Period for settlement in immediately available funds by leading banks in the London interbank market for a period equal to the Interest Period selected.

“LIBOR Rate Loan” shall mean Loans the rate of interest applicable to which is based on the LIBOR Rate.

“LIBOR Tranche” shall mean the collective reference to LIBOR Rate Loans whose Interest Periods begin and end on the same day.

“Lien” shall mean any mortgage, pledge, hypothecation, collateral assignment, collateral deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any security agreement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any Capital Lease having substantially the same economic effect as any of the foregoing).

“Liquidity” shall mean, as of any date of determination, the sum of following for the Credit Parties and their Subsidiaries on a Consolidated basis: (a) the Accessible Borrowing Availability plus (b) cash and Cash Equivalents.

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“Loan” shall mean a Revolving Loan and/or a Swingline Loan, as appropriate.

“LOC Commitment” shall mean the commitment of the Issuing Lender to issue Letters of Credit and with respect to each Revolving Lender, the commitment of such Revolving Lender to purchase Participation Interests in the Letters of Credit up to such Lender’s Revolving Commitment Percentage of the LOC Committed Amount.

“LOC Committed Amount” shall have the meaning set forth in Section 2.3(a).

“LOC Documents” shall mean, with respect to each Letter of Credit, such Letter of Credit, any amendments thereto, any documents delivered in connection therewith, any application therefor, and any agreements, instruments, guarantees or other documents (whether general in application or applicable only to such Letter of Credit) governing or providing for (a) the rights and obligations of the parties concerned or (b) any Collateral for such obligations.

“LOC Obligations” shall mean, at any time, the sum of (a) the maximum amount which is, or at any time thereafter may become, available to be drawn under Letters of Credit then outstanding, assuming compliance with all requirements for drawings referred to in such Letters of Credit plus (b) the aggregate amount of all drawings under Letters of Credit honored by the Issuing Lender but not theretofore reimbursed.

“Mandatory LOC Borrowing” shall have the meaning set forth in Section 2.3(e).

“Mandatory Swingline Borrowing” shall have the meaning set forth in Section 2.4(b)(ii).

“Material Adverse Effect” shall mean a material adverse effect on (a) the business, properties, operations or financial condition of the Borrower and its Subsidiaries taken as a whole, (b) the ability of the Borrower and the Guarantors, taken as a whole, to perform their payment and other material obligations, when such obligations are required to be performed, under this Agreement, any of the Notes or any other Credit Document or (c) the validity or enforceability of this Agreement, any of the Notes or any of the other Credit Documents (to the extent constituting agreements) or the rights or remedies of the Administrative Agent or the Lenders hereunder or thereunder.

“Material Domestic Subsidiary” shall mean, as of any date of determination, any Domestic Subsidiary of the Borrower that, together with such Domestic Subsidiary’s Subsidiaries, (a) generates more than 5% of Consolidated EBITDA for the four (4) fiscal quarter period most recently ended or (b) owns more than 5% of the Consolidated Assets as of the last day of the most recently ended fiscal quarter of the Borrower. For purposes of determining whether the Target of any Permitted Acquisition qualifies as a Material Domestic Subsidiary pursuant to clause (a) above, the foregoing calculations shall be made after giving effect to such acquisition on a Pro Forma Basis.

“Materials of Environmental Concern” shall mean any gasoline or petroleum (including crude oil or any extraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Law, including, without limitation, asbestos, perchlorate, polychlorinated biphenyls and urea-formaldehyde insulation.

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“Maturity Date” shall mean the date that is three (3) years following the Closing Date.

“Moody’s” shall mean Moody’s Investors Service, Inc.

“Multiemployer Plan” shall mean a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

“Net Cash Proceeds” shall mean the aggregate cash proceeds received by any Credit Party or any Subsidiary in respect of any Asset Disposition, net of (a) direct costs (including, without limitation, legal, accounting and investment banking fees, and sales commissions) associated therewith, (b) amounts held in escrow to be applied as part of the purchase price of any Asset Disposition and (c) taxes paid or payable as a result thereof, (d) the principal amount of, premium, if any, and interest on any Indebtedness secured by a Lien on the asset (or a portion thereof) sold, which Indebtedness is required to be repaid in connection with such sale; it being understood that “Net Cash Proceeds” shall include (when received by a Credit Party or Subsidiary as cash), without limitation, any cash received upon the sale or other disposition of any non-cash consideration received by any Credit Party or any Subsidiary in any Asset Disposition and any cash released from escrow to any Credit Party or Subsidiary as part of the purchase price in connection with any Asset Disposition.

“Note” or “Notes” shall mean the Revolving Notes and/or the Swingline Note, collectively, separately or individually, as appropriate.

“Notice of Borrowing” shall mean a request for a Revolving Loan borrowing pursuant to Section 2.1(b)(i) or a request for a Swingline Loan borrowing pursuant to Section 2.4(b)(i), as appropriate. A Form of Notice of Borrowing is attached as Exhibit 1.1(e).

“Notice of Conversion/Extension” shall mean the written notice of conversion of a LIBOR Rate Loan to an Alternate Base Rate Loan or an Alternate Base Rate Loan to a LIBOR Rate Loan, or extension of a LIBOR Rate Loan, in each case substantially in the form of Exhibit 1.1(f).

“Obligations” shall mean, collectively, Loans, LOC Obligations, and all other obligations of the Credit Parties to the Administrative Agent and the Lenders under the Credit Documents.

“OFAC” shall mean the U.S. Department of the Treasury’s Office of Foreign Assets Control.

“Off-Shore Rights” shall mean all rights to Intellectual Property outside the United States.

“Operating Lease” shall mean, as applied to any Person, any lease (including, without limitation, leases which may be terminated by the lessee at any time) of any property (whether real, personal or mixed) which is not a Capital Lease other than any such lease in which that Person is the lessor.

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“Other Taxes” shall mean all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Credit Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Credit Document.

“Outside LC Account” shall mean that certain deposit account numbered 1009353460 maintained at Wachovia Bank.

“Owned Intellectual Property” shall mean, collectively, all Copyrights, Patents and Trademarks owned by the Credit Parties and their Subsidiaries, all goodwill associated therewith and all rights to sue for infringement thereof.

“Participant” has the meaning assigned to such term in clause (d) of Section 9.6.

“Participation Interest” shall mean a participation interest purchased by a Revolving Lender in LOC Obligations as provided in Section 2.3(c) and in Swingline Loans as provided in Section 2.4.

“Patent Licenses” shall mean all agreements, whether written or oral, providing for the grant by or to a Person of any right to manufacture, use or sell any invention covered by a Patent, including, without limitation, any thereof referred to in Schedule 3.15.

“Patents” shall mean (a) all letters patent of the United States or any other country, now existing or hereafter arising, and all improvement patents, reissues, reexaminations, patents of additions, renewals and extensions thereof, including, without limitation, any thereof referred to in Schedule 3.15, and (b) all applications for letters patent of the United States or any other country, now existing or hereafter arising, and all provisionals, divisions, continuations and continuations-in-part and substitutes thereof, including, without limitation, any thereof referred to in Schedule 3.15.

“Patriot Act” shall mean The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)), as amended or modified from time to time.

“Payment Event of Default” shall mean an Event of Default specified in Section 7.1(a).

“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA.

“Permitted Acquisition” shall mean an acquisition or any series of related acquisitions by a Credit Party or a Subsidiary of a Credit Party of (a) all or substantially all of the assets or a majority of the outstanding Voting Stock or economic interests of a Person, (b) a Person by a merger, amalgamation or consolidation or any other combination with such Person or (c) any

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division, line of business or other business unit (such assets or such Person or such division, line of business or other business unit of such Person shall be referred to herein as the “Target”), in each case that is a type of business (or assets used in a type of business) permitted to be engaged in by the Credit Parties and their Subsidiaries pursuant to Section 6.3, in each case so long as:

(i) no Default or Event of Default shall then exist or would exist after giving effect thereto;

(ii) the Credit Parties shall demonstrate to the reasonable satisfaction of the Administrative Agent that, after giving effect to the acquisition on a Pro Forma Basis (including giving pro forma effect to any earnout payments and any deferred purchase price to be paid in connection with such acquisition, in each case if the aggregate amount of all such payments with respect to such Permitted Acquisition reasonably anticipated to be made within fifteen (15) months of the consummation of such Permitted Acquisition exceeds $5,000,000), the Credit Parties are in compliance with each of the financial covenants set forth in Section 5.9;

(iii)(A) to the extent required as of the consummation of such Permitted Acquisition by, and in accordance with the terms of, Sections 5.10 and 5.12 hereof, the Administrative Agent, on behalf of the Secured Parties, shall have received (or shall receive in connection with the closing of such acquisition) a first priority (subject to Permitted Liens) perfected security interest in substantially all Collateral acquired with respect to the Target and (B) to the extent required as of the consummation of such Permitted Acquisition by, and in accordance with the terms of, Section 5.10 hereof, the Target, if a Person, shall have executed a Joinder Agreement;

(iv) with respect to any Permitted Acquisition with a cash purchase price in excess of $20,000,000, the Administrative Agent and the Lenders shall have received, not less than ten (10) days prior to the consummation of such Permitted Acquisition, (A) a description of the material terms of such acquisition, (B) audited financial statements (or, if unavailable, management-prepared financial statements) of the Target for its two most recent fiscal years and for any fiscal quarters ended for more than 45 days within the fiscal year to date, (C) Consolidated projected income statements for the period of four fiscal quarters from the date of consummation of the acquisition of the Credit Parties and their Subsidiaries on a Consolidated basis (giving effect to such acquisition), and (D) a certificate substantially in the form of Exhibit 1.1(g), executed by a Responsible Officer of the Borrower certifying that such Permitted Acquisition complies with the requirements of this Agreement; and

(v) such acquisition shall not be a “hostile” acquisition and shall have been approved by the Board of Directors (or equivalent) and/or shareholders (or equivalent), if required by law, of the applicable Credit Party or Subsidiary and the Target.

“Permitted Investments” shall mean:

(a) cash and Cash Equivalents;

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(b) Investments set forth on Schedule 1.1(a);

(c) receivables owing to the Credit Parties or any of their Subsidiaries or any receivables and advances to suppliers, in each case if created, acquired or made in the ordinary course of business and payable or dischargeable in accordance with customary trade terms;

(d) Investments in and loans to any Credit Party;

(e) loans and advances to officers, directors and employees in an aggregate amount not to exceed $2,000,000 at any time outstanding; provided that such loans and advances shall comply with all applicable Requirements of Law (including Sarbanes-Oxley);

(f) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business;

(g) Investments, acquisitions or transactions permitted under Section 6.4(b);

(h) Permitted Acquisitions;

(i) Hedging Agreements to the extent permitted hereunder;

(j) Investments of assets made pursuant to any non-qualified deferred compensation plan sponsored by the Borrower or its Subsidiaries;

(k)(i) Investments by the Credit Parties in any Foreign Subsidiary, to the extent necessary for such Foreign Subsidiary to meet its tax, payroll and operating expense requirements in the ordinary course of its business, but only to the extent such tax, payroll and operating expenses exceed the revenues of such Foreign Subsidiary, (ii) additional Investments by the Credit Parties in Foreign Subsidiaries (including, to the extent applicable, Eclipsys (Mauritius) Limited and Eclipsys (India) Private Limited) in an amount not to exceed $10,000,000 during any Fiscal Year and (iii) Investments by Foreign Subsidiaries in other Foreign Subsidiaries;

(l)(i) Investments by any Credit Party or an Excluded Subsidiary described in clause (b) of the definition of “Excluded Subsidiary” in any International Holding Company in the form of any capital contribution by such Person to such International Holding Company of the shares of Capital Stock owned by such Person in a Foreign Subsidiary and in the form of a transfer of Off-Shore Rights to such International Holding Company and (ii) Investments by any Credit Party consisting of Offshore Rights in any International Holding Company and (iii) Investments consisting of any International Holding Company Note; and

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(m) additional loans and/or Investments; provided that such loans, advances and/or Investments made after the Closing Date pursuant to this clause shall not exceed an aggregate amount of $10,000,000 at any one time outstanding.

“Permitted Liens” shall mean:

(a) Liens created by or otherwise existing under or in connection with this Agreement or the other Credit Documents in favor of the Administrative Agent on behalf of the Secured Parties;

(b) Liens under the Credit Documents in favor of a Hedging Agreement Provider in connection with a Secured Hedging Agreement under the Credit Documents;

(c) Liens securing purchase money Indebtedness and Capital Lease Obligations to the extent permitted under Section 6.1(c); provided, that (i) any such Lien attaches to such property concurrently with or within ninety (90) days after the acquisition, construction, repair, replacement or improvement (as applicable) thereof and (ii) such Lien attaches solely to the property so acquired in such transaction (and proceeds and products thereof and proceeds of insurance maintained with respect thereto); provided, that individual financings of equipment provided by one lender may be cross collateralized to other financings of equipment provided by such lender;

(d) Liens for taxes, assessments, charges or other governmental levies not yet due or as to which the period of grace, if any, related thereto has not expired or which are being contested in good faith by appropriate proceedings; provided that adequate reserves with respect thereto are maintained on the books of any Credit Party or its Subsidiaries, as the case may be, in conformity with GAAP;

(e) statutory Liens such as carriers’, warehousemen’s, mechanics’, materialmen’s, landlords’, repairmen’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than sixty (60) days or which are being contested in good faith by appropriate proceedings; provided that a reserve or other appropriate provision shall have been made therefor to the extent required by GAAP and the aggregate amount of such Liens could not reasonably be expected to have a Material Adverse Effect; and Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

(f) pledges or deposits in connection with workers’ compensation, unemployment insurance and other social security legislation (other than any Lien imposed by ERISA) and deposits securing liability to insurance carriers under insurance or self-insurance arrangements arising in the ordinary course of business;

(g) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

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(h) easements, rights of way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person;

(i) leases, licenses, subleases or sublicenses granted to others not interfering in any material respect with the business of Borrower and its Subsidiaries, taken as a whole; and Liens arising from precautionary Uniform Commercial Code financing statements or similar filings made in respect of Operating Leases entered into by the Borrower or any of its Subsidiaries;

(j) Liens existing on the Closing Date and, to the extent securing obligations in excess of $10,000 as of the Closing Date, set forth on Schedule 1.1(b); provided that (i) no such Lien shall at any time be extended to cover property or assets other than the property or assets subject thereto on the Closing Date and improvements thereon and (ii) the principal amount of the Indebtedness secured by such Lien shall not be extended, renewed, refunded or refinanced, except as permitted hereunder;

(k) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any Lien referred to in this definition); provided that such extension, renewal or replacement Lien shall be limited to all or a part of the property which secured the Lien so extended, renewed or replaced (plus improvements on such property);

(l) Liens arising in the ordinary course of business by virtue of any contractual, statutory or common law provision relating to banker’s Liens, rights of set-off or similar rights and remedies covering deposit or securities accounts (including funds or other assets credited thereto) or other funds or assets maintained with a depository institution or securities intermediary; and Liens of a collecting bank arising under Section 4-210 of the UCC on items in the course of collection;

(m) any zoning, building or similar laws or rights reserved to or vested in any Governmental Authority;

(n) restrictions on transfers of securities imposed by applicable Securities Laws;

(o) Liens arising out of judgments or awards not resulting in an Event of Default;

(p) Liens on property acquired pursuant to a Permitted Acquisition or on the property of a Person existing at the time such Person becomes a Subsidiary of a Credit Party (or is a Subsidiary that survives a merger with such a Person) securing Indebtedness or other obligations in an aggregate amount not to exceed $5,000,000 for all such Liens; provided, however, that any such Lien may not extend to any other property of any Credit

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Party (other than proceeds of such property and after-acquired property that is affixed or incorporated into the property covered by such Lien); provided, further, that any such Lien was not created in anticipation of or in connection with the applicable Permitted Acquisition or the transaction or series of transactions pursuant to which such Person became a Subsidiary of a Credit Party;

(q) any interest or title of a lessor, licensor or sublessor under any lease, license or sublease entered into by any Credit Party or any Subsidiary thereof in the ordinary course of its business and covering only the assets so leased, licensed or subleased (and proceeds and products thereof and proceeds of insurance maintained with respect thereto);

(r) assignments of insurance or condemnation proceeds provided to landlords (or their mortgagees) pursuant to the terms of any lease and Liens or rights reserved in any lease for rent or for compliance with the terms of such lease;

(s) Liens securing Indebtedness or other obligations or any Subsidiary that is not a Credit Party to any other Subsidiary;

(t) Liens (i) on cash advances in favor of the seller of any property to be acquired in a Permitted Acquisition to be applied against the purchase price of such Permitted Acquisition, and (ii) consisting of an agreement to sell, transfer, lease or otherwise dispose of any property in a transaction permitted hereunder, in each case, solely to the extent such Permitted Acquisition, sale, disposition, transfer or lease, as the case may be, would have been permitted on the date of the creation of such Lien;

(u) Liens on assets not constituting Collateral so long as the amount of Indebtedness and other obligations secured thereby does not exceed $5,000,000 outstanding at any time; and

(v) additional Liens so long as the principal amount of Indebtedness and other obligations secured thereby does not exceed $5,000,000 outstanding at any time.

“Person” shall mean any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“Plan” shall mean, as of any date of determination, any employee benefit plan which is subject to Title IV of ERISA and in respect of which any Credit Party or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Pledge Agreement” shall mean the Pledge Agreement dated as of the Closing Date executed by the Credit Parties in favor of the Administrative Agent, for the benefit of the Secured Parties, as the same may from time to time be amended, modified, extended, restated, replaced, or supplemented from time to time in accordance with the terms hereof and thereof.

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“Prime Rate” shall have the meaning set forth in the definition of Alternate Base Rate.

“Pro Forma Basis” shall mean, with respect to any transaction, that such transaction shall be deemed to have occurred as of the first day of the four-quarter period ending as of the most recent quarter end preceding the date of such transaction.

“Properties” shall have the meaning set forth in Section 3.10(a).

“Qualified Preferred Stock” shall mean, with respect to any Person, any Capital Stock of such Person so long as the terms of any such Capital Stock (a) (i) do not contain any mandatory put, redemption, repayment, sinking fund or other similar provision and (ii) do not permit such Capital Stock to be converted into Indebtedness, in each case prior to the date which is six (6) months after the Maturity Date and (b) do not require the cash payment of dividends, distributions or other Restricted Payments that would otherwise be prohibited by the terms of this Agreement.

“Recovery Event” shall mean the receipt by the Credit Parties or any of their Subsidiaries of any cash insurance proceeds or condemnation or expropriation award payable by reason of theft, loss, physical destruction or damage, taking or similar event with respect to any of their respective property or assets other than obsolete property or assets no longer used or useful in the business of the Credit Parties or any of their Subsidiaries.

“Register” shall have the meaning set forth in Section 9.6(c).

“Reimbursement Obligation” shall mean the obligation of the Borrower to reimburse the Issuing Lender pursuant to Section 2.3(d) for amounts drawn under Letters of Credit.

“Related Parties” shall mean, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

“Reorganization” shall mean, with respect to any Multiemployer Plan, the condition that such Plan is in reorganization within the meaning of such term as used in Section 4241 of ERISA.

“Reportable Event” shall mean any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty-day notice period is waived under PBGC Reg. §4043.

“Required Lenders” shall mean, as of any date of determination, Lenders holding at least a majority of (a) the outstanding Revolving Commitments or (b) if the Revolving Commitments have been terminated, the outstanding Loans and Participation Interests; provided, however, that if any Lender shall be a Defaulting Lender at such time, then there shall be excluded from the determination of Required Lenders, Obligations (including Participation Interests) owing to such Defaulting Lender and such Defaulting Lender’s Commitments.

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“Requirement of Law” shall mean, as to any Person, (a) the articles or certificate of incorporation, by-laws or other organizational or governing documents of such Person, and (b) all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes, executive orders, and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority (in each case whether or not having the force of law); in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

“Responsible Officer” shall mean, for any Credit Party, any duly authorized officer thereof and with respect to which the Administrative Agent has an incumbency certificate indicating such officer is a duly authorized officer thereof.

“Restricted Payment” shall mean (a) any dividend or other distribution, direct or indirect, on account of any shares (or equivalent) of any class of Capital Stock of any Credit Party or any of its Subsidiaries, now or hereafter outstanding (other than a stock split effected as a dividend or distribution of purchase rights pursuant to a stockholder rights plan (poison pill)), (b) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares (or equivalent) of any class of Capital Stock of any Credit Party or any of its Subsidiaries, now or hereafter outstanding (c) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of Capital Stock of any Credit Party or any of its Subsidiaries, now or hereafter outstanding and (d) any payment or prepayment of principal of, premium, if any, or interest on, redemption, purchase, retirement, defeasance, sinking fund or similar payment with respect to, any Subordinated Debt of any Credit Party or any of its Subsidiaries; provided, that the following will be deemed not to be Restricted Payments: (i) the repurchase, redemption, or other acquisition for value of Capital Stock held by present or former officers, directors or employees (or their transferees, estates or beneficiaries under their estates) of any Credit Party or any of its Subsidiaries upon their death, disability, retirement, severance or termination of employment or service or pursuant to any management equity plan or stock option plan or any other management or employee benefit plan, agreement or arrangement; provided that the aggregate cash consideration paid for all such repurchases, redemptions and acquisitions shall not exceed, without duplication, in any calendar year, $2,000,000; (ii) tax payments made by any Credit Party or any of its Subsidiaries to any taxing authority related to the vesting of Capital Stock issued to employees or directors for compensatory purposes (and the surrender of shares of Capital Stock to any Credit Party or any of its Subsidiaries by any such employees or directors in connection therewith); (iii) non-cash repurchases of Capital Stock deemed to occur upon the exercise of stock options if the Capital Stock represents a portion of the exercise price thereof and (iv) cash payments in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Capital Stock of any Credit Party or any of its Subsidiaries.

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“Revolving Commitment” shall mean, with respect to each Revolving Lender, the commitment of such Revolving Lender to make Revolving Loans in an aggregate principal amount at any time outstanding up to an amount equal to such Revolving Lender’s Revolving Commitment Percentage of the Revolving Committed Amount. The Revolving Commitment of all Lenders on the Closing Date shall be One Hundred Twenty-Five Million Dollars ($125,000,000).

“Revolving Commitment Percentage” shall mean, for each Lender, the percentage identified as its Revolving Commitment Percentage in its Lender Commitment Letter or in the Register or the applicable Assignment and Assumption pursuant to which such Lender became a Lender hereunder, as such percentage may be modified in connection with any assignment made in accordance with the provisions of Section 9.6(b).

“Revolving Committed Amount” shall have the meaning set forth in Section 2.1(a).

“Revolving Lender” shall mean, as of any date of determination, a Lender holding a Revolving Commitment, a Revolving Loan or a Participation Interest on such date.

“Revolving Loan” shall have the meaning set forth in Section 2.1.

“Revolving Note” or “Revolving Notes” shall mean the promissory notes of the Borrower provided pursuant to Section 2.1(e) in favor of any of the Revolving Lenders evidencing the Revolving Loan provided by any such Revolving Lender pursuant to Section 2.1(a), individually or collectively, as appropriate, as such promissory notes may be amended, modified, extended, restated, replaced, or supplemented from time to time.

“S&P” shall mean Standard & Poor’s Ratings Services, a division of The McGraw Hill Companies, Inc.

“Sanctioned Country” shall mean a country subject to a sanctions program identified on the list maintained by OFAC and made publicly available from time to time.

“Sanctioned Person” shall mean (a) a Person named on the list of “Specially Designated Nationals and Blocked Persons” maintained by OFAC and made publicly available from time to time, or (b) (i) an agency of the government of a Sanctioned Country, (ii) an organization controlled by a Sanctioned Country, or (iii) a person resident in a Sanctioned Country, to the extent subject to a sanctions program administered by OFAC.

“Sarbanes-Oxley” shall mean the Sarbanes-Oxley Act of 2002.

“Scheduled Funded Debt Payments” shall mean, without duplication, as of any date of determination for the four consecutive fiscal quarter period ending on such date, the sum of all regularly scheduled payments of principal on Funded Debt of the Credit Parties and their Subsidiaries for the applicable period ending on the date of determination ((i) including the principal component of payments due on Capital Leases during the applicable period ending on the date of determination but (ii) excluding any principal payments due with respect to Funded Debt owed by the Borrower or any Subsidiary to the Borrower or any Subsidiary during the applicable period ending on the date of determination).

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“SEC” shall mean the Securities and Exchange Commission or any successor Governmental Authority.

“Secured Hedging Agreement” shall mean any Hedging Agreement between a Credit Party or a Subsidiary thereof and a Hedging Agreement Provider, as amended, modified, extended, restated, replaced, or supplemented from time to time.

“Secured Parties” shall mean the Administrative Agent, the Lenders and the Hedging Agreement Providers.

“Securities Account Control Agreement” shall mean an agreement, among a Credit Party, a securities intermediary, and the Administrative Agent, which agreement is either substantially in the form of Exhibit 1.1(h) or in a form acceptable to the Administrative Agent and which provides the Administrative Agent with “control” (as such term is used in Articles 8 and 9 of the Uniform Commercial Code) over the securities account(s) described therein, as the same may be as amended, modified, extended, restated, replaced, or supplemented from time to time.

“Securities Act” shall mean the Securities Act of 1933, together with any amendment thereto or replacement thereof and any rules or regulations promulgated thereunder.

“Securities Laws” shall mean the Securities Act, the Exchange Act, Sarbanes-Oxley and the applicable accounting and auditing principles, rules, standards and practices promulgated, approved or incorporated by the SEC or the Public Company Accounting Oversight Board, as each of the foregoing may be amended and in effect on any applicable date hereunder.

“Security Agreement” shall mean the Security Agreement dated as of the Closing Date executed by the Credit Parties in favor of the Administrative Agent, for the benefit of the Secured Parties, as amended, modified, extended, restated, replaced, or supplemented from time to time in accordance with its terms.

“Security Documents” shall mean the Security Agreement, the Pledge Agreement and all other agreements, documents and instruments relating to, arising out of, or in any way connected with any of the foregoing documents granting to the Administrative Agent, Liens or security interests to secure, the Credit Party Obligations whether now or hereafter executed and/or filed, each as may be amended from time to time in accordance with the terms hereof, including, without limitation, UCC financing statements, Deposit Account Control Agreements and Securities Account Control Agreements.

“Single Employer Plan” shall mean any Plan that is not a Multiemployer Plan.

“Subordinated Debt” shall mean any Indebtedness incurred by any Credit Party which by its terms is specifically subordinated in right of payment to the prior payment of the Credit Party Obligations and contains subordination and other terms reasonably acceptable to the Administrative Agent.

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“Subsidiary” shall mean, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, limited liability company, partnership or other entity are at the time owned, directly or indirectly through one or more intermediaries, by such Person. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.

“Swingline Commitment” shall mean the commitment of the Swingline Lender to make Swingline Loans in an aggregate principal amount at any time outstanding up to the Swingline Committed Amount, and the commitment of the Revolving Lenders to purchase participation interests in the Swingline Loans as provided in Section 2.4(b)(ii), as such amounts may be reduced from time to time in accordance with the provisions hereof.

“Swingline Committed Amount” shall mean the amount of the Swingline Lender’s Swingline Commitment as specified in Section 2.4(a).

“Swingline Lender” shall mean Wachovia and any successor swingline lender.

“Swingline Loan” shall have the meaning set forth in Section 2.4(a).

“Swingline Note” shall mean the promissory note of the Borrower in favor of the Swingline Lender evidencing the Swingline Loans provided pursuant to Section 2.4(d), as such promissory note may be amended, modified, extended, restated, replaced, or supplemented from time to time.

“Synthetic Lease” shall mean any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing product where such transaction is considered borrowed money indebtedness for tax purposes but is classified as an Operating Lease in accordance with GAAP.

“Target” shall have the meaning set forth in the definition of “Permitted Acquisition”.

“Taxes” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“Trademark License” shall mean any agreement, whether written or oral, providing for the grant by or to a Person of any right to use any Trademark, including, without limitation, any thereof referred to in Schedule 3.15.

“Trademarks” shall mean (a) all trademarks, trade names, corporate names, company names, business names, fictitious business names, service marks, elements of package or trade dress of goods or services, logos and other source or business identifiers, together with the goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations

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and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, including, without limitation, any thereof referred to in Schedule 3.15 and (b) all renewals thereof including, without limitation, any thereof referred to in Schedule 3.15.

“Tranche” shall mean the collective reference to (a) LIBOR Rate Loans whose Interest Periods begin and end on the same day and (b) Alternate Base Rate Loans made on the same day.

“Transactions” shall mean the closing of this Agreement and the other Credit Documents and the consummation of the other transactions contemplated hereby to occur in connection with such closing (including, without limitation, the initial borrowings under the Credit Documents and the payment of fees and expenses in connection with all of the foregoing).

“Transfer Effective Date” shall have the meaning set forth in each Assignment and Assumption.

“Type” shall mean, as to any Loan, its nature as an Alternate Base Rate Loan or LIBOR Rate Loan, as the case may be.

“UCC” shall mean the Uniform Commercial Code from time to time in effect in any applicable jurisdiction.

“Voting Stock” shall mean, with respect to any Person, Capital Stock issued by such Person the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote may be or have been suspended by the happening of such a contingency.

“Wachovia” shall mean Wachovia Bank, National Association, a national banking association, together with its successors and/or assigns.

“WCM” shall mean Wachovia Capital Markets, LLC, together with its successors and assigns.

“Works” shall mean all works which are subject to copyright protection pursuant to Title 17 of the United States Code.

Section 1.2 Other Definitional Provisions.

The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be

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construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented, amended and restated or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (e) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights and (g) all terms defined in this Agreement shall have the defined meanings when used in any other Credit Document or any certificate or other document made or delivered pursuant hereto.

Section 1.3 Accounting Terms.

Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with GAAP applied on a basis consistent with the most recent audited Consolidated financial statements of the Borrower delivered to the Lenders; provided that, if the Borrower shall notify the Administrative Agent that it wishes to amend any definitions or covenant incorporated in Section 5.9 to eliminate the effect of any change in GAAP on the operation of any such definition or provision (or if the Administrative Agent notifies the Borrower that the Required Lenders wish to amend any such definition or provision for such purpose), then the Borrower’s compliance with such provisions shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such definition or provision is amended in a manner satisfactory to the Borrower and the Required Lenders.

The Borrower shall deliver to the Administrative Agent and each Lender at the same time as the delivery of any annual or quarterly financial statements given in accordance with the provisions of Section 5.1, (a) a description in reasonable detail of any material change in the application of accounting principles employed in the preparation of such financial statements from those applied in the most recently preceding quarterly or annual financial statements as to which no objection shall have been made in accordance with the provisions above and (b) a reasonable estimate of the effect on the financial statements on account of such changes in application.

For purposes of computing the financial covenants set forth in Section 5.9 for any applicable test period, any Permitted Acquisition or permitted sale of a Subsidiary, division, line of business or other business unit (including the incurrence or repayment of Indebtedness in connection with any such Permitted Acquisition or permitted sale) shall be given pro forma effect as if such transaction had taken place as of the first day of such applicable test period.

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Section 1.4 Time References.

Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

Section 1.5 Execution of Documents.

Unless otherwise specified, all Credit Documents and all other certificates executed in connection therewith must be signed by a Responsible Officer.

ARTICLE II

THE LOANS; AMOUNT AND TERMS

Section 2.1 Revolving Loans.

(a) Revolving Commitment. During the Commitment Period, subject to the terms and conditions hereof, each Revolving Lender severally, but not jointly, agrees to make revolving credit loans in Dollars (“Revolving Loans”) to the Borrower from time to time in an aggregate principal amount of up to ONE HUNDRED TWENTY-FIVE MILLION DOLLARS ($125,000,000) (as increased from time to time as provided in Section 2.2 and as such aggregate maximum amount may be reduced from time to time as provided in Section 2.6, the “Revolving Committed Amount”) for the purposes hereinafter set forth; provided, however, that (i) with regard to each Revolving Lender individually, the sum of such Revolving Lender’s Revolving Commitment Percentage of the aggregate principal amount of outstanding Revolving Loans plus such Revolving Lender’s Revolving Commitment Percentage of outstanding Swingline Loans plus such Revolving Lender’s Revolving Commitment Percentage of outstanding LOC Obligations shall not exceed such Revolving Lender’s Revolving Commitment and (ii) with regard to the Revolving Lenders collectively, the sum of the aggregate principal amount of outstanding Revolving Loans plus outstanding LOC Obligations shall not exceed the Revolving Committed Amount then in effect. Revolving Loans may consist of Alternate Base Rate Loans or LIBOR Rate Loans, or a combination thereof, as the Borrower may request, and may be repaid and reborrowed in accordance with the provisions hereof; provided, however, that the Revolving Loans made on the Closing Date or any of the three (3) Business Days following the Closing Date, may only consist of Alternate Base Rate Loans unless the Borrower delivers a funding indemnity letter, substantially in the form of Exhibit 2.1(a), reasonably acceptable to the Administrative Agent not less than three (3) Business Days prior to the Closing Date. LIBOR Rate Loans shall be made by each Revolving Lender at its LIBOR Lending Office and Alternate Base Rate Loans at its Domestic Lending Office.

(b) Revolving Loan Borrowings.

(i) Notice of Borrowing. The Borrower shall request a Revolving Loan borrowing by delivering a written Notice of Borrowing (or telephone notice

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promptly confirmed in writing by delivery of a written Notice of Borrowing, which delivery may be by fax) to the Administrative Agent not later than 11:00 A.M. on the Business Day prior to the date of the requested borrowing in the case of Alternate Base Rate Loans, and on the third Business Day prior to the date of the requested borrowing in the case of LIBOR Rate Loans. Each such Notice of Borrowing shall be irrevocable and shall specify (A) that a Revolving Loan is requested, (B) the date of the requested borrowing (which shall be a Business Day), (C) the aggregate principal amount to be borrowed and (D) whether the borrowing shall be comprised of Alternate Base Rate Loans, LIBOR Rate Loans or a combination thereof, and if LIBOR Rate Loans are requested, the Interest Period(s) therefor. If the Borrower shall fail to specify in any such Notice of Borrowing (1) an applicable Interest Period in the case of a LIBOR Rate Loan, then such notice shall be deemed to be a request for an Interest Period of one month, or (2) the Type of Revolving Loan requested, then such notice shall be deemed to be a request for an Alternate Base Rate Loan hereunder. The Administrative Agent shall give notice to each Revolving Lender promptly upon receipt of each Notice of Borrowing, the contents thereof and each such Revolving Lender’s share thereof.

(ii) Minimum Amounts. Each Revolving Loan that is made as an Alternate Base Rate Loan shall be in a minimum aggregate amount of $500,000 and in integral multiples of $500,000 in excess thereof (or the remaining amount of the Revolving Committed Amount, if less). Each Revolving Loan that is made as a LIBOR Rate Loan shall be in a minimum aggregate amount of $1,000,000 and in integral multiples of $1,000,000 in excess thereof (or the remaining amount of the Revolving Committed Amount, if less).

(iii) Advances. Each Revolving Lender will make its Revolving Commitment Percentage of each Revolving Loan borrowing available to the Administrative Agent for the account of the Borrower at the office of the Administrative Agent specified in Section 9.2, or at such other office as the Administrative Agent may designate in writing, upon reasonable advance notice by 1:00 P.M. on the date specified in the applicable Notice of Borrowing, in Dollars and in funds immediately available to the Administrative Agent. Such borrowing will then be made available to the Borrower by the Administrative Agent by crediting the account of the Borrower on the books of such office (or such other account that the Borrower may designate in writing to the Administrative Agent) with the aggregate of the amounts made available to the Administrative Agent by the Revolving Lenders and in like funds as received by the Administrative Agent.

(c) Repayment. Subject to the terms of this Agreement, Revolving Loans may be borrowed, repaid and reborrowed during the Commitment Period. The principal amount of all Revolving Loans shall be due and payable in full on the Maturity Date, unless accelerated sooner pursuant to Section 7.2. The Borrower shall have the right to repay Revolving Loans in whole or in part from time to time without penalty; provided,

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however; that each partial repayment of a Revolving Loan shall be in a minimum principal amount of (i) in the case of Alternate Base Rate Loans, $500,000 and integral multiples of $500,000 in excess thereof (or the remaining outstanding principal amount) and (ii) in the case of LIBOR Rate Loans, $1,000,000 and integral multiples of $1,000,000 in excess thereof (or the remaining outstanding principal amount).

(d) Interest. Subject to the provisions of Section 2.8, Revolving Loans shall bear interest as follows:

(i) Alternate Base Rate Loans. During such periods as any Revolving Loans shall be comprised of Alternate Base Rate Loans, each such Alternate Base Rate Loan shall bear interest at a per annum rate equal to the sum of the Alternate Base Rate plus the Applicable Percentage; and

(ii) LIBOR Rate Loans. During such periods as Revolving Loans shall be comprised of LIBOR Rate Loans, each such LIBOR Rate Loan shall bear interest at a per annum rate equal to the sum of the LIBOR Rate plus the Applicable Percentage.

(e) Revolving Notes; Covenant to Pay. The Borrower’s obligation to pay each Revolving Lender shall be evidenced by this Agreement and, upon such Revolving Lender’s request, by a duly executed promissory note of the Borrower to such Revolving Lender in substantially the form of Exhibit 2.1(e). The Borrower covenants and agrees to pay the Revolving Loans in accordance with the terms of this Agreement.

Section 2.2 Incremental Revolving Facility.

Subject to the terms and conditions set forth herein and so long as no Default or Event of Default has occurred and is continuing, the Borrower shall have the right, up to three times prior to the Maturity Date, to incur additional Indebtedness under this Credit Agreement in the form of an increase to the Revolving Committed Amount (each an “Incremental Revolving Facility” and collectively the “Incremental Revolving Facilities”). The following terms and conditions shall apply to each Incremental Revolving Facility: (i) the loans made under each Incremental Revolving Facility (each an “Additional Revolving Loan”) shall constitute Credit Party Obligations and will be secured and guaranteed with the other Credit Party Obligations on a pari passu basis, (ii) each Incremental Revolving Facility shall have the same terms (including interest rate and maturity date) as the existing Revolving Loans (provided, however, that the Borrower may at its discretion pay additional fees to the Lenders providing such Incremental Revolving Facilities), (iii) each Incremental Revolving Facility shall be entitled to the same voting rights as the existing Revolving Loans, voting as one class, and shall be entitled to receive a pro rata share of proceeds of prepayments on the same basis as the existing Revolving Loans, (iv) each Incremental Revolving Facility shall be obtained from existing Lenders or from other banks, financial institutions or investment funds, in each case in accordance with the terms set forth below, (v) the proceeds of the Additional Revolving Loans will be used for the purposes set forth in Section 3.11, (vi) the Borrower shall execute a Revolving Note in favor of any new Lender or any existing Lender requesting a Revolving Note whose Revolving Commitment is

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increased, (vii) the conditions to Extensions of Credit in Section 4.2 shall have been satisfied, (viii) each such Incremental Revolving Facility shall be in a minimum amount of $5,000,000 (and $1,000,000 increments in excess thereof), (ix) the aggregate amount of all Incremental Revolving Facilities shall not exceed $25,000,000 at any time and (x) the Administrative Agent shall have received from the Borrower (A) resolutions, legal opinions and other corporate authority documents with respect to each Incremental Revolving Facility requested by the Administrative Agent, substantially the same in form and substance as those delivered on the Closing Date pursuant to Section 4.1 and (B) updated financial projections and an officer’s certificate, in each case in form and substance reasonably satisfactory to the Administrative Agent, demonstrating that, after giving effect to such Incremental Revolving Facility on a Pro Forma Basis, the Credit Parties will be in compliance with the financial covenants set forth in Section 5.9 and no Default or Event of Default shall exist. The Borrower may invite other banks, financial institutions and investment funds reasonably acceptable to the Administrative Agent to join this Credit Agreement as Lenders hereunder, provided that such other banks, financial institutions and investment funds shall enter into such joinder agreements to give effect thereto as the Administrative Agent may reasonably request. The Administrative Agent is authorized to enter into, on behalf of the Lenders, any amendment to this Credit Agreement or any other Credit Document as may be necessary to solely incorporate the terms of each Incremental Revolving Facility therein.

In connection with the closing of any Incremental Revolving Facility, the outstanding Revolving Loans and Participation Interests shall be reallocated by causing such fundings and repayments (which shall not be subject to any processing and/or recordation fees) among the Revolving Lenders (which the Borrowers shall be responsible for any costs arising under Section 2.15 resulting from such reallocation and repayments; provided, that the Administrative Agent will use its reasonable efforts to minimize any such costs) of Revolving Loans as necessary such that, after giving effect to such Incremental Revolving Facility, each Revolving Lender will hold Revolving Loans and Participation Interests based on its Revolving Commitment Percentage (after giving effect to such Incremental Revolving Facility).

Section 2.3 Letter of Credit Subfacility.

(a) Issuance. Subject to the terms and conditions hereof and of the LOC Documents, if any, and any other terms and conditions which the Issuing Lender may reasonably require which are not inconsistent with the terms of this Agreement, during the Commitment Period the Issuing Lender shall issue, and the Revolving Lenders shall participate in, standby Letters of Credit for the account of the Borrower from time to time upon request in a form reasonably acceptable to the Issuing Lender; provided, however, that (i) the aggregate amount of outstanding LOC Obligations shall not at any time exceed TEN MILLION DOLLARS ($10,000,000) (the “LOC Committed Amount”), (ii) the sum of the aggregate principal amount of outstanding Revolving Loans plus outstanding Swingline Loans plus outstanding LOC Obligations shall not at any time exceed the Revolving Committed Amount then in effect, (iii) all Letters of Credit shall be denominated in Dollars and (iv) Letters of Credit shall be issued for any lawful corporate purposes and shall be issued as standby letters of credit, including in connection with workers’ compensation and other insurance programs. Except as otherwise expressly

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agreed upon by all the Revolving Lenders, no Letter of Credit shall have an original expiry date more than twelve (12) months from the date of issuance; provided, however, so long as no Default or Event of Default has occurred and is continuing and subject to the other terms and conditions to the issuance of Letters of Credit hereunder, the expiry dates of Letters of Credit may be extended annually or periodically from time to time on the request of the Borrower or by operation of the terms of the applicable Letter of Credit to a date not more than twelve (12) months from the date of extension; provided, further, that no Letter of Credit, as originally issued or as extended, shall have an expiry date extending beyond the Maturity Date. Each Letter of Credit shall comply with the related LOC Documents. The issuance and expiry date of each Letter of Credit shall be a Business Day. Each Letter of Credit issued hereunder shall be in a minimum original face amount of $100,000 or such lesser amount as approved by the Issuing Lender. The Borrower’s Reimbursement Obligations in respect of each Existing Letter of Credit, and each Revolving Lender’s participation obligations in connection therewith, shall be governed by the terms of this Credit Agreement. Wachovia shall be the Issuing Lender on all Letters of Credit issued after the Closing Date. The Existing Letters of Credit shall, as of the Closing Date, be deemed to have been issued as Letters of Credit hereunder and subject to and governed by the terms of this Agreement.

(b) Notice and Reports. The request for the issuance of a Letter of Credit shall be submitted to the Issuing Lender at least five (5) Business Days prior to the requested date of issuance. The Issuing Lender will promptly upon request provide to the Administrative Agent for dissemination to the Revolving Lenders a detailed report specifying the Letters of Credit which are then issued and outstanding and any activity with respect thereto which may have occurred since the date of any prior report, and including therein, among other things, the account party, the beneficiary, the face amount, expiry date as well as any payments or expirations which may have occurred. The Issuing Lender will further provide to the Administrative Agent promptly upon request copies of the Letters of Credit. The Issuing Lender will provide to the Administrative Agent promptly upon request a summary report of the nature and extent of LOC Obligations then outstanding.

(c) Participations. Each Revolving Lender, (i) on the Closing Date with respect to each Existing Letter of Credit and (ii) upon issuance of a Letter of Credit, shall be deemed to have purchased without recourse a risk participation from the Issuing Lender in such Letter of Credit and the obligations arising thereunder and any collateral relating thereto, in each case in an amount equal to its Revolving Commitment Percentage of the obligations under such Letter of Credit and shall absolutely, unconditionally and irrevocably assume, as primary obligor and not as surety, and be obligated to pay to the Issuing Lender therefor and discharge when due, its Revolving Commitment Percentage of the obligations arising under such Letter of Credit; provided that any Person that becomes a Revolving Lender after the Closing Date shall be deemed to have purchased a Participation Interest in all outstanding Letters of Credit on the date it becomes a Lender hereunder and any Letter of Credit issued on or after such date, in each case in accordance with the foregoing terms. Without limiting the scope and nature of each Revolving Lender’s participation in any Letter of Credit, to the extent that the

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Issuing Lender has not been reimbursed as required hereunder or under any LOC Document, each such Revolving Lender shall pay to the Issuing Lender its Revolving Commitment Percentage of such unreimbursed drawing in same day funds pursuant to and in accordance with the provisions of subsection (d) hereof. The obligation of each Revolving Lender to so reimburse the Issuing Lender shall be absolute and unconditional and shall not be affected by the occurrence of a Default, an Event of Default or any other occurrence or event. Any such reimbursement shall not relieve or otherwise impair the obligation of the Borrower to reimburse the Issuing Lender under any Letter of Credit, together with interest as hereinafter provided.

(d) Reimbursement. In the event of any drawing under any Letter of Credit, the Issuing Lender will promptly notify the Borrower and the Administrative Agent. The Borrower shall reimburse the Issuing Lender on the day of drawing under any Letter of Credit if notified prior to 3:00 P.M. on a Business Day or, if after 3:00 P.M., on the following Business Day (either with the proceeds of a Revolving Loan obtained hereunder or otherwise) in same day funds as provided herein or in the LOC Documents. If the Borrower shall fail to reimburse the Issuing Lender as provided herein, the unreimbursed amount of such drawing shall bear interest at a per annum rate equal to the Default Rate until reimbursed. Unless the Borrower shall immediately notify the Issuing Lender and the Administrative Agent of its intent to otherwise reimburse the Issuing Lender, the Borrower shall be deemed to have requested a Mandatory LOC Borrowing in the amount of the drawing as provided in subsection (e) hereof, the proceeds of which will be used to satisfy the Reimbursement Obligations. The Borrower’s Reimbursement Obligations hereunder shall be absolute and unconditional under all circumstances irrespective of any rights of set-off, counterclaim or defense to payment the Borrower may claim or have against the Issuing Lender, the Administrative Agent, the Lenders, the beneficiary of the Letter of Credit drawn upon or any other Person, including without limitation any defense based on any failure of the Borrower to receive consideration or the legality, validity, regularity or unenforceability of the Letter of Credit; provided that the foregoing shall not exonerate any Issuing Lender, the Administrative Agent or any other Lender from any liability to the Borrower or any other Credit Party or Subsidiary thereof resulting from such Issuing Lender’s, the Administrative Agent’s or such Lender’s gross negligence or willful misconduct. The Issuing Lender will promptly notify the other Revolving Lenders of the amount of any unreimbursed drawing and each Revolving Lender shall promptly pay to the Administrative Agent for the account of the Issuing Lender, in Dollars and in immediately available funds, the amount of such Revolving Lender’s Revolving Commitment Percentage of such unreimbursed drawing. Such payment shall be made on the Business Day such notice is received by such Revolving Lender from the Issuing Lender if such notice is received at or before 2:00 P.M., otherwise such payment shall be made at or before 12:00 Noon on the Business Day next succeeding the Business Day such notice is received. If such Revolving Lender does not pay such amount to the Issuing Lender in full upon such request, such Revolving Lender shall, on demand, pay to the Administrative Agent for the account of the Issuing Lender interest on the unpaid amount during the period from the date of such drawing until such Revolving Lender pays such amount to the Issuing Lender in full at a rate per annum equal to, if paid within two (2) Business Days of the date of drawing, the Federal

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Funds Effective Rate and thereafter at a rate equal to the Alternate Base Rate. Each Revolving Lender’s obligation to make such payment to the Issuing Lender, and the right of the Issuing Lender to receive the same, shall be absolute and unconditional, shall not be affected by any circumstance whatsoever and without regard to the termination of this Agreement or the Commitments hereunder, the existence of a Default or Event of Default or the acceleration of the Credit Party Obligations hereunder and shall be made without any offset, abatement, withholding or reduction whatsoever.

(e) Repayment with Revolving Loans. On any day on which the Borrower shall have requested, or been deemed to have requested, a Revolving Loan to reimburse a drawing under a Letter of Credit, the Administrative Agent shall give notice to the Revolving Lenders that a Revolving Loan has been requested or deemed requested in connection with a drawing under a Letter of Credit, in which case a Revolving Loan borrowing comprised entirely of Alternate Base Rate Loans (each such borrowing, a “Mandatory LOC Borrowing”) shall be made (without giving effect to any termination of the Commitments pursuant to Section 7.2) pro rata based on each Revolving Lender’s respective Revolving Commitment Percentage (determined before giving effect to any termination of the Commitments pursuant to Section 7.2) and the proceeds thereof shall be paid directly to the Issuing Lender for application to the respective LOC Obligations. Each Revolving Lender hereby irrevocably agrees to make such Revolving Loans on the day such notice is received by the Revolving Lenders from the Administrative Agent if such notice is received at or before 2:00 P.M., otherwise such payment shall be made at or before 12:00 Noon on the Business Day next succeeding the day such notice is received, in each case notwithstanding (i) the amount of Mandatory LOC Borrowing may not comply with the minimum amount for borrowings of Revolving Loans otherwise required hereunder, (ii) whether any conditions specified in Section 4.2 are then satisfied, (iii) whether a Default or an Event of Default then exists, (iv) failure for any such request or deemed request for Revolving Loan to be made by the time otherwise required in Section 2.1(b), (v) the date of such Mandatory LOC Borrowing, or (vi) any reduction in the Revolving Committed Amount after any such Letter of Credit may have been drawn upon. In the event that any Mandatory LOC Borrowing cannot for any reason be made on the date otherwise required above (including, without limitation, as a result of the occurrence of a Bankruptcy Event), then each such Revolving Lender hereby agrees that it shall forthwith fund as of the date the Mandatory LOC Borrowing would otherwise have occurred, but adjusted for any payments received from the Borrower on or after such date and prior to such purchase) its Participation Interests in the outstanding LOC Obligations; provided, further, that in the event any Revolving Lender shall fail to fund its Participation Interest on the day the Mandatory LOC Borrowing would otherwise have occurred, then the amount of such Revolving Lender’s unfunded Participation Interest therein shall bear interest payable by such Revolving Lender to the Issuing Lender upon demand, at the rate equal to, if paid within two (2) Business Days of such date, the Federal Funds Effective Rate, and thereafter at a rate equal to the Alternate Base Rate.

(f) Modification, Extension. The issuance of any supplement, modification, amendment, renewal, or extension to any Letter of Credit shall, for purposes hereof, be treated in all respects the same as the issuance of a new Letter of Credit hereunder.

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(g) ISP98. Unless otherwise expressly agreed by the Issuing Lender and the Borrower, when a Letter of Credit is issued, the rules of the “International Standby Practices 1998,” published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance) shall apply to each standby Letter of Credit.

(h) Conflict with LOC Documents. In the event of any conflict between this Agreement and any LOC Document (including any letter of credit application and any LOC Documents relating to the Existing Letters of Credit), this Agreement shall control.

(i) Designation of Subsidiaries as Account Parties. Notwithstanding anything to the contrary set forth in this Agreement, including without limitation Section 2.3(a), a Letter of Credit issued hereunder may contain a statement to the effect that such Letter of Credit is issued for the account of a Subsidiary of the Borrower; provided that, notwithstanding such statement, the Borrower shall be the actual account party for all purposes of this Agreement for such Letter of Credit and such statement shall not affect the Borrower’s Reimbursement Obligations hereunder with respect to such Letter of Credit.

Section 2.4 Swingline Loan Subfacility.

(a) Swingline Commitment. During the Commitment Period, subject to the terms and conditions hereof, the Swingline Lender, in its individual capacity, agrees to make certain revolving credit loans to the Borrower (each a “Swingline Loan” and, collectively, the “Swingline Loans”) for the purposes hereinafter set forth; provided, however, (i) the aggregate principal amount of Swingline Loans outstanding at any time shall not exceed FIVE MILLION DOLLARS ($5,000,000) (the “Swingline Committed Amount”), and (ii) the sum of the aggregate principal amount of outstanding Revolving Loans plus outstanding Swingline Loans plus outstanding LOC Obligations shall not exceed the Revolving Committed Amount then in effect. Swingline Loans hereunder may be repaid and reborrowed in accordance with the provisions hereof.

(b) Swingline Loan Borrowings.

(i) Notice of Borrowing and Disbursement. Upon receiving a Notice of Borrowing from the Borrower not later than 12:00 P.M. on any Business Day requesting that a Swingline Loan be made, the Swingline Lender will make Swingline Loans available to the Borrower on the same Business Day such request is received by the Administrative Agent. Swingline Loan borrowings hereunder shall be made in minimum amounts of $100,000 (or the remaining available amount of the Swingline Committed Amount if less) and in integral amounts of $100,000 in excess thereof.

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(ii) Repayment of Swingline Loans. Each Swingline Loan borrowing shall be due and payable on the earlier of (A) the Maturity Date and (B) fifteen (15) days following such borrowing. The Swingline Lender may, at any time, in its sole discretion, by written notice to the Borrower and the Administrative Agent, demand repayment of its Swingline Loans by way of a Revolving Loan borrowing, in which case the Borrower shall be deemed to have requested a Revolving Loan borrowing comprised entirely of Alternate Base Rate Loans in the amount of such Swingline Loans; provided, however, that, in the following circumstances, any such demand shall also be deemed to have been given one Business Day prior to each of (A) the Maturity Date, (B) the occurrence of any Bankruptcy Event, (C) upon acceleration of the Credit Party Obligations hereunder, whether on account of a Bankruptcy Event or any other Event of Default, and (D) the exercise of remedies in accordance with the provisions of Section 7.2 hereof (each such Revolving Loan borrowing made on account of any such deemed request therefor as provided herein being hereinafter referred to as “Mandatory Swingline Borrowing”). Each Revolving Lender hereby irrevocably agrees to make such Revolving Loans promptly upon any such request or deemed request on account of each Mandatory Swingline Borrowing in the amount and in the manner specified in the preceding sentence on the date such notice is received by the Revolving Lenders from the Administrative Agent if such notice is received at or before 2:00 P.M., otherwise such payment shall be made at or before 12:00 P.M. on the Business Day next succeeding the date such notice is received notwithstanding (1) the amount of Mandatory Swingline Borrowing may not comply with the minimum amount for borrowings of Revolving Loans otherwise required hereunder, (2) whether any conditions specified in Section 4.2 are then satisfied, (3) whether a Default or an Event of Default then exists, (4) failure of any such request or deemed request for Revolving Loans to be made by the time otherwise required in Section 2.1(b)(i), (5) the date of such Mandatory Swingline Borrowing, or (6) any reduction in the Revolving Committed Amount or termination of the Revolving Commitments immediately prior to such Mandatory Swingline Borrowing or contemporaneously therewith. In the event that any Mandatory Swingline Borrowing cannot for any reason be made on the date otherwise required above (including, without limitation, as a result of the commencement of a proceeding under the Bankruptcy Code), then each Revolving Lender hereby agrees that it shall forthwith purchase (as of the date the Mandatory Swingline Borrowing would otherwise have occurred, but adjusted for any payments received from the Borrower on or after such date and prior to such purchase) from the Swingline Lender such Participation Interest in the outstanding Swingline Loans as shall be necessary to cause each such Revolving Lender to share in such Swingline Loans ratably based upon its respective Revolving Commitment Percentage (determined before giving effect to any termination of the Commitments pursuant to Section 7.2); provided that (x) all interest payable on the Swingline Loans shall be for the account of the Swingline Lender until the date as of which the respective Participation Interest is purchased, and (y) at the time any purchase of a Participation Interest pursuant to this sentence is actually made, the purchasing Revolving Lender shall be required to pay to the Swingline Lender interest on the principal amount of such Participation Interest purchased for each day from and including the day upon

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which the Mandatory Swingline Borrowing would otherwise have occurred to but excluding the date of payment for such Participation Interest, at the rate equal to, if paid within two (2) Business Days of the date of the Mandatory Swingline Borrowing, the Federal Funds Effective Rate, and thereafter at a rate equal to the Alternate Base Rate. The Borrower shall have the right to repay the Swingline Loan in whole or in part from time to time; provided, however; that each partial repayment of a Swingline Loan shall be in a minimum principal amount of $100,000 and integral multiples of $100,000 in excess thereof (or the remaining outstanding principal amount).

(c) Interest on Swingline Loans. Subject to the provisions of Section 2.8, Swingline Loans shall bear interest at a per annum rate equal to the Alternate Base Rate plus the Applicable Percentage for Revolving Loans that are Alternate Base Rate Loans. Interest on Swingline Loans shall be payable in arrears on each Interest Payment Date.

(d) Swingline Note; Covenant to Pay. The Swingline Loans shall be evidenced by this Agreement and, upon request of the Swingline Lender, by a duly executed promissory note of the Borrower in favor of the Swingline Lender in the original amount of the Swingline Committed Amount and substantially in the form of Exhibit 2.4(d). The Borrower covenants and agrees to pay the Swingline Loans in accordance with the terms of this Agreement.

Section 2.5 Fees.

(a) Commitment Fee. In consideration of the Revolving Commitments, the Borrower agrees to pay to the Administrative Agent, for the ratable benefit of the Revolving Lenders, a commitment fee (the “Commitment Fee”) in an amount equal to the Applicable Percentage per annum on the average daily unused amount of the Revolving Committed Amount; provided, that no Commitment Fee shall accrue or be payable on any of the Revolving Commitments of a Defaulting Lender so long as such Lender shall be a Defaulting Lender. For purposes of computation of the Commitment Fee, LOC Obligations shall be considered usage of the Revolving Committed Amount but Swingline Loans shall not be considered usage of the Revolving Committed Amount. The Commitment Fee shall be payable quarterly in arrears on the last Business Day of each calendar quarter.

(b) Letter of Credit Fees. In consideration of the LOC Commitments, the Borrower agrees to pay to the Administrative Agent, for the ratable benefit of the Revolving Lenders, a fee (the “Letter of Credit Fee”) equal to the Applicable Percentage for Revolving Loans that are LIBOR Rate Loans per annum on the average daily maximum amount available to be drawn under each Letter of Credit from the date of issuance to the date of expiration. The Letter of Credit Fee shall each be payable quarterly in arrears on the last Business Day of each calendar quarter.

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(c) Issuing Lender Fees. In addition to the Letter of Credit Fees payable pursuant to subsection (b) hereof, the Borrower shall pay to the Issuing Lender for its own account without sharing by the other Lenders the reasonable and customary charges from time to time of the Issuing Lender with respect to the amendment, transfer, administration, cancellation and conversion of, and drawings under, such Letters of Credit (collectively, the “Issuing Lender Fees”). The Issuing Lender may charge, and retain for its own account without sharing by the other Lenders, an additional facing fee (the “Letter of Credit Facing Fee”) of 0.25% per annum on the average daily maximum amount available to be drawn under each such Letter of Credit issued by it. The Issuing Lender Fees and the Letter of Credit Facing Fee shall be payable quarterly in arrears on the last Business Day of each calendar quarter.

(d) Administrative Fee. The Borrower agrees to pay to the Administrative Agent the annual administrative fee as described in the Engagement Letter.

Section 2.6 Commitment Termination and Reductions.

(a) Voluntary Termination and Reductions. The Borrower shall have the right to terminate or permanently reduce the unused portion of the Revolving Committed Amount at any time or from time to time upon not less than five (5) Business Days’ prior written notice to the Administrative Agent (which shall notify the Lenders thereof as soon as practicable) of each such termination or reduction, which notice shall specify the effective date thereof and the amount of any such reduction which shall be in a minimum amount of $500,000 or a whole multiple of $500,000 in excess thereof or the entire remaining amount of the Revolving Committed Amount and shall be irrevocable (other than as set forth in the last sentence of this paragraph (a) below) and effective upon receipt by the Administrative Agent; provided that no such reduction or termination shall be permitted if after giving effect thereto, and to any prepayments of the Revolving Loans made on the effective date thereof, the sum of the aggregate principal amount of outstanding Revolving Loans plus outstanding Swingline Loans plus outstanding LOC Obligations would exceed the Revolving Committed Amount then in effect. Any notice of termination given by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities or capital raising, in which case such notice may be revoked by the Borrower (by notice to Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.

(b) Swingline Committed Amount and LOC Committed Amount. If the Revolving Committed Amount is reduced below the then current Swingline Committed Amount and/or LOC Committed Amount, the Swingline Committed Amount and/or the LOC Committed Amount, as applicable, shall automatically be reduced by an amount such that the Swingline Committed Amount and/or the LOC Committed Amount, as applicable, equals the Revolving Committed Amount.

(c) Maturity Date. The Revolving Commitments, the Swingline Commitment and the LOC Commitment shall automatically terminate on the Maturity Date.

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Section 2.7 Prepayments.

(a) Optional Prepayments. The Borrower shall have the right to prepay Loans in whole or in part from time to time without penalty; provided, that each partial prepayment (i) of Alternate Base Rate Loans shall be in a minimum principal amount of $500,000 and integral multiples of $100,000 in excess thereof or the remaining outstanding principal amount and (ii) LIBOR Rate Loans shall be in a minimum principal amount of $1,000,000 and integral multiples of $100,000 in excess thereof (or the remaining outstanding principal amount). The Borrower shall give three Business Days’ irrevocable notice of prepayment in case of LIBOR Rate Loans and same-day irrevocable notice on any Business Day in the case of the Alternate Base Rate Loans to the Administrative Agent (which shall notify the Lenders thereof as soon as practicable). Within the foregoing parameters, prepayments under this Section shall be applied first to Alternate Base Rate Loans and then to LIBOR Rate Loans in direct order of Interest Period maturities. All prepayments under this Section shall be subject to Section 2.15, but otherwise without premium or penalty. Interest on the principal amount prepaid shall be payable on the next occurring Interest Payment Date that would have occurred had such loan not been prepaid or, at the request of the Administrative Agent, interest on the principal amount prepaid shall be payable on any date that a prepayment is made hereunder through the date of prepayment. Any notice of prepayment given by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities or capital raising, in which case such notice may be revoked by the Borrower (by notice to Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.

(b) Mandatory Prepayments.

(i) Revolving Committed Amount. If at any time after the Closing Date, the sum of the aggregate principal amount of outstanding Revolving Loans plus outstanding LOC Obligations plus outstanding Swingline Loans shall exceed the Revolving Committed Amount, the Borrower shall immediately prepay the Revolving Loans and Swingline Loans and (after all Revolving Loans and Swingline Loans have been repaid) cash collateralize the LOC Obligations in an amount sufficient to eliminate such excess (such prepayment to be applied as set forth in clause (vi) below.

(ii) Asset Dispositions. Promptly following any Asset Disposition (or related series of Asset Dispositions), the Borrower shall prepay the Loans and/or cash collateralize the LOC Obligations in an aggregate amount equal to one hundred percent (100%) of the Net Cash Proceeds derived from such Asset Disposition (or related series of Asset Dispositions) (such prepayment to be applied as set forth in clause (iii) below); provided, however, that, so long as no Default or Event of Default has occurred and is continuing, such Net Cash Proceeds shall not be required to be so applied (A) until the aggregate amount of Asset Dispositions during any Fiscal Year not previously applied to prepayments is equal to or greater than $35,000,000 and (B) to the extent the Borrower delivers to the Administrative Agent a certificate stating that the Credit Parties intend to

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use such Net Cash Proceeds to acquire assets useful to the business of the Credit Parties within 365 days of the receipt of such Net Cash Proceeds, it being expressly agreed that Net Cash Proceeds not so reinvested within such 365 day period shall be applied to prepay the Loans and/or cash collateralize the LOC Obligations immediately thereafter (such prepayment to be applied as set forth in clause (iii) below).

(iii) Application of Mandatory Prepayments. All amounts required to be paid pursuant to this Section shall be applied as follows:

(A) with respect to all amounts prepaid pursuant to Section 2.7(b)(i), (1) first to the outstanding Swingline Loans, (2) second to the outstanding Revolving Loans and (3) third to cash collateralize the LOC Obligations; and

(B) with respect to all amounts prepaid pursuant to Section 2.7(b)(ii), (1) first to the Swingline Loans (with a corresponding reduction of the Revolving Committed Amount) and (2) second to the Revolving Loans (with a corresponding reduction of the Revolving Committed Amount) and (3) third to a cash collateral account in respect of LOC Obligations (with a corresponding reduction of the Revolving Committed Amount). Within the parameters of the applications set forth above, prepayments shall be applied first to Alternate Base Rate Loans and then to LIBOR Rate Loans in direct order of Interest Period maturities. All prepayments under this Section shall be subject to Section 2.15 and be accompanied by interest on the principal amount prepaid through the date of prepayment, but otherwise without premium or penalty.

(c) Hedging Obligations Unaffected. Any repayment or prepayment made pursuant to this Section shall not affect the Borrower’s obligation to continue to make payments under any Secured Hedging Agreement, which shall remain in full force and effect notwithstanding such repayment or prepayment, subject to the terms of such Secured Hedging Agreement.

Section 2.8 Default Rate and Payment Dates.

(a) If all or a portion of the principal amount of any Loan which is a LIBOR Rate Loan shall not be paid when due or continued as a LIBOR Rate Loan in accordance with the provisions of Section 2.9 (whether at the stated maturity, by acceleration or otherwise), such overdue principal amount of such Loan shall be converted to an Alternate Base Rate Loan at the end of the Interest Period applicable thereto.

(b) Upon the occurrence and during the continuance of a Bankruptcy Event of Default or a Payment Event of Default, the principal of and, to the extent permitted by law, interest on the Loans and any other amounts owing hereunder or under the other

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Credit Documents shall bear interest at a rate per annum which is equal to the Default Rate. Upon the occurrence, and during the continuance, of any other Event of Default hereunder, at the option of the Required Lenders, the principal of and, to the extent permitted by law, interest on the Loans and any other amounts owing hereunder or under the other Credit Documents shall bear interest at the Default Rate (after as well as before judgment).

(c) Interest on each Loan shall be payable in arrears on each Interest Payment Date; provided that interest accruing pursuant to paragraph (a) of this Section shall be payable from time to time on demand.

Section 2.9 Conversion Options.

(a) The Borrower may, in the case of Revolving Loans, elect from time to time to convert Alternate Base Rate Loans to LIBOR Rate Loans or to continue LIBOR Rate Loans, by delivering a Notice of Conversion/Extension to the Administrative Agent at least three (3) Business Days prior to the proposed date of conversion or continuation. In addition, the Borrower may elect from time to time to convert all or any portion of a LIBOR Rate Loan to an Alternate Base Rate Loan by giving the Administrative Agent irrevocable written notice thereof by 11:00 A.M. one (1) Business Day prior to the proposed date of conversion. If the date upon which an Alternate Base Rate Loan is to be converted to a LIBOR Rate Loan is not a Business Day, then such conversion shall be made on the next succeeding Business Day and during the period from such last day of an Interest Period to such succeeding Business Day such Loan shall bear interest as if it were an Alternate Base Rate Loan. LIBOR Rate Loans may only be converted to Alternate Base Rate Loans on the last day of the applicable Interest Period. If the date upon which a LIBOR Rate Loan is to be converted to an Alternate Base Rate Loan is not a Business Day, then such conversion shall be made on the next succeeding Business Day and during the period from such last day of an Interest Period to such succeeding Business Day such Loan shall bear interest as if it were an Alternate Base Rate Loan. All or any part of outstanding Alternate Base Rate Loans may be converted as provided herein; provided that (i) no Loan may be converted into a LIBOR Rate Loan when any Default or Event of Default has occurred and is continuing and (ii) partial conversions shall be in an aggregate principal amount of $1,000,000 or a whole multiple of $100,000 in excess thereof. All or any part of outstanding LIBOR Rate Loans may be converted as provided herein; provided that partial conversions shall be in an aggregate principal amount of $1,000,000 or a whole multiple of $100,000 in excess thereof.

(b) Any LIBOR Rate Loans may be continued as such upon the expiration of an Interest Period with respect thereto by compliance by the Borrower with the notice provisions contained in Section 2.9(a); provided, that no LIBOR Rate Loan may be continued as such when any Default or Event of Default has occurred and is continuing, in which case such Loan shall be automatically converted to an Alternate Base Rate Loan at the end of the applicable Interest Period with respect thereto. If the Borrower shall fail to give timely notice of an election to continue a LIBOR Rate Loan, or the continuation of LIBOR Rate Loans is not permitted hereunder, such LIBOR Rate Loans shall be automatically converted to Alternate Base Rate Loans at the end of the applicable Interest Period with respect thereto.

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Section 2.10 Computation of Interest and Fees; Usury.

(a) Interest payable hereunder with respect to any Alternate Base Rate Loan based on the Prime Rate shall be calculated on the basis of a year of 365 days (or 366 days, as applicable) for the actual days elapsed. All other fees, interest and all other amounts payable hereunder shall be calculated on the basis of a 360-day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the Borrower and the Lenders of each determination of a LIBOR Rate on the Business Day of the determination thereof. Any change in the interest rate on a Loan resulting from a change in the Alternate Base Rate shall become effective as of the opening of business on the day on which such change in the Alternate Base Rate shall become effective. The Administrative Agent shall as soon as practicable notify the Borrower and the Lenders of the effective date and the amount of each such change.

(b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the computations used by the Administrative Agent in determining any interest rate.

(c) It is the intent of the Lenders and the Credit Parties to conform to and contract in strict compliance with applicable usury law from time to time in effect. All agreements between the Lenders and the Credit Parties are hereby limited by the provisions of this subsection which shall override and control all such agreements, whether now existing or hereafter arising and whether written or oral. In no way, nor in any event or contingency (including but not limited to prepayment or acceleration of the maturity of any Credit Party Obligation), shall the interest taken, reserved, contracted for, charged, or received under this Agreement, under the Notes or otherwise, exceed the maximum nonusurious amount permissible under applicable law. If, from any possible construction of any of the Credit Documents or any other document, interest would otherwise be payable in excess of the maximum nonusurious amount, any such construction shall be subject to the provisions of this paragraph and such interest shall be automatically reduced to the maximum nonusurious amount permitted under applicable law, without the necessity of execution of any amendment or new document. If any Lender shall ever receive anything of value which is characterized as interest on the Loans under applicable law and which would, apart from this provision, be in excess of the maximum nonusurious amount, an amount equal to the amount which would have been excessive interest shall, without penalty, be applied to the reduction of the principal amount owing on the Loans and not to the payment of interest, or refunded to the Borrower or the other payor thereof if and to the extent such amount which would have been excessive exceeds such unpaid principal amount of the Loans. The right to demand payment of the Loans or any other Indebtedness evidenced by any of the Credit Documents does not include the right to receive any interest which has not otherwise

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accrued on the date of such demand, and the Lenders do not intend to charge or receive any unearned interest in the event of such demand. All interest paid or agreed to be paid to the Lenders with respect to the Loans shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term (including any renewal or extension) of the Loans so that the amount of interest on account of such Indebtedness does not exceed the maximum nonusurious amount permitted by applicable law.

Section 2.11 Pro Rata Treatment and Payments.

(a) Allocation of Payments Prior to Exercise of Remedies. Each borrowing of Revolving Loans and any reduction of the Revolving Commitments shall be made pro rata according to the respective Revolving Commitment Percentages of the Revolving Lenders. Unless otherwise required by the terms of this Agreement, each payment under this Agreement or any Note shall be applied, first, to any fees then due and owing by the Borrower pursuant to Section 2.5, second, to interest then due and owing hereunder and under the Notes of the Borrower and, third, to principal then due and owing hereunder and under the Notes of the Borrower. Each payment on account of any fees pursuant to Section 2.5 shall be made pro rata in accordance with the respective amounts due and owing (except as to the Letter of Credit Facing Fees and the Issuing Lender Fees). Each payment (other than prepayments) by the Borrower on account of principal of and interest on the Revolving Loans shall be applied to such Loans, as applicable, on a pro rata basis in accordance with the terms of Section 2.7(a) hereof. Each optional prepayment on account of principal of the Loans shall be applied in accordance with Section 2.7(a). Each mandatory prepayment on account of principal of the Loans shall be applied in accordance with Section 2.7(b). All payments (including prepayments) to be made by the Borrower on account of principal, interest and fees shall be made without defense, set-off or counterclaim (except as provided in Section 2.16(b)) and shall be made to the Administrative Agent for the account of the Lenders at the Administrative Agent’s office specified on Section 9.2 in Dollars and in immediately available funds not later than 1:00 P.M. on the date when due. The Administrative Agent shall distribute such payments to the Lenders entitled thereto promptly upon receipt in like funds as received. If any payment hereunder (other than payments on the LIBOR Rate Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. If any payment on a LIBOR Rate Loan becomes due and payable on a day other than a Business Day, such payment date shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day.

(b) Allocation of Payments After Exercise of Remedies. Notwithstanding any other provisions of this Agreement to the contrary, after the exercise of remedies (other than the invocation of default interest pursuant to Section 2.8) by the Administrative Agent or the Lenders pursuant to Section 7.2 (or after the Commitments shall

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automatically terminate and the Loans (with accrued interest thereon) and all other amounts under the Credit Documents (including without limitation the maximum amount of all outstanding contingent liabilities under Letters of Credit) shall automatically become due and payable in accordance with the terms of such Section), all amounts collected or received by the Administrative Agent or any Lender on account of the Credit Party Obligations or any other amounts outstanding under any of the Credit Documents or in respect of the Collateral shall be paid over or delivered as follows (irrespective of whether the following costs, expenses, fees, interest, premiums, scheduled periodic payments or Credit Party Obligations are allowed, permitted or recognized as a claim in any proceeding resulting from the occurrence of a Bankruptcy Event):

FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including without limitation reasonable attorneys’ fees) of the Administrative Agent in connection with enforcing the rights of the Lenders under the Credit Documents and any protective advances made by the Administrative Agent with respect to the Collateral under or pursuant to the terms of the Security Documents;

SECOND, to the payment of any fees owed to the Administrative Agent and the Issuing Lender

THIRD, to the payment of all reasonable out-of-pocket costs and expenses (including without limitation, reasonable attorneys’ fees) of each of the Lenders in connection with enforcing its rights under the Credit Documents or otherwise with respect to the Credit Party Obligations owing to such Lender;

FOURTH, to the payment of all of the Credit Party Obligations consisting of accrued fees and interest, and including, with respect to any Secured Hedging Agreement, any fees, premiums and scheduled periodic payments due under such Secured Hedging Agreement and any interest accrued thereon;

FIFTH, to the payment of the outstanding principal amount of the Credit Party Obligations and the payment or cash collateralization of the outstanding LOC Obligations, and including with respect to any Secured Hedging Agreement, any breakage, termination or other payments due under such Secured Hedging Agreement and any interest accrued thereon;

SIXTH, to all other Credit Party Obligations and other obligations which shall have become due and payable under the Credit Documents or otherwise and not repaid pursuant to clauses “FIRST” through “FIFTH” above; and

SEVENTH, to the payment of the surplus, if any, to whoever may be lawfully entitled to receive such surplus.

In carrying out the foregoing, (a) amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding

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category; (b) each of the Lenders and any Hedging Agreement Provider shall receive an amount equal to its pro rata share (based on the proportion that the then outstanding Loans and LOC Obligations held by such Lender or the outstanding obligations payable to such Hedging Agreement Provider bears to the aggregate then outstanding Loans and LOC Obligations and obligations payable under all Secured Hedging Agreements) of amounts available to be applied pursuant to clauses “THIRD”, “FOURTH”, “FIFTH” and “SIXTH” above; and (c) to the extent that any amounts available for distribution pursuant to clause “FIFTH” above are attributable to the issued but undrawn amount of outstanding Letters of Credit, such amounts shall be held by the Administrative Agent in a cash collateral account and applied (i) first, to reimburse the Issuing Lender from time to time for any drawings under such Letters of Credit and (ii) then, following the expiration of all Letters of Credit, to all other obligations of the types described in clauses “FIFTH” and “SIXTH” above in the manner provided in this Section. Notwithstanding the foregoing terms of this Section, only Collateral proceeds and payments under the Guaranty (as opposed to ordinary course principal, interest and fee payments hereunder) shall be applied to obligations under any Secured Hedging Agreement.

Section 2.12 Non-Receipt of Funds by the Administrative Agent.

(a) Funding by Lenders; Presumption by Administrative Agent. Unless the Administrative Agent shall have received written notice from a Lender prior to the proposed date of any Extension of Credit that such Lender will not make available to the Administrative Agent such Lender’s share of such Extension of Credit, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with this Agreement and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Extension of Credit available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of a payment to be made by such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation and (ii) in the case of a payment to be made by the Borrower, the interest rate applicable to Alternate Base Rate Loans. If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays its share of the applicable Extension of Credit to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such Extension of Credit. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

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(b) Payments by Borrower; Presumptions by Administrative Agent. Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Lender hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Lender, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Lender, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or the Issuing Lender, with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under subsections (a) and (b) of this Section shall be conclusive, absent manifest error.

(c) Failure to Satisfy Conditions Precedent. If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and such funds are not made available to the Borrower by the Administrative Agent because the conditions to the applicable Extension of Credit set forth in Article IV are not satisfied or waived in accordance with the terms thereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.

(d) Obligations of Lenders Several. The obligations of the Lenders hereunder to make Revolving Loans, to fund participations in Letters of Credit and Swingline Loans and to make payments pursuant to Section 9.5(c) are several and not joint. The failure of any Lender to make any Loan, to fund any such participation or to make any such payment under Section 9.5(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, to purchase its participation or to make its payment under Section 9.5(c).

(e) Funding Source. Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

Section 2.13 Inability to Determine Interest Rate.

Notwithstanding any other provision of this Agreement, if (a) the Required Lenders shall reasonably determine that, by reason of circumstances affecting the relevant market, reasonable and adequate means do not exist for ascertaining the LIBOR Rate for such Interest Period, or

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(b) the Required Lenders shall reasonably determine that the LIBOR Rate does not adequately and fairly reflect the cost to such Lenders of funding LIBOR Rate Loans that the Borrower has requested be outstanding as a LIBOR Tranche during such Interest Period, the Administrative Agent shall forthwith give telephone notice of such determination, confirmed in writing, to the Borrower, and the Lenders at least two (2) Business Days prior to the first day of such Interest Period. Unless the Borrower shall have notified the Administrative Agent upon receipt of such telephone notice that it wishes to rescind or modify its request regarding such LIBOR Rate Loans, any Loans that were requested to be made as LIBOR Rate Loans shall be made as Alternate Base Rate Loans and any Loans that were requested to be converted into or continued as LIBOR Rate Loans shall remain as or be converted into Alternate Base Rate Loans. Until any such notice has been withdrawn by the Administrative Agent, no further Loans shall be made as, continued as, or converted into, LIBOR Rate Loans for the Interest Periods so affected.

Section 2.14 Yield Protection.

(a) Increased Costs Generally. If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender or the Issuing Lender;

(ii) subject any Lender or the Issuing Lender to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or any Loan made by it, or change the basis of taxation of payments to such Lender or the Issuing Lender in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 2.16 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or the Issuing Lender); or

(iii) impose on any Lender or the Issuing Lender or the London interbank market any other condition, cost or expense affecting this Agreement or Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or the Issuing Lender of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or the Issuing Lender hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or the Issuing Lender, the Borrower will pay to such Lender or the Issuing Lender, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Lender, as the case may be, for such additional costs incurred or reduction suffered.

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(b) Capital Requirements. If any Lender or the Issuing Lender determines that any Change in Law affecting such Lender or the Issuing Lender or any lending office of such Lender or such Lender’s or the Issuing Lender’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s or the Issuing Lender’s capital or on the capital of such Lender’s or the Issuing Lender’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Lender, to a level below that which such Lender or the Issuing Lender or such Lender’s or the Issuing Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Lender’s policies and the policies of such Lender’s or the Issuing Lender’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or the Issuing Lender, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Lender or such Lender’s or the Issuing Lender’s holding company for any such reduction suffered.

(c) Certificates for Reimbursement. A certificate of a Lender or the Issuing Lender setting forth the amount or amounts (and setting forth in reasonable detail the calculation thereof) necessary to compensate such Lender or the Issuing Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section and delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender or the Issuing Lender, as the case may be, the amount shown as due on any such certificate within ten (10) days after receipt thereof.

(d) Delay in Requests. Failure or delay on the part of any Lender or the Issuing Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or the Issuing Lender’s right to demand such compensation, provided that the Borrower shall not be required to compensate a Lender or the Issuing Lender pursuant to this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender or the Issuing Lender, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the Issuing Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).

Section 2.15 Indemnity.

(a) The Credit Parties hereby agree to indemnify each Lender and to hold such Lender harmless from any funding loss or expense which such Lender may sustain or incur as a consequence of (i) the failure by the Borrower to pay the principal amount of or interest on any Loan by such Lender in accordance with the terms hereof, (ii) the failure by the Borrower to accept a borrowing after the Borrower has given a notice in accordance with the terms hereof, (iii) default by the Borrower in making any prepayment after the Borrower has given a notice in accordance with the terms hereof and/or (iv) the making by the Borrower of a prepayment of a Loan, or the conversion thereof, on a day which is not the last day of the Interest Period with respect thereto, in each case including, but not limited to, any such loss or expense arising from

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interest or fees payable by such Lender to lenders of funds obtained by it in order to maintain its Loans hereunder. A certificate setting forth in reasonable detail the calculation of any additional amounts payable pursuant to this Section submitted by any Lender, through the Administrative Agent, to the Borrower (which certificate must be delivered to the Administrative Agent within thirty days following such default, prepayment or conversion) shall be conclusive in the absence of manifest error. The agreements in this Section shall survive termination of this Agreement and payment of the Credit Party Obligations.

(b) The Borrower shall pay to each Lender, as long as such Lender shall be required to maintain reserves under Regulation D with respect to “Eurocurrency liabilities” within the meaning of Regulation D, or under any similar or successor regulation with respect to Eurocurrency liabilities or Eurocurrency funding, additional interest on the unpaid principal amount of each LIBOR Rate Loan equal to the actual costs of such reserves allocated to such LIBOR Rate Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive in the absence of manifest error), which shall be due and payable on each date on which interest is payable on such LIBOR Rate Loan, provided the Borrower shall have received at least fifteen (15) days prior notice (with a copy to the Administrative Agent) of such additional interest from such Lender. If a Lender fails to give notice fifteen (15) days prior to the relevant interest payment date, such additional interest shall be due and payable fifteen (15) days from receipt of such notice.

Section 2.16 Taxes.

(a) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Credit Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that if the Borrower shall be required by applicable law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, Lender or Issuing Lender, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

(b) Payment of Other Taxes by the Borrower. Without limiting the provisions of paragraph (a) above, the Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c) Indemnification by the Borrower. The Borrower shall indemnify the Administrative Agent, each Lender and the Issuing Lender, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Administrative Agent, such Lender or the Issuing

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Lender, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate setting forth in reasonable detail the calculation of the amount of such payment or liability delivered to the Borrower by a Lender or the Issuing Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Lender, shall be conclusive absent manifest error.

(d) Evidence of Payments. As soon as practicable after any payment of Indemnified Taxes or Other Taxes pursuant to Sections 2.16(a), (b) or (c) above by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e) Status of Lenders. Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any other Credit Document shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.

Without limiting the generality of the foregoing, in the event that the Borrower is resident for tax purposes in the United States of America, any Foreign Lender shall deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of the Borrower or the Administrative Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable:

(i) duly completed copies of Internal Revenue Service Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States of America is a party,

(ii) duly completed copies of Internal Revenue Service Form W-8ECI,

(iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (i) a certificate to the effect that such Foreign Lender is not (A) a “bank” within the meaning of

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section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (ii) duly completed copies of Internal Revenue Service Form W-8BEN, or

(iv) any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in United States Federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower to determine the withholding or deduction required to be made.

(f) Treatment of Certain Refunds. If the Administrative Agent, a Lender or the Issuing Lender determines, in its reasonable discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent directly related to receipt of such refund, such Lender or the Issuing Lender, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrower, upon the request of the Administrative Agent, such Lender or the Issuing Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority with respect to the amount paid over to the Borrower) to the Administrative Agent, such Lender or the Issuing Lender in the event the Administrative Agent, such Lender or the Issuing Lender is required to repay such refund to such Governmental Authority. This paragraph shall not be construed to require the Administrative Agent, any Lender or the Issuing Lender to make available its tax returns (or any other information relating to its taxes that it reasonably deems confidential) to the Borrower or any other Person.

Section 2.17 Indemnification in Respect of Letters of Credit; Nature of Issuing Lender’s Duties.

(a) In addition to its other obligations under Section 2.3, the Credit Parties hereby agree to protect, indemnify, pay and save the Issuing Lender and each Lender harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys’ fees) that the Issuing Lender or such Lender may incur or be subject to as a consequence, direct or indirect, of (i) the issuance of any Letter of Credit or (ii) the failure of the Issuing Lender to honor a drawing under a Letter of Credit as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or Governmental Authority (all such acts or omissions, herein called “Government Acts”).

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(b) As between the Credit Parties, the Issuing Lender and each Lender, the Credit Parties shall assume all risks of the acts, omissions or misuse of any Letter of Credit by the beneficiary thereof. Neither the Issuing Lender nor any Lender shall be responsible: (i) for the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of any Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, that may prove to be invalid or ineffective for any reason; (iii) for failure of the beneficiary of a Letter of Credit to comply fully with conditions required in order to draw upon a Letter of Credit; (iv) for errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) for errors in interpretation of technical terms; (vi) for any loss or delay in the transmission or otherwise of any document required in order to make a drawing under a Letter of Credit or of the proceeds thereof; and (vii) for any consequences arising from causes beyond the control of the Issuing Lender or any Lender, including, without limitation, any Government Acts. None of the above shall affect, impair, or prevent the vesting of the Issuing Lender’s rights or powers hereunder.

(c) In furtherance and extension and not in limitation of the specific provisions hereinabove set forth, any action taken or omitted by the Issuing Lender or any Lender, under or in connection with any Letter of Credit or the related certificates, if taken or omitted in the absence of gross negligence or willful misconduct, shall not put such Issuing Lender or such Lender under any resulting liability to the Credit Parties. It is the intention of the parties that this Agreement shall be construed and applied to protect and indemnify the Issuing Lender and each Lender against any and all risks involved in the issuance of the Letters of Credit, all of which risks are hereby assumed by the Credit Parties, including, without limitation, any and all risks of the acts or omissions, whether rightful or wrongful, of any Government Authority. The Issuing Lender and the Lenders shall not, in any way, be liable for any failure by the Issuing Lender or anyone else to pay any drawing under any Letter of Credit as a result of any Government Acts or any other cause beyond the control of the Issuing Lender and the Lenders.

(d) Nothing in this Section is intended to limit the Reimbursement Obligation of the Borrower contained in Section 2.3(d) hereof. The obligations of the Credit Parties under this Section shall survive the termination of this Agreement. No act or omissions of any current or prior beneficiary of a Letter of Credit shall in any way affect or impair the rights of the Issuing Lender and the Lenders to enforce any right, power or benefit under this Agreement.

(e) Notwithstanding anything to the contrary contained in this Section or any other provision of any Credit Document or LOC Document, the Credit Parties shall have no obligation to indemnify the Issuing Lender or any Lender in respect of any liability incurred by the Issuing Lender or such Lender arising out of the gross negligence or willful misconduct of the Issuing Lender (including action not taken by the Issuing Lender or such Lender), as determined by a court of competent jurisdiction or pursuant to arbitration.

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Section 2.18 Illegality.

Notwithstanding any other provision of this Credit Agreement, if any Change in Law shall make it unlawful for such Lender or its LIBOR Lending Office to make or maintain LIBOR Rate Loans as contemplated by this Credit Agreement or to obtain in the interbank eurodollar market through its LIBOR Lending Office the funds with which to make such Loans, (a) such Lender shall promptly notify the Administrative Agent and the Borrower thereof, (b) the commitment of such Lender hereunder to make LIBOR Rate Loans or continue LIBOR Rate Loans as such shall forthwith be suspended until the Administrative Agent shall give notice that the condition or situation which gave rise to the suspension shall no longer exist, and (c) such Lender’s Loans then outstanding as LIBOR Rate Loans, if any, shall be converted on the last day of the Interest Period for such Loans or within such earlier period as required by law as Alternate Base Rate Loans. The Borrower hereby agrees to promptly pay any Lender, upon its demand, any additional amounts necessary to compensate such Lender for actual and direct costs (but not including anticipated profits) reasonably incurred by such Lender in making any repayment in accordance with this Section including, but not limited to, any interest or fees payable by such Lender to lenders of funds obtained by it in order to make or maintain its LIBOR Rate Loans hereunder. A certificate (which certificate shall include a description of the basis for the computation) as to any additional amounts payable pursuant to this Section submitted by such Lender, through the Administrative Agent, to the Borrower shall be conclusive in the absence of manifest error. Each Lender agrees to use reasonable efforts (including reasonable efforts to change its LIBOR Lending Office) to avoid or to minimize any amounts which may otherwise be payable pursuant to this Section; provided, however, that such efforts shall not cause the imposition on such Lender of any additional costs or legal or regulatory burdens deemed in good faith by such Lender to be material.

Section 2.19 Mitigation Obligations; Replacement of Lenders.

(a) Designation of a Different Lending Office. If any Lender requests compensation under Section 2.14, or requires the Borrower to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.14 or Section 2.16, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b) Replacement of Lenders. If any Lender requests compensation under Sections 2.14 or 2.18, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, or if any Lender ceases to make LIBOR Rate Loans as a result of any

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condition described in Section 2.18, or if any Lender is a Defaulting Lender, or if any Lender shall refuse to consent to a waiver or amendment to, or a departure from the provisions of this Agreement or any other Credit Document which requires the consent of all Lenders or all Lenders directly affected thereby and that has been consented to by the Required Lenders, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 9.6), all of its interests, rights and obligations under this Agreement and the related Credit Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:

(i) the Borrower shall have paid to the Administrative Agent the assignment fee specified in Section 9.6;

(ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and funded participations in Letters of Credit, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Credit Documents (including any amounts under Section 2.15) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);

(iii) in the case of any such assignment resulting from a claim for compensation under Section 2.14 or payments required to be made pursuant to Section 2.16, such assignment will result in a reduction in such compensation or payments thereafter; and

(iv) such assignment does not conflict with applicable law.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

To induce the Lenders to enter into this Agreement and to make the Extensions of Credit herein provided for, the Credit Parties hereby represent and warrant to the Administrative Agent and to each Lender that:

Section 3.1 Financial Condition.

(a)(i) The audited Consolidated financial statements of the Credit Parties and their Subsidiaries for the fiscal years ended December 31, 2005 (as restated), 2006 and

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2007, together with the related Consolidated statements of income or operations, equity and cash flows for the fiscal years ended on such dates, (ii) the unaudited Consolidated financial statements of the Credit Parties and their Subsidiaries for the year-to-date period for the most recent month ending at least 30 days prior to the Closing Date, together with the related Consolidated statements of income or operations, equity and cash flows for the year-to-date period ending on such date and (iii) a pro forma balance sheet of the Credit Parties and their Subsidiaries as of the last day of the month that ended at least thirty (30) days prior to the Closing Date:

(A) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein;

(B) fairly present the financial condition of the Credit Parties and their Subsidiaries in all material respects, as applicable, as of the date thereof (subject, in the case of the unaudited financial statements, to normal year-end adjustments) and results of operations for the period covered thereby; and

(C) reflect all material Indebtedness and other material liabilities, direct or contingent, of the Credit Parties and their Subsidiaries as of the date thereof, including material liabilities for taxes, material commitments and material contingent obligations (to the extent required to be disclosed by GAAP).

(b) The three-year projections of the Credit Parties and their Subsidiaries delivered to the Lenders on or prior to the Closing Date have been prepared in good faith based upon assumptions believed by the Borrower at the time of the preparation thereof to be reasonable (it being understood that projections are subject to significant uncertainties and contingencies, many of which are beyond the Borrower’s control, and that no assurance can be given that the projections will be realized).

Section 3.2 No Material Adverse Effect.

Since December 31, 2007, there has been no development or event which, individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect.

Section 3.3 Corporate Existence; Compliance with Law.

Each of the Credit Parties (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, organization or formation, (b) has the requisite power and authority and the legal right to own and operate all its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged and (except as could not reasonably be expected to have a Material Adverse Effect), has taken all actions necessary to maintain all rights, privileges, licenses and franchises necessary or required in the normal conduct of its business, (c) is duly qualified to conduct business and in good

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standing under the laws of (i) the jurisdiction of its incorporation, organization or formation, (ii) the jurisdiction where its chief executive office is located and (iii) each other jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification except to the extent that the failure to so qualify or be in good standing in any such other jurisdiction could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect and (d) is in compliance with all Requirements of Law, organizational documents, government permits and government licenses except to the extent such non-compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

Section 3.4 Corporate Power; Authorization; Enforceable Obligations.

Each of the Credit Parties has full organizational power and authority to execute, deliver and perform the Credit Documents to which it is party and has taken all necessary limited liability company, partnership or corporate action to authorize the execution, delivery and performance by it of the Credit Documents to which it is party. Each Credit Document to which it is a party has been duly executed and delivered on behalf of each Credit Party. Each Credit Document that is an agreement to which it is a party constitutes a legal, valid and binding obligation of each Credit Party, enforceable against such Credit Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

Section 3.5 No Legal Bar; No Default.

The execution, delivery and performance by each Credit Party of the Credit Documents to which such Credit Party is a party, the borrowings thereunder and the use of the proceeds of the Loans (a) will not violate any material Requirement of Law, (b) except as could not reasonably be expected to have a Material Adverse Effect, will not conflict with, result in a breach of or constitute a default under the articles of incorporation, bylaws, articles of organization, operating agreement or other organization documents of the Credit Parties or any material approval or material consent from any Governmental Authority relating to such Person, and (c) will not result in, or require, the creation or imposition of any Lien on any Credit Party’s properties or revenues pursuant to any Requirement of Law or Contractual Obligation other than the Liens arising under or contemplated in connection with the Credit Documents or Permitted Liens. Except as could not reasonably be expected to have a Material Adverse Effect, no Credit Party is in default under or with respect to any of its Contractual Obligations. No Default or Event of Default has occurred and is continuing.

Section 3.6 No Material Litigation.

No litigation, investigation, claim, criminal prosecution, civil investigative demand, imposition of criminal or civil fines and penalties, or any other proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Credit Parties, threatened in writing by or against any Credit Party or any of its Subsidiaries or against any of its

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or their respective properties or revenues (a) with respect to the Credit Documents or any Extension of Credit or any of the transactions contemplated hereby, or (b) which could reasonably be expected to have a Material Adverse Effect. To the knowledge of the Credit Parties, no permanent injunction, temporary restraining order or similar decree has been issued against any Credit Party or any of its Subsidiaries which could reasonably be expected to have a Material Adverse Effect.

Section 3.7 Investment Company Act; etc.

No Credit Party is an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended. No Credit Party is a subject to regulation under the Federal Power Act, the Interstate Commerce Act, or any federal or state statute or regulation limiting its ability to incur the Credit Party Obligations.

Section 3.8 Margin Regulations.

No part of the proceeds of any Extension of Credit hereunder will be used directly or indirectly for any purpose that violates the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect. The Credit Parties and their Subsidiaries (a) are not engaged, principally or as one of their important activities, in the business of extending credit for the purpose of “purchasing” or “carrying” “margin stock” within the respective meanings of each of such terms under Regulation U and (b) as of the Closing Date, taken as a group do not own “margin stock” except as identified in the financial statements referred to in Section 3.1. The aggregate value of all “margin stock” within the meaning of such term under Regulation U owned by the Credit Parties and their Subsidiaries taken as a group does not exceed 25% of the value of their assets.

Section 3.9 ERISA.

Except as, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, neither a Reportable Event nor an “accumulated funding deficiency” (within the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred during the five-year period prior to the date on which this representation is made or deemed made with respect to any Plan, and each Plan has complied with the applicable provisions of ERISA and the Code. No termination of a Single Employer Plan has occurred resulting in any material liability that has not be satisfied in full, and no Lien in favor of the PBGC or a Plan has arisen, during such five-year period. Neither any Credit Party nor any Commonly Controlled Entity is currently subject to any material liability for a complete or partial withdrawal from a Multiemployer Plan.

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Section 3.10 Environmental Matters.

Except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect:

(a) To the knowledge of the Credit Parties, the facilities and properties owned, leased or operated by the Credit Parties or any of their Subsidiaries (the “Properties”) do not contain any Materials of Environmental Concern in amounts or concentrations which (i) constitute a violation of, or (ii) could give rise to liability on behalf of any Credit Party under, any Environmental Law.

(b) All operations of the Credit Parties and/or their Subsidiaries at the Properties are in compliance, and have in the last five years been in compliance, with all applicable Environmental Laws, and to the knowledge of the Credit Parties there is no contamination at, under or about the Properties or violation of any Environmental Law with respect to the Properties or the business operated by the Credit Parties or any of their Subsidiaries (the “Business”).

(c) Neither the Credit Parties nor their Subsidiaries have received any written or actual notice of violation, alleged violation, non-compliance, liability or potential liability on behalf of any Credit Party with respect to environmental matters or Environmental Laws regarding any of the Properties or the Business, nor do the Credit Parties or their Subsidiaries have knowledge or reason to believe that any such notice will be received or is being threatened.

(d) To the knowledge of the Credit Parties, Materials of Environmental Concern have not been transported or disposed of from the Properties in violation of, or in a manner or to a location that could give rise to liability on behalf of any Credit Party under any Environmental Law, and no Materials of Environmental Concern have been generated, treated, stored or disposed of at, on or under any of the Properties in violation of, or in a manner that could give rise to liability on behalf of any Credit Party under, any applicable Environmental Law.

(e) No judicial proceeding or governmental or administrative action is pending or, to the knowledge of the Credit Parties and their Subsidiaries, threatened, under any Environmental Law to which any Credit Party or any Subsidiary is a party with respect to the Properties or the Business, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding, in each case, to the extent binding on the Credit Parties or their Subsidiaries, under any Environmental Law with respect to the Properties or the Business.

(f) There has been no release or threat of release of Materials of Environmental Concern at or from the Properties arising from or related to the operations of any Credit Party or any Subsidiary in connection with the Properties or otherwise in connection with the Business, in violation of or in amounts or in a manner that could give rise to liability on behalf of any Credit Party under Environmental Laws.

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Section 3.11 Use of Proceeds.

The proceeds of the Extensions of Credit shall be used by the Borrower solely (a) to pay any costs, fees and expenses associated with this Agreement on the Closing Date, (b) to refinance certain existing Indebtedness of the Credit Parties and their Subsidiaries, and (c) for working capital and other general corporate purposes of the Credit Parties and their Subsidiaries, including, without limitation, Permitted Acquisitions.

Section 3.12 Subsidiaries; Joint Ventures; Partnerships.

Set forth on Schedule 3.12 is a complete and accurate list of all Subsidiaries of the Credit Parties and partnerships in which any of the Credit Parties owns any partnership interest as of the Closing Date or as of the date such Schedule was last updated in accordance with the terms of Section 5.2. Information on the attached Schedule includes the following: (a) the number of shares of each class of Capital Stock or other equity interests of each Subsidiary outstanding; (b) the number and percentage of outstanding shares of each class of Capital Stock owned by the Borrower or any of its Subsidiaries; and (c) the number and effect, if exercised, of all outstanding options, warrants, rights of conversion or purchase and similar rights regarding the Capital Stock or other equity interests of each Subsidiary. The outstanding Capital Stock and other equity interests of all such Subsidiaries is validly issued, fully paid and non-assessable and is owned free and clear of all Liens (other than those arising under or contemplated in connection with the Credit Documents). There are no outstanding subscriptions, options, warrants, calls, rights or other agreements or commitments (other than stock options granted to employees or directors and directors’ qualifying shares) of any nature relating to any Capital Stock of the Subsidiary, except as contemplated in connection with the Credit Documents.

Section 3.13 Ownership.

Each of the Credit Parties and its Subsidiaries is the owner of, and has good and marketable title to or a valid leasehold interest in, all of its respective assets, which, together with assets leased or licensed by the Credit Parties and their Subsidiaries, represents all assets in the aggregate material to the conduct of the business of the Credit Parties and their Subsidiaries, and (after giving effect to the Transactions) none of such assets is subject to any Lien other than Permitted Liens. Except as could not reasonably be expected to have a Material Adverse Effect, each Credit Party and its Subsidiaries enjoys peaceful and undisturbed possession under all of its leases and all such leases are valid and subsisting and in full force and effect.

Section 3.14 Taxes.

Except as set forth in Schedule 3.14, each of the Credit Parties and its Subsidiaries has filed, or caused to be filed, all federal income tax returns and all other material tax returns (federal, state, local and foreign) required to be filed and paid (a) all amounts of taxes shown thereon to be due (including interest and penalties) and (b) all other taxes, fees, assessments and other governmental charges (including mortgage recording taxes, documentary stamp taxes and intangibles taxes) owing by it, except for such taxes (i) that are not yet delinquent or (ii) that are being contested in good faith and by proper proceedings, and against which adequate reserves are being maintained in accordance with GAAP. None of the Credit Parties or their Subsidiaries is aware as of the Closing Date of any proposed tax assessments against it or any of its Subsidiaries.

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Section 3.15 Intellectual Property Rights.

Each of the Credit Parties and its Subsidiaries owns, or has the legal right to use, all material Owned Intellectual Property, tradenames, technology, know-how and processes necessary for each of them to conduct its business as currently conducted. Set forth on Schedule 3.15 is a list of all registered or issued Credit Party Intellectual Property (including all applications for registration and issuance) as of the Closing Date, excluding any software licenses commercially available on terms comparable to the terms currently applicable to the applicable Credit Party, as of the Closing Date (including name/title, current owner, registration or application number, and registration or application date). Except as could not reasonably be expected to have a Material Adverse Effect, (a) each Credit Party has the right to use its Owned Intellectual Property in perpetuity and without payment of royalties and (b) all registrations with and applications to Governmental Authorities in respect of such Owned Intellectual Property are valid and in full force and effect and are not subject to the payment of any taxes or maintenance fees (other than ordinary filing and administrative fees) or the taking of any interest therein, held by any of the Credit Parties to maintain their validity or effectiveness. Except as could not reasonably be expected to have a Material Adverse Effect, none of the Credit Parties is in default (or with the giving of notice or lapse of time or both, would be in default) under any license to use its Credit Party Intellectual Property. Except as could not reasonably be expected to have a Material Adverse Effect, no claim has been asserted and is pending by any Person challenging or questioning the use of any such Owned Intellectual Property or the validity or effectiveness of any such Owned Intellectual Property, nor do the Credit Parties or any of their Subsidiaries know of any such claim; and, to the knowledge of the Credit Parties or any of their Subsidiaries, the use of such Owned Intellectual Property by any of the Credit Parties or any of its Subsidiaries does not infringe on the rights of any Person. Except as could not reasonably be expected to have a Material Adverse Effect, the Credit Parties have recorded or deposited with and paid to the United States Copyright Office, the Register of Copyrights, the Copyrights Royalty Tribunal or other Governmental Authority, all notices, statements of account, royalty fees and other documents and instruments required under the terms and conditions of any Contractual Obligation of the Credit Parties and/or under Title 17 of the United States Code and the rules and regulations issued thereunder (collectively, the “Copyright Act”), and are not liable to any Person for copyright infringement under the Copyright Act or any other law, rule, regulation, contract or license as a result of their business operations.

Section 3.16 Solvency.

After giving effect to the Transactions, (a) the Credit Parties taken as a whole are solvent and are able to pay their debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, and (b) the fair saleable value of the Credit Parties’ assets taken as a whole, measured on a going concern basis, exceeds all probable liabilities, including those to be incurred pursuant to this Agreement. After giving effect to the Transactions, none of the Credit Parties (i) has unreasonably small capital in relation to the business in which it is or proposes to be engaged or (ii) has incurred, or believes that it will

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incur debts beyond its ability to pay such debts as they become due. In executing the Credit Documents and consummating the Transactions, none of the Credit Parties intends to hinder, delay or defraud either present or future creditors or other Persons to which one or more of the Credit Parties is or will become indebted.

Section 3.17 Location of Offices.

Set forth on Schedule 3.17 is the state of incorporation or organization, the chief executive office, the principal place of business, the federal tax identification number and organization identification number of each of the Credit Parties and their Subsidiaries as of the Closing Date.

Section 3.18 No Burdensome Restrictions.

None of the Credit Parties or their Subsidiaries is a party to any agreement or instrument or subject to any other obligation or any charter or corporate restriction or any provision of any applicable law, rule or regulation which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

Section 3.19 Brokers’ Fees.

None of the Credit Parties or their Subsidiaries has any obligation to any Person in respect of any finder’s, broker’s, investment banking or other similar fee in connection with any of the transactions contemplated under the Credit Documents other than the closing and other fees payable pursuant to this Agreement and as set forth in the Engagement Letter.

Section 3.20 Labor Matters.

There are no collective bargaining agreements or Multiemployer Plans covering the employees of the Credit Parties or any of their Subsidiaries as of the Closing Date, other than as set forth in Schedule 3.20 hereto. Except as could not reasonably be expected to have a Material Adverse Effect, no unfair labor practice complaint is pending against any Credit Party or any of its Subsidiaries. Except as could not reasonably be expected to have a Material Adverse Effect, there are no strikes, walkouts, work stoppages or other material labor difficulty pending or threatened by any employees of any Credit Party.

Section 3.21 Accuracy and Completeness of Information.

All written factual information (taken as a whole) heretofore, contemporaneously or hereafter furnished by or on behalf of any Credit Party or any of its Subsidiaries to the Administrative Agent or any Lender for purposes of or in connection with this Agreement or any other Credit Document, or any transaction contemplated hereby or thereby, is or will be true and accurate in all material respects and not incomplete by omitting to state any material fact necessary to make such information not misleading (taken as a whole) as of the date provided in light of the circumstances under which such factual information was furnished; it being understood and agreed that for purposes of this Section 3.21, such factual information and data shall not include proforma financial information, projections or estimates (including financial estimates, forecasts and other forward-looking information) and information of a general economic or general industry nature).

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Section 3.22 Insurance.

The insurance coverage of the Credit Parties and their Subsidiaries as of the Closing Date (or as of the date Schedule 3.22 was last updated in accordance with the terms of Section 5.2) is outlined as to carrier, policy number, expiration date, type and amount on Schedule 3.22 and such insurance coverage complies with the requirements set forth in Section 5.5(b).

Section 3.23 Security Documents.

The Security Documents create valid security interests in, and Liens on, the Collateral purported to be covered thereby. Except as set forth in the Security Documents, such security interests and Liens are currently (or will be, upon (a) the filing of appropriate financing statements with the Secretary of State of the state of incorporation or organization for each Credit Party, and the filing of appropriate assignments or notices with the United States Patent and Trademark Office and the United States Copyright Office, in each case in favor of the Administrative Agent, on behalf of the Lenders, and (b) the Administrative Agent obtaining Control (as defined in the Security Agreement) or possession over those items of Collateral in which a security interest is perfected through Control or possession) perfected security interests and Liens, prior to all other Liens other than Permitted Liens.

Section 3.24 Classification of Senior Indebtedness.

The Credit Party Obligations constitute “Senior Indebtedness”, “Designated Senior Indebtedness” or any similar designation under and as defined in any agreement governing any Subordinated Debt and the subordination provisions set forth in each such agreement are legally valid and enforceable against the parties thereto.

Section 3.25 Anti-Terrorism Laws.

Neither any Credit Party nor any of its Subsidiaries is an “enemy” or an “ally of the enemy” within the meaning of Section 2 of the Trading with the Enemy Act of the United States of America (50 U.S.C. App. §§ 1 et seq.), as amended. Neither any Credit Party nor any or its Subsidiaries is in violation of (a) the Trading with the Enemy Act, as amended, (b) any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto or (c) the Patriot Act. None of the Credit Parties (i) is a blocked person described in Section 1 of the Anti-Terrorism Order or (ii) to the best of its knowledge, engages in any dealings or transactions, or is otherwise associated, with any such blocked person.

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Section 3.26 Compliance with OFAC Rules and Regulations.

To the best of their knowledge, none of the Credit Parties or their Subsidiaries or their respective Affiliates (a) is a Sanctioned Person, (b) has more than 15% of its assets in Sanctioned Countries, or (c) derives more than 15% of its operating income from investments in, or transactions with Sanctioned Persons or Sanctioned Countries. No part of the proceeds of any Extension of Credit hereunder will be used directly or indirectly to fund any operations in, finance any investments or activities in or make any payments to, a Sanctioned Person or a Sanctioned Country.

Section 3.27 Compliance with FCPA.

Each of the Credit Parties and their Subsidiaries is in compliance with the Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq., and any foreign counterpart thereto. None of the Credit Parties or their Subsidiaries has made a payment, offering, or promise to pay, or authorized the payment of, money or anything of value (a) in order to assist in obtaining or retaining business for or with, or directing business to, any foreign official, foreign political party, party official or candidate for foreign political office, (b) to a foreign official, foreign political party or party official or any candidate for foreign political office, and (c) with the intent to induce the recipient to misuse his or her official position to direct business wrongfully to such Credit Party or its Subsidiary or to any other Person, in violation of the Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq.

Section 3.28 Consent; Governmental Authorizations.

No approval, consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with acceptance of Extensions of Credit by the Borrower or the making of the Guaranty hereunder or with the execution, delivery or performance of any Credit Document by the Credit Parties (other than those which have been obtained) or with the validity or enforceability of any Credit Document against the Credit Parties (except such filings as are necessary in connection with the perfection of the Liens created by such Credit Documents).

ARTICLE IV

CONDITIONS PRECEDENT

Section 4.1 Conditions to Closing Date.

This Agreement shall become effective upon, and the obligation of each Lender to make the initial Revolving Loans on the Closing Date is subject to, the satisfaction or waiver of the following conditions precedent:

(a) Execution of Credit Agreement; Credit Documents. The Administrative Agent shall have received (i) counterparts of this Agreement, executed by a duly authorized officer of each party hereto, (ii) for the account of each Revolving Lender requesting a promissory note, a Revolving Note, (iii) for the account of each Swingline

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Lender requesting a promissory note, the Swingline Note, (iv) counterparts of the Security Agreement and the Pledge Agreement, in each case conforming to the requirements of this Agreement and executed by duly authorized officers of the Credit Parties or other Person, as applicable and (v) counterparts of any other Credit Document required to be delivered on the Closing Date, executed by the duly authorized officers of the parties thereto.

(b) Authority Documents. The Administrative Agent shall have received the following:

(i) Articles of Incorporation/Charter Documents. Certified copies of articles of incorporation or other charter documents, as applicable, of each Credit Party certified (A) by an officer of such Credit Party (pursuant to an officer’s certificate in substantially the form of Exhibit 4.1(b) attached hereto) as of the Closing Date to be true and correct and in force and effect as of such date, and (B) to be true and complete as of a recent date by the appropriate Governmental Authority of the state of its incorporation or organization, as applicable.

(ii) Resolutions. Copies of resolutions of the board of directors or comparable managing body of each Credit Party approving and adopting the Credit Documents, the transactions contemplated therein and authorizing execution and delivery thereof, certified by an officer of such Credit Party (pursuant to an officer’s certificate in substantially the form of Exhibit 4.1(b) attached hereto) as of the Closing Date to be true and correct and in force and effect as of such date.

(iii) Bylaws/Operating Agreement. A copy of the bylaws or comparable operating agreement of each Credit Party certified by an officer of such Credit Party (pursuant to an officer’s certificate in substantially the form of Exhibit 4.1(b) attached hereto) as of the Closing Date to be true and correct and in force and effect as of such date.

(iv) Good Standing. Original certificates of good standing, existence or its equivalent with respect to each Credit Party certified as of a recent date by the appropriate Governmental Authorities of the state of incorporation or organization and each other state in which the failure to so qualify and be in good standing could reasonably be expected to have a Material Adverse Effect.

(v) Incumbency. An incumbency certificate of each Credit Party certified by an officer (pursuant to an officer’s certificate in substantially the form of Exhibit 4.1(b) attached hereto) to be true and correct as of the Closing Date.

(c) Legal Opinion of Counsel. The Administrative Agent shall have received an opinion or opinions of counsel (which, for certain opinions, may be internal counsel) for the Credit Parties, dated the Closing Date and addressed to the Administrative Agent and the Lenders, in form and substance reasonably acceptable to the Administrative

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Agent (which shall include, without limitation, opinions with respect to the due organization and valid existence of each Credit Party, opinions as to perfection of the Liens granted to the Administrative Agent pursuant to the Security Documents and opinions as to the non-contravention of the Credit Parties’ organizational documents).

(d) Personal Property Collateral. The Administrative Agent shall have received, in form and substance satisfactory to the Administrative Agent:

(i)(A) searches of UCC filings in the jurisdiction of incorporation or formation, as applicable, of each Credit Party and copies of the financing statements on file in such jurisdictions and (B) tax lien, judgment and pending litigation searches;

(ii) completed UCC financing statements for each appropriate jurisdiction as is necessary, in the Administrative Agent’s sole discretion, to perfect the Administrative Agent’s security interest in the Collateral;

(iii) stock or membership certificates, if any, evidencing the Capital Stock pledged to the Administrative Agent pursuant to the Pledge Agreement, and duly executed in blank undated stock or transfer powers;

(iv) duly executed consents as are necessary, in the Administrative Agent’s sole discretion, to perfect the Lenders’ security interest in the Collateral;

(v) to the extent constituting Collateral, all instruments and chattel paper with an individual face amount in excess of $1,000,000 in the possession of any of the Credit Parties, together with allonges or assignments as may be necessary or appropriate to perfect the Administrative Agent’s and the Lenders’ security interest in the Collateral;

(vi) searches of ownership of Credit Party Intellectual Property in the appropriate governmental offices and such patent/trademark/copyright filings as reasonably requested by the Administrative Agent in order to perfect the Administrative Agent’s security interest in the Intellectual Property;

(vii) Deposit Account Control Agreements reasonably satisfactory to the Administrative Agent with respect to each deposit account, except Excluded Accounts and to the extent otherwise determined by the Administrative Agent; and

(viii) Securities Account Control Agreements satisfactory to the Administrative Agent with respect to each securities account, except Excluded Accounts and to the extent otherwise determined by the Administrative Agent.

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(e) Liability, Casualty, Property and Business Interruption Insurance. The Administrative Agent shall have received copies of insurance policies or certificates and endorsements of insurance evidencing liability, casualty, property and business interruption insurance meeting the requirements set forth herein or in the Security Documents. The Administrative Agent shall be named as additional insured, as its interest may appear, with respect to any such insurance providing liability coverage, and the Borrower will use its commercially reasonable efforts to have each provider of any such insurance agree, by endorsement upon the policy or policies issued by it or by independent instruments to be furnished to the Administrative Agent, that it will endeavor to give the Administrative Agent thirty (30) days prior written notice before any such policy or policies shall be altered or cancelled.

(f) Solvency Certificate. The Administrative Agent shall have received an officer’s certificate prepared by the chief financial officer of the Borrower as to the financial condition, solvency and related matters of the Credit Parties and their Subsidiaries, after giving effect to the Transactions and the initial borrowings under the Credit Documents, in substantially the form of Exhibit 4.1(f) hereto.

(g) Account Designation Notice. The Administrative Agent shall have received the executed Account Designation Notice in the form of Exhibit 1.1(a) hereto.

(h) Notice of Borrowing. The Administrative Agent shall have received a Notice of Borrowing with respect to the Loans to be made on the Closing Date.

(i) Consents. The Administrative Agent shall have received evidence that all boards of directors, governmental, shareholder and material third party consents and approvals necessary in connection with the Transactions have been obtained.

(j) Compliance with Laws. The financings and other Transactions contemplated hereby shall be in compliance with all applicable laws and regulations (including all applicable securities and banking laws, rules and regulations).

(k) Bankruptcy. There shall be no bankruptcy or insolvency proceedings pending with respect to any Credit Party or any Subsidiary thereof.

(l) Existing Indebtedness of the Credit Parties. All of the existing Indebtedness for borrowed money of the Credit Parties and their Subsidiaries (other than Indebtedness permitted to exist pursuant to Section 6.1) shall be repaid in full and all security interests related thereto shall be terminated on or prior to the Closing Date.

(m) Financial Statements. The Administrative Agent and the Lenders shall have received copies of the financial statements referred to in Section 3.1, each in form and substance satisfactory thereto.

(n) No Material Adverse Change. Since December 31, 2007, no material adverse change shall have occurred in the business, properties, operations or condition (financial or otherwise) of the Credit Parties and their Subsidiaries, taken as a whole other than the impact of any development or event with respect to the market for auction rate securities.

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(o) Financial Condition Certificate. The Administrative Agent shall have received a certificate or certificates executed by a Responsible Officer of the Borrower as of the Closing Date, substantially in the form of Exhibit 4.1(o) stating that (i) there exists no pending or, to such Responsible Officer’s knowledge, threatened litigation, injunction, order or claim with respect to the Borrower or its Subsidiaries, in each case that could reasonably be expected to have a Material Adverse Effect, (ii) immediately after giving effect to this Agreement, the other Credit Documents, and all the Transactions contemplated to occur on such date, (A) no Default or Event of Default exists, (B) all representations and warranties contained herein and in the other Credit Documents shall (x) with respect to representations and warranties that contain a materiality qualification, are true and correct and (y) with respect to representations and warranties that do not contain a materiality qualification, are true and correct in all material respects; (C) the Credit Parties are in pro forma compliance with each of the initial financial covenants set forth in Section 5.9 (as evidenced through reasonably detailed calculations of such financial covenants on a schedule to such certificate) as of the most recent month ending at least 30 days prior to the Closing Date and (iii) each of the other conditions precedent in Section 4.1 have been satisfied, except to the extent the satisfaction of any such condition is subject to the judgment or discretion of the Administrative Agent or any Lender.

(p) Patriot Act Certificate. At least five (5) Business Days prior to the Closing Date, the Administrative Agent shall have received a certificate satisfactory thereto, substantially in the form of Exhibit 4.1(p), for benefit of itself and the Lenders, provided by the Borrower that sets forth information required by the Patriot Act including, without limitation, the identity of the Credit Parties, the name and address of the Credit Parties and other information that will allow the Administrative Agent or any Lender, as applicable, to identify the Credit Parties in accordance with the Patriot Act.

(q) Corporate Structure. The number of shares of each class of Capital Stock issued and outstanding and the ownership thereof of the Credit Parties and their Subsidiaries as of the Closing Date shall be as described in Schedule 3.12.

(r) Fees and Expenses. The Administrative Agent and the Lenders shall have received all fees and expenses, if any, owing pursuant to the Engagement Letter and Section 2.5.

(s) Litigation. There shall exist no pending or threatened litigation, injunction, order or claim with respect to the Borrower or its Subsidiaries, in each case that could reasonably be expected to have a Material Adverse Effect.

(t) Additional Matters. All other documents and legal matters in connection with the transactions contemplated by this Agreement shall be reasonably satisfactory in form and substance to the Administrative Agent and its counsel.

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Without limiting the generality of the provisions of Section 8.4, for purposes of determining compliance with the conditions specified in this Section 4.1, each Lender that has executed this Credit Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required hereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

Section 4.2 Conditions to All Extensions of Credit.

The obligation of each Lender to make any Extension of Credit hereunder is subject to the satisfaction of the following conditions precedent on the date of making such Extension of Credit:

(a) Representations and Warranties. The representations and warranties made by the Credit Parties herein, in the Security Documents and which are contained in any certificate furnished at any time under or in connection herewith shall (i) with respect to representations and warranties that contain a materiality qualification, be true and correct and (ii) with respect to representations and warranties that do not contain a materiality qualification, be true and correct in all material respects, in each case with the same effect as though such representations and warranties had been made on and as of the date of such Extension of Credit as if made on and as of such date, except to the extent that such representations and warranties expressly related solely to an earlier date (in which case such representations and warranties shall have been true and accurate on such earlier date);

(b) No Default or Event of Default. No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the Extension of Credit to be made on such date unless such Default or Event of Default shall have been waived in accordance with this Agreement.

(c) Compliance with Commitments. Immediately after giving effect to the making of any such Extension of Credit (and the application of the proceeds thereof), (i) the sum of the aggregate principal amount of outstanding Revolving Loans plus outstanding Swingline Loans plus outstanding LOC Obligations shall not exceed the Revolving Committed Amount then in effect, (ii) the outstanding LOC Obligations shall not exceed the LOC Committed Amount and (iii) the outstanding Swingline Loans shall not exceed the Swingline Committed Amount.

(d) Additional Conditions to Revolving Loans. If a Revolving Loan is requested, all conditions set forth in Section 2.1 shall have been satisfied.

(e) Incremental Facility. If an Incremental Facility is requested, all conditions set forth in Section 2.2 shall have been satisfied.

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(f) Additional Conditions to Letters of Credit. If the issuance of a Letter of Credit is requested, all conditions set forth in Section 2.3 shall have been satisfied.

(g) Additional Conditions to Swingline Loans. If a Swingline Loan is requested, all conditions set forth in Section 2.4 shall have been satisfied.

Each request for an Extension of Credit and each acceptance by the Borrower of any such Extension of Credit shall be deemed to constitute representations and warranties by the Credit Parties as of the date of such Extension of Credit that the conditions set forth above in paragraphs (a) through (g), as applicable, have been satisfied.

ARTICLE V

AFFIRMATIVE COVENANTS

Each of the Credit Parties hereby covenants and agrees that on the Closing Date, and thereafter (a) for so long as this Agreement is in effect, (b) until the Commitments have terminated, and (c) until no Note remains outstanding and unpaid and the Credit Party Obligations (other than contingent indemnity obligations) are paid in full, such Credit Party shall, and shall cause each of their Subsidiaries, to:

Section 5.1 Financial Statements.

Furnish to the Administrative Agent for prompt further distribution to each Lender:

(a) Annual Financial Statements. As soon as available and in any event no later than the earlier of (i) to the extent applicable, the date the Borrower is required by the SEC to deliver its Form 10-K for each fiscal year of the Borrower and (ii) one hundred twenty (120) days after the end of each fiscal year of the Borrower, a copy of the Consolidated balance sheet of the Credit Parties and their Subsidiaries as at the end of such fiscal year and the related Consolidated statements of income and shareholders’ equity and of cash flows of the Credit Parties and their Subsidiaries for such year, which shall be audited by PricewaterhouseCoopers or another firm of independent certified public accountants of nationally recognized standing, setting forth in each case in comparative form the figures for the previous year, reported on without a “going concern” or like qualification or exception, or qualification indicating that the scope of the audit was inadequate to permit such independent certified public accountants to certify such financial statements without such qualification;

(b) Quarterly Financial Statements. As soon as available and in any event no later than the earlier of (i) to the extent applicable, the date the Borrower is required by the SEC to deliver its Form 10-Q for any fiscal quarter of the Borrower and (ii) forty-five (45) days after the end of each fiscal quarter of the Borrower, a copy of the Consolidated balance sheet of the Credit Parties and their Subsidiaries as at the end of such period and

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related Consolidated statements of income and retained earnings and of cash flows for the Credit Parties and their Subsidiaries for such quarterly period and for the portion of the fiscal year ending with such period, in each case setting forth in comparative form Consolidated figures for the corresponding period or periods of the preceding fiscal year (subject to normal recurring year-end audit adjustments) and including a management discussion and analysis; and

(c) Annual Operating Budget and Cash Flow. As soon as available, but in any event within seventy-five (75) days after the end of each Fiscal Year, a copy of the detailed annual operating budget or plan including cash flow projections of the Credit Parties and their Subsidiaries for the next four fiscal quarter period prepared on a quarterly basis, in form and detail reasonably acceptable to the Administrative Agent and the Lenders, together with a summary of the material assumptions made in the preparation of such annual budget or plan (it being understood that operating budgets or plans and projections are subject to significant uncertainties and contingencies, many of which are beyond the Borrower’s control, and that no assurance can be given that any operating budget or plan or projections will be realized);

all such financial statements to be complete and correct in all material respects (subject, in the case of interim statements, to normal recurring year-end audit adjustments) and to be prepared in reasonable detail and, in the case of the annual and quarterly financial statements provided in accordance with subsections (a) and (b) above, in accordance with GAAP applied consistently throughout the periods reflected therein and further accompanied by a description of, and an estimation of the effect on the financial statements on account of, a change, if any, in the application of accounting principles as provided in Section 1.3.

Notwithstanding the foregoing, financial statements and reports required to be delivered pursuant to the foregoing provisions of this Section may be delivered electronically and if so, shall be deemed to have been delivered on the date on which either (i) such financial statements and reports are filed by the Borrower with the SEC or (ii) the Administrative Agent receives such reports from the Borrower through electronic mail; provided that, upon the Administrative Agent’s request, the Borrower shall provide paper copies of any documents required hereby to the Administrative Agent.

Section 5.2 Certificates; Other Information.

Furnish to the Administrative Agent for prompt further distribution to each Lender:

(a) concurrently with the delivery of the financial statements referred to in Sections 5.1(a) and 5.1(b) above, a certificate of a Responsible Officer substantially in the form of Exhibit 5.2(a) stating that (i) (A) such financial statements present fairly the financial position of the Credit Parties and their Subsidiaries for the periods indicated in conformity with GAAP applied on a consistent basis, (B) each of the Credit Parties during such period observed or performed all of its covenants and other agreements, and satisfied every condition, contained in this Agreement to be observed, performed or satisfied by it, and (C) such Responsible Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate and such certificate shall include the calculations in reasonable detail required to indicate compliance with Section 5.9 as of the last day of such period;

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(b) concurrently with or prior to the delivery of the financial statements referred to in Sections 5.1(a) and 5.1(b) above, (i) an updated copy of Schedule 3.12 if the Credit Parties or any of their Subsidiaries has formed or acquired a new Subsidiary since the Closing Date or since such Schedule was last updated, as applicable, (ii) an updated copy of Schedule 3.22 if the Credit Parties or any of their Subsidiaries has materially altered or acquired any material insurance policies since the Closing Date or since Schedule 3.22 was last updated and (iii) an updated copy of Schedule 6.12 if any Credit Party opens, maintains or otherwise has any checking, savings or other account (including securities accounts) other than Excluded Accounts not set forth on Schedule 6.12;

(c) promptly upon their becoming available, (i) all material regulatory reports and (ii) copies of all Form 8-K reports and all registration statements and prospectuses (other than Form S-8 registration statements), if any, which any Credit Party may file with the SEC (or any successor or analogous Governmental Authority);

(d) within ninety (90) days after the end of each Fiscal Year of the Borrower, a certificate containing information including a calculation of the amount of all acquisitions, all dividends paid and Asset Dispositions that were made during the prior fiscal year; and

(e) promptly, such additional financial and other information as the Administrative Agent or any Lender may from time to time reasonably request.

Section 5.3 Payment of Taxes and Other Obligations.

Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, subject, where applicable, to specified grace periods, (a) all of its Federal and other material taxes and (b) any material additional costs that are imposed as a result of any failure to so pay, discharge or otherwise satisfy such taxes, except when the amount or validity of any such taxes is currently being contested in good faith by appropriate proceedings and reserves, if applicable, in conformity with GAAP with respect thereto have been provided on the books of the Credit Parties.

Section 5.4 Conduct of Business and Maintenance of Existence.

Continue to engage in business of the same general type as now conducted by it on the Closing Date and preserve, renew and keep in full force and effect its corporate or other formative existence and good standing in its jurisdiction of formation, except as permitted by this Agreement. Except as could not reasonably be expected to have a Material Adverse Effect, (a) keep in full force and effect good standing in all jurisdictions where required, other than the jurisdiction of formation and (b) take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business.

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Section 5.5 Maintenance of Property; Insurance.

(a) Keep all material property useful and necessary in its business in good working order and condition (ordinary wear and tear and obsolescence excepted), except as could not reasonably be expected to have a Material Adverse Effect.

(b) Maintain with financially sound and reputable insurance companies liability, casualty, property and business interruption insurance (including, without limitation, insurance with respect to its tangible Collateral) in at least such amounts and against at least such risks as are usually insured against in the same general area by companies engaged in the same or a similar business; and furnish to the Administrative Agent, upon the request of the Administrative Agent, full information as to the insurance carried. The Administrative Agent shall be named as additional insured, as its interest may appear, with respect to any such liability insurance, and each provider of any such insurance shall agree, by endorsement upon the policy or policies issued by it or by independent instruments to be furnished to the Administrative Agent, that it will endeavor to give the Administrative Agent thirty (30) days prior written notice before any such policy or policies shall be altered or canceled.

Section 5.6 Inspection of Property; Books and Records; Discussions.

Keep proper books, records and accounts in conformity with GAAP and all material Requirements of Law; and permit, during regular business hours and upon reasonable notice by the Administrative Agent, the Administrative Agent or any Lender to visit and inspect any of its properties and examine and make abstracts from any of its books and records at any reasonable time and as often as may reasonably be desired, and to discuss the business, operations, properties, financial conditions and other conditions of the Credit Parties and their Subsidiaries with officers and employees of the Credit Parties and their Subsidiaries and with its independent certified public accountants, in each case at the reasonable expense of the Borrower.

Section 5.7 Notices.

Give notice in writing to the Administrative Agent (which shall promptly transmit such notice to each Lender):

(a) promptly, but in any event within two (2) Business Days after any Credit Party knows thereof, the occurrence of any Default or Event of Default;

(b) promptly, any default or event of default under any Contractual Obligation of any Credit Party or any of its Subsidiaries which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect;

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(c) promptly, any litigation, or any investigation or proceeding known to any Credit Party (i) affecting any Credit Party or any of its Subsidiaries which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or involve a monetary claim in excess of $5,000,000 or involving injunctions or requesting injunctive relief by or against any Credit Party or any Subsidiary of any Credit Party, (ii) affecting or with respect to this Agreement, any other Credit Document or any security interest or Lien created thereunder, (iii) involving an environmental claim or potential liability under Environmental Laws which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, or (iv) by any Governmental Authority relating to the Borrower or any Subsidiary thereof and alleging fraud, deception or willful misconduct by such Person;

(d) of any labor controversy that has resulted in, or threatens to result in, a strike or other work action against any Credit Party which could reasonably be expected to have a Material Adverse Effect;

(e) of any attachment, judgment, lien, levy or order exceeding $1,000,000 that may be assessed against any Credit Party other than Permitted Liens;

(f) as soon as possible and in any event within thirty (30) days after any Credit Party knows or has reason to know thereof: (i) the occurrence or expected occurrence of any Reportable Event with respect to any Plan, a failure to make any required contribution to a Plan, the creation of any Lien in favor of the PBGC (other than a Permitted Lien) or a Plan or any withdrawal from, or the termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or the taking of any other action by the PBGC or any Credit Party, any Commonly Controlled Entity or any Multiemployer Plan, with respect to the withdrawal from, or the terminating, Reorganization or Insolvency of, any Plan;

(g) promptly, any notice of any violation received by any Credit Party from any Governmental Authority including, without limitation, any notice of violation of Environmental Laws, that could reasonably be expected to have a Material Adverse Effect; and

(h) promptly, any other development or event which could reasonably be expected to have a Material Adverse Effect.

Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the Credit Parties propose to take with respect thereto. In the case of any notice of a Default or Event of Default, the Borrower shall specify that such notice is a Default or Event of Default notice on the face thereof.

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Section 5.8 Environmental Laws.

(a) Except as could not reasonably be expected to have a Material Adverse Effect (i) comply in all material respects with, and ensure compliance in all material respects by all tenants and subtenants, if any, with, all applicable Environmental Laws and (ii) and obtain and comply in all material respects with and maintain, and ensure that all tenants and subtenants obtain and comply in all material respects with and maintain, any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws; and

(b) Except as could not reasonably be expected to have a Material Adverse Effect (i) conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required to be conducted by a Credit Party under Environmental Laws and (ii) promptly comply in all material respects with all lawful orders and directives of all Governmental Authorities regarding Environmental Laws except to the extent that the same are being contested in good faith by appropriate proceedings.

Section 5.9 Financial Covenants.

Comply with the following financial covenants:

(a) Leverage Ratio. The Leverage Ratio, measured as of the last day of each fiscal quarter of the Borrower shall be less than or equal to (a) for each such date occurring on or before June 30, 2009, 2.50 to 1.00 and (b) for each such date thereafter, 2.25 to 1.00:

(b) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio, measured as of the last day of each fiscal quarter of the Borrower shall be greater than or equal to 1.25 to 1.00.

(c) Minimum Liquidity. Liquidity shall, at all times, be greater than or equal to $35,000,000.

Section 5.10 Additional Guarantors.

The Credit Parties will cause each of their Material Domestic Subsidiaries, whether newly formed, after acquired or otherwise existing to promptly (and in any event within thirty (30) days after such Material Domestic Subsidiary is formed or acquired (or such longer period of time as agreed to by the Administrative Agent in its reasonable discretion)) become a Guarantor hereunder by way of execution of a Joinder Agreement. In addition, if the Domestic Subsidiaries of the Borrower that are not Guarantors (the “Non-Guarantor Domestic Subsidiaries”) shall, as of the last day of any fiscal quarter of the Borrower, collectively (a) generate more than 10% of Consolidated EBITDA for the four (4) fiscal quarter period ending as of such date or (b) own more than 10% of the Consolidated Assets as of such date (clause (a) and (b), the “Additional Guarantor Criteria”), then the Borrower shall cause one or more of such Non-Guarantor Domestic Subsidiaries to promptly (and in any event within thirty

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(30) days after the end of the applicable fiscal quarter of the Borrower) become Guarantors hereunder by way of execution of Joinder Agreements so that, after such Non-Guarantor Domestic Subsidiaries become Guarantors, neither of the Additional Guarantor Criteria will be met. In connection with the foregoing, the Credit Parties shall give notice to the Administrative Agent not less than ten (10) days after creating a Domestic Subsidiary (or such larger period of time as agreed to by the Administrative Agent in its reasonable discretion), or acquiring a majority of the Capital Stock of any other Person.

The Credit Party Obligations shall be secured by, among other things, a first priority perfected security interest in the Collateral of such new Guarantor and a pledge of 100% of the Capital Stock of such new Guarantor and its Domestic Subsidiaries (unless such Domestic Subsidiary is not owned directly by a Domestic Subsidiary and is owned, directly or indirectly, by a Subsidiary described in clause (a) of the definition of “Foreign Subsidiary”) and 65% of the voting Capital Stock and 100% of the non-voting Capital Stock of (a) the first-tier Foreign Subsidiaries of such new Guarantor and (b) the first-tier Foreign Subsidiaries of each Excluded Subsidiary of such new Guarantor (unless such Excluded Subsidiary is owned, directly or indirectly, by a Subsidiary described in clause (a) of the definition of “Foreign Subsidiary”), in each case to the extent set forth in, and as provided in, the Security Documents. In connection with the foregoing, the Credit Parties shall, except to the extent, if any, waived by the Administrative Agent, deliver to the Administrative Agent, with respect to each new Guarantor to the extent applicable, substantially the same documentation required pursuant to Sections 4.1(b), (c) and (d)(iii) and 5.12 and such other documents or agreements as the Administrative Agent may reasonably request. The Credit Parties shall also cause each Excluded Subsidiary of such new Guarantor to become a party to the Pledge Agreement. Notwithstanding the foregoing, with respect to any checking, savings, or other account (including securities accounts) acquired directly or indirectly by the Credit Parties as part of a Permitted Acquisition, Section 6.12(b) shall not apply until thirty (30) days following the consummation of such Permitted Acquisition.

Section 5.11 Compliance with Law.

(a) Comply with all Requirements of Law and orders (including Environmental Laws), and all applicable restrictions imposed by all Governmental Authorities, applicable to it and the Collateral if noncompliance with any such Requirements of Law, order or restriction could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(b) Comply with all Contractual Obligations, except to the extent that failure to comply could not reasonably be expected to have a Material Adverse Effect.

Section 5.12 Pledged Assets.

(a) Each Credit Party will cause 100% of the Capital Stock in each of its direct or indirect Domestic Subsidiaries (unless such Domestic Subsidiary is not owned directly by a Domestic Subsidiary and is owned, directly or indirectly, by a Subsidiary described in clause (a) of the definition of “Foreign Subsidiary”) and 65% of the voting

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Capital Stock and 100% of the non-voting Capital Stock of (i) the first-tier Foreign Subsidiaries of such Credit Party and (ii) the first-tier Foreign Subsidiaries of each Excluded Subsidiary of such Credit Party (unless such Excluded Subsidiary is owned, directly or indirectly, by a Subsidiary described in clause (a) of the definition of “Foreign Subsidiary”), in each case to the extent owned by such Credit Party, to be subject at all times to a first priority, perfected Lien in favor of the Administrative Agent pursuant to the terms and conditions of the Security Documents or such other security documents as the Administrative Agent shall reasonably request; provided, that with respect to the Capital Stock of Eclipsys International Holding, LLC, such Lien shall be limited to 65% of its voting Capital Stock and 100% of its non-voting Capital Stock.

(b) Each Credit Party will cause all Collateral now owned or hereafter acquired to be subject at all times to a first priority, perfected Lien (subject in each case to Permitted Liens) in favor of the Administrative Agent, in each case pursuant to the terms and conditions of the Security Documents.

(c) Notwithstanding the foregoing, with respect to any checking, savings, or other account (including securities accounts) acquired directly or indirectly by the Credit Parties as part of a Permitted Acquisition, Section 5.12(b) shall not apply until thirty (30) days following the consummation of such Permitted Acquisition.

(d) The Credit Parties will cause all Off-Shore Rights transferred to an International Holding Company after the date hereof to at all times be owned by a Credit Party or by an International Holding Company.

Section 5.13 Further Assurances.

(a) Public/Private Designation. Borrower will cooperate with the Administrative Agent in connection with the publication of certain written materials and/or written information provided by or on behalf of the Borrower to the Administrative Agent and Lenders (collectively, “Information Materials”) pursuant to this Article V and will designate Information Materials (i) that are either available to the public or not material with respect to the Credit Parties and their Subsidiaries or any of their respective securities for purposes of United States federal and state securities laws, as “Public Information”. Any Information Materials that are not Public Information so marked shall be deemed to be “Private Information”.

(b) Further Assurances. Upon the reasonable request of the Administrative Agent, promptly perform or cause to be performed any and all acts and execute or cause to be executed any and all documents for filing under the provisions of the Uniform Commercial Code or any other Requirement of Law which are necessary or advisable to maintain in favor of the Administrative Agent, for the benefit of the Secured Parties, Liens on the Collateral that are duly perfected in accordance with the requirements of, or the obligations of the Credit Parties under, the Credit Documents and all applicable Requirements of Law.

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ARTICLE VI

NEGATIVE COVENANTS

Each of the Credit Parties hereby covenants and agrees that on the Closing Date, and thereafter (a) for so long as this Agreement is in effect, (b) until the Commitments have terminated, and (c) until no Note remains outstanding and unpaid and the Credit Party Obligations (other than contingent indemnity obligations) are paid in full that:

Section 6.1 Indebtedness.

No Credit Party will, nor will it permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness, except:

(a) Indebtedness arising or existing under this Agreement and the other Credit Documents;

(b) Indebtedness of the Credit Parties and their Subsidiaries existing as of the Closing Date (and set out more specifically in Schedule 6.1(b) hereto) and any renewals, refinancings or extensions thereof in a principal amount not in excess of that outstanding as of the date of such renewal, refinancing or extension;

(c) Indebtedness of the Credit Parties and their Subsidiaries incurred after the Closing Date consisting of Capital Leases or Indebtedness incurred to provide all or a portion of the purchase price or cost of construction or improvement of an asset and any renewals, refinancings or extensions thereof; provided that (i) such Indebtedness when incurred shall not exceed the purchase price or cost of construction or improvement of such asset plus applicable transaction costs; (ii) no such Indebtedness shall be renewed, refinanced or extended for a principal amount in excess of the principal balance outstanding thereon at the time of such renewal, refinancing or extension plus applicable transaction costs; and (iii) the total amount of all such Indebtedness shall not exceed $5,000,000 at any time outstanding;

(d)(i) Intercompany Indebtedness among the Credit Parties; (ii) intercompany Indebtedness owed to a Credit Party by an Excluded Subsidiary; (iii) Indebtedness of an Excluded Subsidiary in respect of the Credit Party Obligations; and (iv) intercompany Indebtedness among Foreign Subsidiaries;

(e) Indebtedness and obligations owing under Secured Hedging Agreements and other Hedging Agreements entered into in order to manage existing or anticipated interest rate, exchange rate or commodity price risks and not for speculative purposes;

(f) Guaranty Obligations in respect of Indebtedness of a Credit Party to the extent such Indebtedness is permitted to exist or be incurred pursuant to this Section;

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(g) to the extent constituting Indebtedness, surety bonds and appeal bonds required in the ordinary course of business or in connection with the enforcement of rights or claims of the Borrower or any Restricted Subsidiary or in connection with judgments that do not result in a Default or Event of Default;

(h) Indebtedness owing to any Credit Party by an International Holding Company in the form of a note issued solely in whole or partial consideration for Off-Shore Rights (an “International Holding Company Note”); and

(i) other Indebtedness of Credit Parties and their Subsidiaries which does not exceed $30,000,000 in the aggregate at any time outstanding (of which up to $5,000,000 in the aggregate at any time outstanding may be secured Indebtedness).

Section 6.2 Liens.

The Credit Parties will not, nor will they permit any Subsidiary to, create, incur, assume or permit to exist any Lien with respect to any of their respective property or assets of any kind (whether real or personal, tangible or intangible), whether now owned or hereafter acquired, except for Permitted Liens.

Section 6.3 Nature of Business.

The Borrower and its Subsidiaries, taken as a whole, will not substantively alter in any material respect the character of their business from that conducted as of the Closing Date (and others reasonably related, supplemental, ancillary and/or incidental thereto).

Section 6.4 Consolidation, Merger, Sale or Purchase of Assets, etc.

The Credit Parties will not, nor will they permit any Subsidiary to,

(a) dissolve or liquidate or sell, transfer, lease or otherwise dispose of its property or assets or agree to do so at a future time (other than agreements to dispose of property or assets with a fair market value less than $1,000,000 individually or $5,000,000 in the aggregate during the term of this Agreement), except the following, without duplication, shall be expressly permitted:

(i)(A) the sale, transfer, lease, sublease or other disposition of property in the ordinary course of business; (B) the conversion of cash into Cash Equivalents and of Cash Equivalents into cash and (C) (1) the licensing out of intellectual property and other rights and (2) the sale, transfer, licensing or other disposition of Off-Shore Rights to an International Holding Company;

(ii) Recovery Events for which such Credit Party or such Subsidiary has received any cash insurance proceeds or condemnation or expropriation award with respect to such property or assets;

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(iii) the sale, lease, sublease, transfer or other disposition of property, machinery, parts and equipment and other goods no longer used or useful in, or consistent with the Borrower’s plans for, the conduct of the business of the Credit Parties or any of their Subsidiaries;

(iv) the sale, lease or transfer of property or assets from the Borrower or any Subsidiary to a Credit Party or from one Credit Party to another Credit Party or from any Subsidiary that is not a Credit Party to any other Subsidiary that is not a Credit Party;

(v) the termination of any Hedging Agreement;

(vi) the sale of Investments held in securities accounts;

(vii) the liquidation or dissolution of any Subsidiary that is not a Credit Party if the assets of such Subsidiary are transferred to a Credit Party after the repayment of all Indebtedness and other obligations of such Subsidiary upon liquidation or dissolution;

(viii) the disposition of any property or assets for purposes of making a Permitted Investment; and

(ix) the sale, lease or transfer of property or assets not to exceed (A) $50,000,000 in net cash proceeds in the aggregate during any Fiscal Year and (B) $100,000,000 in net cash proceeds in the aggregate during the term of the Agreement;

provided that (A) with respect to clauses (i)(A), (ii), (iii), (vi) and (ix) above, except for transactions involving assets with a fair market value (as determined by a Responsible Officer) not exceeding $2,000,000 in any fiscal year, at least 75% of the consideration received therefor by the Credit Parties or any such Subsidiary shall be in the form of cash or Cash Equivalents, (B) after giving effect to any Asset Disposition pursuant to clause (ix) above, the Credit Parties shall be in compliance on a Pro Forma Basis with the financial covenants set forth in Section 5.9 hereof, recalculated for the most recently ended quarter for which information is available, and (C) no Default or Event of Default shall exist or shall result therefrom; provided, further, that with respect to dispositions of assets permitted hereunder only, the Administrative Agent shall be entitled, without the consent of any Lender, to release its Liens relating to the particular assets subject to such disposition; or

(b)(i) purchase, lease or otherwise acquire (in a single transaction or a series of related transactions) all or substantially all of the property or assets of any Person, other than (A) Permitted Acquisitions and (B) except as otherwise limited or prohibited herein, purchases or other acquisitions of inventory, materials, property and equipment in the ordinary course of business, or (ii) enter into any transaction of merger or consolidation, except for (A) in connection with Investments or acquisitions permitted pursuant to Section 6.5 so long as the Credit Party subject to such merger or

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consolidation is the surviving entity or the surviving entity will become a Credit Party concurrently with effectiveness of the merger or consolidation, (B) (y) the merger or consolidation of a Subsidiary that is not a Credit Party with and into a Credit Party; provided that such Credit Party will be the surviving entity and (z) the merger or consolidation of a Credit Party with and into another Credit Party; provided that if the Borrower is a party thereto, the Borrower will be the surviving corporation, (C) the merger or consolidation of a Subsidiary that is not a Credit Party with and into another Subsidiary that is not a Credit Party and (D) any merger or consolidation, the purpose or effect of which is to effect, all or in part, a disposition permitted pursuant to Section 6.4(a) or an Investment permitted pursuant to Section 6.5.

Section 6.5 Advances, Investments and Loans.

The Credit Parties will not, nor will they permit any Subsidiary to, make any Investment except for Permitted Investments.

Section 6.6 Transactions with Affiliates.

The Credit Parties will not, nor will they permit any Subsidiary to, enter into any transaction or series of transactions, whether or not in the ordinary course of business, with any officer, director, shareholder or Affiliate other than on terms and conditions substantially as favorable as would be obtainable in a comparable arm’s-length transaction with a Person other than an officer, director, shareholder or Affiliate; provided, that the foregoing shall not prohibit (a) transactions among the Credit Parties, (b) Investments in Foreign Subsidiaries to the extent permitted pursuant to Section 6.5 and Investments by Foreign Subsidiaries in Credit Parties; (c) Restricted Payments to the extent permitted pursuant to Section 6.9; (d) employment and severance arrangements between the Borrower or any of its Subsidiaries and their respective officers and employees and transactions pursuant to stock option plans and employee benefit plans and arrangements, in each case in the ordinary course of business and (e) the payment of customary fees and reasonable out-of-pocket costs to, and indemnities provided on behalf of, directors, officers, employees and consultants of the Borrower and its Subsidiaries in the ordinary course of business.

Section 6.7 Corporate Changes.

The Borrower will not change its fiscal year. No Credit Party will, nor will it permit any of its Subsidiaries to, (a) change its fiscal year (other than to conform its fiscal year to the Borrower’s), (b) amend, modify or change its articles of incorporation, certificate of designation (or corporate charter or other similar organizational document) operating agreement or bylaws (or other similar document) in any material respect adverse to the interests of the Lenders without the prior written consent of the Administrative Agent; provided that no Credit Party shall (i) alter its legal existence in any way materially adverse to the Lenders, or, in one transaction or a series of transactions, merge into or consolidate with any other entity (other than, in each case, as permitted by Section 6.4), or sell all or substantially all of its assets (other than as permitted by Section 6.4), (ii) change its state of incorporation or organization, or (iii) change its registered legal name, without providing thirty (30) days prior written notice to the Administrative Agent

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and without filing (or confirming that the Administrative Agent has filed) such financing statements and amendments to any previously filed financing statements as the Administrative Agent may require, (c) change its state of incorporation, organization or formation without the consent of the Administrative Agent without providing thirty (30) days prior written notice to the Administrative Agent and without filing (or confirming that the Administrative Agent has filed) such financing statements and amendments to any previously filed financing statements as the Administrative Agent may require or have more than one state of incorporation, organization or formation or (d) change its accounting method (except in accordance with GAAP) in any manner materially adverse to the interests of the Lenders without the prior written consent of the Required Lenders.

Section 6.8 Limitation on Restricted Actions.

The Credit Parties will not, nor will they permit any Domestic Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any contractual encumbrance or restriction on the ability of any such Person to act as a Guarantor and pledge its Collateral pursuant to the Credit Documents.

Section 6.9 Restricted Payments.

The Credit Parties will not, nor will they permit any Subsidiary to, directly or indirectly, declare, order, make or set apart any sum for or pay any Restricted Payment, except (a) dividends payable solely in the same class of Capital Stock of such Person, (b) dividends or other distributions payable to the Credit Parties (directly or indirectly through their Subsidiaries), (c) dividends or other distributions by a Subsidiary that is not a Credit Party to another Subsidiary that is not a Credit Party and (d) other Restricted Payments so long as after giving effect to each such payment made pursuant to this clause (d) on a Pro Forma Basis (i) no Default or Event of Default shall then exist or would result therefrom, (ii) the Credit Parties shall be in compliance with each of the financial covenants set forth in Section 5.9 hereof and (iii) as of the date such Restricted Payment is made, the aggregate amount of all such Restricted Payments during the period beginning July 1, 2008 through the date of such Restricted Payment does not exceed 50% of Consolidated Net Income of the Borrower during such period beginning July 1, 2008 through the most recent fiscal quarter ended prior to such Restricted Payment for which financial statements are available (treating such period as a single accounting period).

Section 6.10 Amendment of Subordinated Debt.

The Credit Parties will not, nor will they permit any Subsidiary to, without the prior written consent of the Required Lenders, amend, modify, waive or extend or permit the amendment, modification, waiver or extension of any term of any document governing or relating to any Subordinated Debt in a manner that is adverse to the interests of the Lenders.

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Section 6.11 No Further Negative Pledges.

The Credit Parties will not, nor will they permit any Subsidiary to, enter into, assume or become subject to any agreement prohibiting or otherwise restricting the creation or assumption of any Lien upon the Collateral to secure the Credit Party Obligations.

Section 6.12 Account Control Agreements; Additional Bank Accounts.

(a) Set forth on Schedule 6.12 is a complete and accurate list of all checking, savings or other accounts (including securities accounts) other than Excluded Accounts of the Credit Parties at any bank or other financial institution, or any other account where money is or may be deposited or maintained with any Person as of the Closing Date or as of the date such Schedule was last updated in accordance with the terms of Section 5.2.

(b) Each of the Credit Parties will not open, maintain or otherwise have any checking, savings or other accounts (including securities accounts) at any bank or other financial institution, or any other account where money is or may be deposited or maintained with any Person, other than (i) deposit accounts that are subject to a Deposit Account Control Agreement, (ii) securities accounts that are subject to a Securities Account Control Agreement and other securities accounts so long as the aggregate balance in all such other securities accounts does not exceed $500,000, (iii) the EPSI Account, the Outside LC Account, deposit accounts established solely as payroll and other zero balance accounts and other deposit accounts so long as at any time the balance in any such other deposit account (other than the EPSI Account and the Outside LC Account) does not exceed $500,000 and the aggregate balance in all such other deposit accounts (excluding the EPSI Account and the Outside LC Account) does not exceed $2,500,000 (such payroll, zero balance, EPSI Account, Outside LC Account and other deposit accounts are referred to herein as “Excluded Accounts”). The EPSI Account shall be transferred to Wachovia no later than June 30, 2009. The Outside LC Account shall be closed no later than thirty (30) days after the Closing Date or by such other date as may be agreed to by the Borrower and the Administrative Agent.

(c) Notwithstanding the foregoing, with respect to any checking, savings or other account (including securities accounts) acquired directly or indirectly by the Credit Parties as part of a Permitted Acquisition, Section 6.12(b) shall not apply until thirty (30) days following the consummation of such Permitted Acquisition.

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ARTICLE VII

EVENTS OF DEFAULT

Section 7.1 Events of Default.

An Event of Default shall exist upon the occurrence of any of the following specified events (each an “Event of Default”):

(a) Payment. (i) The Borrower shall fail to pay any principal on any Loan or Note when due (whether at maturity, by reason of acceleration or otherwise) in accordance with the terms hereof or thereof; or (ii) the Borrower shall fail to reimburse the Issuing Lender for any LOC Obligations when due (whether at maturity, by reason of acceleration or otherwise) in accordance with the terms hereof; or (iii) the Borrower shall fail to pay any interest on any Loan or any fee or other amount payable hereunder when due (whether at maturity, by reason of acceleration or otherwise) in accordance with the terms hereof and such failure shall continue unremedied for three (3) Business Days; or (iv) or any Guarantor shall fail to pay after written demand therefor on the Guaranty in respect of any of the foregoing or in respect of any other Guaranty Obligations hereunder (after giving effect to the grace period in clause (iii)); or

(b) Misrepresentation. Any representation or warranty made or deemed made herein, in the Security Documents or in any of the other Credit Documents or which is contained in any certificate, document or financial or other statement furnished at any time under or in connection with this Agreement shall (i) with respect to representations and warranties that contain a materiality qualification, prove to have been incorrect, false or misleading on or as of the date made or deemed made and (ii) with respect to representations and warranties that do not contain a materiality qualification, prove to have been incorrect, false or misleading in any material respect on or as of the date made or deemed made; or

(c) Covenant Default. (i) Any Credit Party shall fail to perform, comply with or observe any term, covenant or agreement applicable to it contained in Sections 5.1, 5.2, 5.4 (as to maintenance of the Borrower’s existence), 5.7, 5.9, or 5.11 or Article VI hereof; or (ii) any Credit Party shall fail to comply with any other covenant contained in this Agreement or the other Credit Documents or any other agreement, document or instrument among any Credit Party, the Administrative Agent and the Lenders or executed by any Credit Party in favor of the Administrative Agent or the Lenders (other than as described in Sections 7.1(a) or 7.1(c)(i) above), and such breach or failure to comply is not cured within thirty (30) days of its occurrence; or

(d) Indebtedness Cross-Default. (i) Any Credit Party shall default in any payment of principal of or interest on any Indebtedness (other than the Loans, Reimbursement Obligations and the Guaranty) in a principal amount outstanding of at least $10,000,000 for the Credit Parties and any of their Subsidiaries in the aggregate beyond any applicable grace period (not to exceed sixty (60) days), if any, provided in the instrument or agreement under which such Indebtedness was created; or (ii) any Credit Party shall default in the observance or performance of any other agreement or condition relating to any Indebtedness (other than the Loans, Reimbursement Obligations and the Guaranty) in a principal amount outstanding of at least $10,000,000 in the aggregate for the Credit Parties and their Subsidiaries or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or

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beneficiaries) to cause, with the giving of notice if required, such Indebtedness to become due prior to its stated maturity or to be repurchased, prepaid, deferred or redeemed (automatically or otherwise); or (iii) any Credit Party shall have liability greater than $10,000,000 resulting from a termination event under any Secured Hedging Agreement; or

(e) Bankruptcy Default. (i) A Credit Party or any of its material Subsidiaries shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or a Credit Party or any of its Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against a Credit Party or any of its material Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of sixty (60) days; or (iii) there shall be commenced against a Credit Party or any of its material Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of their assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within sixty (60) days from the entry thereof; or (iv) a Credit Party or any of its material Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) a Credit Party or any of its material Subsidiaries shall generally not, or shall be unable to, or shall admit in writing their inability to, pay its debts as they become due; or

(f) Judgment Default. (i) One or more judgments or decrees shall be entered against a Credit Party or any of its material Subsidiaries involving in the aggregate a liability (to the extent not covered by insurance) of $10,000,000 or more or (ii) any injunction, temporary restraining order or similar decree shall be issued against a Credit Party or any of its Subsidiaries that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect, and, in the case of either (i) or (ii), such judgment, injunction, temporary restraining order or decree shall not have been paid or satisfied, vacated, discharged, stayed or bonded pending appeal within twenty (20) Business Days from the entry thereof; or

(g) ERISA Default. Except as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect: (i) any Person shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any “accumulated funding deficiency” (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan (other than a Permitted Lien) shall

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arise on the assets of the Credit Parties or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Required Lenders, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) a Credit Party or any Commonly Controlled Entity shall incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, any Multiemployer Plan;

(h) Change of Control. There shall occur a Change of Control; or

(i) Invalidity of Guaranty. At any time after the execution and delivery thereof, the Guaranty, for any reason other than the satisfaction in full of all Credit Party Obligations, shall cease to be in full force and effect (other than in accordance with its terms) or shall be declared to be null and void, or any Credit Party shall contest the validity, enforceability, perfection or priority of the Guaranty, any Credit Document, or any Lien granted thereunder in writing or deny in writing that it has any further liability, including with respect to future advances by the Lenders, under any Credit Document to which it is a party; or

(j) Invalidity of Credit Documents. Any other Credit Document shall fail to be in full force and effect or to give the Administrative Agent and/or the Lenders the security interests, liens, material rights, material powers, priority and material privileges purported to be created thereby (except as such documents may be terminated or no longer in force and effect in accordance with the terms thereof, other than those indemnities and provisions which by their terms shall survive) or any Lien shall, subject to Permitted Liens, fail to be a first priority, perfected Lien on a material portion of the Collateral; or

(k) Subordinated Debt. Any default (which is not waived or cured within the applicable period of grace) or event of default shall occur under any Subordinated Debt or the subordination provisions contained therein shall cease to be in full force and effect or shall cease to give the Lenders the material rights, material powers and material privileges purported to be created thereby; or

(l) Classification as Senior Debt. The Credit Party Obligations shall cease to be classified as “Senior Indebtedness,” “Designated Senior Indebtedness” or any similar designation under any Subordinated Debt instrument.

Once a Default occurs under the Credit Documents, then such Default will continue to exist until it either is cured (to the extent specifically permitted) in accordance with the Credit Documents or is otherwise expressly waived by Administrative Agent (with the approval of requisite Lenders (in their sole and absolute discretion) as determined in accordance with Section 9.1); and once an Event of Default occurs under the Credit Documents, then such Event of Default will continue to exist until it is expressly waived by Administrative Agent with the approval of the requisite Lenders, as required hereunder (in their sole and absolute discretion) in Section 9.1.

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Section 7.2 Acceleration; Remedies.

Upon the occurrence and during the continuance of an Event of Default, then, and in any such event, (a) if such event is a Bankruptcy Event of Default, automatically the Commitments shall immediately terminate and the Loans (with accrued interest thereon), and all other amounts under the Credit Documents (including without limitation the maximum amount of all contingent liabilities under Letters of Credit, which shall be cash collateralized) shall immediately become due and payable, and (b) if such event is any other Event of Default, any or all of the following actions may be taken: (i) with the written consent of the Required Lenders, the Administrative Agent may, or upon the written request of the Required Lenders, the Administrative Agent shall, declare the Commitments to be terminated forthwith, whereupon the Commitments shall immediately terminate; (ii) the Administrative Agent may, or upon the written request of the Required Lenders, the Administrative Agent shall, declare the Loans (with accrued interest thereon) and all other amounts owing under this Agreement and the Notes to be due and payable forthwith and direct the Borrower to pay to the Administrative Agent cash collateral as security for the LOC Obligations for subsequent drawings under then outstanding Letters of Credit an amount equal to the maximum amount of which may be drawn under Letters of Credit then outstanding, whereupon the same shall immediately become due and payable; and/or (iii) with the written consent of the Required Lenders, the Administrative Agent may, or upon the written request of the Required Lenders, the Administrative Agent shall, exercise such other rights and remedies as provided under the Credit Documents and under applicable law.

ARTICLE VIII

THE ADMINISTRATIVE AGENT

Section 8.1 Appointment and Authority.

Each of the Lenders and the Issuing Lender hereby irrevocably appoints Wachovia to act on its behalf as the Administrative Agent hereunder and under the other Credit Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article (other than those provisions in Sections 8.9 and 8.11) are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Lender, and neither the Borrower nor any other Credit Party shall have rights as a third party beneficiary of any of such provisions.

Section 8.2 Nature of Duties.

The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Credit Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such

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sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

Section 8.3 Exculpatory Provisions.

The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Credit Documents. Without limiting the generality of the foregoing, the Administrative Agent:

(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Credit Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Credit Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Credit Document or applicable law; and

(c) shall not, except as expressly set forth herein and in the other Credit Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 9.1 and 7.2) or (ii) in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent by the Borrower, a Lender or the Issuing Lender.

The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Credit Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Credit Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

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Section 8.4 Reliance by Administrative Agent.

The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the Issuing Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender or the Issuing Lender unless the Administrative Agent shall have received notice to the contrary from such Lender or the Issuing Lender prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

Section 8.5 Notice of Default.

The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received written notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”. In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give prompt notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided, however, that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders except to the extent that this Agreement expressly requires that such action be taken, or not taken, only with the consent or upon the authorization of the Required Lenders, or all of the Lenders, as the case may be.

Section 8.6 Non-Reliance on Administrative Agent and Other Lenders.

Each Lender and the Issuing Lender expressly acknowledges that neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates has made any representation or warranty to it and that no act by the Administrative Agent hereinafter taken, including any review of the affairs of any Credit Party, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender. Each Lender and the Issuing Lender acknowledges that it has, independently and without reliance

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upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and the Issuing Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Credit Document or any related agreement or any document furnished hereunder or thereunder.

Section 8.7 Indemnification.

The Lenders agree to indemnify the Administrative Agent, Issuing Lender and the Swingline Lender in its capacity hereunder and their Affiliates and their respective officers, directors, agents and employees (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Revolving Commitment Percentages in effect on the date on which indemnification is sought under this Section, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Credit Party Obligations) be imposed on, incurred by or asserted against any such indemnitee in any way relating to or arising out of any Credit Document or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by any such indemnitee under or in connection with any of the foregoing; provided, however, that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements to the extent resulting from such indemnitee’s gross negligence or willful misconduct, as determined by a court of competent jurisdiction. The agreements in this Section shall survive the termination of this Agreement and payment of the Notes, any Reimbursement Obligation and all other amounts payable hereunder.

Section 8.8 Administrative Agent in Its Individual Capacity.

The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

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Section 8.9 Successor Administrative Agent.

The Administrative Agent may at any time give notice of its resignation to the Lenders, the Issuing Lender and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, or an Affiliate of any such bank. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may on behalf of the Lenders and the Issuing Lender, appoint a successor Administrative Agent meeting the qualifications set forth above provided that if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (a) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Credit Documents solely in its capacity as Administrative Agent and not as Lender (except that in the case of any Collateral held by the Administrative Agent on behalf of the Lenders or the Issuing Lender under any of the Credit Documents, the retiring Administrative Agent shall continue to hold such Collateral until such time as a successor Administrative Agent is appointed) and (b) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and the Issuing Lender directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this paragraph. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Credit Documents solely in its capacity as Administrative Agent and not as Lender (if not already discharged therefrom as provided above in this paragraph). The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring Administrative Agent’s resignation hereunder and under the other Credit Documents, the provisions of this Article and Section 9.5 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.

Section 8.10 Other Agents.

None of the Lenders or other Persons identified on the facing page or signature pages of this Agreement as a “syndication agent,” “documentation agent,” “co–agent,” “joint book runner” or “joint lead arranger” shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than, in the case of such Lenders, those applicable to all Lenders as such. Without limiting the foregoing, none of the Lenders or other Persons so identified shall have or be deemed to have any fiduciary relationship with any Lender. Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders or other Persons so identified in deciding to enter into this Agreement or in taking or not taking action hereunder.

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Section 8.11 Collateral and Guaranty Matters.

(a) The Lenders irrevocably authorize and direct the Administrative Agent to, and the Administrative Agent shall:

(i) release any Lien on any Collateral granted to or held by the Administrative Agent under any Credit Document (i) upon termination of the Revolving Commitments and payment in full of all Credit Party Obligations (other than contingent indemnification obligations) and the expiration or termination of all Letters of Credit, (ii) that is transferred or to be transferred as part of or in connection with any sale or other disposition not prohibited under Section 6.4, (iii) consisting of property owned by any Subsidiary of the Borrower that ceases to be a Guarantor pursuant to a transaction permitted hereunder or (iv) subject to Section 9.1, if approved, authorized or ratified in writing by the Required Lenders;

(ii) subordinate any Lien on any Collateral granted to or held by the Administrative Agent under any Credit Document to the holder of any Lien on such Property that is permitted described under clause (c) of the definition of Permitted Lien and permitted by Section 6.2; and

(iii) release any Guarantor from its obligations under the applicable Guaranty if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder.

(b) In connection with a termination or release pursuant to this Section, the Administrative Agent shall promptly execute and deliver to the applicable Credit Party, at the Borrower’s expense, all documents that the applicable Credit Party shall reasonably request to evidence such termination or release. Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release or subordinate its interest in particular types or items of Collateral, or to release any Guarantor from its obligations under the Guaranty pursuant to this Section.

ARTICLE IX

MISCELLANEOUS

Section 9.1 Amendments, Waivers and Release of Collateral.

Neither this Agreement nor any of the other Credit Documents, nor any terms hereof or thereof may be amended, modified, extended, restated, replaced, or supplemented (by amendment, waiver, consent or otherwise) except in accordance with the provisions of this Section nor may Collateral be released except as specifically provided herein or in the Security Documents or in accordance with the provisions of this Section. The Required Lenders may or, with the written consent of the Required Lenders, the Administrative Agent may, from time to

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time, (a) enter into with the Borrower written amendments, supplements or modifications hereto and to the other Credit Documents for the purpose of adding any provisions to this Agreement or the other Credit Documents or changing in any manner the rights of the Lenders or of the Borrower hereunder or thereunder or (b) waive or consent to the departure from, on such terms and conditions as the Required Lenders may specify in such instrument, any of the requirements of this Agreement or the other Credit Documents or any Default or Event of Default and its consequences; provided, however, that no such amendment, supplement, modification, release, waiver or consent shall:

(i) reduce the amount or extend the scheduled date of maturity of any Loan or Note or any installment thereon, or reduce the stated rate of any interest or fee payable hereunder (except in connection with a waiver of interest at the increased post-default rate set forth in Section 2.8 which shall be determined by a vote of the Required Lenders) or extend the scheduled date of any payment thereof or increase the amount or extend the expiration date of any Lender’s Commitment, in each case without the written consent of each Lender directly affected thereby; provided that, it is understood and agreed that no waiver, reduction or deferral of a mandatory prepayment required pursuant to Section 2.7(b)(ii), nor any amendment of Section 2.7(b)(ii) or the definitions of Asset Disposition, shall constitute a reduction of the amount of, or an extension of the scheduled date of, the scheduled date of maturity of, or any installment of, any Loan or Revolving Note; or

(ii) amend, modify or waive any provision of this Section or reduce the percentage specified in the definition of Required Lenders, without the written consent of all the Lenders; or

(iii) release the Borrower or all or substantially all of the Guarantors from obligations under the Guaranty, without the written consent of all of the Lenders and Hedging Agreement Providers; or

(iv) except as set forth in Section 8.11, release all or substantially all of the Collateral without the written consent of all of the Lenders and Hedging Agreement Providers; or

(v) subordinate the Loans to any other Indebtedness without the written consent of all of the Lenders; or

(vi) permit a Letter of Credit to have an original expiry date more than twelve (12) months from the date of issuance without the consent of each of the Revolving Lenders; provided, that the expiry date of any Letter of Credit may be extended in accordance with the terms of Section 2.3(a); or

(vii) permit the Borrower to assign or transfer any of its rights or obligations under this Agreement or other Credit Documents without the written consent of all of the Lenders; or

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(viii) amend, modify or waive any provision of the Credit Documents requiring consent, approval or request of the Required Lenders or all Lenders without the written consent of the Required Lenders or all the Lenders as appropriate; or

(ix) amend, modify or waive the order in which Credit Party Obligations are paid or in a manner that would alter the pro rata sharing of payments by and among the Lenders in Section 2.11 without the written consent of each Lender and each Hedging Agreement Provider directly affected thereby; or

(x) amend, modify or waive any provision of Article VIII without the written consent of the then Administrative Agent; or

(xi) amend or modify the definition of Credit Party Obligations to delete or exclude any obligation or liability described therein without the written consent of each Lender and each Hedging Agreement Provider directly affected thereby; or

(xii) amend the definitions of “Hedging Agreement,” “Secured Hedging Agreement,” or “Hedging Agreement Provider” without the consent of any Hedging Agreement Provider that would be adversely affected thereby.

provided, further, that no amendment, waiver or consent affecting the rights or duties of the Administrative Agent, the Issuing Lender or the Swingline Lender under any Credit Document shall in any event be effective, unless in writing and signed by the Administrative Agent, the Issuing Lender and/or the Swingline Lender, as applicable, in addition to the Lenders required hereinabove to take such action.

Any such waiver, any such amendment, supplement or modification and any such release shall apply equally to each of the Lenders and shall be binding upon the Borrower, the other Credit Parties, the Lenders, the Administrative Agent and all future holders of the Notes. In the case of any waiver, the Borrower, the other Credit Parties, the Lenders and the Administrative Agent shall be restored to their former position and rights hereunder and under the outstanding Loans and Notes and other Credit Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon.

Notwithstanding any of the foregoing to the contrary, the consent of the Borrower and the other Credit Parties shall not be required for any amendment, modification or waiver of the provisions of Article VIII that is in no way adverse to the Borrower or any other Credit Party (other than the provisions of Sections 8.9 and 8.11, as to which any amendment, modification or waiver will require the consent of the Borrower and the other Credit Parties).

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Notwithstanding the fact that the consent of all the Lenders is required in certain circumstances as set forth above, (a) each Lender is entitled to vote as such Lender sees fit on any bankruptcy reorganization plan that affects the Loans, and each Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy Code supersedes the unanimous consent provisions set forth herein and (b) the Required Lenders may consent to allow a Credit Party to use cash collateral in the context of a bankruptcy or insolvency proceeding.

For the avoidance of doubt and notwithstanding any provision to the contrary contained in this Section 9.1, this Agreement may be amended (or amended and restated) with the written consent of the Credit Parties and the Administrative Agent in accordance with Section 2.2.

Section 9.2 Notices.

(a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows:

(i) If to the Borrower or any other Credit Party:

Eclipsys Corporation

Three Ravinia Drive

Atlanta, Georgia 30346

Attention: Chief Financial Officer

Telephone:

Fax:

With a copy to:

Eclipsys Corporation

18201 Von Karman Avenue, Suite 120

Irvine, California 92612

Attention: General Counsel

Telephone: (949) 885-1022

Fax: (949) 258-5320

(ii) If to the Administrative Agent:

Wachovia Bank, National Association, as Administrative Agent

201 South College Street

Charlotte, NC 28288-0680

Attn: Syndication Agency Services

Telephone: (704) 715-9297

Fax: (704) 383-0288

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With a copy to:

Wachovia Bank, National Association, as Administrative Agent

980 N. Federal Hwy, Suite 100

Boca Raton, FL 33432

Mail Code: FL 7322

Attn: Alina Cannon

Telephone: (561) 393-3470

Fax: (561) 393-9867

(iii) if to a Lender, to it at its address (or telecopier number) set forth in its Administrative Questionnaire.

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through electronic communications to the extent provided in paragraph (b) below, shall be effective as provided in said paragraph (b).

(b) Electronic Communications. Notices and other communications to the Lenders and the Issuing Lender hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender or the Issuing Lender pursuant to Article II if such Lender or the Issuing Lender, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

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(c) Change of Address, Etc. Any party hereto may change its address or telecopier number for notices and other communications hereunder by notice to the other parties hereto.

Section 9.3 No Waiver; Cumulative Remedies.

No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

Section 9.4 Survival of Representations and Warranties.

All representations and warranties made hereunder and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the Notes and the making of the Loans; provided that all such representations and warranties shall terminate on the date upon which the Commitments have been terminated and all amounts owing hereunder (other than contingent indemnity obligations) and under any Notes have been paid in full.

Section 9.5 Payment of Expenses and Taxes; Indemnity.

(a) Costs and Expenses. The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent, limited to one counsel), and shall pay all reasonable fees and time charges and disbursements for attorneys who may be employees of the Administrative Agent, in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Credit Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing Lender and the Swingline Lender in connection with the issuance, amendment, renewal or extension of any Letter of Credit or Swingline Loan or any demand for payment thereunder and (iii) all reasonable out-of-pocket expenses incurred by the Administrative Agent, any Lender, the Issuing Lender or the Swingline Lender (including the fees, charges and disbursements of any counsel for the Administrative Agent, any Lender or the Issuing Lender), and including all reasonable fees and time charges for attorneys who may be employees of the Administrative Agent, any Lender, the Issuing Lender or the Swingline Lender, in connection with the enforcement of its rights (A) in connection with this Agreement and the other Credit Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

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(b) Indemnification by the Borrower. The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender, the Issuing Lender and the Swingline Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, penalties, damages, liabilities and related expenses (including the reasonable fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all reasonable fees and time charges and disbursements for attorneys who may be employees of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower or any other Credit Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Credit Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the Issuing Lender to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Materials of Environmental Concern on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any liability under Environmental Law related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Credit Party, and regardless of whether any Indemnitee is a party thereto, provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (A) are determined by a court of competent jurisdiction to have resulted from the willful misconduct, bad faith or gross negligence of such Indemnitee or (B) are determined by a court of competent jurisdiction to have resulted from a material breach of the obligations of such Indemnitee hereunder or (C) arise out of, or in connection with, any proceeding that does not involve an act or omission by the Credit Parties or any of their Subsidiaries or Affiliates and that is brought by an Indemnitee against any other Indemnitee, other than claims against any Indemnitee in its capacity or in fulfilling its role as Administrative Agent, Issuing Lender, Swingline Lender or any other similar role hereunder. To the extent that any prepayment made by the Borrower to or for an Indemnitee is determined by a court of competent jurisdiction to have been improper or not required by reason of the foregoing exceptions to the Borrower’s indemnity obligations, such Indemnitee shall promptly refund such payment to the Borrower. In matters that involve claims against the Borrower that also name an Indemnitee, such Indemnitee will instruct its counsel, if any, to cooperate with the Borrower and its counsel in an effort to work efficiently and minimize overall legal expense, to the extent possible without compromising any legal position either party may have.

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(c) Reimbursement by Lenders. To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under paragraph (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof), the Issuing Lender, the Swingline Lender or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the Issuing Lender, the Swingline Lender or such Related Party, as the case may be, such Lender’s Revolving Commitment Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent), the Issuing Lender or the Swingline Lender in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent), the Issuing Lender or the Swingline Lender in connection with such capacity. The obligations of the Lenders under this paragraph (c) are subject to the provisions of Section 2.12.

(d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Credit Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in paragraph (b) above shall (in the absence of gross negligence or willful misconduct by such Indemnitee) be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Credit Documents or the transactions contemplated hereby or thereby.

(e) Payments. All amounts due under this Section shall be payable promptly/not later than five (5) days after written demand therefor.

Section 9.6 Successors and Assigns; Participations.

(a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither the Borrower nor any other Credit Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender, and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of paragraph (b) of this Section, (ii) by way of participation in accordance with the provisions of paragraph (d) of this Section or (iii) by way of pledge or assignment of a security interest subject to the restrictions of paragraph (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in paragraph (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

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(b) Assignments by Lenders. Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that any such assignment shall be subject to the following conditions:

(i) Minimum Amounts.

(A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

(B) in any case not described in paragraph (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $5,000,000, in the case of any assignment in respect of a revolving facility, or $1,000,000, in the case of any assignment in respect of a term facility (provided, however, that simultaneous assignments shall be aggregated in respect of a Lender and its Approved Funds), unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed).

(ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loan or the Commitment assigned, except that this clause (ii) shall not prohibit any Lender from assigning all or a portion of its rights and obligations among separate Tranches on a non-pro rata basis.

(iii) Assignment and Assumption. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500 (provided that only one (1) such fee shall be payable in respect of simultaneous assignments by a Lender and its Approved Funds), and the assignee, if it is not a Lender, shall deliver to the Administrative Agent and the Borrower an Administrative Questionnaire.

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(iv) No Assignment to Borrower. No such assignment shall be made to the Borrower or any of the Borrower’s Affiliates or Subsidiaries.

(v) No Assignment to Natural Persons. No such assignment shall be made to a natural person.

Subject to acceptance and recording thereof by the Administrative Agent pursuant to paragraph (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 2.14 and 9.5 with respect to facts and circumstances occurring prior to the effective date of such assignment. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (d) of this Section.

(c) Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at one of its offices in Charlotte, North Carolina a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(d) Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the Lenders, Issuing Lender and Swingline Lender shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Each Lender that sells such a participation shall maintain a register on which it enters the name and address of each of its

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Participants and the principal amount of each such Participant’s participation interest in the Loans (or other rights or obligations) held by it (the “Participant Register”). The entries in the Participant Register shall be conclusive, absent manifest error, and such Lender shall treat each person whose name is recorded in its Participant Register as the owner of such participation interest as the owner thereof for all purposes notwithstanding any notice to the contrary. In maintaining a Participant Register, a Lender shall be acting as the agent of the Borrower solely for purposes of applicable United States federal income tax law and Treasury regulations promulgated thereunder; provided, however, that such Lender thereby undertakes no duty, responsibility or obligation to the Borrower (without limitation, in no event shall such Lender be a fiduciary of the Borrower for any purpose, except that such Lender shall maintain the Participant Register and, upon request by the Borrower, such Lender shall show the Participant Register to the Borrower).

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that affects such Participant except to the extent that such amendment, modification or waiver would (i) extend the scheduled maturity of any Loan or Note or any installment thereon in which such Participant is participating (it is understood and agreed that no waiver, reduction or deferral of a mandatory prepayment required pursuant to Section 2.7(b), nor any amendment of Section 2.7(b) or the definitions of Asset Disposition, shall constitute a reduction of the amount of, or an extension of the scheduled date of, any principal installment of any Loan or Note), or reduce the stated rate or extend the time of payment of interest or fees thereon (except in connection with a waiver of interest at the increased post-default rate) or reduce the principal amount thereof, or increase the amount of the Participant’s participation of the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default shall not constitute a change in the terms of such participation, and that an increase in any Commitment or Loan shall be permitted without consent of a Participant if such Participant’s participation is not increased as a result thereof), (ii) release the Borrower or all or substantially all of the Guarantors from its or their obligations under the Guaranty, (iii) release all or substantially all of the Collateral, or (iv) consent to the assignment or transfer by a Borrower of any of its rights and obligations under this Credit Agreement. Subject to paragraph (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.14 and 2.16 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.7 as though it were a Lender, provided such Participant agrees to be subject to Section 2.11 as though it were a Lender.

(e) Limitations upon Participant Rights. A Participant shall not be entitled to receive any greater payment under Sections 2.14 and 2.16 than the applicable Lender would have been entitled to receive with respect to the participation sold to such

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Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.16 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.16 as though it were a Lender.

(f) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

Section 9.7 Right of Set-off; Sharing of Payments.

(a) If an Event of Default shall have occurred and be continuing, each Lender, the Issuing Lender, and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, the Issuing Lender or any such Affiliate to or for the credit or the account of the Borrower or any other Credit Party against any and all of the obligations of the Borrower or such Credit Party now or hereafter existing under this Agreement or any other Credit Document to such Lender or the Issuing Lender, irrespective of whether or not such Lender or the Issuing Lender shall have made any demand under this Agreement or any other Credit Document and although such obligations of the Borrower or such Credit Party may be unmatured or are owed to a branch or office of such Lender or the Issuing Lender different from the branch or office holding such deposit or obligated on such indebtedness. The rights of each Lender, the Issuing Lender and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the Issuing Lender or their respective Affiliates may have. Each Lender and the Issuing Lender agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.

(b) If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or other obligations hereunder resulting in such Lender’s receiving payment of a proportion of the aggregate amount of its Loans and accrued interest thereon or other such obligations greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (i) notify the Administrative Agent of such fact, and (ii) purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them, provided that:

(i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

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(ii) the provisions of this paragraph shall not be construed to apply to (A) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or (B) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in Letters of Credit to any assignee or participant, other than to the Borrower or any Subsidiary thereof (as to which the provisions of this paragraph shall apply).

(c) Each Credit Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against each Credit Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of each Credit Party in the amount of such participation.

Section 9.8 Table of Contents and Section Headings.

The table of contents and the Section and subsection headings herein are intended for convenience only and shall be ignored in construing this Agreement.

Section 9.9 Counterparts; Integration; Effectiveness; Electronic Execution.

(a) Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Credit Documents, and any separate letter agreements with respect to fees payable to the Administrative Agent, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.1, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or email shall be effective as delivery of a manually executed counterpart of this Agreement.

(b) Electronic Execution of Assignments. The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each

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of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

Section 9.10 Severability.

Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

Section 9.11 Integration.

This Agreement and the other Credit Documents represent the agreement of the Borrower, the other Credit Parties, the Administrative Agent and the Lenders with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent, the Borrower, the other Credit Parties, or any Lender relative to the subject matter hereof not expressly set forth or referred to herein or therein.

Section 9.12 Governing Law.

This Credit Agreement and, unless otherwise specified therein, each other Credit Document and the rights and obligations of the parties under this Credit Agreement and such other Credit Document shall be governed by, and construed and interpreted in accordance with, the law of the State of New York without regard to conflict of laws principles thereof (other than Sections 5-1401 and 5-1402 of The New York General Obligations Law).

Section 9.13 Consent to Jurisdiction; Service of Process and Venue.

(a) Consent to Jurisdiction. The Borrower and each other Credit Party irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the courts of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Credit Document, or for recognition or enforcement of any judgment, and each of the parties hereto irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York sitting State court or, to the fullest extent permitted by applicable law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or in any other Credit Document shall affect any right that the Administrative Agent, any

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Lender or the Issuing Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Credit Document against the Borrower or any other Credit Party or its properties in the courts of any jurisdiction.

(b) Service of Process. Each party hereto irrevocably consents to service of process in the manner provided for notices in Section 9.2. Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable law.

(c) Venue. The Borrower and each other Credit Party irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement or any other Credit Document in any court referred to in paragraph (a) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

Section 9.14 Confidentiality.

Each of the Administrative Agent, the Lenders and the Issuing Lender agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and other representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder, under any other Credit Document or Secured Hedging Agreement or any action or proceeding relating to this Agreement, any other Credit Document or Secured Hedging Agreement or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (g) (i) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (ii) an investor or prospective investor in securities issued by an Approved Fund that also agrees that Information shall be used solely for the purpose of evaluating an investment in such securities issued by the Approved Fund, (iii) a trustee, collateral manager, servicer, backup servicer, noteholder or secured party in connection with the administration, servicing and reporting on the assets serving as collateral for securities issued by an Approved Fund, or (iv) a nationally recognized rating agency that requires access to information regarding the Credit Parties, the Loans and Credit Documents in connection with ratings issued in respect of securities issued by an Approved Fund (in each case, it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such information and instructed to keep such information confidential), (h) with the consent of the Borrower or (i) to the extent such Information (x) becomes publicly

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available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender, the Issuing Lender or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower. Further, the foregoing notwithstanding, the Credit Parties agree that the Administrative Agent, any Lender or any Affiliate of the Administrative Agent or such Lender may use any Credit Party’s name or logo in connection with reasonable and customary advertising, marketing or other similar purposes.

For purposes of this Section, “Information” means all information received from the Borrower of any of its Subsidiaries relating to the Borrower or any of its Subsidiaries or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or the Issuing Lender on a nonconfidential basis prior to disclosure by the Borrower or any of its Subsidiaries. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

Section 9.15 Acknowledgments.

The Borrower and the other Credit Parties each hereby acknowledges that:

(a) it has been advised by counsel in the negotiation, execution and delivery of each Credit Document;

(b) neither the Administrative Agent nor any Lender has any fiduciary relationship with or duty to the Borrower or any other Credit Party arising out of or in connection with this Agreement and the relationship between the Administrative Agent and the Lenders, on one hand, and the Borrower and the other Credit Parties, on the other hand, in connection herewith is solely that of debtor and creditor; and

(c) no joint venture exists among the Lenders or among the Borrower or the other Credit Parties and the Lenders.

Section 9.16 Waivers of Jury Trial.

EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

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Section 9.17 Patriot Act Notice.

Each Lender and the Administrative Agent (for itself and not on behalf of any other party) hereby notifies the Borrower that, pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrower and the other Credit Parties, which information includes the name and address of the Borrower and the other Credit Parties and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower and the other Credit Parties in accordance with the Patriot Act.

Section 9.18 Resolution of Drafting Ambiguities.

Each Credit Party acknowledges and agrees that it was represented by counsel in connection with the execution and delivery of this Agreement and the other Credit Documents to which it is a party, that it and its counsel reviewed and participated in the preparation and negotiation hereof and thereof and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation hereof or thereof.

Section 9.19 Continuing Agreement.

This Credit Agreement shall be a continuing agreement and shall remain in full force and effect until all Loans, LOC Obligations, interest, fees and other Credit Party Obligations (other than those obligations that expressly survive the termination of this Credit Agreement) have been paid in full and all Commitments and Letters of Credit have been terminated. Upon termination, the Credit Parties shall have no further obligations (other than those obligations that expressly survive the termination of this Credit Agreement) under the Credit Documents and the Administrative Agent shall, at the request and expense of the Borrower, deliver all the Collateral in its possession to the Borrower and release all Liens on the Collateral and sign, deliver and file all documents reasonably requested by the Borrower in connection with such release; provided that should any payment, in whole or in part, of the Credit Party Obligations be rescinded or otherwise required to be restored or returned by the Administrative Agent or any Lender, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, then to the extent permitted by applicable law, the Credit Documents shall automatically be reinstated and all Liens of the Administrative Agent shall reattach to the Collateral and all amounts required to be restored or returned and all costs and expenses incurred by the Administrative Agent or any Lender in connection therewith shall be deemed included as part of the Credit Party Obligations.

Section 9.20 Lender Consent.

Each Lender executing this Credit Agreement (a) approves the Credit Agreement and acknowledges and agrees that all of the conditions set forth in Section 4.1 have been satisfied, (b) authorizes and appoints the Administrative Agent as its agent in accordance with the terms of Article VIII, (c) is a Lender hereunder and therefore shall have all the rights and obligations of a Lender under this Agreement and (d) has consented to, approved or accepted or is satisfied with, each document or other matter required under Section 4.1 to be consented to or approved by or be acceptable or satisfactory to a Lender.

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ARTICLE X

GUARANTY

Section 10.1 The Guaranty.

In order to induce the Lenders to enter into this Agreement and any Hedging Agreement Provider to enter into any Secured Hedging Agreement and to extend credit hereunder and thereunder and in recognition of the direct benefits to be received by the Guarantors from the Extensions of Credit hereunder and any Secured Hedging Agreement, each of the Guarantors hereby agrees with the Administrative Agent, the Lenders and the Hedging Agreement Providers as follows: each Guarantor hereby unconditionally and irrevocably jointly and severally guarantees as primary obligor and not merely as surety the full and prompt payment when due, whether upon maturity, by acceleration or otherwise, of any and all Credit Party Obligations. If any or all of the indebtedness becomes due and payable hereunder or under any Secured Hedging Agreement, each Guarantor unconditionally promises to pay such indebtedness to the Administrative Agent, the Lenders, the Hedging Agreement Providers, or their respective order, on demand, together with any and all reasonable expenses which may be incurred by the Administrative Agent or the Lenders in collecting any of the Credit Party Obligations. The Guaranty set forth in this Article X is a guaranty of timely payment and not of collection. The word “indebtedness” is used in this Article X in its most comprehensive sense and includes any and all advances, debts, obligations and liabilities of the Borrower, including specifically all Credit Party Obligations, arising in connection with this Agreement, the other Credit Documents or any Secured Hedging Agreement, in each case, heretofore, now, or hereafter made, incurred or created, whether voluntarily or involuntarily, absolute or contingent, liquidated or unliquidated, determined or undetermined, whether or not such indebtedness is from time to time reduced, or extinguished and thereafter increased or incurred, whether the Borrower may be liable individually or jointly with others, whether or not recovery upon such indebtedness may be or hereafter become barred by any statute of limitations, and whether or not such indebtedness may be or hereafter become otherwise unenforceable.

Notwithstanding any provision to the contrary contained herein or in any other of the Credit Documents, to the extent the obligations of a Guarantor shall be adjudicated to be invalid or unenforceable for any reason (including, without limitation, because of any applicable state or federal law relating to fraudulent conveyances or transfers) then the obligations of each such Guarantor hereunder shall be limited to the maximum amount that is permissible under applicable law (whether federal or state and including, without limitation, the Bankruptcy Code).

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Section 10.2 Bankruptcy.

Additionally, each of the Guarantors unconditionally and irrevocably guarantees jointly and severally the payment of any and all Credit Party Obligations of the Borrower to the Lenders and any Hedging Agreement Provider whether or not due or payable by the Borrower upon the occurrence of any Bankruptcy Event and unconditionally promises to pay such Credit Party Obligations to the Administrative Agent for the account of the Lenders and to any such Hedging Agreement Provider, or order, on demand, in lawful money of the United States. Each of the Guarantors further agrees that to the extent that the Borrower or a Guarantor shall make a payment or a transfer of an interest in any property to the Administrative Agent, any Lender or any Hedging Agreement Provider, which payment or transfer or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, or otherwise is avoided, and/or required to be repaid to the Borrower or a Guarantor, the estate of the Borrower or a Guarantor, a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then to the extent of such avoidance or repayment, the obligation or part thereof intended to be satisfied shall be revived and continued in full force and effect as if said payment had not been made.

Section 10.3 Nature of Liability.

The liability of each Guarantor hereunder is exclusive and independent of any security for or other guaranty of the Credit Party Obligations of the Borrower whether executed by any such Guarantor, any other guarantor or by any other party, and no Guarantor’s liability hereunder shall be affected or impaired by (a) any direction as to application of payment by the Borrower or by any other party, or (b) any other continuing or other guaranty, undertaking or maximum liability of a guarantor or of any other party as to the Credit Party Obligations of the Borrower, or (c) any reduction of any such other guaranty or undertaking, or (d) any dissolution, termination or increase, decrease or change in personnel by the Borrower, or (e) any payment made to the Administrative Agent, the Lenders or any Hedging Agreement Provider on the Credit Party Obligations which the Administrative Agent, such Lenders or such Hedging Agreement Provider repay the Borrower pursuant to court order in any bankruptcy, reorganization, arrangement, moratorium or other debtor relief proceeding, and each of the Guarantors waives to the extent permitted by law any right to the deferral or modification of its obligations hereunder by reason of any such proceeding.

Section 10.4 Independent Obligation.

The obligations of each Guarantor hereunder are independent of the obligations of any other Guarantor or the Borrower, and a separate action or actions may be brought and prosecuted against each Guarantor whether or not action is brought against any other Guarantor or the Borrower and whether or not any other Guarantor or the Borrower is joined in any such action or actions.

Section 10.5 Authorization.

Each of the Guarantors authorizes the Administrative Agent, each Lender and each Hedging Agreement Provider without notice or demand (except as shall be required by applicable law and cannot be waived), and without affecting or impairing its liability hereunder,

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from time to time to (a) renew, compromise, extend, increase, accelerate or otherwise change the time for payment of, or otherwise change the terms of the Credit Party Obligations or any part thereof in accordance with this Agreement and any Secured Hedging Agreement, as applicable, including any increase or decrease of the rate of interest thereon, (b) take and hold security from any Guarantor or any other party for the payment of this Guaranty or the Credit Party Obligations and exchange, enforce waive and release any such security, (c) apply such security and direct the order or manner of sale thereof as the Administrative Agent and the Lenders in their discretion may determine, (d) release or substitute any one or more endorsers, Guarantors, the Borrower or other obligors and (e) to the extent otherwise permitted herein, release or substitute any Collateral.

Section 10.6 Reliance.

It is not necessary for the Administrative Agent, the Lenders or any Hedging Agreement Provider to inquire into the capacity or powers of the Borrower or the officers, directors, members, partners or agents acting or purporting to act on its behalf, and any Credit Party Obligations made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder.

Section 10.7 Waiver.

(a) Each of the Guarantors waives any right (except as shall be required by applicable law and cannot be waived) to require the Administrative Agent, any Lender or any Hedging Agreement Provider to (i) proceed against the Borrower, any other guarantor or any other party, (ii) proceed against or exhaust any security held from the Borrower, any other guarantor or any other party, or (iii) pursue any other remedy in the Administrative Agent’s, any Lender’s or any Hedging Agreement Provider’s power whatsoever. Each of the Guarantors waives any defense based on or arising out of any defense of the Borrower, any other guarantor or any other party other than payment in full of the Credit Party Obligations (other than contingent indemnity obligations), including without limitation any defense based on or arising out of the disability of the Borrower, any other guarantor or any other party, or the unenforceability of the Credit Party Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Borrower other than payment in full of the Credit Party Obligations. The Administrative Agent may, at its election, foreclose on any security held by the Administrative Agent or a Lender by one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable (to the extent such sale is permitted by applicable law), or exercise any other right or remedy the Administrative Agent or any Lender may have against the Borrower or any other party, or any security, without affecting or impairing in any way the liability of any Guarantor hereunder except to the extent the Credit Party Obligations have been paid in full and the Commitments have been terminated. Each of the Guarantors waives any defense arising out of any such election by the Administrative Agent or any of the Lenders, even though such election operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of the Guarantors against the Borrower or any other party or any security.

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(b) Each of the Guarantors waives all presentments, demands for performance, protests and notices, including without limitation notices of nonperformance, notice of protest, notices of dishonor, notices of acceptance of this Guaranty, and notices of the existence, creation or incurring of new or additional Credit Party Obligations. Each Guarantor assumes all responsibility for being and keeping itself informed of the Borrower’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Credit Party Obligations and the nature, scope and extent of the risks which such Guarantor assumes and incurs hereunder, and agrees that neither the Administrative Agent nor any Lender shall have any duty to advise such Guarantor of information known to it regarding such circumstances or risks.

(c) Each of the Guarantors hereby agrees it will not exercise any rights of subrogation which it may at any time otherwise have as a result of this Guaranty (whether contractual, under Section 509 of the U.S. Bankruptcy Code, or otherwise) to the claims of the Lenders or any Hedging Agreement Provider against the Borrower or any other guarantor of the Credit Party Obligations of the Borrower owing to the Lenders or such Hedging Agreement Provider (collectively, the “Other Parties”) and all contractual, statutory or common law rights of reimbursement, contribution or indemnity from any Other Party which it may at any time otherwise have as a result of this Guaranty until such time as the Credit Party Obligations (other than contingent indemnity obligations) shall have been paid in full and the Commitments have been terminated. Each of the Guarantors hereby further agrees not to exercise any right to enforce any other remedy which the Administrative Agent, the Lenders or any Hedging Agreement Provider now have or may hereafter have against any Other Party, any endorser or any other guarantor of all or any part of the Credit Party Obligations of the Borrower and any benefit of, and any right to participate in, any security or collateral given to or for the benefit of the Lenders and/or the Hedging Agreement Providers to secure payment of the Credit Party Obligations of the Borrower until such time as the Credit Party Obligations (other than contingent indemnity obligations) shall have been paid in full and the Commitments have been terminated.

Section 10.8 Limitation on Enforcement.

The Lenders and the Hedging Agreement Providers agree that this Guaranty may be enforced only by the action of the Administrative Agent acting upon the instructions of the Required Lenders or such Hedging Agreement Provider (only with respect to obligations under the applicable Secured Hedging Agreement) and that no Lender or Hedging Agreement Provider shall have any right individually to seek to enforce or to enforce this Guaranty, it being understood and agreed that such rights and remedies may be exercised by the Administrative Agent for the benefit of the Lenders under the terms of this Agreement and for the benefit of any Hedging Agreement Provider under any Secured Hedging Agreement. The Lenders and the Hedging Agreement Providers further agree that this Guaranty may not be enforced against any director, officer, employee or stockholder of the Guarantors.

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Section 10.9 Confirmation of Payment.

The Administrative Agent and the Lenders will, upon request after payment of the Credit Party Obligations which are the subject of this Guaranty and termination of the Commitments relating thereto, confirm to the Borrower, the Guarantors or any other Person that such indebtedness and obligations have been paid and the Commitments relating thereto terminated, subject to the provisions of Section 10.2.

[Signature Pages Follow]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by its proper and duly authorized officers as of the day and year first above written.

BORROWER:	ECLIPSYS CORPORATION, a Delaware corporation
	By:	/s/ Robert J. Colletti
	Name:	Robert J. Colletti
	Title:	SVP and Chief Financial Officer
GUARANTOR:	ENTERPRISE PERFORMANCE SYSTEMS, INC., a Missouri corporation
	By:	/s/ Robert J. Colletti
	Name:	Robert J. Colletti
	Title:	SVP and Chief Financial Officer

ADMINISTRATIVE AGENT:

WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent and as a Lender
By:	/s/ Robin B. Henderson
Name:	Robin B. Henderson
Title:	Senior Vice President

LENDER:	RBC Bank (USA),
	as a Lender
	By:	/s/ James R. Payer
	Name:	James R. Payer
	Title:	Managing Director

LENDER:	SunTrust Bank, as a Lender
	By:	/s/ David Dupuy
	Name:	David Dupuy
	Title:	Managing Director

LENDER:	Fifth Third Bank,
	as a Lender
	By:	/s/ Joshua Livingston
	Name:	Joshua Livingston
	Title:	Officer

LENDER:	Bank of America, N.A., as a Lender
	By:	/s/ Khuzaim Y. Shakir
	Name:	Khuzaim Y. Shakir
	Title:	Senior Vice President

EX-10.2

Exhibit 10.2

EXECUTION VERSION

AGREEMENT AND PLAN OF MERGER

among

MEDINOTES CORPORATION,

THE STOCKHOLDER SIGNATORIES,

THE STOCKHOLDERS’ REPRESENTATIVE,

SIRONA ACQUISITION CORPORATION

and

ECLIPSYS CORPORATION

DATED AS OF SEPTEMBER 19, 2008

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS		2
ARTICLE II THE MERGER		16
2.1	The Merger	16
2.2	Closing; Effective Time	16
2.3	Effects of the Merger	17
2.4	Certificate of Incorporation and By-laws	17
2.5	Directors; Officers	17
2.6	Subsequent Actions	17
2.7	Effect of Merger on the Capital Stock of MediNotes	18
2.8	Dissenting Shares	20
2.9	Payment for Shares, Company Options and Company Warrants	20
2.10	Calculation of Net Working Capital, Closing Payment and Final Adjustments	24
2.11	Dispute Resolution of Calculation of Net Working Capital, the Closing Date Cash or the Closing Date Debt	26
2.12	Continuity of Interest Adjustments	26
2.13	Approval	27
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE MAJOR STOCKHOLDERS		27
3.1	Ownership of the Shares, Company Options and Company Warrants	27
3.2	Authorization, Validity, and Effect of Agreements	28
3.3	No Violations; Consents	28
3.4	Related Party Transactions	29
3.5	Investment Intent	29
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MEDINOTES		31
4.1	MediNotes Existence; Good Standing	31
4.2	Subsidiaries	31
4.3	Capitalization	31
4.4	Material Contracts; No Violation	32
4.5	Financial Statements; No Undisclosed Liabilities	35
4.6	Authority, No Violations; Consents	36
4.7	Compliance; Permits; Litigation	37
4.8	Absence of Certain Changes	38
4.9	Taxes	39
4.10	Certain Employee Plans	42
4.11	Labor Matters	43
4.12	Restrictions on Business Activities	45
4.13	Real Property	45
4.14	Intellectual Property	45
4.15	Other Assets	51

i

4.16	Environmental Matters	52
4.17	Insurance	52
4.18	Warranties	54
4.19	Customers; Suppliers	55
4.20	Accounts Receivable	56
4.21	Accounts Payable	56
4.22	Bank Accounts	56
4.23	No Brokers	56
4.24	Disclosure	57
ARTICLE V REPRESENTATIONS AND WARRANTIES OF ECLIPSYS AND MERGER SUB		57
5.1	Existence; Good Standing; Corporate Authority	57
5.2	Authorization, Validity, and Effect of Agreements	57
5.3	No Violation	58
5.4	No Brokers	58
5.5	Funds	58
5.6	Valid Issuance	58
5.7	Exchange Compliance	58
5.8	SEC Filings; Financials; Absence of Changes	59
5.9	Tax-Free Reorganization	59
ARTICLE VI COVENANTS		59
6.1	Conduct of Business	59
6.2	Further Action	62
6.3	Access to Information	63
6.4	Publicity	63
6.5	Expenses	64
6.6	Third-Party Offers	64
6.7	Restrictive Covenants	65
6.8	Directors	67
6.9	Stockholders’ Representative	67
6.10	Employee Matters	68
6.11	Release	69
6.12	Confidentiality	70
6.13	Covenants Regarding Contracts	72
6.14	Stockholder Meeting	72
6.15	Tax-Free Reorganization Status	72
6.16	Second Merger	72
6.17	Indemnification of Directors and Officers	73
6.18	Compliance with Rule 144(c)(1)	73
6.19	Termination of 401(k) Plan	73
6.20	Bond Agreement Escrow	73
ARTICLE VII SURVIVAL; INDEMNIFICATION; REMEDIES		75
7.1	Survival of Representations and Warranties and Covenants	75
7.2	Indemnification and Other Rights	75

ii

7.3	Time Limitations	77
7.4	Other Limitations	78
7.5	Set-Off	80
7.6	Procedures Relating to Indemnification Involving Third-Party Claims	81
7.7	Other Claims	83
7.8	Recovery in the Case of Strict Liability or Negligence	83
7.9	Sole and Exclusive Remedy	83
ARTICLE VIII CONDITIONS		84
8.1	Conditions to Each Party’s Obligation to Effect the Closing	84
8.2	Conditions to Obligations of Eclipsys	84
8.3	Conditions to the Obligations of MediNotes and the Stockholders	87
ARTICLE IX TERMINATION		88
9.1	Termination by Mutual Consent	88
9.2	Termination by Eclipsys or MediNotes	88
9.3	Termination by MediNotes	89
9.4	Termination by Eclipsys	89
9.5	Effect of Termination	89
ARTICLE X MISCELLANEOUS		90
10.1	Entire Agreement; Assignment	90
10.2	Validity	90
10.3	Notices	91
10.4	Governing Law	92
10.5	Construction	92
10.6	Counterparts	92
10.7	Parties In Interest	92
10.8	Prior Review and Counsel	92
10.9	Waiver	93
10.10	Amendments	93
10.11	Specific Performance	93
10.12	Further Assurances	93
10.13	Cumulative Remedies	93
10.14	Arbitration	93
10.15	Costs and Fees	95

iii

EXHIBITS

Exhibit A	Form of Certificate of Merger
Exhibit B	[Intentionally Deleted]
Exhibit C-1	Form of Employment Agreement (Bond)
Exhibit C-2	Form of Employment Agreement (Restricted Stock)
Exhibit C-3	Form of Employment Agreement (Cash)
Exhibit C-4	Key Employee Details
Exhibit D	Form of Legal Opinion
Exhibit E	[Intentionally Deleted]
Exhibit F	Form of Investor Questionnaire
Exhibit G	Form of Royalty Termination Agreement
Exhibit H	Form of Commission Agreement
Exhibit I	Form of Consulting Agreement Termination

SCHEDULES

Schedule 1(a)	Key Employees
Schedule 1(b)	Stockholder Notes
Schedule 1(c)	Accredited Investors
Schedule 2.10	Hypothetical Calculation-Closing Date Net Worth
Schedule 6.10(a)	Continuing Employees

Disclosure Schedule

Section 3.1	Ownership of the Shares
Section 4.1	Foreign Jurisdictions
Section 4.3(a)(i)	Options and Warrants
Section 4.4(a)	Material Contracts
Section 4.5(a)	Financial Statements
Section 4.7(b)	Permits
Section 4.7(d)(i)	Litigation
Section 4.10(a)	Company Benefit Plans
Section 4.11(b)(i)	Employees
Section 4.11(b)(ii)	Independent Contractors
Section 4.13(a)	Leased Real Property
Section 4.14(a)(i)	Company Registered IP
Section 4.14(a)(ii)	Other Rights in Company Registered IP
Section 4.14(b)	Company Licensed IP
Section 4.14(d)(i)	Form of Assignment Agreements
Section 4.14(d)(ii)	Software Escrow Agreements
Section 4.14(m)	Software Incorporating Encryption Subroutines
Section 4.17(a)	Insurance
Section 4.17(c)	Material Open Claims
Section 4.18(a)	Warranty Claims
Section 4.18(b)	Documentation

iv

Section 4.19(a)	Customers
Section 4.19(c)	Suppliers
Section 4.20	Accounts Receivable
Section 4.21	Accounts Payable
Section 4.22	Bank Accounts

v

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER, dated as of September 19, 2008 (this “Agreement”), is entered into among Eclipsys Corporation, a Delaware corporation (“Eclipsys”), Sirona Acquisition Corporation, an Iowa corporation and a wholly owned Subsidiary of Eclipsys (“Merger Sub”), MediNotes Corporation, an Iowa corporation (“MediNotes”), the stockholders of MediNotes named on the signature page hereto (the “Major Stockholders”) and Danny R. Wipff (as the “Stockholders’ Representative”);

WHEREAS, the Boards of Directors of each of Eclipsys, MediNotes and Merger Sub have (i) determined that the merger of Merger Sub with and into MediNotes (the “Merger”), with MediNotes surviving the Merger, and the Second Merger (as defined below), are advisable and fair to, and in the best interests of, their respective stockholders and (ii) approved the Merger upon the terms and subject to the conditions set forth in this Agreement and pursuant to the applicable laws of the States of Iowa and Delaware;

WHEREAS, as soon as practicable following the Merger, Eclipsys shall cause the Surviving Corporation to be merged with and into a wholly owned limited liability company Subsidiary of Eclipsys that is treated as a disregarded entity for tax purposes (the “Second Merger”), with such entity surviving the Second Merger as a wholly owned Subsidiary of Eclipsys;

WHEREAS, Eclipsys, Merger Sub, MediNotes and the Major Stockholders intend for federal income tax purposes that the Merger followed by the Second Merger qualify as a “reorganization” described in Section 368(a) of the Code, and that this Agreement constitute a “plan of reorganization” within the meaning of Section 1.368-2(g) of the regulations promulgated under the Code;

WHEREAS, as a condition to and concurrently with the execution of this Agreement, the Major Stockholders representing approximately 80% of the outstanding shares of Company Common Stock, approximately 83% of the outstanding shares of Series A Preferred Stock, 100% of the outstanding shares of Series B Preferred Stock and approximately 56% of the outstanding shares of Series C Preferred Stock have entered into a voting agreement with Eclipsys (the “Voting Agreement”) pursuant to which such Stockholders have agreed, among other matters, to vote their Shares in favor of the approval and adoption of this Agreement and the transactions contemplated hereby, including the Merger; and

WHEREAS, the parties desire to make certain representations, warranties, covenants and agreements in connection with the Merger and to prescribe various conditions to the Merger.

NOW, THEREFORE, in consideration of the foregoing, and the respective representations, warranties, covenants and agreements set forth herein, and for other good and valuable consideration, intending to be legally bound, the parties hereto agree as follows:

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ARTICLE I

DEFINITIONS

As used in this Agreement:

“Acceptance Notice” is defined in Section 2.10(c).

“Accounts Payable” means all accounts payable of MediNotes.

“Accounts Receivable” means (a) all trade accounts receivable and other rights to payment from customers of MediNotes, and (b) all other accounts or notes receivable of MediNotes, in each case, whether billed or unbilled.

“Affiliate,” as applied to any Person, shall mean any other Person directly or indirectly controlling, controlled by, or under common control with, the first Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities, by Contract or otherwise.

“Aggregate Exercise Price” means the aggregate exercise price of all outstanding Company Options and Company Warrants.

“Aggregate Liquidation Preference” means an amount equal to the sum of the following: (i) the Series A Liquidation Preference multiplied by the number of shares of Series A Preferred Stock outstanding immediately prior to the Effective Time; (ii) the Series B Liquidation Preference multiplied by the number of shares of Series B Preferred Stock outstanding immediately prior to the Effective Time; (iii) the Series C Liquidation Preference multiplied by the number of shares of Series C Preferred Stock outstanding immediately prior to the Effective Time; and (iv) the Series D Cash Liquidation Preference multiplied by the number of shares of Series D Preferred Stock outstanding immediately prior to the Effective Time.

“Aggregate Option Consideration” means the aggregate amount of Option Consideration payable in respect of Company Options pursuant to Section 2.7(d).

“Aggregate Warrant Consideration” means the aggregate amount of Warrant Consideration payable in respect of Company Warrants pursuant to Section 2.7(e).

“Agreement” is defined in the introductory paragraph of this Agreement.

“Average Market Price” means the arithmetic mean of the last sale price (or, if on any day no sale price is reported, the average of the quoted high bid and low ask price on such day) of a share of Eclipsys Common Stock on the Nasdaq Stock Market on each of the 10 consecutive trading days ending two trading days immediately prior to the Closing Date.

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“Bond Agreement” means the Asset Purchase Agreement, dated February 25, 2008, by and among MediNotes, the Bond Entities, Travis Bond as Owners’ Representative and the equity owners named therein.

“Bond Entities” means Bond Medical Group, Bond SideWinder, LLC and Bond Technologies, L.L.C.

“Bond Escrow Fund” is defined in Section 6.20.

“Bond Medical Group” is defined in Section 6.7(b).

“Business” means the business of MediNotes of developing, marketing, selling, and licensing software for physician practice management, electronic health records and electronic prescriptions, including the Software Products, providing certain related support and services, and any incidental, related or ancillary businesses as currently conducted or under development by MediNotes on the Closing Date.

“Business Day” means any day other than a Saturday, Sunday or day on which banks in the State of New York are authorized or required to close or the national securities exchanges in the United States are closed.

“Capital Stock” means common stock and preferred stock, partnership interests, profits interests, limited liability company interests or other equity, equity equivalent, or ownership interests, entitling the holder thereof to vote with respect to matters involving the issuer thereof, or to share in its profits, or to share in its distributions upon its liquidation, or the sale or transfer of its assets, and any securities exercisable, or exchangeable for, or convertible into, such capital stock.

“Capitalization Update” is defined in Section 6.2(c).

“Cash Merger Consideration” means the product of the Purchase Price and the Cash Percentage.

“Cash Percentage” is thirty-nine percent (39%).

“Certificates” is defined in Section 2.9(c).

“Claimed Amount” is defined in Section 2.9(b).

“Claims” is defined in Section 6.11(a).

“Closing” is defined in Section 2.2(a).

“Closing Date” is defined in Section 2.2(a).

“Closing Payment” is defined in Section 2.9(a)(ii).

“Closing Payment Amount” is defined in Section 2.9(a)(ii).

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“Closing Payment Cash” is defined in Section 2.9(a)(ii).

“Code” means the Internal Revenue Code of 1986, as amended (or any successor thereto).

“Company Benefit Plans” means each of the following which is sponsored, maintained, contributed to or required to be contributed to by MediNotes for the benefit of the current or former employees, officers or directors of MediNotes, has been so sponsored, maintained, contributed to or required to be contributed to by MediNotes prior to the Closing Date, or with respect to which MediNotes has any liability (contingent or otherwise): (i) each “employee benefit plan,” as such term is defined in Section 3(3) of ERISA (including, but not limited to, employee benefit plans, such as foreign plans, which are not subject to the provisions of ERISA), and (ii) each stock or stock option plan, bonus plan or arrangement, incentive award plan or arrangement, change in control, severance or termination pay plan, policy, or agreement, deferred compensation agreement or arrangement, or supplemental income arrangement, and each other employee benefit plan, program or practice which is not described in clause (i) of this sentence.

“Company Capital Stock” means the Company Common Stock, the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, the Company Options and the Company Warrants.

“Company Common Stock” means the common stock, no par value, of MediNotes.

“Company IP” means any Company Licensed IP or Company Owned IP, including Company Registered IP.

“Company IP Contract” is defined in Section 4.14(o).

“Company Licensed IP” means any Intellectual Property that is owned by any other Person and that is licensed to, used or distributed by MediNotes.

“Company Option” means each option issued by MediNotes to purchase Company Capital Stock.

“Company Owned IP” means any Intellectual Property owned (in whole or in part) by MediNotes.

“Company Registered IP” means all Company Owned IP that is the subject of any registrations, or applications or filings for registration with or by any Governmental Entity, including without limitation the United States Patent and Trademark Office, foreign patent offices, or the United States Copyright Office.

“Company Stockholder Approval” is defined in Section 4.6(a).

“Company Warrant” means each warrant to purchase Company Capital Stock issued by MediNotes.

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“Confidential Information” means the disclosing party’s confidential and proprietary information, including information concerning the disclosing party’s business, products (including, with respect to MediNotes, any source code, object code, functions, current and future design documents, documentation and associated functions and functionality provided by and related to any Software Product), operations, employees, customers, suppliers and other technical and non-technical information and trade secrets, whenever disclosed, whether before or after the date hereof, and whether prepared by the disclosing party, its officers, employees, agents or advisors or otherwise and irrespective of the form of communication, and all notes, analyses, compilations, studies, interpretations or other documents which contain, reflect or are based upon, in whole or in part, the Confidential Information of another party.

The term “Confidential Information” shall not include information that (i) is or becomes generally available to the public other than as a result of a disclosure by the receiving party or its representatives, (ii) was within the receiving party’s possession prior to its being furnished to it, provided that the source of such information was not known by the receiving party to be bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to, the disclosing party with respect to such information, (iii) becomes available to the receiving party on a non-confidential basis from a source other than the disclosing party or any of its representatives, provided that such source is not bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation of confidentiality to, the disclosing party or any other Person with respect to such information, or (iv) is developed by the receiving party independently of Confidential Information provided by the disclosing party.

“Confidentiality Agreement” means that certain confidentiality agreement, dated May 2, 2008, between Eclipsys and MediNotes.

“Consent” means any consent, approval, authorization, waiver, permit, grant, franchise, concession, exemption or order of, registration, certificate, declaration or filing with, or report or notice to, any Person, including in each case any Governmental Entity.

“Contract” means any contract, agreement, or other instrument or understanding of any kind, including any amendment, supplement, modification, extension or renewal in respect of the foregoing, in each case, whether written or oral.

“Costs and fees” is defined in Section 10.15.

“Covenant Not to Compete” is defined in Section 6.7(b).

“Current Assets” means the aggregate assets of MediNotes that would be categorized as “current assets” on a balance sheet of MediNotes under GAAP, as of 11:59 p.m. on the Closing Date, but excluding all cash.

“Current Liabilities” means the aggregate liabilities of MediNotes that would be categorized as “current liabilities” on a balance sheet of MediNotes under GAAP, as of 11:59 p.m. on the Closing Date, but excluding (i) deferred revenues, other than deferred revenues, if any, representing accruals for customer claims, (ii) the current portion of any Final Closing Date Debt (or, for purposes of the Estimated Closing Date Net Working Capital, the Estimated Closing Date Debt) and (iii) accrued Seller Transaction Expenses unpaid as of the

5

Closing (provided such expenses are less than or equal to the Stockholder Fund Amount available for payment thereof). For the avoidance of doubt, Current Liabilities shall include any amounts payable to MediNotes’ employees as a result of or in connection with consummation of the Merger or the Second Merger, including any bonuses, but excluding severance payments, if any, resulting from the post-Closing termination of any employee.

“Customer Documentation” is defined in Section 4.18(b).

“Damages” is defined in Section 7.2(a).

“Debt” means, as to any Person, (i) any indebtedness of such Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or other similar instruments or letters of credit (or reimbursement agreements in respect thereof) or banker’s acceptances or representing capitalized lease obligations, (ii) all indebtedness of others secured by a Lien on any asset of such Person (whether or not such indebtedness is assumed by such Person), (iii) all obligations contingent or otherwise, of such Person under letter of credit or similar facilities, and (iv) to the extent not otherwise included in clauses (i) through (iii), any guaranty by such Person of any Debt of any other Person.

“Disclosure Schedule” is defined in the introductory paragraph of Article III.

“Dissenting Shares” is defined in Section 2.8.

“Dissenting Share Amount” means the product of the Per Share Consideration and the number of Dissenting Shares.

“Eclipsys” is defined in the introductory paragraph of this Agreement.

“Eclipsys Common Stock” means the Class A common stock of Eclipsys, par value $.01 per share.

“Eclipsys Final Calculations” is defined in Section 2.10(c).

“Eclipsys Indemnified Parties” is defined in Section 7.2(a).

“Eclipsys SEC Filings” is defined in Section 5.8.

“Effective Time” is defined in Section 2.2(c).

“Effective Time Company Holder” shall mean any holder of record of any Company Capital Stock immediately prior to the Effective Time.

“Employee” means employees and other persons filling similar functions.

“Employment Agreements” is defined in Section 8.2(l).

6

“Environmental Laws” means the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq., the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. § 11001 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. § 136 et seq., the Clean Air Act, 42 U.S.C. § 7401 et seq., the Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C. § 1251 et seq., the Safe Drinking Water Act, 42 U.S.C. § 300f et seq., the Occupational Safety and Health Act, 29 U.S.C. § 641 et seq., and the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq., as any of the above statutes have been or may be amended from time to time, all rules and regulations promulgated pursuant to any of the above statutes, and any other Legal Requirements related to or governing Environmental Matters, as the same have been or may be amended from time to time, including any common law cause of action providing any right or remedy with respect to Environmental Matters, and all applicable Orders, of any Governmental Entity relating to Environmental Matters.

“Environmental Matters” means all matters involving the prevention of or response to pollution, the handling or management of Hazardous Materials, the regulation of wetlands and other natural resources, and the protection of the environment, noise, human health, and occupational health and safety.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended (or any successor thereto).

“ERISA Affiliate” means any trade or business, whether or not incorporated, under common control with MediNotes and that, together with MediNotes, is treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of the Code.

“Escrow Accounts” is defined in Section 2.9(b).

“Escrow Agent” means Wells Fargo Bank, National Association, or such other escrow agent selected by Eclipsys and MediNotes, or after the Closing, Eclipsys and the Stockholders’ Representative.

“Escrow Merger Consideration” means any remaining portion of the escrowed funds not subject to claims and therefore released by the Escrow Agreement to the Effective Time Company Holders as provided by this Agreement and the Escrow Agreement.

“Estimated Closing Date Cash” means MediNotes’ good faith estimate of Final Closing Date Cash determined pursuant to Section 2.10(a).

“Estimated Closing Date Debt” means MediNotes’ good faith estimate of Final Closing Date Debt determined pursuant to Section 2.10(a).

“Estimated Closing Date Net Working Capital” means MediNotes’ good faith estimate of Final Closing Date Net Working Capital determined pursuant to Section 2.10(a).

“Estimated Closing Date Net Working Capital Adjustment” is the amount equal to the Estimated Closing Date Net Working Capital less the Minimum Net Working Capital.

7

“Estimated Purchase Price” means an amount equal to (i) $42,000,000, less (ii) the Estimated Closing Date Debt, plus (iii) the Estimated Closing Date Cash, plus (or minus if negative) (iii) any Estimated Closing Date Net Working Capital Adjustment.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Final Closing Date Cash” means the amount of cash of MediNotes, as of 11:59 p.m. on the Closing Date, less $1,000,000.

“Final Closing Date Debt” means all Debt of MediNotes, as of 11:59 p.m. on the Closing Date, including capital lease obligations and the obligations under the Stockholder Notes.

“Final Closing Date Net Working Capital” means the Current Assets less the Current Liabilities determined in accordance with Section 2.10.

“Final Closing Date Net Working Capital Adjustment” is the amount equal to the Final Closing Date Net Working Capital less the Minimum Net Working Capital. For the avoidance of doubt, if the Final Closing Date Net Working Capital is greater than the Minimum Net Working Capital, there shall be an increase in the Purchase Price in respect thereof, and if the Final Closing Date Net Working Capital is less than the Minimum Net Working Capital, there shall be a decrease in the Purchase Price in respect thereof.

“Financial Statements” is defined in Section 4.5(a).

“Fraud” means fraud or intentional misrepresentation or omission.

“GAAP” means United States generally accepted accounting principles.

“Governmental Entity” means any foreign, domestic, federal, territorial, state or local governmental authority, quasi-governmental authority, instrumentality, court, government or self regulatory organization, commission, tribunal or organization or any regulatory, administrative or other agency, or any political or other subdivision, department or branch of any of the foregoing which has or claims to have competent jurisdiction over the relevant Persons or its business, property, assets or operations.

“Hazardous Materials” means any substance or material that is defined under the Environmental Laws as a “hazardous substance,” “regulated substance,” “pollutant,” “contaminant,” “hazardous waste,” “extremely hazardous substance,” “toxic substance,” or “hazardous material,” or that is otherwise defined in or regulated under the Environmental Laws, including, without limitation, petroleum, asbestos-containing materials, lead-containing paint or plumbing, polychlorinated biphenyls, radioactive materials, and radon.

“Holdback Amount” is the amount equal to the sum of the Indemnification Amount, the Stockholder Fund Amount and the True-Up Reserve Amount.

“Holdback Escrow Agreement” means the Holdback Escrow Agreement, among Eclipsys, the Stockholders’ Representative and the Escrow Agent, to be entered into concurrently with the Closing, relating to the escrow of the Holdback Amount, in the form mutually agreed by Eclipsys and MediNotes.

8

“Holdback Termination Date” is defined in Section 2.9(b).

“Indemnification Amount” means (i) shares of Eclipsys Common Stock with an aggregate value of $2,562,000, valued at the Average Market Price, plus (ii) cash, with an aggregate value of $1,638,000. For the avoidance of doubt, the cash amount shall not be less than thirty-nine percent (39%) of the Indemnification Amount.

“Institutional Major Stockholders” means Iowa Farm Bureau Federation, Iowa First Capital Fund II LP and Iowa Capital Corporation.

“Instruments” is defined in Section 2.9(c).

“Insurance Policies” is defined in Section 4.17(a).

“Intellectual Property” means any patent, patent application, trademark (whether registered or unregistered), trademark application, trade name, fictitious business name, service mark (whether registered or unregistered), service mark application, domain name, copyright (whether registered or unregistered), copyright application, mask work, mask work application, trade secret, know-how, customer list, franchise, system, Software, including without limitation, Software development processes, practices, methods and policies recorded in permanent form, relating thereto, invention, work of authorship, design, blueprint, engineering drawing, proprietary product, technology or other intellectual property right.

“Interim Financial Statements” is defined in Section 4.5(a).

“Key Employees” means the employees of MediNotes listed on Schedule 1(a).

“Knowledge of Eclipsys” means actual knowledge of the Chief Executive Officer or Chief Financial Officer of Eclipsys. Actual knowledge of any matter will be deemed to include such knowledge as such person could have obtained after making reasonable inquiry and investigation of the matter.

“Knowledge of a Major Stockholder” means (i) actual knowledge of such Major Stockholder if such Major Stockholder is an individual, (ii) actual knowledge of the trustee(s) of such Major Stockholder if such Major Stockholder is a trust, and (iii) the actual knowledge of any director or officer of any Institutional Major Stockholder. Actual knowledge of any matter will be deemed to include such knowledge as such persons could have obtained after making reasonable inquiry and investigation of the matter.

“Knowledge of MediNotes” means the actual knowledge of Donald G. Schoen, Davin Hills or Travis Bond. Actual knowledge of any matter will be deemed to include such knowledge as such person could have obtained after making reasonable inquiry and investigation of the matter.

9

“Lease” means any lease or sublease as lessee or lessor of, or option, occupancy or space agreement relating to, real estate used, useful or held by MediNotes.

“Leased Real Property” is defined in Section 4.13(a).

“Legal Requirement” means any federal, state, local, municipal, foreign, international, multinational or other administrative order, constitution, law, ordinance, principle of common law, regulation, rule, statute or treaty, including any interpretation thereof by any Governmental Entity.

“Liability” means, with respect to any Person, any liability or obligation of such Person of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise, whether or not the same is required to be accrued on the financial statements of such Person and whether or not the same is disclosed on any schedule to this Agreement.

“License-In Agreement” is defined in Section 4.14(b).

“Lien” means any lien (including judgment and mechanics’ liens, regardless of whether liquidated), mortgage, assessment, security interest, easement, claim, pledge, trust (constructive or otherwise), deed of trust, option or other charge, title defect or objection, encumbrance, restriction or any other Contract having the same effect as any of the foregoing.

“Material Adverse Effect” means with respect to any Person, or its business, one or more changes, events, occurrences, conditions or circumstances (whether or not covered by insurance) which, individually or in the aggregate, result in a material adverse effect on or change in (i) the business, operations, assets, Liabilities, condition (financial or otherwise), prospects, or results of operations of such Person, taken as a whole with its Subsidiaries, or its business, or (ii) the ability of such Person (and, in the case of MediNotes, the Stockholders) to timely (A) perform his or its obligations hereunder, or (B) consummate the transactions contemplated in this Agreement and the other Transaction Documents.

“Material Contracts” is defined in Section 4.4(a).

“MediNotes” is defined in the introductory paragraph of this Agreement, and unless the context otherwise requires, after the Effective Time shall mean the Surviving Corporation or the survivor of the Second Merger, as applicable.

“MediNotes Articles of Incorporation” means the Second Amended and Restated Articles of Incorporation of MediNotes as amended and in effect on the date hereof.

“Merger Consideration” means the cash and Eclipsys Common Stock payable to Effective Time Company Holders pursuant to Section 2.7 of this Agreement.

“Merger Sub” is defined in the introductory paragraph of this Agreement.

“Minimum Net Working Capital” means $275,000.

10

“Non-Stock Consideration” is defined in Section 2.12.

“Objection Notice” is defined in Section 2.10(c).

“Off-the-Shelf Software” is defined in Section 4.14(b).

“Order” means any award, decision, injunction, judgment, decree, stipulation, order, ruling, subpoena, or verdict entered, issued, made or rendered by any court, administrative agency or other Governmental Entity or by any arbitrator.

“Option Consideration” is defined in Section 2.7(d).

“Participating Cash Percentage” means the percentage calculated by dividing (A)(x) the product of (i) the Purchase Price less the Indemnification Amount and (ii) the Cash Percentage, less (y) the sum of the Stockholder Fund Amount, the True-Up Reserve Amount, the Small Holder Cash, the Aggregate Liquidation Preference, the Aggregate Option Consideration, the Aggregate Warrant Consideration and the Dissenting Share Amount by (B)(i) the Purchase Price less (ii) the sum of the Holdback Amount, the Small Holder Cash, the Aggregate Liquidation Preference, the Aggregate Option Consideration, the aggregate Series D Stock Liquidation Preference, Aggregate Warrant Consideration and the Dissenting Share Amount.

“Participating Shares” means the sum of (i) the number of shares of Series B Preferred Stock and Company Common Stock outstanding immediately prior to the Effective Time, (ii) the number of shares of Company Common Stock for which Company Warrants are exercisable immediately prior to the Effective Time, and (iii) the number of shares of Company Common Stock for which Company Options are exercisable immediately prior to the Effective Time.

“Per Share Cash Consideration” is defined in Section 2.7(c)(ii).

“Per Share Consideration” means the quotient obtained by dividing (i) the Purchase Price, plus the Aggregate Exercise Price, less the sum of (x) the Holdback Amount, (y) the Aggregate Liquidation Preference and (z) the Series D Stock Liquidation Preference (valued at the Average Market Price), by (ii) the Participating Shares.

“Per Share Escrow Amount” means the quotient obtained by dividing the Escrow Merger Consideration by the Participating Shares.

“Per Share Stock Consideration” is defined in Section 2.7(c)(ii).

“Permits” means all licenses, permits, easements, variances, exemptions, consents, certificates, orders, approvals and other authorizations required by applicable Legal Requirements in connection with the Business.

“Permitted Liens” means (i) Liens for utilities and current taxes that are not yet due and payable or that may thereafter be paid without penalty in the ordinary course of business consistent with past practices, (ii) mechanics’, carriers’, workers’, repairers’, materialmen’s, warehousemen’s, lessor’s, landlord’s and other similar Liens arising or incurred in the ordinary course of business with respect to which the underlying obligations are not yet due and payable

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and which do not exceed $50,000 in the aggregate, (iii) Liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business, (iv) easements, restrictive covenants and similar encumbrances or impediments against any of MediNotes’ assets or properties which do not materially interfere with the Business or impair the ownership, use or operation of the assets to which they relate, or the transfer thereof, and (v) minor irregularities and defects of title which do not materially interfere with the Business or impair the ownership, use or operation of the assets to which they relate, or the transfer thereof.

“Person” means any individual, corporation, limited liability company, partnership, trust, joint venture, association, organization or other entity or group (which term shall include a “group” as such term is defined in Section 13(d)(3) of the Exchange Act) or Governmental Entity.

“Privacy Regulations” is defined in Section 4.14(q).

“Pro Rata Portion” means with respect to each Effective Time Company Holder the quotient obtained by dividing (A) the sum of the number of shares of Series B Preferred Stock and shares of Company Common Stock held by such Effective Time Company Holder immediately prior to the Effective Time, if any, and the number of shares of Common Stock for which Company Options and Company Warrants held by such Effective Time Company Holder immediately prior to the Effective Time, if any, were exercisable, by (B) the Participating Shares.

“Purchase Price” means an amount equal to (i) $42,000,000, less (ii) the Final Closing Date Debt, plus (or minus if negative) (iii) the Final Closing Date Cash, plus (or minus if negative) (iv) any Final Closing Date Net Working Capital Adjustment.

“Registered Intellectual Property” means any Intellectual Property that is the subject of any registrations, or applications or filings for registration with or by any Governmental Entity, including without limitation the United States Patent and Trademark Office, foreign patent offices, or the United States Copyright Office.

“Released Parties” is defined in Section 6.11(a).

“Restrictive Covenants” is defined in Section 6.7(e).

“Restrictive Period” is defined in Section 6.7(b).

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“Seller Transaction Expenses” means all costs and expenses (including fees of attorneys, accountants and brokers or finders) of the Stockholders and MediNotes incurred or payable in connection with this Agreement and the other Transaction Documents and the transactions contemplated hereby and thereby, including the percentage of expenses, if any, owed to the Unrelated Accounting Firm under Section 2.11 and all amounts owed to the brokers disclosed in

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Section 4.23, or any other broker, finder or similar agent employed by or acting on behalf of MediNotes, any Major Stockholder or any of their respective Affiliates or agents in connection with this Agreement or any other Transaction Documents, or the transactions contemplated hereby or thereby.

“Series A Liquidation Preference” is defined in Section 2.7(c)(i).

“Series A Preferred Stock” means the Series A Convertible Preferred Stock of MediNotes.

“Series B Liquidation Preference” is defined in Section 2.7(c)(ii).

“Series B Preferred Stock” means the Series B Convertible Preferred Stock of MediNotes.

“Series C Liquidation Preference” is defined in Section 2.7(c)(iii).

“Series C Preferred Stock” means the Series C Convertible Preferred Stock of MediNotes.

“Series D Cash Liquidation Preference” is defined in Section 2.7(c)(iv).

“Series D Liquidation Preference” is defined in Section 2.7(c)(iv).

“Series D Preferred Stock” means the Series D Non-Voting Preferred Stock of MediNotes.

“Series D Stock Liquidation Preference” is defined in Section 2.7(c)(iv).

“Settlement Agreement” means that certain Settlement Agreement and Release, entered into on the date hereof, by and among the Bond Entities, Travis Bond, Lisa Bond, Nevestis, LLC, Primi, LLC, and MediNotes, in the form provided to Eclipsys on the date hereof.

“Shares” means shares of Company Common Stock, Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock.

“Small Holder” means all Effective Time Company Holders, other than (i) those who have executed and delivered to Eclipsys an Investor Questionnaire, prior to the date hereof, certifying that they are an accredited investor under Regulation D of the Securities Act, and are listed as such on Schedule 1(c), and (ii) any other Effective Time Company Holder who executes and delivers to Eclipsys an Investor Questionnaire, within five (5) Business Days after the date hereof, certifying that they are an accredited investor under Regulation D of the Securities Act, and that Eclipsys, in its sole discretion, approves be added to such schedule within such time period.

“Small Holder Cash” means the aggregate cash paid to Small Holders pursuant to Section 2.7(f).

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“Software” means all of the following used, licensed or sold in the Business, but excluding any Company Licensed IP: (i) computer programs, including any and all software implementations of algorithms, heuristics, models and methodologies, whether in source code or object code; and (ii) machine-readable databases and compilations of data.

“Software Documentation” means (i) descriptions, schematics, flow-charts and other work product used to design, plan, organize and develop Software, (ii) testing, validation and verification materials relating to Software, (iii) documentation, including user manuals; web materials; architectural, design, feature and functionality specifications; and training materials, relating to Software, and (iv) performance metrics, bug and feature lists, build, release and change control manifests recorded in permanent form, relating to Software.

“Software Products” means all Software produced by MediNotes for sale or license to third parties, including, but not limited to MediNotes e EHR, MediNotes Clinician EHR/PM Suite, MediNotes Rx, MediNotes Clinician PM and MediNotes Clinician SCM.

“Stock Consideration” is defined in Section 2.12.

“Stock Percentage” is sixty-one percent (61%).

“Stockholder” means a record owner of Company Capital Stock.

“Stockholder Fraud” means Fraud by any of the Stockholders, or Fraud by any employee or other representative or agent of MediNotes (other than a Stockholder) as to which MediNotes had Knowledge or any of the Major Stockholders had actual knowledge.

“Stockholder Fund Amount” means an amount equal to $1,100,000, in cash.

“Stockholder Notes” means those certain promissory notes listed on Schedule 1(b), issued by MediNotes to the Stockholders or their Affiliates.

“Stockholders Agreement” means that certain Amended and Restated Stockholder Agreement, dated March 07, 2008, among MediNotes and the Stockholders named therein.

“Stockholders’ Representative” is defined in Section 6.9.

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, joint venture or other entity of which such Person (either alone or through or together with any other Subsidiary), owns, directly or indirectly, securities or other interests (A) the holders of which are generally entitled to at least 50% of the vote for the election of the board of directors or other similar governing body of such corporation or other legal entity, or otherwise having the power to direct the business and policies of that Person, or (B) representing at least 50% of the outstanding Capital Stock of such corporation or other legal entity.

“Survival Period” is defined in Section 7.1(a).

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“Surviving Corporation” is defined in Section 2.1, and unless the context otherwise requires, after the effective time of the Second Merger, shall mean the survivor of the Second Merger.

“Tax” means (A) all federal, state, local, foreign, and other net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profits, customs duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts with respect thereto, (B) any Liability for payment of amounts described in clause (A) whether as a result of transferee Liability, joint and several liability for being a member of an affiliated, consolidated, combined or unitary group for any period, or otherwise through operation of law, and (C) any Liability for the payment of amounts described in clauses (A) or (B) as a result of any tax sharing, tax indemnity or tax allocation agreement or any other express or implied Contract to indemnify any other Person.

“Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“Testing Price” is defined in Section 2.12.

“Third-Party Acquisition” means (i) the acquisition by a Person, other than Eclipsys and its Affiliates, of any of the Capital Stock or assets or property of MediNotes, or any interest therein, whether by issuance, or sale or other disposition of Capital Stock, sale, lease, license or other disposition of assets, merger or otherwise, other than sales or licenses of products to customers in the ordinary course of business consistent with past practice, or (ii) any other transaction that would interfere with or delay the Closing or the ability of MediNotes to operate the Business and control its assets substantially as operated and controlled by MediNotes on the date hereof.

“Third-Party Claim” is defined in Section 7.6(a).

“Threatened” a claim, proceeding, dispute or other matter shall be deemed to have been “threatened” if any demand or statement has been made, or any other notice has been given, that would lead a prudent person to conclude that such a claim, proceeding, dispute or other matter is reasonably likely to be asserted, commenced or otherwise pursued; in each case either made in writing or orally to Donald G. Schoen, Davin Hills or Travis Bond, or to any other person if Donald G. Schoen, Davin Hills or Travis Bond has been informed or would have been informed after making reasonable inquiry; provided that such duty to make reasonably inquiry shall not be required to be made any more frequently than in conjunction with MediNotes certifying as to the accuracy of its representations and warranties made herein, which are as of the date of this Agreement and the Closing.

“Transaction Documents” means, collectively, this Agreement, the Holdback Escrow Agreement, the Voting Agreement, the Employment Agreements, the Royalty Termination Agreement, the Commission Agreement, the Investor Questionnaires and the letter of transmittal of each Stockholder, and all certificates contemplated to be delivered hereunder.

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“True-Up Reserve Amount” means an amount equal to $250,000, in cash.

“Unrelated Accounting Firm” is defined in Section 2.11.

“Valuation Date” is defined in Section 2.12.

“Value of Stock Consideration” is defined in Section 2.12.

“WARN Act” is defined in Section 6.10(c).

“Warrant Consideration” is defined in Section 2.7(e).

“Warranty Claim” means any claim based upon any theory of product liability, strict liability, negligence, misrepresentation, product defect, breach of warranty (express or implied), and any other similar claims that relates to the products and services of MediNotes, including the Software Products.

“Year-End Financial Statements” is defined in Section 4.5(a).

ARTICLE II

THE MERGER

2.1 The Merger. Upon the terms and subject to the conditions of this Agreement, at the Effective Time and in accordance with the laws of the State of Iowa, Merger Sub shall be merged with and into MediNotes pursuant to which (a) the separate corporate existence of Merger Sub shall cease, (b) MediNotes shall be the surviving corporation in the Merger (the “Surviving Corporation”) and shall continue its corporate existence under the laws of the State of Iowa as a wholly owned Subsidiary of Eclipsys (until the Second Merger occurs), (c) all of the properties, rights, privileges, powers and franchises of MediNotes will vest in the Surviving Corporation, and all of the debts, liabilities, obligations and duties of MediNotes will become the debts, liabilities, obligations and duties of the Surviving Corporation; and (d) all of the properties, rights, privileges, powers and franchises of Merger Sub will vest in the Surviving Corporation, and all of the debts, liabilities, obligations and duties of Merger Sub will become the debts, liabilities, obligations and duties of the Surviving Corporation.

2.2 Closing; Effective Time.

(a) The closing of the Merger (the “Closing”) shall take place on the second Business Day following the satisfaction or, to the extent permitted by applicable law, waiver of all conditions to the obligations of the parties set forth in Article VIII (other than such conditions as may, by their terms, only be satisfied at the Closing or on the Closing Date, subject to such satisfaction or waiver), by telecopy exchange of signature pages with originals to follow by overnight delivery, or in such other manner or at such place as the parties hereto may agree in writing. The day on which the Closing takes place is referred to as the “Closing Date.”

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(b) As soon as practicable on the Closing Date, and immediately prior to the Closing, the parties shall cause a certificate of merger substantially in the form attached as Exhibit A (the “Certificate of Merger”) to be executed and filed with the Secretary of State of the State of Iowa.

(c) The Merger shall become effective upon the filing of the Certificate of Merger with the Secretary of State of the State of Iowa or at such other time as the parties shall agree and as shall be specified in the Certificate of Merger. The date and time that the Merger shall become effective is herein referred to as the “Effective Time.”

2.3 Effects of the Merger.

(a) The Merger shall have the effects provided for herein and in the applicable provisions of Iowa Legal Requirements.

(b) Each share of common stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and exchanged for one (1) validly issued, fully paid and nonassessable share of common stock of the Surviving Corporation. Each stock certificate of Merger Sub evidencing ownership of any such shares of common stock of Merger Sub shall thereafter evidence ownership of such shares of common stock of the Surviving Corporation.

2.4 Certificate of Incorporation and By-laws. From and after the Effective Time, (a) the Articles of Incorporation of Merger Sub, as in effect immediately prior to the Effective Time shall be the articles of incorporation of the Surviving Corporation, until amended in accordance with the provisions thereof and applicable law, and (b) the by-laws of Merger Sub, as in effect immediately prior to the Effective Time shall be the by-laws of the Surviving Corporation, until amended in accordance with the provisions thereof and applicable law.

2.5 Directors; Officers. From and after the Effective Time, (a) the directors of Merger Sub serving immediately prior to the Effective Time shall be the directors of the Surviving Corporation until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be, and (b) the officers of Merger Sub serving immediately prior to the Effective Time shall be the officers of the Surviving Corporation until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be.

2.6 Subsequent Actions. If, at any time after the Effective Time, the Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of either MediNotes or Merger Sub acquired or to be acquired by the Surviving Corporation as a result of or in connection with the Merger or otherwise to carry out this Agreement, the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name of and on behalf of MediNotes or Merger Sub, as applicable, all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of each of such corporations or otherwise, all such other actions and things as such

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officers or directors may deem necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in the Surviving Corporation or otherwise to carry out this Agreement. Notwithstanding anything contained herein to the contrary, all rights granted to and obligations of the Surviving Corporation hereunder shall also be for the benefit and the obligation of the survivor of the Second Merger.

2.7 Effect of Merger on the Capital Stock of MediNotes.

(a) Notwithstanding anything to the contrary in this Section 2.7, at the Effective Time, by virtue of the Merger and without any action on the part of Eclipsys, Merger Sub or MediNotes, each Share that is held by Eclipsys, MediNotes or any Subsidiary of Eclipsys or MediNotes immediately prior to the Effective Time, shall be cancelled and extinguished without any consideration paid therefor or in respect thereof.

(b) Notwithstanding anything to the contrary in this Section 2.7, at the Effective Time, Dissenting Shares shall be treated in accordance with Section 2.8.

(c) Subject to Section 2.7(f), at the Effective Time, by virtue of the Merger and without any action on the part of Eclipsys, Merger Sub, MediNotes or the Stockholders, each Share that is issued and outstanding immediately prior to the Effective Time (other than any Dissenting Shares and any Shares cancelled pursuant to Section 2.7(a)) shall be cancelled and extinguished and shall be converted automatically into the right to receive, subject to the terms and conditions set forth in this Agreement (subject to the holdback of the Holdback Amount), the following consideration:

(i) each share of Series A Preferred Stock will be converted only into the right to receive $.71 in cash, plus an amount equal to any accrued and unpaid dividends (the “Series A Liquidation Preference”);

(ii) each share of Series B Preferred Stock will be converted into the right to receive (a) $4.75 in cash, plus an amount equal to any accrued and unpaid dividends (the “Series B Liquidation Preference”), (b) cash equal to the product of the Per Share Consideration and the Participating Cash Percentage (the “Per Share Cash Consideration”), (c) a number of shares of Eclipsys Common Stock equal to the quotient obtained by dividing (x) the Per Share Consideration less the Per Share Cash Consideration by (y) the Average Market Price (the “Per Share Stock Consideration”) and (d) the Per Share Escrow Amount;

(iii) each share of Series C Preferred Stock will be converted only into the right to receive $4.75 in cash, plus an amount equal to any accrued and unpaid dividends (the “Series C Liquidation Preference”);

(iv) each share of Series D Preferred Stock will be converted only into the right to receive $800 (the “Series D Liquidation Preference”), of which (A) the Cash Percentage shall be payable in cash (the “Series D Cash Liquidation Preference”) and (B) the Stock Percentage shall be payable in shares of Eclipsys Common Stock (with such number of shares of Eclipsys Common Stock equal to such stock portion value, divided by the Average Market Price) (the “Series D Stock Liquidation Preference”); and

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(v) each share of Company Common Stock will be converted into the right to receive (a) the Per Share Cash Consideration, (b) the Per Share Stock Consideration and (c) the Per Share Escrow Amount.

(d) At the Effective Time, each Company Option then outstanding shall, whether or not then vested, by virtue of the Merger and without any action on the part of the holder thereof, be cancelled and converted without exercise only into and, subject to the terms and conditions set forth in this Agreement, represent only the right to receive (subject to the holdback of the Holdback Amount), with respect to each share of Company Common Stock then subject to purchase under such Company Option:

(i) cash equal to the Per Share Consideration less the exercise price per share of such Company Option (“Option Consideration”); and

(ii) the Per Share Escrow Amount.

(e) At the Effective Time, each Company Warrant then outstanding shall by virtue of the Merger and without any action on the part of the holder thereof, be cancelled and converted without exercise only into and, subject to the terms and conditions set forth in this Agreement, represent only the right to receive (subject to the holdback of the Holdback Amount), with respect to each share of Company Common Stock then subject to purchase under such Company Warrant:

(i) cash equal to the Per Share Consideration less the exercise price per share of such Company Warrant (“Warrant Consideration”); and

(ii) the Per Share Escrow Amount.

(f) Notwithstanding anything to the contrary in this Section 2.7, Small Holders will receive the entire amount of consideration to which they are each entitled in respect of the Merger entirely in cash. Notwithstanding anything to the contrary in this Agreement, if after deduction from the Cash Merger Consideration of the cash portion of the Holdback Amount, the payment of cash to the Small Holders pursuant to the foregoing sentence and the payment of cash to holders of the Company Options and Company Warrants pursuant to the foregoing, the amount of the Cash Merger Consideration remaining is insufficient to pay the Aggregate Liquidation Preference entirely in cash, the Series A Liquidation Preference, Series B Liquidation Preference, Series C Liquidation Preference and Series D Cash Liquidation Preference may be paid ratably in Eclipsys Common Stock to the extent the Aggregate Liquidation Preference exceeds the Cash Merger Consideration available after such deductions, and to the extent the holders of such shares of preferred stock are not Small Holders. For purposes of calculating the amount of Merger Consideration payable to each Effective Time Company Holder pursuant to this Section 2.7, all amounts payable in cash to such Effective Time Company Holder shall be aggregated and rounded up to the nearest whole cent, all shares of Eclipsys Common Stock payable to such Effective Time Company Holder shall be aggregated and rounded down to the nearest whole share. No fractional shares of Eclipsys Common Stock will be issued by virtue of the Merger, but in lieu thereof each Effective Time Company Holder that would otherwise be entitled to a fraction of a share of Eclipsys Common Stock (after

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aggregating all fractional shares of Eclipsys Common Stock that otherwise would be received by such holder) shall, upon surrender of such holder’s Certificate(s) or Instruments or in the case of a lost, stolen or destroyed Certificate or Instrument, upon delivery of an affidavit (and bond, if required) pursuant to Section 2.9(f), receive from Eclipsys an amount of cash (rounded to the nearest whole cent), without interest, equal to the product of: (i) such fraction, multiplied by (ii) the Average Market Price (less any applicable withholding tax).

(g) Escrow Merger Consideration, if any, will be paid: (i) in cash, to Small Holders and holders of Company Options and Company Warrants with respect to such Company Options and Company Warrants; and (ii) in cash and Eclipsys Common Stock, to all Effective Time Company Holders (other than (A) Small Holders, and (B) in respect of Series A Preferred Stock, Series C Preferred Stock or Series D Preferred Stock, each of which do not entitle the holder to any portion of the Escrow Merger Consideration), as set forth in the Escrow Agreement.

2.8 Dissenting Shares. Notwithstanding anything in this Agreement to the contrary, Shares (other than any Shares to be cancelled pursuant to Section 2.7(a)) outstanding immediately prior to the Effective Time and held by an Effective Time Company Holder who has not voted in favor of the Merger or consented thereto in writing and who has properly asserted dissenters’ rights in accordance with Division XIII of the Iowa Business Corporation Act (“Dissenting Shares”) shall not be converted into or be exchangeable for the right to receive a portion of the Merger Consideration unless and until such Effective Time Company Holder fails to perfect or withdraws or otherwise loses such holder’s right to appraisal and payment thereunder. If, after the Effective Time, any such Effective Time Company Holder fails to perfect or withdraws or loses such holder’s right to appraisal, such Dissenting Shares shall thereupon be treated as if they had been converted as of the Effective Time into the right to receive the portion of the Merger Consideration, if any, to which such holder is entitled pursuant to Section 2.7(c), without interest. MediNotes shall give Eclipsys (a) prompt notice of any demands received by MediNotes for appraisal of Shares, attempted written withdrawals of such demands, and any other instruments served pursuant to Iowa law and received by MediNotes relating to a stockholders’ rights to appraisal with respect to the Merger and (b) the opportunity to direct all negotiations and proceedings with respect to any exercise of such appraisal rights under Iowa law. MediNotes shall not, except with the prior written consent of Eclipsys, voluntarily make any payment with respect to any demands for payment for Capital Stock of MediNotes, offer to settle or settle any such demands or approve any withdrawal of any such demands.

2.9 Payment for Shares, Company Options and Company Warrants.

(a)(i) At or prior to the Effective Time, Eclipsys shall, or shall cause the Surviving Corporation to, make available to ComputerShare (the “Paying Agent”), for the benefit of the Effective Time Company Holders, the Closing Payment.

(ii) The “Closing Payment” shall consist of: (A) a number of shares of Eclipsys Common Stock equal to the quotient of (x) the Closing Payment Amount less the Closing Payment Cash divided by (y) the Average Market Price; and (B) the Closing Payment Cash. The “Closing Payment Amount” shall be an amount equal to the

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Estimated Purchase Price, less the sum of the Holdback Amount and the Dissenting Share Amount. The “Closing Payment Cash” shall be an amount equal to (A) the product of (x) the Estimated Purchase Price less the Indemnification Amount and (y) the Cash Percentage, less (B) the sum of the True-Up Reserve Amount, the Stockholder Fund Amount and the Dissenting Share Amount.

(iii) The cash component of the Closing Payment shall be invested at the discretion, and for the benefit, of Eclipsys or the Surviving Corporation, as the case may be, pending payment therefor by the Paying Agent to the Effective Time Company Holders. Earnings from such investments shall be the sole and exclusive property of Eclipsys or the Surviving Corporation, as the case may be, and no part thereof shall accrue to the benefit of Effective Time Company Holders.

(iv) If any Shares become Dissenting Shares after the payment by Eclipsys or the Surviving Corporation to the Paying Agent of the Closing Payment, Eclipsys may instruct the Paying Agent to, and the Paying Agent shall promptly upon receipt of such instruction, remit to Eclipsys the portion of the Closing Payment allocable to such Dissenting Shares.

(b) At the Closing, Eclipsys shall deposit or cause to be deposited the Holdback Amount with the Escrow Agent. The Holdback Amount shall be held and invested in, and distributed out of, three (3) separate escrow accounts, all as provided in the Holdback Escrow Agreement and this Agreement (the “Escrow Accounts”). The Escrow Account for the Indemnification Amount shall be used to pay Damages, if any, to the Eclipsys Indemnified Parties. The Escrow Account for the Stockholder Fund Amount shall be available to pay Seller Transaction Expenses and to reimburse the Stockholders’ Representative for out-of-pocket costs and expenses incurred in the performance of his or her duties hereunder, including fees of attorneys and accountants employed by the Stockholders’ Representative necessary to discharge his or her duties as Stockholders’ Representative. Notwithstanding the foregoing, the Stockholders’ Representative may direct in writing that certain Seller Transaction Expenses be paid at Closing, rather than such amounts being paid into the Escrow Account for the Stockholder Fund Amount. The Escrow Account for the True-Up Reserve Amount shall be used to pay to Eclipsys any shortfall if the Estimated Purchase Price exceeds the Purchase Price, with the balance of any amount not so used being transferred to the Escrow Account for the Stockholder Fund Amount upon written instructions of the Stockholders’ Representative to the Escrow Agent, which may be given any time after payments pursuant to Section 2.10(d) have been made. Promptly following the date that is 456 days after the Closing Date (the “Holdback Termination Date”), Eclipsys and the Stockholders’ Representative shall give joint written instructions to the Escrow Agent to (A) retain any portion of the Escrow Account for the Indemnification Amount subject to good faith pending claims by Eclipsys under this Agreement or the other Transaction Documents (the “Claimed Amount”) as of such date, and (B) pay any remaining part of the funds in such Escrow Account to the Effective Time Company Holders according to Section 2.7(g). Any Claimed Amount unpaid at the Holdback Termination Date shall be paid pursuant to the Holdback Escrow Agreement upon a final resolution of the applicable claim. Promptly following the Holdback Termination Date, the Stockholders’ Representative shall give written instructions to the Escrow Agent to pay any remaining part of the funds in the Escrow Account for the Stockholder Fund Amount to the Effective Time

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Company Holders according to Section 2.7(g). The interests of the Effective Time Company Holders in the Escrow Accounts shall not be assignable or transferable, whether directly, indirectly or by operation of law, except in the event of death to an Effective Time Company Holder’s estate, personal representative or heirs by will or the laws of descent and distribution; provided, however, that as a condition to any such transfer the transferee(s) shall hold such interests subject to the terms and conditions of this Agreement and the Holdback Escrow Agreement and the transferee(s) shall execute and deliver to Eclipsys and the Escrow Agent an agreement in form and substance satisfactory to Eclipsys agreeing to be bound by the terms and conditions of this Agreement and the Holdback Escrow Agreement.

(c) As promptly as practicable after the Closing Date, Eclipsys or the Surviving Corporation, shall cause the Paying Agent to mail to each Effective Time Company Holder whose Company Capital Stock was converted with the right to receive the consideration described in Section 2.7: (i) a letter of transmittal in form acceptable to Eclipsys; and (ii) instructions for surrendering certificates that represented Shares immediately prior to the Effective Time (“Certificates”) and any instruments representing Company Options or Company Warrants (“Instruments”), in exchange for payment therefor (other than holders of Certificates representing Dissenting Shares). Upon surrender of a Certificate for cancellation to the Paying Agent or such other agent or agents as may be appointed by Eclipsys, together with such letter of transmittal duly executed and delivered, the holder of such Certificate shall become entitled to receive in exchange therefor (as promptly as practicable thereafter), the consideration specified in Section 2.7(c). Upon surrender, such Certificate will be cancelled. Upon receipt of a duly executed and delivered letter of transmittal by Eclipsys and any associated Instrument, the holder of Company Options or Company Warrants will become entitled to receive (as promptly as practicable thereafter) consideration therefor in accordance with Section 2.7(d) or Section 2.7(e), as applicable. No portion of any Merger Consideration will be paid to the holder of any Shares, Company Options or Company Warrants until a letter of transmittal has been validly executed and delivered pursuant hereto, with all Certificates and related Instruments. Payment pursuant to this Section 2.9(c) will be made ratably by the Paying Agent from the Closing Payment, provided that if at the time of any payment hereunder, the Final Closing Date Net Working Capital, the Final Closing Date Cash and the Final Closing Date Debt shall have been determined pursuant to Section 2.10(d), such payment hereunder shall be based on any adjusted amounts pursuant to the provisions of Section 2.10(d). If payment in respect of any Certificate or Instrument is to be made to a Person other than the Person in whose name such Certificate or Instrument is registered, it shall be a condition of payment that the Certificate or Instrument so surrendered shall be properly endorsed or shall otherwise be in proper form for transfer, that the signatures on such Certificate or Instrument or any related stock power shall be properly guaranteed and that the Person requesting such payment shall have established to the satisfaction of Eclipsys and the Paying Agent that any transfer and other Taxes required by reason of such payment to a Person other than the registered holder of such Certificate or Instrument have been paid or are not applicable. Until surrendered in accordance with the provisions of this Section 2.9, any Certificate (other than Certificates representing Shares described in Section 2.7(a) and any Dissenting Shares) or Instrument shall be deemed, at any time after the Effective Time, to represent only the right to receive (upon execution and delivery as described herein) the portion of the Merger Consideration payable with respect thereto, including cash, without interest, as contemplated herein.

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(d) At the Effective Time, the stock transfer books of MediNotes shall be closed and there shall thereafter be no further registration of transfers of any Shares, Company Options or Company Warrants, or any conversion or exercise thereof. If, after the Effective Time, a Certificate or Instrument (other than a Certificate representing Shares described in Section 2.7(a)) is presented to the Surviving Corporation, it shall be cancelled and exchanged as provided in this Section 2.9 (subject to Section 2.8 with regard to Dissenting Shares).

(e) All Merger Consideration paid upon conversion of the Shares in accordance with the terms of this Article II and all Merger Consideration deposited with the Escrow Agent pursuant to Section 2.9(b), in each case, subject to adjustment as set forth in Section 2.10, shall be deemed to have been paid in full satisfaction of all rights pertaining to such Shares. From and after the Effective Time, the holders of Certificates shall cease to have any rights with respect to the Shares represented thereby, except as otherwise provided herein or by applicable law.

(f) If any Certificate (other than a Certificate representing Dissenting Shares) or Instrument shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the holder thereof, the Surviving Corporation shall pay or cause to be paid in exchange for such lost, stolen or destroyed Certificate or Instrument the relevant portion of the Merger Consideration payable in respect thereof pursuant to Section 2.9(c) for the Shares, Company Options or Company Warrants represented thereby; provided, however, that the Surviving Corporation or the Paying Agent may, in their discretion, require the delivery of a satisfactory indemnity.

(g) Promptly following the date that is 180 days after the Effective Time, Eclipsys shall be entitled to require the Paying Agent to deliver to it any funds and other property (including any interest or other income received with respect thereto) that had been made available to the Paying Agent and that have not been disbursed to Effective Time Company Holders, and any Certificates, Instruments or other documents relating to the Merger in its possession, and thereafter such holders shall be entitled to look to Eclipsys only as general creditors thereof with respect to any portion of the Merger Consideration payable upon due surrender of their Certificates or Instruments, without interest. Notwithstanding anything to the contrary in this Section 2.9, to the fullest extent permitted by Legal Requirements, none of the Paying Agent, Eclipsys or the Surviving Corporation shall be liable to any holder of a Certificate or Instrument for any amount properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar Legal Requirements.

(h) The amount of the Merger Consideration payable to holders of Shares, the Company Warrants and the Company Options and any other applicable numbers or amounts, shall be adjusted as necessary to reflect appropriately the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into Shares), reorganization, recapitalization, reclassification or other like change with respect to Company Capital Stock occurring or having a record date on or after the date hereof and prior to the Effective Time.

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2.10 Calculation of Net Working Capital, Closing Payment and Final Adjustments.

(a)(i) The Current Assets, the Current Liabilities, the Final Closing Date Net Working Capital, the Estimated Closing Date Net Working Capital, the Final Closing Date Debt, the Estimated Closing Date Debt, the Final Closing Date Cash and the Estimated Closing Date Cash shall be calculated, as applicable (A) consistent with the hypothetical calculations set forth in Schedule 2.10; (B) consistent with the practices and policies of MediNotes used in preparing the Financial Statements; and (C) with all normal and recurring accounting entries reflected therein and all errors and omissions corrected.

(ii) Each line item component or subcomponent of the Current Assets, Current Liabilities, the Final Closing Date Debt, the Estimated Closing Date Debt, the Final Closing Date Cash and the Estimated Closing Date Cash shall be calculated in conformity with GAAP.

(iii) For purposes of calculating the Current Assets, the Current Liabilities, the Final Closing Date Net Working Capital, the Estimated Closing Date Net Working Capital, the Final Closing Date Debt and the Estimated Closing Date Debt, such calculation shall not take into account (A) the impact of any purchase accounting adjustments relating to Eclipsys’s acquisition of MediNotes, including any write-up or write-down of assets or liabilities resulting from such purchase accounting, or (B) any Seller Transaction Expenses unpaid as of the Closing Date, provided such expenses are (y) less than or equal to the Stockholder Fund Amount available for payment thereof and (z) paid on or before the date that is 59 days after the Closing Date.

(iv) At least two Business Days prior to the Closing Date, MediNotes shall provide Eclipsys with its good faith estimate of the Seller Transaction Expenses that will not be paid on or before the Closing Date. The Stockholders’ Representative shall give prompt written instructions to the Escrow Agent to pay any of the Seller Transaction Expenses not paid on or before the Closing Date out of the Stockholder Fund Amount within 59 days after the Closing Date. If the Seller Transaction Expenses exceed the amount in the Stockholder Fund Amount, the portion, if any, of such excess paid by Eclipsys to the creditors thereof shall be reimbursed to Eclipsys by the Stockholders in their Pro Rata Portion, in cash, or, at Eclipsys’s option, paid to Eclipsys from the Escrow Account for the Indemnification Amount.

(b) At least five Business Days prior to the Closing Date, MediNotes shall deliver to Eclipsys its good faith calculations of the Estimated Closing Date Net Working Capital, the Estimated Closing Date Cash and the Estimated Closing Date Debt. Within two Business Days after receipt of such calculations, Eclipsys shall provide MediNotes with Eclipsys’s written comments thereto, and MediNotes shall in good faith consider any such comments. Estimated Closing Date Net Working Capital, Estimated Closing Date Cash and Estimated Closing Date Debt shall be as agreed by the parties, provided that if they do not agree, then such amounts shall be as calculated by MediNotes, provided further that if the Estimated Purchase Price exceeds $42,000,000, then if Eclipsys so elects, the Closing will be delayed until the parties agree on the Estimated Purchase Price.

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(c)(i) Within 60 days following the Closing, Eclipsys shall prepare and deliver to the Stockholders’ Representative a balance sheet of MediNotes as of the Closing Date showing Eclipsys’s good faith determination of the Final Closing Date Net Working Capital, the Final Closing Date Cash and the Final Closing Date Debt (the “Eclipsys Final Calculations”).

(ii) On or before the date which is 15 days after the date of Eclipsys’s delivery to the Stockholders’ Representative of the Eclipsys Final Calculations, the Stockholders’ Representative shall deliver to Eclipsys a notice of objection, stating in reasonable detail the grounds for such objection and signed by the Stockholders’ Representative (an “Objection Notice”), or a notice of acceptance signed by the Stockholders’ Representative (an “Acceptance Notice”), with respect to the Eclipsys Final Calculations. Eclipsys shall provide the Stockholders’ Representative and any accountants and other representatives engaged by the Stockholders’ Representative, upon reasonable advance notice, access to such books and records of MediNotes relating to the Eclipsys Final Calculations as may be reasonably requested by the Stockholders’ Representative.

(iii) The Eclipsys Final Calculations shall be final and binding on the parties if an Acceptance Notice is delivered to Eclipsys or if no Objection Notice is delivered to Eclipsys with respect to such amounts within the 15 day period required by Section 2.10(c)(ii). If an Objection Notice is delivered, the potential dispute with respect to the Eclipsys Final Calculations shall be resolved as set forth in Section 2.11, and the Final Closing Date Net Working Capital, the Final Closing Date Cash or the Final Closing Date Debt, to the extent in dispute, determined pursuant to such procedures, in addition to the undisputed amounts, shall be final and binding on the parties.

(d) Upon determination of the Final Closing Date Net Working Capital, the Final Closing Date Cash and the Final Closing Date Debt pursuant to Section 2.10(c), Eclipsys shall determine the Purchase Price. If the Purchase Price exceeds the Estimated Purchase Price, then Eclipsys shall deposit with the Paying Agent an amount in cash (subject to Section 2.12), equal to the difference (less a ratable portion attributable to any Dissenting Shares), which the Paying Agent shall distribute to the holders of Participating Shares (other than holders of Dissenting Shares) according to Section 2.7. If the Purchase Price is less than the Estimated Purchase Price, then the Stockholders’ Representative shall provide written instructions to the Escrow Agent to pay that shortfall in cash to Eclipsys out of the True-Up Reserve Amount, and if the shortfall exceeds the True-Up Reserve Amount, such excess will be paid to Eclipsys by the Effective Time Company Holders in their Pro Rata Portion, if any, in cash, or, at Eclipsys’s option, paid to Eclipsys from the Indemnification Amount. Payments pursuant to this Section 2.10(d) shall be made in cash (subject to Section 2.12) by wire transfer of immediately available funds within five Business Days after, as applicable, the delivery of the Acceptance Notice, the expiration of the 15 day period, if no Objection Notice is delivered, the agreement of the parties after consultation, or the issuance by the Unrelated Accounting Firm of its final report pursuant to Section 2.11. Notwithstanding anything contained herein to the contrary, if the Purchase Price exceeds the Estimated Purchase Price, but in an amount less than $250,000, then Eclipsys shall deposit with the Escrow Agent, for addition to the Escrow Account for the Indemnification Amount, such difference. Further, if the Purchase Price exceeds the Estimated

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Purchase Price by more than $250,000, but the Paying Agent has paid to Effective Time Company Holders more than 50% of the Closing Payment, then Eclipsys may make such payment directly to the Effective Time Company Holders, in its discretion.

2.11 Dispute Resolution of Calculation of Net Working Capital, the Closing Date Cash or the Closing Date Debt. If an Objection Notice is given with respect to any or all of the Eclipsys Final Calculations, the Stockholders’ Representative and Eclipsys shall consult with each other with respect to the objection. If Eclipsys and the Stockholders’ Representative are unable to reach agreement within 15 days after an Objection Notice has been given, any unresolved disputed items shall be promptly referred to the Dallas, Texas office of such nationally recognized independent accounting firm, or economic consulting or valuation firm, as is mutually agreed to by Eclipsys and the Stockholders’ Representative (the “Unrelated Accounting Firm”). The Unrelated Accounting Firm shall be directed to render a written report on the unresolved disputed issues as promptly as practicable (but in no event later than 45 days following submission of the matter to the Unrelated Accounting Firm) and to resolve only those issues of dispute set forth in the Objection Notice (subject to any items resolved by the parties after consultation pursuant to the first sentence of this Section 2.11). In resolving any disputed issues relating to the Eclipsys Final Calculations, the Unrelated Accounting Firm shall act as experts and not as arbitrators. The resolution by the Unrelated Accounting Firm of the disputed amount, and the undisputed amounts, shall be final and binding on the parties for purposes of determining the Final Closing Date Net Working Capital, the Final Closing Date Cash and the Final Closing Date Debt, and the amounts owed by the parties under Sections 2.10(d), if any. The Effective Time Company Holders shall promptly pay the entire amount of the expenses of the Unrelated Accounting Firm if the Unrelated Accounting Firm determines Eclipsys to be correct in its determination, net in the aggregate, of the Final Closing Date Net Working Capital, the Final Closing Date Cash and the Final Closing Date Debt. Eclipsys shall promptly pay the entire amount of the expenses of the Unrelated Accounting Firm if the Unrelated Accounting Firm determines the Stockholders’ Representative to be correct, net in the aggregate, in his or her determination of the Final Closing Date Net Working Capital, the Final Closing Date Cash and the Final Closing Date Debt. If neither Eclipsys nor the Stockholders’ Representative is correct, then Eclipsys and the Effective Time Company Holders shall share the expenses of the Unrelated Accounting Firm in such proportion as the Unrelated Accounting Firm may determine appropriately reflects the relative accuracy of their respective determinations. If the Effective Time Company Holders are obligated to pay some or all of the expenses of the Unrelated Accounting Firm, the Stockholders’ Representative shall give written instructions to the Escrow Agent to make any such payment out of the Escrow Account for the Stockholder Fund Amount. If the remaining funds in the Escrow Account for the Stockholder Fund Amount are insufficient to make such payment, such additional cash as may be required to make such payment shall promptly be paid to the Unrelated Accounting Firm by the Effective Time Company Holders in their Pro Rata Portion, or, if the Effective Time Company Holders fail to do so, the expenses or the portion of the expenses of the Unrelated Accounting Firm allocable to the Effective Time Company Holders may, at Eclipsys’s option, be paid from the Escrow Account for the Indemnification Amount.

2.12 Continuity of Interest Adjustments. Notwithstanding anything in this Agreement to the contrary, if the product of (A) the number of shares of Eclipsys Common Stock to be issued in the Merger in exchange for Shares (without taking account of any shares of Eclipsys

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Common Stock that is transferred into the Escrow Account) (the “Stock Consideration”) and (B) the Testing Price of Eclipsys Common Stock as reported on the Nasdaq Stock Market for the trading session that closes immediately before the Effective Time (or other applicable valuation date under Treasury Regulation Section 1.368-1(e)(2) for purposes of testing the continuity of interest requirement under Treasury Regulation Section 1.368-1(e)) (such date the “Valuation Date” and such product the “Value of Stock Consideration”) is less than 40% of the sum of the Value of Stock Consideration and the amount of Non-Stock Consideration (as defined below), then the amount of Non-Stock Consideration shall be reduced and the number of shares of Eclipsys Common Stock issued in the Merger in exchange for Shares shall be increased pro rata based on the cash consideration to which any Effective Time Company Holder is otherwise entitled pursuant to the Merger so as to cause such percentage to be equal to 40%. The additional shares of Eclipsys Common Stock to be issued in lieu of cash in exchange for Shares pursuant to the preceding sentence shall be determined using a per share value equal to the Average Market Price. For purposes of this paragraph, the “Non-Stock Consideration” shall mean (a) any cash consideration paid pursuant to the Merger (including cash included in the Holdback Amount and any adjustment payment pursuant to Section 2.10(d)), (b) any cash and the fair market value of any property that is distributed, transferred or paid by MediNotes to its stockholders (whether in a redemption transaction or as a dividend distribution) in connection with the Merger, and (c) any other cash or property (other than shares of Eclipsys Common Stock) that is transferred, paid or distributed by Eclipsys (or any Person related to Eclipsys within the meaning of Treasury Regulation Section 1.368-1(e)(3)) to holders of Shares in exchange for such Shares in connection with the Merger (including any payments of expenses incurred in connection with the disposition of fractional shares in the Merger). The “Testing Price” shall be the lowest trading price of the Eclipsys Common Stock on the Valuation Date.

2.13 Approval. The receipt of the Company Stockholder Approval shall be deemed to constitute approval of all arrangements relating to the transactions contemplated hereby and to the provisions hereof binding upon the Stockholders and the Effective Time Company Holders.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE MAJOR

STOCKHOLDERS

Except as set forth in the disclosure schedule delivered to Eclipsys concurrent herewith, that is arranged in Sections corresponding to the numbered and lettered Sections contained in this Agreement (the “Disclosure Schedule”), each Major Stockholder, severally but not jointly, and only as to itself, represents and warrants to Eclipsys, as of the date of this Agreement and as of the Closing Date, as follows:

3.1 Ownership of the Shares, Company Options and Company Warrants. Such Major Stockholder is the sole record and beneficial owner of the Shares, Company Options and Company Warrants set forth next to such Stockholder’s name in Section 3.1 of the Disclosure Schedule, has good and valid title in such Shares, Company Options and Company Warrants, free and clear of all adverse claims and other Liens, and its interests in MediNotes represented by such Shares, Company Options and Company Warrants shall be transferred to Eclipsys in the Merger free and clear of all adverse claims and other Liens (other than Liens arising from the actions of Eclipsys). Such Shares are duly registered in the name of such Major Stockholder on

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the stock register of MediNotes. Such Company Options and Company Warrants are duly registered in the name of such Major Stockholder on the option or warrant register of MediNotes, as applicable. Except for this Agreement, the Stockholders Agreement and the Voting Agreement, the Shares are not subject to any voting trust or stockholder agreement or other similar Contract, including any such Contract restricting or otherwise relating to the voting, dividend rights or disposition of the Shares.

3.2 Authorization, Validity, and Effect of Agreements. Such Major Stockholder has all requisite right, capacity, power and authority to execute and deliver this Agreement and the other Transaction Documents to be executed and delivered by such Major Stockholder and to consummate the transactions contemplated hereby and thereby. This Agreement has been duly executed and delivered by such Major Stockholder and constitutes, and the other Transaction Documents to be executed by such Major Stockholder (when executed and delivered pursuant hereto) will constitute, the valid and legally binding obligations of such Major Stockholder, enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization or other similar laws relating to creditors’ rights and general principles of equity, whether in equity or at law.

3.3 No Violations; Consents.

(a) The execution and delivery by such Major Stockholder of this Agreement, and the other Transaction Documents and the consummation of the transactions contemplated herein and therein in accordance with the terms hereof and thereof do not and will not (i) violate any settlement agreement, Order or material Legal Requirement applicable to such Major Stockholder, or such Major Stockholder’s properties or assets, or (ii) violate, or conflict with, or result in a material breach of any provision of, or constitute a material default (or an event which, with notice or lapse of time or both, would constitute a material breach or default) under, any of the terms, conditions or provisions of any Contract to which such Major Stockholder is a party or by which such Major Stockholder’s assets or properties are bound (including the Shares).

(b) No Consent is required to be made by or with respect to such Major Stockholder in connection with the execution, delivery and performance of this Agreement and the other Transaction Documents, or the consummation of the transactions contemplated hereby and thereby.

(c) There are no pending or Threatened lawsuits, arbitrations, proceedings, investigations or other claims against such Major Stockholder that would be reasonably expected to prevent or materially alter or delay the transactions contemplated by this Agreement and the other Transaction Documents.

(d) If the Major Stockholder is not an individual, neither the execution and delivery by such Major Stockholder of this Agreement or the other Transaction Documents, nor the consummation by such Major Stockholder of the transactions contemplated herein and therein in accordance with the terms hereof and thereof, will conflict with or result in a breach of any provisions of its articles of incorporation or by-laws, trust agreement or other governing documents.

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3.4 Related Party Transactions.

(a) Neither such Major Stockholder nor any Affiliate or any immediate family member thereof:

(i) has, or at any time since January 1, 2007 had, any interest in any assets or property (whether real, personal, or mixed and whether tangible or intangible), used by MediNotes, or otherwise used in or pertaining to the Business;

(ii) owns, or at any time since January 1, 2007 has owned (of record or as a beneficial owner) Capital Stock or other financial interest in, any Person that (A) has, or at anytime since January 1, 2007 had, business dealings with MediNotes or a material financial interest in any transaction with MediNotes, or (B) is, or at anytime since January 1, 2007 has, engaged in activities that are, or could reasonably be expected to become, competitive with the Business, except in each case for (1) the acquisition of Company Capital Stock or (2) ownership (of record or as a beneficial owner) of less than one percent (1%) of the outstanding capital stock of any Person that is publicly traded on any national or foreign stock exchange, or the over-the-counter market; or

(iii) is, or since January 1, 2007 was, a party to any Contract with, or has any claim or right against, MediNotes, with the exception of (x) any applicable Stockholder Note, (y) the Stockholders Agreement and agreements to purchase Shares, all of which have been fully performed or will be extinguished on or before the Effective Time, and (z) as to Travis Bond only, (A) the royalty agreement entered into by MediNotes and the Bond Entities, dated December 8, 2007, which was terminated and of no further force and effect on February 25, 2008, and (B) the royalty agreement entered into by MediNotes with the Bond Entities, pursuant to the Bond Agreement, under which MediNotes has performed all obligations required to be performed by it and is not in breach or default thereunder.

(b) There are no Contracts between (i) such Major Stockholder, or his or its Affiliates (other than MediNotes), or, if applicable, any immediate family member of such Major Stockholder, on the one hand, and (ii) any officer, director or employee of MediNotes, on the other hand, provided that if such Major Stockholder is an Institutional Major Stockholder, the representations in this Section 3.4(b) shall be made to the Knowledge of such Institutional Major Stockholder.

(c) If the Major Stockholder holds a Stockholder Note, MediNotes is not in default with respect to such Stockholder Note, nor do any facts or circumstances exist that will, or with notice or lapse of time would, constitute a default under any such Stockholder Note.

3.5 Investment Intent.

(a) Such Major Stockholder represents and acknowledges to Eclipsys that the Stock Consideration to be received by such Major Stockholder pursuant to this Agreement is being acquired by such Major Stockholder for its own account and not with a view to the distribution thereof.

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(b) Such Major Stockholder, alone or together with the Persons it has retained to advise it with respect to the transactions contemplated hereby and the proposed investment in the Stock Consideration to be received by such Major Stockholder pursuant to this Agreement, has such knowledge and experience in business and financial matters that it is capable of evaluating the merits and risks of such proposed investment. Such Major Stockholder acknowledges and understands that the Stock Consideration has not been registered under the Securities Act and therefore, cannot be sold without registration under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act.

(c) Each Major Stockholder understands that shares of Eclipsys Common Stock issued in certificate form as part of the Merger Consideration will bear, and any other document that evidences uncertificated shares delivered as part of the Merger Consideration will bear, the following legend:

“THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER STATE SECURITIES LAWS, AND SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER WILL BE EFFECTED IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AT THAT TIME AMENDED, AND SUCH STATE SECURITIES LAWS, OR IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH STATE SECURITIES LAWS, WHICH MAY THEN BE AVAILABLE THERETO.”

(d) Such Major Stockholder understands that Eclipsys will remove such legend and transfer restriction only in the event that (i) such Major Stockholder transfers the Stock Consideration received as Merger Consideration pursuant to and in the manner provided for in an effective registration statement covering the transfer or sale of such shares, or (ii) such Major Stockholder shall have delivered to Eclipsys a letter from the staff of the SEC, or an opinion of counsel in form and substance satisfactory to Eclipsys to the effect that such legend is not required under or for the purposes of the Securities Act and any applicable state securities laws or (iii) counsel to Eclipsys has advised Eclipsys that shares that would be subject to removal of the transfer restriction represent only such number of shares of Eclipsys Common Stock as such Major Stockholder, in a single transaction, could then sell under Rule 144 promulgated under the Securities Act.

(e) Such Major Stockholder has delivered to Eclipsys an Investor Questionnaire in the form attached hereto as Exhibit F, and the information set forth in such Investor Questionnaire is true, correct and complete. Such Major Stockholder understands that Eclipsys will rely on such Investor Questionnaire and the other representations of such Major Stockholder set forth herein in issuing the Stock Consideration to be received as Merger Consideration by such Major Stockholder.

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF MEDINOTES

Except as set forth in the Disclosure Schedule, MediNotes represents and warrants to Eclipsys, as of the date of this Agreement and as of the Closing Date, as follows:

4.1 MediNotes Existence; Good Standing. MediNotes is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Iowa. MediNotes is licensed or qualified to do business as a foreign corporation and in good standing in each of the jurisdictions listed on Section 4.1 of the Disclosure Schedule. MediNotes is not required to be licensed or qualified to do business as a foreign corporation under the laws of any other jurisdiction, except where the lack of such license or qualification would not reasonably be expected to have a Material Adverse Effect on MediNotes or the Business. MediNotes has all requisite corporate power and authority to own, operate and lease its properties and assets and carry on its business as now conducted. The copies of the MediNotes Articles of Incorporation and by-laws previously delivered, or made available, to Eclipsys are true, correct and complete, and such documents are in full force and effect and have not been supplemented or amended since they were delivered or made available to Eclipsys.

4.2 Subsidiaries. MediNotes does not hold, nor has it ever held, directly or indirectly, any Capital Stock of any other Person. There are no obligations or other Contracts, contingent or otherwise, of MediNotes to make any investment (in the form of a loan, capital contribution or otherwise) in any other Person.

4.3 Capitalization.

(a) The authorized Capital Stock of MediNotes consists solely of 50,000,000 shares of Company Common Stock, of which 3,473,959 shares are issued and outstanding on the date hereof, and 25,000,000 shares of preferred stock, of which (i) 1,250,000 shares are designated as Series A Preferred Stock, of which 422,654 shares are issued and outstanding on the date hereof, (ii) 1,100,000 shares are designated as Series B Preferred Stock, of which 936,842 shares are issued and outstanding on the date hereof, (iii) 1,000,000 shares are designated as Series C Preferred Stock, of which 729,271 shares are issued and outstanding on the date hereof, and (iv) 1,000 shares are designated as Series D Preferred Stock, of which no shares are issued and outstanding on the date hereof. The Shares, Company Options and Company Warrants are held of record by the Persons and in the amounts set forth in Section 4.3(a)(i) of the Disclosure Schedule, and except as set forth therein, there is no Capital Stock of MediNotes outstanding. The parties acknowledge that the outstanding shares set forth above may change prior to the Closing Date as a result of (A) conversion of shares of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock outstanding on the date hereof according to the terms of such preferred stock or exercise of the Company Options and Company Warrants outstanding on the date hereof according to terms of such Company Options or Company Warrants, as the case may be, in each case for shares of Company Common Stock, and (B) the issuance of 1,000 shares of Series D Preferred Stock pursuant to the terms and conditions of the Settlement Agreement, and MediNotes agrees to provide the Capitalization Update on or before the Closing Date, which shall set forth an accurate and complete update of all such changes through the Closing Date, arising after the date hereof in the holders of

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MediNotes Capital Stock, or the number and class of shares of MediNotes Capital Stock held by any such holder. Except for the Stockholders Agreement, the Settlement Agreement and the Company Options and Company Warrants set forth in Section 4.3(a)(i) of the Disclosure Schedule, and the rights granted to Eclipsys and Merger Sub under this Agreement, there are no outstanding obligations of MediNotes, contingent or otherwise, to issue, sell or transfer or repurchase, redeem or otherwise acquire, or that relate to the holding, voting or disposition of, or that restrict the transfer of, the issued or unissued Capital Stock of MediNotes. Each share of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock is convertible into one share of Company Common Stock. Shares of Series D Preferred Stock are not convertible.

(b) All issued and outstanding Shares are duly authorized, validly issued, fully paid and nonassessable, and none of such Shares has been issued in violation of or, except as specified in the Stockholders Agreement, is subject to, any option, call, right of first refusal, preemptive, subscription or similar right. Except for the Settlement Agreement, the Company Options set forth in Section 4.3(a)(i) of the Disclosure Schedule and the Company Warrants set forth in Section 4.3(a)(i) of the Disclosure Schedule, there are no options, warrants, calls, subscriptions, convertible securities, convertible debt or other rights or other Contracts which obligate MediNotes to issue, or MediNotes or any of the Stockholders to transfer, any Capital Stock of MediNotes. The outstanding Company Capital Stock has been issued in compliance with all applicable Legal Requirements.

(c) MediNotes does not have any outstanding bonds, debentures, notes or other obligations, the holders of which have the right to vote (or which are convertible into or exercisable or exchangeable for securities having the right to vote) with its Stockholders on any matter and there are no equity equivalent interests in the ownership or earnings, or distributions upon liquidation or sale of assets, of MediNotes.

(d) MediNotes is not in default or breach (and no event has occurred which with notice or lapse of time or both, would constitute a breach or default) of any term or provision of the MediNotes Articles of Incorporation or its by-laws.

4.4 Material Contracts; No Violation.

(a) Except for the Contracts listed in Section 4.4(a) of the Disclosure Schedule, MediNotes is not a party to, and none of its assets or properties is bound by, any:

(i) Contract that involves performance of services or delivery of Software or other products of MediNotes or any other Person, except for Contracts providing for payments by or to MediNotes of less than $25,000 in any instance or $100,000 in the aggregate;

(ii) Contract with or obligation to any Governmental Entity, including but not limited to development agreements;

(iii) Contract for the future purchase of materials, services or equipment (A) with a future Liability potentially in excess of $25,000 in any instance or $100,000 in the aggregate, or (B) that are not cancelable by MediNotes on no more than 60 days’ notice without liability, penalty or premium;

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(iv) license, option, escrow agreement or other Contract relating in whole or in part to Company IP, other than licenses contained in Contracts entered into in the ordinary course of business, consistent with past practice, with resellers and other customers of MediNotes for the delivery of Software or other products of MediNotes;

(v) lease, sublease or similar Contract under which (A) it is a lessor or sublessor of real property owned by any other Person, or makes available for use to any Person, any portion of any premises otherwise occupied, leased or subleased by it, or (B) it is a lessee or sublessee of, or holds or uses any real property owned by any other Person;

(vi) lease, sublease or similar Contract under which (A) it is a lessee or sublessee of, or holds or uses, any machinery, equipment, vehicle or other tangible personal property owned by any Person, or (B) it is a lessor or sublessor of, or makes available for use by any Person, any tangible personal property owned or leased by it, except in each case for Contracts providing for payments by or to MediNotes of less than $25,000 in any instance or $100,000 in the aggregate;

(vii) Contract with any of its officers, directors or employees or any of its former officers, directors or employees, including employee policies of MediNotes (including any severance pay or change in control agreement or policy of MediNotes to provide such payments, and whether such payments are payable upon a termination that is voluntary or non-voluntary);

(viii) employee collective bargaining agreement or other Contract with any labor union;

(ix) covenant not to compete or other Contract restricting, or imposing requirements related to, the conduct or location of its business;

(x) management, consulting, financial advisory or other similar type of Contract;

(xi) Contract under which it has borrowed any money from, or issued any Debt to, any Person;

(xii) Contract under which it or any other Person has guaranteed Debt or other obligations directly or indirectly;

(xiii) Contract that grants or contemplates the granting of a security interest in any of its assets or property;

(xiv) Contract not entered into in the ordinary course of business;

(xv) Contract providing for indemnification of any Person;

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(xvi) power of attorney;

(xvii) Tax sharing or Tax allocation agreement;

(xviii) joint venture or partnership agreement or similar Contract;

(xix) Contract (A) that commits MediNotes to make any fixed or contingent payment or expenditure or any related series of fixed or contingent payments or expenditures totaling more than $100,000 in the aggregate, or (B) that does not terminate pursuant to its terms within one year of the date hereof, and is not cancelable by MediNotes within one year without liability, penalty or premium;

(xx) Contract providing for the purchase or other acquisition of any business or operations of another Person, whether through merger, stock purchase, asset purchase or otherwise; or

(xxi) any other Contract that is material to it that is not otherwise listed in Section 4.4(a) of the Disclosure Schedule.

The Contracts listed on Section 4.4(a) of the Disclosure Schedule, or required to be listed thereon, are referred to herein as the “Material Contracts.”

(b)(i) Each of the Material Contracts is valid, binding and in full force and effect and is enforceable against MediNotes, and to the Knowledge of MediNotes, the other parties thereto, in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization or other similar laws relating to creditors’ rights and general principles of equity, whether in equity or at law, (ii) MediNotes has performed all material obligations required to be performed by it under the Material Contracts and it is not (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder, (iii) to the Knowledge of MediNotes, (A) no other party to any Material Contract is (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder, and (B) no event has occurred or circumstance or condition exists (with or without the lapse of time or the giving of notice, or both) that may contravene, conflict with, or result in a violation or breach of any Material Contract, result in the termination or in a right of termination or cancellation of, or accelerate the performance required by, or result in the triggering of any payment obligations under, or result in the creation of any Lien upon any of the assets or properties of MediNotes under, or result in being declared void, voidable, or without further binding effect, or result in any other modification of or trigger any right or obligation under, any Material Contract or provisions thereof; (iv) no party to any Material Contract has given any written notice of an alleged breach thereof or otherwise Threatened such a breach; and (v) MediNotes has not received any written notice that any party to any Material Contract intends to cancel or terminate such Material Contract, to renegotiate such Material Contract, or to exercise or not exercise any options thereunder, and no such intent to cancel, terminate, renegotiate or exercise has been otherwise Threatened.

(c) Neither the execution and delivery by MediNotes of this Agreement and the other Transaction Documents, nor the consummation of the Merger and Second Merger, and any other transactions contemplated herein and therein in accordance with the terms hereof and

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thereof, will violate, or conflict with, or result in a breach of any provision of, or constitute a material default (or an event that, with notice or lapse of time or both, would constitute a breach or default) under, or result in the termination or in a right of termination or cancellation of, or accelerate the performance required by, or result in the triggering of any payment obligations under, or result in the creation of any Lien upon any of the assets or properties of MediNotes under, or result in being declared void, voidable, or without further binding effect, or result in any other modification of or trigger any right or obligation under, any Material Contract or provision thereof.

(d) No Consent of any party to a Material Contract is required in connection with the execution, delivery and performance of this Agreement and the other Transaction Documents and the consummation of the Merger and Second Merger, and any other transactions contemplated hereby and thereby.

(e) True, complete and accurate copies (or, as to oral Contracts, written summaries of the terms), of the Material Contracts entered into on or prior to the date hereof have been provided to Eclipsys, or will be provided to Eclipsys within five Business Days after the date hereof, and true, complete and accurate copies (or, as to oral Contracts, written summaries of the terms) of any Material Contracts entered into after the date hereof and prior to or on the Closing Date will be provided to Eclipsys promptly after being so entered into. There are no terms of any Material Contract not set forth in the copies thereof provided to Eclipsys. The terms and conditions of all of the Material Contracts were negotiated at arm’s length.

4.5 Financial Statements; No Undisclosed Liabilities.

(a) Section 4.5(a) of the Disclosure Schedule sets forth true and complete copies of (i) MediNotes’ balance sheet, and related statement of income, statement of cash flows and changes in stockholders equity as of and for the twelve-month periods ended December 31, 2007, 2006, and 2005, in each case audited by LWBJ, LLP, independent certified public accountants, with such accountant’s unqualified reports attached thereto (the “Year-End Financial Statements”), and (ii) MediNotes’ balance sheet and related statement of income and cash flows as of and for the six months ended June 30, 2008 (the “Interim Financial Statements”). The Year-End Financial Statements and the Interim Financial Statements are collectively referred to herein as the “Financial Statements”).

(b) The Financial Statements (i) were prepared by MediNotes in accordance with the books and records of MediNotes, (ii) are true, correct and complete in all material respects, and (iii) reflect the consistent application of all accounting principles, practices and methods of MediNotes throughout the periods thereof, except as disclosed therein, and (iv) fairly present the financial condition and results of operation of MediNotes as of the dates and for the periods covered thereby, all in accordance with GAAP (consistently applied, except as disclosed therein). The Financial Statements do not contain any material items of a special or nonrecurring nature, except as expressly stated therein. No financial statements of any other Person are required by GAAP to be included in the financial statements of MediNotes.

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(c) There are no Liabilities of MediNotes other than: (i) Liabilities accrued on the balance sheet dated as of June 30, 2008; and (ii) current Liabilities incurred and unpaid since June 30, 2008 that have been incurred in the ordinary course of business consistent with past practice, are accrued on the balance sheet of MediNotes as of the Closing Date, and are included in the calculations of the Estimated Current Liabilities, Estimated Closing Date Net Working Capital, Final Current Liabilities and the Final Closing Date Net Working Capital, as applicable. Deferred revenue amounts indicated on the balance sheet dated as of June 30, 2008 do not, and Current Liabilities will not, reflect reserves for Threatened claims against MediNotes or claims that, to the Knowledge of MediNotes, are likely to be made against MediNotes.

(d) None of the Stockholders or MediNotes have been advised by any independent certified public accountant of MediNotes that there is a significant deficiency or material weakness in the design or operation of MediNotes’ internal controls.

4.6 Authority; No Violations; Consents.

(a) MediNotes has full corporate power and authority to execute and deliver this Agreement and each of the Transaction Documents to which it will be a party and, subject to obtaining approval of the Stockholders, voting separately by each class and series representing a majority of the outstanding Company Common Stock, the Series A Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock, respectively (the “Company Stockholder Approval”), to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by MediNotes of this Agreement and each of the Transaction Documents to which MediNotes will be party and the consummation by MediNotes of the transactions contemplated hereby and thereby have been duly and validly authorized by the Board of Directors of MediNotes. Except for obtaining the Company Stockholder Approval, no other corporate proceedings on the part of MediNotes are necessary to authorize the execution, delivery or performance of this Agreement or any other Transaction Document or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and upon their execution each of the other Transaction Documents to which MediNotes will be a party will have been, duly executed and delivered by MediNotes. This Agreement constitutes, and upon their execution each of the Transaction Documents to which MediNotes will be a party will constitute, the legal, valid and binding obligations of MediNotes, enforceable against MediNotes in accordance with their respective terms, subject to applicable bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization or other similar laws relating to creditors’ rights and general principles of equity, whether in equity or at law.

(b) The execution and delivery by MediNotes of this Agreement, and the other Transaction Documents and the consummation of the transactions contemplated herein and therein in accordance with the terms hereof or thereof will not:

(i) conflict with or result in a breach of any provisions of the MediNotes Articles of Incorporation or its by-laws; or

(ii) violate any settlement agreement, Order or material Legal Requirement applicable to MediNotes, or its properties or assets; or

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(iii) result in the imposition of any Lien upon or with respect to any of the assets or properties owned or used by MediNotes.

(c) No Consent is required to be made by or with respect to MediNotes in connection with the execution, delivery and performance of this Agreement and the other Transaction Documents, and the consummation of the transactions contemplated hereby and thereby.

4.7 Compliance; Permits; Litigation.

(a) MediNotes is, and at all times has been, in compliance in all material respects with all settlement agreements, material Permits, Orders, and material Legal Requirements to which it or any of its properties, assets, operations or business is subject and all non-governmental restrictions as to its property or asset use. To the Knowledge of MediNotes, no event has occurred or circumstance or condition exists that (with or without the lapse of time, the giving of notice, or both) (A) may constitute or result in a violation by MediNotes of, or a failure on the part of MediNotes to comply in all material respects with the terms of any settlement agreement, material Permit, Order, or material Legal Requirement, or (B) may give rise to any obligation of MediNotes to undertake or bear all or any portion of the cost of any material remedial action of any nature. Neither MediNotes nor any of the Stockholders has received any written notice or other written communication from any Governmental Entity or other Person regarding any actual, alleged, possible or potential violation of, or failure to comply with, the terms of any settlement agreement, material Permit, Order, or material Legal Requirement, or that give rise to any obligation of MediNotes to undertake, or bear all or any portion of the cost of, any material remedial action of any nature, and no such actual, alleged, possible or potential violation or failure to comply or obligation has been otherwise Threatened.

(b) MediNotes has at all times obtained all material Permits. Except where the failure to have a Permit would not individually or in the aggregate be material, MediNotes currently holds all of the Permits necessary to permit MediNotes to lawfully conduct and operate its business and to own and use its assets and properties in the manner it currently operates the business and owns and uses such assets and properties, and all such Permits are in full force and effect. Section 4.7(b) of the Disclosure Schedule sets forth a list of the material Permits held by MediNotes. No material Permit held by MediNotes (A) is scheduled to expire within the period beginning on the date hereof through six months after the Closing, or (B) will be subject to suspension, modification, revocation or nonrenewal as a result of the execution and delivery of this Agreement and the other Transaction Documents, or the consummation of the transactions contemplated hereby and thereby.

(c) To the Knowledge of MediNotes, there is no proposed plan, proceeding or effort or proposed change to any Legal Requirements, whether or not directly involving MediNotes, by any Governmental Entity or other Person which in any way challenges or would be reasonably expected to adversely affect MediNotes or the Business, including any Permits.

(d)(i) Section 4.7(d)(i) of the Disclosure Schedule sets forth a list and description of all pending, Threatened, or to the Knowledge of MediNotes reasonably probable, lawsuits, arbitrations, proceedings, investigations or other claims against

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MediNotes, its officers, directors or employees (as such), or any of its properties, assets, operations or business, including but not limited to any action which would be reasonably expected to prevent or materially alter or delay the transactions contemplated by this Agreement and the other Transaction Documents.

(ii) There is no lawsuit, arbitration, proceedings, investigations or other claim by MediNotes pending, threatened or contemplated against any other Person.

(iii) To the Knowledge of MediNotes, no event has occurred or circumstance or condition exists that may give rise to or serve as the basis for the commencement of any lawsuit, arbitration, proceeding, investigation or other claim described in Section 4.7(d)(i) or (ii).

(e) MediNotes is not a party to, and its assets and properties are not subject to, any Order, or any settlement agreement with any Governmental Entity or arbitration tribunal or other Person.

4.8 Absence of Certain Changes.

(a) Since January 1, 2008, MediNotes has conducted its business only in the ordinary course of such business consistent with past practice and there has not been:

(i) any event that has occurred or circumstance or condition that exists which, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on MediNotes or the Business;

(ii) any declaration, setting aside or payment of any dividend or other distribution with respect to the Company Capital Stock or any redemption or repurchase of any Capital Stock of MediNotes, or, any other payment by MediNotes of any kind to any Stockholder or any Affiliate of any Stockholder (other than salary or employment related expenses in the ordinary course of business consistent with past practice);

(iii) any material change in the accounting principles, practices or methods of MediNotes;

(iv) any amendment to the MediNotes Articles of Incorporation or its by-laws, except for amendments expressly contemplated in the Bond Agreement;

(v) any increase in the salaries or other compensation payable to any officer, director or employee of MediNotes or any increase in, or addition to, other benefits to which such officer, director or employee may be entitled (except as required by the terms of plans as in effect on the date of this Agreement and which are listed on Section 4.10(a) of the Disclosure Schedule, as required by law, or, with respect to the employment terms of former employees of the Bond Entities who were employed by MediNotes in connection with the asset purchase transaction contemplated by the Bond Agreement, changes made contemporaneously with and as a result of that transaction);

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(vi) any material adverse change, or to the Knowledge of MediNotes, any threat of a material adverse change, in the relations of MediNotes with, or any loss or threat of loss of, any of the suppliers or customers or employees of MediNotes;

(vii) any sale, assignment, transfer, license or other disposal of any Intellectual Property or interest therein, except licenses of the Software Products to customers in the ordinary course of business consistent with past practice;

(viii) any termination, cancellation, amendment or waiver of any material Contract or other right material to MediNotes, except for note and royalty cancellations expressly contemplated in the Bond Agreement; or

(ix) any agreement to take any action or omit to take any action (A) described in this Section 4.8, or (B) that would constitute a breach of any of the representations and warranties of MediNotes or the Major Stockholders contained in this Agreement.

(b) No actions or events have occurred that would violate the provisions of Sections 6.1(a) through (t).

4.9 Taxes.

(a) All Tax Returns that were required to be filed by or with respect to MediNotes have been accurately prepared and timely filed. All such Tax Returns are true, correct, and complete in all respects and do not contain a disclosure statement under Section 6662 of the Code or any predecessor provision or comparable provision of state, local or foreign Legal Requirements. MediNotes has at all times complied with applicable Legal Requirements pertaining to Taxes, including, without limitation, all applicable Legal Requirements relating to record retention.

(b) MediNotes has timely paid all Taxes that have become due or payable (without regard to whether or not such Taxes are shown on any Tax Return) and has established in the Interim Financial Statements an adequate reserve in accordance with GAAP for all Taxes (other than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) that have accrued but are not yet due or payable as of the date of such statements. All Taxes of MediNotes accrued following the end of the most recent period covered by the Interim Financial Statements have been accrued in the ordinary course of business and do not exceed comparable amounts incurred in similar periods in prior years, taking into account any changes in MediNotes’ operating results. The provisions for Taxes currently payable on the Interim Financial Statements are at least equal, as of the date thereof, to all unpaid Taxes of MediNotes as of the date of such statements.

(c) No claim has been made by any taxing authority in any jurisdiction where MediNotes does not file Tax Returns that MediNotes is or may be subject to Tax by that jurisdiction and to the Knowledge of MediNotes no such claim is being contemplated. No extensions or waivers of statutes of limitations with respect to any Tax Returns or Taxes have been given by or requested from MediNotes. No power of attorney has been granted by MediNotes with respect to any matter relating to Taxes.

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(d) No foreign, federal, state or local Tax audits or administrative or judicial Tax proceedings are pending, being conducted or are Threatened with respect to MediNotes and to the Knowledge of MediNotes no such action or proceeding is being contemplated. All deficiencies asserted or assessments made against MediNotes as a result of any examinations, audits, or other proceedings by any Taxing authority have been fully paid. No issue has been raised in any such examination, audit, or other proceeding, which by application of the same or similar principles, reasonably could be expected to result in a proposed deficiency in Taxes of MediNotes.

(e) There are no Liens for Taxes (other than for current Taxes not yet due and payable) upon the assets or properties of MediNotes. No asset or property of MediNotes (i) is property that is required to be treated as being owned by any other Person pursuant to the so-called “safe harbor lease” provisions of former Section 168(f)(8) of the Code; (ii) directly or indirectly secures any debt the interest on which is Tax exempt under Section 103(a) of the Code; or (iii) is “tax-exempt use property” within the meaning of Section 168(h) of the Code.

(f) MediNotes is not a party to or bound by any closing agreement, offer in compromise, or other Contract with any Taxing authority that could affect Taxes for which MediNotes or Eclipsys may be liable. MediNotes is not a party to or bound by any tax indemnity, tax sharing or tax allocation agreement.

(g) MediNotes is not and has not been a member of an affiliated group of corporations, within the meaning of Section 1504 of the Code, or a member of a combined, consolidated or unitary group for state, local or foreign Tax purposes. MediNotes has no liability for Taxes of any Person under Treasury Regulations Section 1.1502-6 or any corresponding provision of state, local or foreign income Tax Legal Requirements, as transferee or successor, by Contract or otherwise.

(h) MediNotes is not a party to any plan or other Contract that has resulted or would result, separately or in the aggregate, in connection with this Agreement, in the payment of any “excess parachute payments” within the meaning of Section 280G of the Code.

(i) MediNotes has withheld and paid all Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third-party.

(j) There is no taxable income of MediNotes that is required under applicable Tax Legal Requirements to be reported by MediNotes for a taxable period beginning after the date hereof which taxable income was realized (and reflects economic income arising) prior to the date hereof or relates to a transaction that occurred prior to the date hereof. MediNotes has not taken any action that is not in accordance with past practice that could defer a liability for Taxes of MediNotes from any taxable period ending on or before the date hereof to any taxable period ending after such date.

(k) MediNotes will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting for a taxable

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period ending on or prior to the Closing Date (including pursuant to Section 481(a) of the Code or any similar Legal Requirement), (ii) “closing agreement” as described in Code Section 7121 (or any corresponding or similar provision of state, local or foreign Tax law) executed on or prior to the Closing Date, or (iii) installment sale or open transaction disposition made on or prior to the Closing Date.

(l) MediNotes has not engaged in a transaction that constitutes a “reportable transaction”, as such term is defined in Treasury Regulation Section 1.6011-4(b)(1).

(m) MediNotes is not subject to Tax, is not engaged in a business, and does not have a permanent establishment in any jurisdiction outside of the United States of America.

(n) MediNotes is not a party to any joint venture, partnership, or other arrangement or Contract that could be treated as a partnership for federal income tax purposes.

(o) MediNotes is not, nor has it ever been, a United States real property holding corporation, as defined in Section 897(c)(2) of the Code.

(p) MediNotes has not been a “distributing corporation” or a “controlled corporation” in connection with a distribution described in Section 355 of the Code.

(q) None of the shares of MediNotes’ outstanding Capital Stock constitutes “restricted stock” (i.e., stock that is subject to a risk of forfeiture) for purposes of Section 83 of the Code with respect to which an election under Section 83(b) of the Code has not been made.

(r) MediNotes does not currently hold, and has not at anytime held, an interest in any Subsidiary that was organized under the laws of a jurisdiction outside the United States.

(s) Neither MediNotes nor, to the Knowledge of MediNotes, any of its Affiliates or shareholders has taken or has agreed to take any action that would prevent the Merger followed by the Second Merger from constituting a reorganization qualifying under the provisions of Section 368(a) of the Code.

(t) All of MediNotes’ indebtedness, instruments, contracts, financial positions and other arrangements that MediNotes has treated as debt for U.S. federal income tax purposes (by deducting interest or otherwise) are properly classified as debt rather than as equity for such purposes, and have not been treated as other than debt for any other purpose. None of MediNotes’ options and warrants are properly classified as stock of MediNotes for U.S. federal income tax purposes.

(u) MediNotes has not made, and will not make, any distributions to its shareholders prior to, in contemplation of, or otherwise in connection with, the transactions contemplated by this Agreement. Neither MediNotes nor any Person related to MediNotes (as defined in Treasury Regulation Section 1.368-1(e)) has acquired or has any plan or intention to acquire any stock of MediNotes in contemplation of the transactions contemplated by this Agreement or otherwise as part of a plan of which these transactions are part.

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4.10 Certain Employee Plans.

(a) Section 4.10(a) of the Disclosure Schedule lists all Company Benefit Plans. With respect to each Company Benefit Plan, true, complete and correct copies of such plans and the most recent summary plan descriptions thereof and any summaries of material modifications, if any, have been furnished to Eclipsys, along with the two most recent annual reports on Form 5500 (including schedules) filed with the Internal Revenue Service for each Company Benefit Plan where such report is required and the most recent favorable IRS determination letter for each Company Benefit Plan that is intended to be qualified pursuant to Section 401(a) of the Code.

(b) Neither MediNotes nor any ERISA Affiliate sponsors, maintains or contributes to or has ever sponsored, maintained, contributed to, or incurred an obligation to contribute or incurred any liability (contingent or otherwise) with respect to any “multiemployer plan” (as such term is defined in Section 3(37) of ERISA) or any other employee benefit plan that is subject to Title IV of ERISA, Part 3 of Subtitle B of Title I of ERISA or Section 412 of the Code.

(c) MediNotes does not provide any health, welfare or life insurance benefits to any of its former or retired employees other than pursuant to Section 4980B of the Code or similar state laws.

(d) (i) Each Company Benefit Plan has been maintained and operated in all material respects in accordance with its terms and all applicable Legal Requirements.

(ii) MediNotes has in all material respects performed all obligations, whether arising by operation of any Legal Requirements or by Contract, required to be performed by it in connection with the Company Benefit Plans.

(iii) To the Knowledge of MediNotes, there have been no defaults or violations by any other party to the Company Benefit Plans.

(iv) There are no actions, suits, or claims pending (other than routine claims for benefits) or Threatened against, or with respect to, any of the Company Benefit Plans, there is no matter pending with respect to any of the Company Benefit Plans before any Governmental Entity, and to the Knowledge of MediNotes, there is no basis for any such action, suit or claim.

(v) Each Company Benefit Plan intended to be qualified under Section 401(a) of the Code has been determined to be so qualified by the Internal Revenue Service, and since the date of each most recent determination, no event has occurred, and no condition or circumstance exists, that has adversely affected or is reasonably likely to adversely affect such qualified status.

(vi) Neither MediNotes, nor, to the Knowledge of MediNotes, any other fiduciary or party in interest of any Company Benefit Plan has participated in, engaged in or been a party to any transaction that is prohibited under Section 4975 of the Code or Section 406 of ERISA and not exempt under Section 4975 of the Code or Section 408 of ERISA, respectively.

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(vii) MediNotes and, to the Knowledge of MediNotes, its ERISA Affiliates, have made full and timely payment of all amounts required to be contributed or paid as expenses or accrued such payments in accordance with normal procedures under the terms of each Company Benefit Plan and applicable Legal Requirements.

(e) The execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby (either alone or in combination with any other action or event) will not (i) require MediNotes to make a larger contribution to, or pay greater benefits or provide other rights under, any Contract or Company Benefit Plan than it otherwise would, (ii) create or give rise to any additional vested rights or service credits under any Contract or Company Benefit Plan, or (iii) entitle any employee, officer or director of MediNotes to severance, termination allowance or similar payments. MediNotes is not a party to any Contract, nor has MediNotes established any other policy or practice, requiring it to make a payment or provide any other form of compensation or benefit to any person performing services for MediNotes upon termination of such services which would not be payable or provided in the absence of the consummation of the transactions contemplated by this Agreement.

(f) In connection with the consummation of the transactions contemplated by this Agreement (either alone or in combination with any other action or event), no payments of money or other property, acceleration of benefits, or provisions of other rights have or will be made under any Contract, Company Benefit Plan or otherwise that would result in the imposition of the sanctions imposed under Section 4999 of the Code.

(g) Each current and former employee of MediNotes has been correctly classified for purposes of each Company Benefit Plan as an eligible or ineligible employee and any retroactive re-classification will not affect any employee’s benefit under any Company Benefit Plan.

(h) Each Company Benefit Plan that is a nonqualified deferred compensation plan (as defined under Section 409A of the Code) satisfies the applicable requirements of Sections 409A(a)(2),(3), and (4) of the Code, and has, since January 1, 2005, been operated in good faith compliance with Sections 409A(a)(2), (3), and (4) of the Code.

4.11 Labor Matters.

(a) MediNotes is not a party to, or bound by, any collective bargaining agreement or other Contract with a labor union or labor organization. There is no unfair labor practice or labor arbitration proceeding pending or Threatened against MediNotes or relating to its business. There has not been and there are no organizational efforts with respect to the formation of a collective bargaining unit being made or threatened involving employees of MediNotes. There are no pending claims or controversies by or between MediNotes and any of its current or former employees, no such claims or controversies are Threatened and no event has occurred or circumstances or conditions exist that would support a claim by any current or

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former employee against MediNotes. None of the Major Stockholders or MediNotes has received notice of any strikes, slowdowns, work stoppages, lockouts, or threats thereof, by or with respect to any employees of MediNotes. MediNotes is and has always been in compliance in all material respects with all applicable Legal Requirements relating to employees and the employment of labor, including provisions thereof relating to wages, hours, equal opportunity and collective bargaining.

(b) Section 4.11(b)(i) of the Disclosure Schedule sets forth a complete and accurate list of all employees employed by MediNotes, including, the salaries or wages or other payment terms, and positions and duties of each such employee, the state in which such employee is located, and whether such employee is required to be paid overtime pay under any applicable Legal Requirements. Each employee listed on Section 4.11(b)(i) of the Disclosure Schedule is hired “at will,” meaning MediNotes or such employee can terminate such employment, with or without cause, at any time, without liability. Section 4.11(b)(ii) of the Disclosure Schedule sets forth a complete and accurate list of independent contractors retained by MediNotes who (i) assisted with the development of Company IP or (ii) were paid in the aggregate more than $25,000 since January 1, 2007, indicating the purposes or projects for which each was retained. All Persons who have performed services for MediNotes and have been classified as independent contractors, and all Persons who have performed services for MediNotes and have been classified as exempt employees not entitled to overtime pay under applicable Legal Requirements, have been at all times properly classified as such in accordance with all Legal Requirements. The classification, job description or duties of the employees of MediNotes and independent contractors of MediNotes have not been changed. Section 4.11(b)(iii) of the Disclosure Schedule contains a complete and accurate list of each former employee of MediNotes receiving benefits or entitled to receive benefits under any life insurance, medical insurance or other coverage or benefits offered by MediNotes or which MediNotes is obligated to provide or fund, other than medical insurance provided pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, at no cost to MediNotes.

(c) To the Knowledge of MediNotes, no employee of MediNotes is a party to, or is otherwise bound by, any Contract, including any confidentiality, noncompetition, or proprietary rights agreement, between such employee and any other Person that in any way adversely affects or will affect (i) the performance of his or her duties as an employee of MediNotes, or (ii) the ability of MediNotes to conduct its business. No Key Employee has threatened to terminate his or her employment with MediNotes, as a result of the transaction contemplated hereby or otherwise.

(d) There has not been and is no pending or Threatened discrimination, wrongful termination or wage and hour proceedings, claims, charges or complaints against or involving MediNotes before the National Labor Relations Board, the Occupational Safety & Health Administration (OSHA), the Equal Employment Opportunity Commission (EEOC), or any other Governmental Entity, and no event has occurred or circumstances or conditions exist that would support such a claim.

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4.12 Restrictions on Business Activities.

(a) There is no currently effective Order or Legal Requirement, or any Order, or, to the Knowledge of MediNotes, any Legal Requirement or other action by a Governmental Entity, pending before a Governmental Entity or, to the Knowledge of MediNotes, being considered by a Governmental Entity, which has or would have the effect of restricting the conduct of the Business.

(b) Neither MediNotes nor any director, officer, agent, employee or, to the Knowledge of MediNotes, any consultant or contractor of MediNotes, has directly or indirectly: (i) made any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other payment to any Person, private or public, regardless of form, whether in money, property, or services, that is (A) illegal or (B) violates any policy of MediNotes; or (ii) established or maintained any fund or asset that has not been recorded in the books and records of MediNotes.

4.13 Real Property.

(a) Section 4.13(a) of the Disclosure Schedule provides a true, correct and complete list of all of the Contracts relating to all real property leased to MediNotes (which property includes MediNotes’ right title and interest in any leasehold improvements thereon and personal property and fixtures therein, and in each case all of MediNotes’ rights and interest in any other rights, subleases, licenses, permits, deposits and profits appurtenant or related to such Lease, the “Leased Real Property”). The Leased Real Property constitutes all the fee and leasehold interests in real property (A) held by MediNotes or (B) used in connection with, necessary for the conduct of, or otherwise material to, the Business.

(b) MediNotes has valid and enforceable Leases relating to the Leased Real Property under which MediNotes is entitled to occupy and use such Leased Real Property in connection with the operation of the Business, and there is no breach or default on the part of MediNotes under any such Lease or, to the Knowledge of MediNotes, any other party to any such Lease.

(c) To the Knowledge of MediNotes, all of the buildings, fixtures and other improvements respecting the Leased Real Property are in good operating condition and repair, and the operation thereof as presently conducted is not in violation of any applicable building code, zoning ordinance or other Legal Requirements.

4.14 Intellectual Property.

(a) Section 4.14(a)(i) of the Disclosure Schedule sets forth a true, complete and accurate list of the following Company Owned IP (other than trade secrets and know how): Company Registered IP, material Software and material unregistered Trademarks, indicating for each: (i) for each item thereof the beneficial owner thereof and, if different, the record owner thereof; (ii) whether such Company Owned IP is Company Registered IP; and (iii) for Company Registered IP, (A) the applicable registration or application, issuance or other identifying number, (B) the date, status, and applicable territories of such registration, issuance or filing, as applicable, and (C) the status, including the date and description of any action that is due within 90 days of the date hereof in connection with such registration, issuance or filing, as applicable.

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In the case of any Company Registered IP in which a Person other than MediNotes holds an interest, Section 4.14(a)(ii) of the Disclosure Schedule identifies such Company Registered IP and Person and accurately and fully describes the extent of such interest. All Company Owned IP was created solely by employees or contractors of MediNotes and without any participation or funding by any Governmental Entity or other Person. No Person has an interest in any Company Owned IP that would entitle them to exploit the Company Owned IP without the consent of MediNotes and no such consents have been given by MediNotes.

(b) Section 4.14(b) of the Disclosure Schedule (i) sets forth a true, complete and accurate list of all Company Licensed IP that is (A) incorporated into the products of MediNotes provided to customers or provided to customers in connection with products or services of MediNotes, (B) “resold” or sublicensed to customers by MediNotes, (C) used by MediNotes as a development tool (excluding commercially available, non-customized software and PC applications at a cost of less than $10,000 for current use by MediNotes, such as Word or Windows, that are not incorporated into MediNotes’ products (“Off-the-Shelf Software”)); or (D) material to the Business and is not covered under clauses (A), (B) or (C); (ii) identifies the license or other Contract pursuant to which such Company Licensed IP is being licensed to or used by MediNotes (each, a “License-In Agreement”); (iii) sets forth, to the extent applicable, the number or quantity of copies of the Company Licensed IP that MediNotes is permitted to use or distribute, the number or quantity that MediNotes is using or distributing, and the number or quantity that MediNotes expects to use or distribute in the next three years; and (iv) sets forth a complete and accurate list of the amount of any remaining unused prepaid royalty and identifies those License-In Agreements under which such royalty or license fee (excluding fees for maintenance and support) was paid or may become payable by MediNotes by reason of the passage of time, use or exploitation of Intellectual Property licensed thereunder. True, complete and accurate copies (or, as to oral Contracts, written summaries of the terms), of all License-In Agreements entered into by MediNotes on or prior to the date hereof have been provided to Eclipsys and true, complete and accurate copies (or, as to oral Contracts, written summaries of the terms) of any License-In Agreements entered into by MediNotes after the date hereof and prior to or on the Closing Date will be provided to Eclipsys promptly after being so entered into. There are no terms of any License-In Agreements not set forth in the copies thereof provided to Eclipsys. The terms and conditions of all of the License-In Agreements were negotiated at arm’s length. Without limiting the foregoing, MediNotes has acquired rights to all Company Licensed IP (including without limitation Off-the-Shelf Software) in sufficient quantities and of sufficient scope to cover all of MediNotes’ past and current use(s) and copies of the Company Licensed IP and those reasonably anticipated to be needed (y) for internal use during the year after the Closing Date in accordance with current business plans, and (z) for the duration of the terms (including during any periods subject to a renewal right) of any Contract with or binding on MediNotes or its properties pursuant to which Company Licensed IP is used by third parties. Furthermore, the rights licensed under each License-In Agreement shall be exercisable by MediNotes on and after the Closing Date to the same extent and at the same cost as MediNotes had prior to the Closing Date, and no Person granting rights under any License-In Agreement has given notice in writing, or such other form as permitted by such License-In Agreement, to the Major Stockholders or MediNotes or Threatened that it intends to terminate such License-In Agreement prior to the expiration of the existing term thereof or to deny any request for an extension of such term.

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(c) MediNotes has good and valid title to all of the Company Owned IP, free and clear of any Liens except for Permitted Liens, and (i) all registrations, applications and filings for the Company Registered IP are valid, enforceable, and in full force and effect, and (ii) MediNotes has the right to enforce the Company Owned IP against the Stockholders and third parties. MediNotes is not, and will not with the passage of time or satisfaction of conditions become, obligated to make any payment to any Person in connection with the manufacture, use, sale, importation, distribution, display, modification or other exploitation of any Company Owned IP. MediNotes is free to make, use, modify, copy, distribute, sell, license, import, export and otherwise exploit all Company Owned IP on an exclusive basis subject only to nonexclusive (x) use pursuant to end-user licenses granted to customers; (y) distribution rights granted to the resellers or distributors listed in Section 4.14(c) of the Disclosure Schedule; and (z) nondisclosure or confidentiality agreements pursuant to which any Person has been granted access to Company Owned IP but in which such agreement does not grant the right to exploit such Company Owned IP; in each case of (x) through (z) in the ordinary course of business consistent with past practice and disclosed to Eclipsys prior to the date hereof. No current or former employee, officer, director, stockholder, consultant or independent contractor of MediNotes has any valid right, claim or interest in or with respect to any Company IP which would impair or which could give rise to the impairment of the use, distribution, license or other exploitation of the Company IP by MediNotes or Eclipsys or their successors or transferees.

(d) MediNotes has taken reasonable measures and precautions to protect, preserve and maintain the confidentiality and secrecy of all trade secrets and other confidential information material to the Business, including at a minimum: (i) maintaining the security of its facilities and systems so that confidential information and trade secrets are not available to Persons who are not authorized to have access; (ii) policing the use of such information; and (iii) taking appropriate action to address any misuse, or compromise of the confidentiality of such information. None of the Major Stockholders or MediNotes has disclosed or delivered or has permitted to be disclosed or delivered to any Person, and no Person has access to (other than employees of MediNotes who need such information in the course of their employment) or has any rights with respect to, trade secrets and other confidential or proprietary information material to the Business, the source code or any portion or aspect of the source code related to the Software Products or otherwise material to the Business, or any proprietary information or algorithm contained in any source code related to the Software Products or of any other Software that comprises Company Owned IP, other than instances where such trade secrets, confidential information and source code have been disclosed subject to an agreement with any Person pursuant to which such Person is required to maintain, and has not breached, the confidentiality thereof. Without limiting the generality of the foregoing, MediNotes has in all cases (A) required each Person who has contributed to, or participated in the creation or development of any of the Software Products or other Company Owned IP to execute and deliver to MediNotes an agreement, in the form of Section 4.14(d)(i) of the Disclosure Schedule, or another form provided to Eclipsys prior to the date hereof, assigning all rights in the Software Products and other Company Owned IP to MediNotes, and all such agreements are in full force and effect, and (B) marked confidential or trade secret materials as such prior to disclosure of such materials to any third-party. Section 4.14(d)(ii) of the Disclosure Schedule sets forth all Software escrow Contracts relating to the Software Products or any other Software that comprises Company Owned IP, the parties to such escrow Contracts, and the code escrowed pursuant to such escrow Contracts. No code has ever been released pursuant to any escrow arrangement. True, complete and accurate copies (or, as to oral Contracts, written summaries of the terms) of all such escrow Contracts have been provided to Eclipsys.

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(e) (i) None of the Company Owned IP or any of the products or services of MediNotes or the Intellectual Property used by MediNotes in its operations (including the Company Licensed IP), infringe, misappropriate, violate, dilute or constitute the unauthorized use of any Intellectual Property of any other Person, and MediNotes has not received (A) any notice or claim (oral or written) in the past six (6) years, and no Person has Threatened during such period to provide, a notice or claim, alleging or asserting that any such infringement, misappropriation, violation, dilution or unauthorized use is or may be occurring or has or may have occurred, or (B) any written notice or claim alleging or asserting that any such infringement, misappropriation, violation, dilution or unauthorized use is or may be occurring or has or may have occurred. No confidential information or invention owned by any former employer of any current or former employee or consultant of MediNotes is incorporated into, used or relied upon in the products or services of MediNotes. There is no pending or Threatened claim or demand that challenges the ownership, legality, validity, enforceability, use, exploitation or modification by MediNotes of Company Owned IP or any of the products or services of MediNotes or the Intellectual Property used by MediNotes in its operations (including the Company Licensed IP) and, to the Knowledge of MediNotes, no facts or circumstances exist that could reasonably be expected to result in such a claim or demand. No Company Owned IP or any of the products or services of MediNotes or the Intellectual Property used by MediNotes in its operations (including the Company Licensed IP), is subject to any outstanding Order restricting the use thereof by MediNotes or, in the case of any Intellectual Property licensed by MediNotes to others, restricting the sale, transfer, assignment or licensing thereof by MediNotes to any Person.

(ii) MediNotes has the right to grant the licenses it grants in the course of its business.

(iii) The Company IP held by MediNotes: (A) constitutes all of the Intellectual Property used in or necessary for the conduct of the Business; and (B) constitutes all of the Intellectual Property necessary to operate the Business after the Closing in substantially the same manner as the Business has heretofore been operated by MediNotes. No rights in any Registered Intellectual Property, and to the Knowledge of MediNotes, no rights in any Intellectual Property, in each case other than the rights of MediNotes in the Company IP, are necessary to avoid infringing any Intellectual Property or other legal or contractual right of any Person in the conduct of the Business as currently or previously conducted, or as currently contemplated to be conducted by MediNotes.

(f) All Company Registered IP is valid, enforceable to the full extent permitted by the jurisdiction in which it is registered and in full force and effect, and all maintenance, annuity and other fees due in respect of such Company Registered IP have been fully paid and all filings applicable thereto have been properly made. There is (i) no trademark included in the Company Registered IP that is now involved in any opposition or cancellation proceeding and no trademark that is currently used by MediNotes has been involved in any opposition or cancellation proceeding, and (ii) no patent or patent application included in the Company Registered IP that is now involved in any interference, reissue or reexamination proceeding.

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(g) To the Knowledge of MediNotes, no Person is infringing or misappropriating any Company Owned IP in any respect or making any unlawful use of any products of MediNotes in any respect. None of the Major Stockholders or MediNotes (including its representatives) has given notice to any Person in the last three years of any such infringement, misappropriation or unlawful use or alleged infringement, misappropriation or unlawful use. MediNotes has not initiated nor is it maintaining before a court or in an arbitration proceeding claims or causes of action against any other Person for infringement or misappropriation by such Person of Company Owned IP (including claims for past infringement or misappropriation of Intellectual Property). MediNotes has not, during the last twelve months, threatened in a writing sent by the legal counsel of MediNotes to initiate such proceeding.

(h) There has not been introduced by, or on behalf of, MediNotes into any Company IP incorporated into or used in conjunction with any product, system, program or Software that is or was used in any product of, or that relates to the assets of, MediNotes, including the Software Products, any “back door,” “time bomb,” “Trojan horse,” “worm,” “drop dead device,” “virus” or other software routines or hardware components designed to permit unauthorized access or to disable or erase software, hardware or data without the consent of the user.

(i) The existing and currently manufactured and marketed products of MediNotes, including the Software Products, in all material respects have the features and perform the functions described in (i) any agreed specifications, responses to requests for proposals or end user documentation, provided to customers or potential customers of MediNotes, and (ii) any Contracts or representations made by MediNotes or its representatives (either orally or in writing) that such customers or potential customers could reasonably rely on in deciding to purchase the products (notwithstanding any subsequent disclaimer of any representations or warranties) or would reasonably be expected to rely upon when licensing or otherwise acquiring such products, in each case, subject to subsequent changes expressly requested by the customer and to standard error and maintenance items addressed by MediNotes in the ordinary course of business. Excluding error and maintenance items adequately addressed by MediNotes in the ordinary course of business, MediNotes has not received any notice or complaints alleging that such products do not perform as described. There are no material errors or omissions in the design, creation, implementation or maintenance of any of the Software Products. MediNotes has performed all material obligations (legal and contractual) required to be performed by it under the Contracts with customers and it is not (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder, and, with respect to material obligations required to be performed under such Contracts that are not yet due, there is no reason to expect that such obligations will not be fulfilled when they become due.

(j) No Company Owned IP is, in whole or in part, subject to the provisions of any open source, quasi-open source or other source code license agreement that (i) requires the distribution of source code in connection with the distribution of the licensed Software in object

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code form; (ii) prohibits or limits MediNotes or any Affiliate from charging a fee or receiving consideration in connection with sublicensing or distributing such licensed Software (whether in source code or object code form); or (iii) allows a customer or requires that a customer have the right to decompile, disassemble or otherwise reverse engineer the software by its terms and not by operation of law, including without limitation, any version of any of the following: (A) GNU’s General Public License (“GPL”) or Lesser/Library GPL, (B) The Artistic License (e.g., PERL), (C) the Mozilla Public License, (D) the Netscape Public License, (E) the Berkeley software design (“BSD”) license including Free BSD or BSD-style license, (F) the Sun Community Source License, (G) an Open Source Foundation License (e.g., CDE and Motif UNIX user interfaces), and (H) the Apache Server license.

(k) MediNotes has taken all reasonable actions, including all actions customary in the United States software industry, to document any Software and its operation that is part of the Company IP, such that the Software, including the source code, and Software Documentation:

(i) have been written in a clear and professional manner so that they may be understood, modified, maintained, enhanced and debugged in an efficient manner by programmers of ordinary skill in the art and comply with all applicable contractual requirements;

(ii) fully describe the programming of the Software, including specifications, functional and flow diagrams, tracked changes to each version of the Software; and

(iii) allow debugging of the software and addition and changes of personnel who maintain and enhance the Software without undue experimentation and exploration.

(l) MediNotes has not exported or transmitted Software, trade secrets or any other technical information, including any technical data, or the direct product of such data, to or in any country to which such export or transmission or creation is restricted by any applicable Legal Requirement, without first having obtained all necessary and appropriate United States or other Government Entity Permit(s).

(m) Section 4.14(m) of the Disclosure Schedule identifies all Software Products and any other Software that comprises Company Owned IP that incorporate encryption subroutines, listing for each applicable Software Product or other Software the modules upon which such subroutines operate and the type of encryption employed with respect to each such module.

(n) Without limiting the foregoing, the Software Products are wholly owned by MediNotes and none of the Stockholders or any third-party has any rights or interests therein.

(o) (i) Each Contract relating to Company IP (each, a “Company IP Contract”) is valid, binding and in full force and effect and is enforceable by MediNotes in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization or other similar laws relating to creditors’ rights and general principles of equity, whether in equity or at law;

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(ii) MediNotes has performed all material obligations required to be performed by it under the Company IP Contracts and it is not (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder; and

(iii) to the Knowledge of MediNotes, no other party to any of the Company IP Contracts is (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder. True, complete and accurate copies (or, as to oral Contracts, written summaries of the terms) of the Company IP Contracts entered into on or prior to the date hereof have been provided to Eclipsys, and true, complete and accurate copies (or, as to oral Contracts, written summaries of the terms) of any Company IP Contracts entered into after the date hereof will be provided to Eclipsys promptly after being so entered into.

(p) Neither the execution and delivery by MediNotes or the Major Stockholders of this Agreement and the other Transaction Documents, nor the consummation of the transactions contemplated herein and therein in accordance with the terms hereof and thereof, will violate, or conflict with, or result in a breach of any provision of, or constitute a material default (or an event that, with notice or lapse of time or both, would constitute a breach or default) under, or result in the termination or in a right of termination or cancellation of, or accelerate the performance required by, or result in the triggering of any payment obligations under, or result in the creation of any Lien upon any of the material properties of MediNotes, or result in being declared void, voidable, or without further binding effect, any of the provisions of any Company IP Contract.

(q) The Software Products will, in their intended and ordinary use, not cause the violation of any applicable Legal Requirements restricting the collection, use, retention or distribution of personally identifiable information, including without limitation the Health Insurance Portability and Accountability Act of 1996 and the regulations issued by the United States Department of Health and Human Services thereunder (collectively, “Privacy Regulations”). MediNotes has not violated and is not violating any Privacy Regulations, and the continuation of the Business substantially consistent with past practices, including the continued use of all Company Owned IP, after the consummation of the transactions contemplated by this Agreement and the other Transaction Documents will not violate any Privacy Regulations.

4.15 Other Assets.

(a) MediNotes owns beneficially and of record, and has good and valid title to, all assets reflected on the balance sheet of MediNotes as of December 31, 2007, contained in the Year-End Financial Statements, or thereafter acquired (except those sold or otherwise disposed of since December 31, 2007 in the ordinary course of business consistent with past practice and not in violation of this Agreement), in each case subject only to Permitted Liens.

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(b) All the material tangible personal property used or owned by MediNotes has been maintained in accordance with generally accepted industry practice and is in good operating condition and repair, ordinary wear and tear excepted. The assets owned or leased by MediNotes include all of the material properties and other assets necessary to conduct the Business as currently conducted and planned by MediNotes.

(c) All of the books and records of MediNotes (including without limitation, the financial records and minute books of MediNotes) are true, complete and accurate in all material respects and have been maintained in accordance with generally accepted business practices. MediNotes has made true, complete and accurate copies of such books and records available to Eclipsys, and at the Closing, all of such books and records will be in the possession of MediNotes.

4.16 Environmental Matters. Except as has not and would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on MediNotes or the Business: (a) MediNotes is now and always has been in compliance with all Environmental Laws; (b) MediNotes has all Permits necessary under Environmental Laws for the conduct and operation of the business as now being conducted by MediNotes and, to the Knowledge of MediNotes, all such Permits are in good standing; (c) there is not now, and to the Knowledge of MediNotes there has not been, any Hazardous Material used, generated, treated, stored, transported, disposed of, released, handled or otherwise existing on, under, about, or emanating from or to, any property owned, leased or operated by MediNotes except in compliance with all applicable Environmental Laws; (d) none of the Major Stockholders or MediNotes has received any notice of alleged, actual or potential responsibility for, or any inquiry or investigation regarding, any release or threatened release of Hazardous Material or alleged violation of, or non-compliance with, any Environmental Law, nor to the Knowledge of MediNotes is there any basis for such a notice or claim; (e) there is no site to which MediNotes has transported or arranged for the transport of Hazardous Material which, to the Knowledge of MediNotes, is or may become the subject of any environmental action; and (f) no event has occurred, and no circumstance or condition exists that, with or without notice or lapse of time, or both, might form the basis of any Liability of MediNotes pursuant to Environmental Laws.

4.17 Insurance.

(a) Section 4.17(a) of the Disclosure Schedule contains a true and complete list of all liability, property, workers’ compensation, directors’ and officers’ liability, life and other insurance policies in effect at any time since January 1, 2005, that insure or did insure the business, operations, directors, or employees of MediNotes or affect or relate to the ownership, use or operation of any of the property or assets (both past and present) of MediNotes, whether issued to MediNotes or to any other Person for the benefit of MediNotes (collectively, the “Insurance Policies”). For each Insurance Policy, Section 4.17(a) of the Disclosure Schedule lists (i) the names and addresses of the insurers, (ii) the names of the Persons to whom such policies have been issued (including additional insureds), (iii) the expiration dates thereof, (iv) whether the policies are currently in effect, (v) the annual premiums and payment terms thereof, (vi) whether it is a “claims made” or an “occurrence” policy, (vii) any self insured retention or deductible, (viii) the aggregate limit of the policy and the currently available limit, and (ix) a brief description of the interests insured thereby. MediNotes has provided Eclipsys with true, accurate and complete copies of each Insurance Policy.

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(b) With respect to Insurance Policies currently in effect: (i) the insurance coverage provided by the Insurance Policies will not terminate or lapse by reason of consummation of the transactions contemplated by this Agreement and the other Transaction Documents; (ii) the Insurance Policies were placed with insurers who are financially sound and reputable and, in light of the business, operations and assets of MediNotes, are in amounts and have coverages that are reasonable and customary for Persons engaged in such businesses and operations and having such assets; (iii) the Insurance Policies are sufficient for compliance with all applicable Legal Requirements and Contracts to which MediNotes is a party or by which its property or assets are bound; and do not provide for any retrospective premium adjustment or other experienced-based liability on the part of MediNotes; and (iv) no side agreements or other Contracts exist that alter the terms of the Insurance Policies. Each current Insurance Policy is valid and binding and in full force and effect, no premiums due thereunder have not been paid, and none of MediNotes, the Major Stockholders or the Person to whom such policy has been issued has received any notice of cancellation or termination in respect of any such policy or is in default thereunder.

(c) Section 4.17(c) of the Disclosure Schedule contains a listing of all material open claims made or otherwise asserted by MediNotes or its officers, directors or employees against any Insurance Policy. None of the Major Stockholders nor MediNotes, nor the Person to whom any Insurance Policy has been issued has received written notice that any insurer under such Insurance Policy is denying liability with respect to a claim thereunder or defending under a reservation of rights clause or, to the Knowledge of MediNotes, indicated any intent to do so or not to renew any such policy. All material claims under the Insurance Policies have been filed in a timely fashion. To the Knowledge of MediNotes, the activities and operations of MediNotes have been conducted in a manner so as to conform in all material respects to all applicable provisions of the Insurance Policies. None of MediNotes, the Person to whom any Insurance Policy has been issued or, to the Knowledge of MediNotes, any Major Stockholder, has failed to disclose any fact to the insurance companies or failed to take any other action, the consequences of which non-disclosure or failure to take action would render any Insurance Policy void, or voidable, or suspend, impair or defeat in whole or in part the insurance coverage issued thereunder. None of MediNotes, the Person to whom any Insurance Policy has been issued or, to the Knowledge of MediNotes, any Major Stockholder, has received (A) any refusal of coverage from any insurer from which MediNotes or such other Person sought coverage, (B) any notice that a defense will be afforded with reservation of rights, (C) any notice of cancellation or termination or any other indication that any insurance policy is no longer in full force or effect or will not be renewed or that the issuer of any policy is not willing or able to perform its obligations thereunder, or (D) any notice that MediNotes or such other Person is in default under any Insurance Policy; and to the Knowledge of MediNotes, no event has occurred and no circumstance or condition exists that, with or without notice or lapse of time or both, might form the basis of any such notice or refusal.

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4.18 Warranties.

(a) MediNotes has delivered to Eclipsys complete and accurate copies of all written warranties that are in effect with respect to MediNotes’ products and services, including the Software Products. There have not been any material deviations from such warranties and none of the employees or agents of MediNotes (i) is authorized to undertake obligations to any customer or to other third parties which expands such warranties, or (ii) has made any oral warranty with respect to such products or services of MediNotes. Section 4.18(a) of the Disclosure Schedule sets forth a list of all Warranty Claims currently made in writing against MediNotes or otherwise Threatened, and MediNotes’ reasonable judgment of the estimate of the aggregate Liability of MediNotes in respect of such Warranty Claims. Such estimate was prepared in good faith, based on the Knowledge of MediNotes, although the Major Stockholders do not provide any assurance that such aggregate Liability will not be exceeded. The foregoing sentence does not limit the Major Stockholders’ liability under Article VII.

(b) Without limiting the foregoing, Section 4.18(b) of the Disclosure Schedule includes all material documentation and other written materials pertaining to the Software Products that has been developed by or for MediNotes and distributed to any customers of MediNotes (the “Customer Documentation”). The Software Products conform to the Customer Documentation in all material respects, and MediNotes has not made any material representations or commitments regarding features or functionality of the Software Products other than as set forth in the Customer Documentation.

(c) Since January 1, 2006, no former customer has, and no current customer has at any time, (i) made any claim or assertion that the Software Products do not conform in any material respect to commitments made by MediNotes, (ii) cancelled any Contract with MediNotes, or (iii) refused to accept, or demanded a full or partial refund or abatement of purchase price for, Software Products delivered by MediNotes pursuant to any Contract.

(d) MediNotes has not, with respect to former customers since January 1, 2006, and with respect to current customers at any time, (i) given any rebates or refunds on license, installation, or support fees that any customers have contracted to pay, (ii) made any commitments to provide future services or Software without payment by the recipient thereof of MediNotes’ ordinary fees, other than discounts provided for in sales contracts with customers as a sales term at the time of original sale of products, in the ordinary course of business consistent with past practice, and not as a service credit or other concession, (iii) made any commitment to deliver any specific results or outcomes to any customer, (iv) had a material cost overrun (i.e., costs in excess of estimates) for any consulting services, or (v) committed to deliver to any customer any Software, or features or functionality thereof, that did not exist on the date the commitment was made.

(e) With respect to third-party Software provided by MediNotes to customers:

(i) the rights provided by MediNotes to the customer are within the scope of what MediNotes is permitted to provide pursuant to MediNotes’ Contract with the third-party provider thereof;

(ii) MediNotes has obtained from the customer all end-user agreements and other commitments required by the third-party provider thereof; and

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(iii) any obligations undertaken by MediNotes in respect of the third-party Software (for example, but without limitation, representations regarding features or functionality, maintenance commitments, indemnities) are consistent with, and do not exceed, the corresponding obligations of the third-party provider thereof to MediNotes.

4.19 Customers; Suppliers.

(a) Section 4.19(a) of the Disclosure Schedule sets forth a complete and accurate list of all present and past customers of MediNotes to which MediNotes supplied and provided products and/or services with an aggregate price of more than $10,000 in 2007, or expected to be more than $10,000 in 2008, showing for each, by product and service, (i) the contractual amounts due for Software license fees, installation and training services and annual maintenance and support and project consulting services fees and revenue for the year ended December 31, 2007, and (ii) the contractual amounts due for Software license fees, installation and training services and annual maintenance and support and estimated project consulting services fees and anticipated revenue for the years ended December 31, 2008 and 2009.

(b) Since January 1, 2006, MediNotes has not received from: (i) any current or former customer any written notice or assertion of material breach, misrepresentation, breach of warranty, Software defects, design errors or malfunctions, or other failures of MediNotes to deliver upon any promises or legal or contractual obligations, and no such assertion of breach, misrepresentation, breach of warranty, Software defects, design errors or malfunctions, or other failures have been otherwise Threatened, nor to the Knowledge of MediNotes, has any event occurred, or does any circumstance or condition exist that, with or without the giving of notice or lapse of time, or both, might form the basis of any such notice or assertion; or (ii) any current customer any written notice that such customer has ceased or intends to cease or terminate its use of the products or services of MediNotes, or materially reduced or intends to materially reduce such use, whether or not as a result of the transactions contemplated hereby, or has sought to reduce the price that it pays for such products and services, and no customer has otherwise Threatened such a cessation, termination, or material reduction in use or price; and to the Knowledge of MediNotes, no customer intends to provide such notice.

(c) Section 4.19(c) of the Disclosure Schedule sets forth a complete and accurate list of all present and past suppliers of MediNotes, from which MediNotes ordered supplies or other products or services with an aggregate purchase price of more than $10,000 during the years ended December 31, 2007 and 2006, or $5,000 during the six months ended June 30, 2008, showing for each, the type of product or service purchased, and the amount of such purchases, during such periods.

(d) Neither MediNotes, nor any of the Major Stockholders, has received from: (i) any current supplier or, since January 1, 2006, any former supplier, any notice or assertion of material breach, misrepresentation, breach of warranty, or other failures of MediNotes to deliver upon any promises or legal or contractual obligations, nor to the Knowledge of MediNotes, has any event occurred, or does any circumstance or condition exist that, with or without the giving of notice or lapse of time, or both, might form the basis of any such notice or assertion; or (ii) from any current supplier any notice that such supplier has ceased or intends to cease or terminate supplying the products or services to MediNotes, or materially reduced or intends to

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materially reduce such supply, whether or not as a result of the transactions contemplated hereby, or has sought to increase the price that MediNotes pays for such products and services, other than general and customary price increases in the ordinary course of business, consistent with past practice, and to the Knowledge of MediNotes, no supplier intends to provide such notice.

4.20 Accounts Receivable. Section 4.20 of the Disclosure Schedule sets forth the Accounts Receivable of MediNotes as of the date of the Interim Financial Statements, with the aging of each such Account Receivable. Such Accounts Receivable represent valid obligations of the obligor thereunder and arose in the ordinary course of business of MediNotes. The Accounts Receivable of MediNotes arising after the date of the Interim Financial Statements represent valid obligations of the obligor thereunder and arose in the ordinary course of business. All of such Accounts Receivable, that have not been paid, are collectible in the ordinary course of business, net of the reserves shown on MediNotes’ balance sheet (including the balance sheet as of the Closing Date, upon which the Closing Date Net Working Capital shall be based, and which reserves therein shall not represent a materially greater percentage of the Accounts Receivable than the reserves reflected in the Interim Financial Statements).

4.21 Accounts Payable. Section 4.21 of the Disclosure Schedule sets forth all Accounts Payable as of a date no more than five Business Days prior to the date hereof, with the date incurred, creditor and amount of each Accounts Payable. Such Accounts Payable arose, and as of the Closing, the Accounts Payable reflected in the Estimated Closing Date Net Working Capital calculation (the list of which, in the same format as Section 4.21 of the Disclosure Schedule, will be provided to Eclipsys on or before the Closing) and the Final Closing Date Net Working Capital calculation, will have arisen, in arm’s length transactions in the ordinary course of business of MediNotes. No Accounts Payable are delinquent, and there are no bills representing amounts alleged to be owed by MediNotes, or other alleged obligations of MediNotes, which MediNotes has disputed or determined to dispute or refuse to pay, all or any portion thereof.

4.22 Bank Accounts. Section 4.22 of the Disclosure Schedule sets forth the names and locations of all banks and other financial institutions at which MediNotes maintains accounts of any nature and the names of all persons authorized to draw thereon or make withdrawals therefrom.

4.23 No Brokers. Except for Joseph R. Dunham II, no broker, finder or similar agent has been employed by or acted on behalf of, directly or indirectly, MediNotes, any Major Stockholder, or any of their respective Affiliates or agents in connection with this Agreement or the other Transaction Documents or the transactions contemplated hereby or thereby. None of MediNotes, the Major Stockholders nor any of their respective Affiliates has entered into any arrangement or other Contract with any Person, or taken any other actions, which could obligate any Stockholder, Eclipsys, MediNotes or any of their respective Affiliates to pay any brokerage commission, finder’s fee or any similar compensation in connection with this Agreement, the other Transaction Documents or the transactions contemplated hereby and thereby, except for the Consulting Agreement dated September 5, 2007 with Joseph R. Dunham II.

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4.24 Disclosure.

(a) None of the information included in any information statement or proxy statement relating to the meeting of the Stockholders to be held in connection with the Merger (the “Company Stockholders’ Meeting”), or action by written consent in lieu thereof will, at the date delivered to such Stockholders and at the date of such meeting or consent, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements herein or therein not misleading.

(b) To the Knowledge of MediNotes, no representation or warranty of MediNotes or the Major Stockholders contained in this Agreement, the Transaction Documents to which it is a party or the certificates delivered pursuant to this Agreement or such Transaction Documents, and no statement contained in the Disclosure Schedule or such certificates, contains, or will contain upon delivery as set forth herein, any untrue statement of a material fact, or omits, or will omit upon delivery, to state any material fact necessary, in light of the circumstances under which it was or will be made, in order to make the statements herein or therein not misleading.

(c) To the Knowledge of MediNotes, there is no fact or circumstance existing or event that has occurred, that has specific application to MediNotes (other than general economic or industry conditions), that has had or is reasonably likely to have a Material Adverse Effect on MediNotes or the Business that has not been set forth in this Agreement, including the Disclosure Schedule.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

OF ECLIPSYS AND MERGER SUB

Eclipsys and Merger Sub, jointly and severally, represent and warrant to MediNotes, as of the date of this Agreement and as of the Closing Date, as follows:

5.1 Existence; Good Standing; Corporate Authority. Eclipsys is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. Merger Sub is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Iowa. Each of Eclipsys and Merger Sub is duly licensed or qualified to do business as a foreign corporation and is in good standing under the laws of each other state of the United States in which such qualification is required, except where the failure to be so qualified or in good standing would not have a Material Adverse Effect on Eclipsys.

5.2 Authorization, Validity, and Effect of Agreements. Each of Eclipsys and Merger Sub has the requisite corporate power and authority to execute and deliver this Agreement and the other Transaction Documents to be executed by it, and the consummation by Merger Sub of the Merger, and by Eclipsys and Merger Sub of the other transactions contemplated herein and therein, has been duly authorized by all requisite corporate action on the part of each of Eclipsys and Merger Sub. This Agreement constitutes, and the other Transaction Documents to be executed by Eclipsys and Merger Sub (when executed and delivered pursuant hereto) will constitute, the valid and legally binding obligations of Eclipsys and Merger Sub, respectively, enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization or other similar laws relating to creditors’ rights and general principles of equity, whether in equity or at law.

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5.3 No Violation. Neither the execution and delivery by each of Eclipsys and Merger Sub of this Agreement or the Transaction Documents, nor the consummation by either of Eclipsys or Merger Sub of the transactions contemplated herein and therein in accordance with the terms hereof and thereof, will:

(i) conflict with or result in a breach of any provisions of the certificate of incorporation or by-laws of Eclipsys or Merger Sub, as applicable;

(ii) violate, or conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination or in a right of termination or cancellation of, or accelerate the performance required by, or result in the creation of any Lien upon any of the material properties of Eclipsys or Merger Sub under, or result in being declared void, voidable, or without further binding effect, any of the terms, conditions or provisions of any material Contract to which Eclipsys or its Subsidiaries is a party, or by which any of their respective assets or properties are bound; or

(iii) require any Consent to be made by or with respect to Eclipsys or Merger Sub (other than approvals by their respective boards of directors, which have been obtained).

5.4 No Brokers. Neither Eclipsys nor any of its Subsidiaries has entered into any Contract with any Person, or taken any other action, which may result in the obligation of any other party to this Agreement to pay any finder’s fees, brokerage or agent’s commissions or other like payments in connection with the negotiations leading to this Agreement or the consummation of the transactions contemplated hereby, except for the engagement letter with Piper Jaffray & Co., for which all obligations thereunder Eclipsys shall be solely liable.

5.5 Funds. Eclipsys will have at the Closing Date the funds necessary to pay the cash part of the Closing Payment in accordance with this Agreement.

5.6 Valid Issuance. When issued pursuant to the terms of this Agreement, the Eclipsys Common Stock constituting part of the Merger Consideration will be duly authorized, validly issued, fully paid and nonassessable, and none of such shares of Eclipsys Common Stock will have been issued in violation of or will be subject to any Lien, option, call, right of first refusal, preemptive, subscription or similar right, other than as may be created by the actions of the recipient.

5.7 Exchange Compliance. Eclipsys Common Stock is registered pursuant to the Exchange Act and is listed on the Nasdaq Global Select Market. Eclipsys has taken no action that is designed to terminate the registration of the Eclipsys Common Stock under the Exchange Act and/or the delisting of the Eclipsys Common Stock from the Nasdaq Global Select Market. Eclipsys is in compliance with all of the presently applicable requirements for continued listing of the Eclipsys Common Stock on the Nasdaq Global Select Market in all material respects.

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5.8 SEC Filings; Financials; Absence of Changes. Each Form 10-K, Form 10-Q and any other periodic report and proxy statement required to be filed by Eclipsys under the Exchange Act, since December 31, 2007 (the “Eclipsys SEC Filings”), has been duly and timely filed by Eclipsys, and did not, at the time it was filed, contain any untrue statement of a material fact or omit to state a material fact required to be included therein or necessary in order to make the statements therein in light of the circumstances under which they were made not misleading. The audited financial statements and unaudited interim financial statements included or incorporated by reference in the Eclipsys SEC Filings (a) were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except that the interim financial statements do not contain footnotes and as may be indicated therein or in the notes thereto, and except as permitted by SEC rules), (b) complied as of their respective dates in all material respects with the applicable accounting requirements and the published rules and regulations of the SEC with respect thereto (except as otherwise disclosed in the Eclipsys SEC Filings) and (c) fairly present in all material respects the consolidated financial position of Eclipsys as of the dates thereof and the income, cash flows and changes in stockholder’s equity for the periods involved.

5.9 Tax-Free Reorganization. Neither Eclipsys nor, to the Knowledge of Eclipsys, any of its Affiliates, has taken or has agreed to take any action that would prevent the Merger followed by the Second Merger from constituting a reorganization qualifying under the provisions of Section 368(a) of the Code.

ARTICLE VI

COVENANTS

6.1 Conduct of Business. Except as expressly consented to in writing by Eclipsys, from the date hereof to the earlier of the termination of this Agreement or the Closing Date, MediNotes shall, and the Major Stockholders shall cause MediNotes:

(a) to conduct its operations according to the usual, regular and ordinary course in substantially the same manner as heretofore conducted;

(b) to preserve intact its business organization and goodwill, and use its commercially reasonable efforts to (i) keep available the services of its officers and employees, and (ii) maintain satisfactory relationships with its customers, suppliers and other Persons having business relationships with it in substantially the same manner as heretofore maintained;

(c) to confer on a regular basis with one or more representatives of Eclipsys, including to report material operational matters and any proposals of MediNotes to engage in material transactions, and to provide such other information as Eclipsys may reasonably request;

(d) not to amend the organizational documents of MediNotes;

(e) to notify Eclipsys within two Business Days of (i) any material change in the condition (financial or otherwise) of the business, properties, assets, Liabilities or prospects of MediNotes, (ii) any material litigation or material complaints, investigations or hearings of any Governmental Entity or other Person (or communications indicating that the same may be contemplated) against MediNotes or involving the business, operations or properties of MediNotes, or (iii) the breach in any material respect of any representation or warranty or covenant contained herein;

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(f) to deliver to Eclipsys within two Business Days any material report, statement, schedule or correspondence filed or submitted by MediNotes or with respect to MediNotes or the Business, the Major Stockholders to, or received by MediNotes or with respect to MediNotes or the Business, the Major Stockholders from, any Governmental Entity;

(g) not to (i) issue any Capital Stock (other than (A) the issuance of Company Common Stock (1) upon exercise of the Company Options and Company Warrants pursuant to the terms thereof, and (2) upon conversion of the Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock pursuant to the MediNotes Articles of Incorporation, and (B) the issuance of 1,000 shares of Series D Preferred Stock pursuant to the terms and conditions of the Settlement Agreement), effect any stock split or combination, reclassify the Shares or otherwise change its capitalization from that which existed on the date of the Interim Financial Statements, (ii) grant, confer or award any option, warrant, conversion right or other right to acquire any of its Capital Stock, (iii) increase any compensation or benefits or enter into or amend any employment, severance, termination or similar Contract with any of its present or future employees, officers or directors, except for normal increases in compensation and benefits to employees consistent with past practice, (iv) adopt any new employee benefit plan (including any stock option, stock benefit or stock purchase plan) or amend any existing employee benefit plan in any material respect, except for changes which may be required by applicable Legal Requirements, or (v) increase the amount, or expand the scope, of any indemnification currently provided for employees, officers or directors;

(h) not to (i) declare, set aside or pay any dividend or make any other distribution or payment with respect to any of its Shares, or (ii) directly or indirectly redeem, purchase or otherwise acquire any of its Shares;

(i) not to sell, lease or otherwise dispose of any assets, or enter into any commitment to do so (other than licenses of its products in the ordinary course of business consistent with past practice);

(j) except in the ordinary course of business consistent with past practice, to use commercially reasonable efforts to maintain the assets and properties of MediNotes in substantially the same condition existing as of the date of this Agreement;

(k) not to (i) incur or assume any Debt or issue any Debt securities, (ii) assume, guaranty, endorse or otherwise become liable or responsible (whether directly, indirectly, contingently or otherwise) for the obligations of any other Person, (iii) modify in any manner adverse to MediNotes any outstanding Debt or other obligation of MediNotes (except for entry into the Royalty Termination Agreement pursuant to which, in conjunction with and immediately after the Closing, the Secured Promissory Note issued to MediNotes on March 13, 2008 by the Bond Entities in the principal amount of $600,000 will be cancelled), (iv) pledge or otherwise encumber any Shares, or (v) mortgage or pledge any of its assets, tangible or intangible, or create or suffer to create any Lien of any kind in respect to such assets except in the ordinary course of business consistent with past practices;

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(l) not to change any of its accounting principles or practices, except as required by GAAP;

(m) not to:

(i) acquire (by merger, consolidation or acquisition of stock or assets) any Person or division thereof or any Capital Stock of any Person,

(ii) except in the ordinary course of business consistent with past practices, enter into any Contract which would be required to be listed on Section 4.4(a) of the Disclosure Schedule if entered into prior to the date hereof, or amend or terminate any Material Contract (except for the Royalty Termination Agreement and Commission Agreement, which will be entered into as of the Closing), or

(iii) authorize any new capital expenditure or expenditures (except in the ordinary course of business consistent with past practice or pursuant to Contracts listed in Section 4.4(a) of the Disclosure Schedule), which, individually or in the aggregate, is in excess of $25,000;

(n) not to pay, discharge or satisfy any Liabilities, other than the payment, discharge or satisfaction in the ordinary course of business of Liabilities reflected, reserved against or disclosed in the Interim Financial Statements or incurred in the ordinary course of business thereafter consistent with past practice;

(o) not to settle or compromise any pending or threatened suit, proceeding, action or claim;

(p) not to make any material Tax election (other than in a manner consistent with prior practice), or take any material position on any material Tax Return filed on or after the date of this Agreement, change any method of accounting for Tax purposes, amend any material Tax Return, settle or compromise any Tax liability for an amount in excess of $10,000, in the aggregate, agree to an extension of a statute of limitations, or fail to file in a timely manner any Tax Returns (except as to filings for which a proper extension has been obtained) that become due or fail to pay any Taxes that become due;

(q) not to loan or advance any amount to, or enter into any Contract or other transaction with (except the Royalty Termination Agreement and the Commission Agreement with the Bond Entities, each of which will be entered into as of the Closing), or otherwise make any payments to any Stockholder, or any of their respective Affiliates or, with the exception of payments of salary or expense advancement in the ordinary course of business, consistent with past practice, in their capacity as employees of MediNotes, any officer or director thereof;

(r) not to delay or postpone the payment of any Accounts Payable or other expenses, or accelerate collection of any Accounts Receivable, or other receivables;

(s) not to take any action that would knowingly result in a breach of any representation, warranty or covenant of MediNotes or the Major Stockholders contained in this Agreement;

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(t) not to take any action or fail to take any reasonable action, or agree in writing or otherwise to take or not take any such actions, having the same or similar effect, or being of the same or similar nature, as any of the actions described in Sections 6.1(a) through (s);

(u) take such action, if any, as is necessary under the terms of all Company Benefit Plans and any other documents governing the Company Options to permit all Company Options to be treated in the Merger in accordance with Section 2.7(d); and

(v) take such action, if any, as is necessary under the documents governing the Company Warrants to permit all Company Warrants to be treated in the Merger in accordance with Section 2.7(e).

6.2 Further Action.

(a) Upon the terms and subject to the conditions of this Agreement, MediNotes and the Major Stockholders, on the one hand, and Eclipsys and Merger Sub, on the other hand, shall use all commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all other things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated in this Agreement, to obtain and file in a timely manner all Consents required to consummate the transactions contemplated hereby, and otherwise to satisfy or cause to be satisfied in all material respects all conditions precedent to their obligations under this Agreement.

(b) (i) From the date of this Agreement until the termination of this Agreement or the Closing Date, MediNotes and the Major Stockholders, on the one hand, and Eclipsys and Merger Sub, on the other hand, shall promptly notify the other of any fact, change, circumstance, condition or occurrence that is reasonably likely to (A) materially adversely affect the ability of such party to obtain or file any Consents required for the transactions contemplated in this Agreement and the other Transaction Documents, or (B) materially adversely affect the ability of such party to perform its covenants and agreements under this Agreement or the other Transaction Documents.

(ii) Each party shall promptly notify the other parties orally and in writing if such party becomes aware of:

(A) (1) the material inaccuracy at any time of any representation or warranty contained in this Agreement of such party; or (2) the breach of any covenant or agreement under this Agreement of such party or the inability of such party to comply with or satisfy in any material respect any covenant, condition or agreement under this Agreement; provided however, that no such notification shall affect the representations, warranties, covenants or agreements of any party or the conditions to the obligations of any party hereunder; and

(B) any notice or other communication from any third-party alleging that the Consent of such third-party is or may be required in connection with the transactions contemplated in this Agreement or the other Transaction Documents or that such third-party has a right to any portion of the Purchase Price.

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(c) MediNotes shall deliver a supplement to Section 4.3 on or before the Closing Date that sets forth the capitalization of MediNotes and holders of all outstanding Capital Stock of MediNotes as of the Closing Date, which supplement, may solely reflect changes from the capitalization set forth in Section 4.3 as a result of (A) the exercise of Company Options and Company Warrants outstanding on the date hereof or conversion of shares of Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock outstanding as of the date hereof, in each case, between the date hereof and the Effective Time, provided that such exercise or conversion is in conformity with the agreements governing such exercise delivered to Eclipsys prior to the date hereof and the MediNotes Articles of Incorporation, and the terms and conditions of this Agreement, and (B) the issuance of 1,000 shares of Series D Preferred Stock pursuant to the terms and conditions of the Settlement Agreement and this Agreement (the “Capitalization Update”). Except for the Capitalization Update, no notice under this Section 6.2 shall affect any rights of Eclipsys under Article VII.

In case at any time after the Closing any further action is necessary or desirable to carry out the purposes of this Agreement, each party, including the Stockholders’ Representative, shall use its respective commercially reasonable efforts to take or cause to be taken all such necessary or desirable action.

6.3 Access to Information. From the date hereof until the earlier of termination of this Agreement or the Closing Date, upon reasonable notice and subject to applicable Legal Requirements, MediNotes shall afford Eclipsys and its accountants, counsel, and other representatives, during normal business hours, access to all of the properties and assets, books, Contracts, and other records of MediNotes reasonably requested by Eclipsys. Eclipsys shall, and shall cause its advisors and representatives to:

(i) conduct its investigation in such a manner that will not unreasonably interfere with the normal operations, customers or employee relations of MediNotes; and

(ii) treat as confidential in accordance the terms hereof all information obtained hereunder or in connection herewith regarding MediNotes and not otherwise known to them prior to disclosure hereunder.

6.4 Publicity. The initial press release relating to this Agreement shall be in the form approved by the parties. Thereafter until the Closing Date, none of MediNotes, the Major Stockholders, the Stockholders’ Representative, Eclipsys or Merger Sub may make any public statement with respect to the transactions contemplated by this Agreement or the other Transaction Documents, without the prior written consent of Eclipsys on the one hand, and MediNotes, on the other hand, except to the extent disclosure is legally required (including the requirements and rules of any stock exchange on which the Eclipsys Common Stock is traded), in which case MediNotes and Eclipsys shall consult with each other, and use reasonable efforts to agree upon the text prior to any such disclosure, to the extent reasonably feasible under the circumstances.

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6.5 Expenses. Except as set forth herein, all costs and expenses (including fees of attorneys, accountants and brokers or finders) incurred in connection with this Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby shall be paid by the party incurring such expenses, and if the Closing is consummated, the Seller Transaction Expenses shall be paid in accordance with the terms and conditions of the Holdback Escrow Agreement and as set forth in Section 2.9(b) and Section 2.10(a)(iv). Without limiting the foregoing, Eclipsys shall pay the fees and expenses of any broker engaged by Eclipsys and its Affiliates, including any disclosed in Section 5.4, and the fees and expenses of any brokers engaged by the Stockholders or their Affiliates (including MediNotes), and including those disclosed in Section 4.23, shall be paid as part of the Seller Transaction Expenses.

6.6 Third-Party Offers.

(a) From and after the date of this Agreement, until the earlier of the Closing or termination of this Agreement, MediNotes and each of the Major Stockholders shall, and shall cause each of their Affiliates and their respective officers, directors, employees, representatives (including, without limitation, any investment banker, attorney or accountant) and agents to immediately cease any discussions or negotiations with any Persons with respect to any Third-Party Acquisition, and none of the Major Stockholders or MediNotes shall, or shall authorize or permit any of its respective Affiliates or their respective officers, directors, employees, representatives (including, without limitation, any investment banker, attorney or accountant) or agents to, directly or indirectly, encourage, solicit, participate in or initiate any inquiries, discussions or negotiations with or provide any information or access to any Person concerning any potential Third-Party Acquisition or that may reasonably be expected to lead to any Third-Party Acquisition or attempted Third-Party Acquisition, or otherwise facilitate any effort or attempt to make or implement a Third-Party Acquisition. MediNotes shall, within 24 hours, communicate to Eclipsys the existence or occurrence and the terms of any potential Third-Party Acquisition or contact or inquiry related to any potential Third-Party Acquisition that the Major Stockholders, MediNotes or any of their respective Affiliates, or their respective officers, directors, employees, representatives or agents, receive in respect of such a proposed transaction, and the identity of the Person from whom such proposal, inquiry, or other contact was received.

(b) MediNotes and the Major Stockholders jointly and severally represent and warrant to Eclipsys that each of the Major Stockholders, MediNotes, and their respective Affiliates, officers, directors, and employees, and to the Knowledge of MediNotes, the representatives (including, without limitation, any investment banker, attorney or accountant) and agents of the Major Stockholders and MediNotes, have terminated any and all existing discussions with third parties relating to a Third-Party Acquisition. The Major Stockholders and MediNotes have instructed all of their respective officers, directors, employees, representatives and agents to terminate all discussions relating to a Third-Party Acquisition.

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6.7 Restrictive Covenants.

(a) The Major Stockholders recognize that the covenants of the Major Stockholders contained in this Section 6.7 are an essential part of this Agreement and that but for the agreement of each Major Stockholder to comply with such covenants Eclipsys would not enter into this Agreement. The Major Stockholders acknowledge and agree that the covenants set forth in this Section 6.7 are necessary to protect the legitimate business interests of the Business acquired by Eclipsys pursuant to this Agreement, including without limitation, trade secrets and other confidential information and goodwill, and that irreparable harm and damage will be done to Eclipsys if any Major Stockholder takes any action in any way prohibited by such covenants. In addition, the Major Stockholders acknowledge that the Purchase Price is paid in part as consideration for customer contacts and marketplace reputation developed by MediNotes for the Business and such covenants are necessary for Eclipsys to receive the full benefit of this Agreement.

(b) After the Closing, each Major Stockholder shall not individually, or in concert with any other Person, directly or indirectly:

(i) engage or become interested in, as owner, employee, partner, through equity ownership (not including up to a five percent passive equity interest in a company for which such Major Stockholder does not serve as an officer, director, employee or consultant), investment of capital, lending of money or property, rendering of services, including as a director (or equivalent), or otherwise create or initiate, any business competitive with the Business;

(ii) take, or assist any other Person in taking, any action intended to advance an interest of any competitor or potential competitor of the Business, or encourage any other Person to take such action; or

(iii) take, or assist any other Person in taking, any material action intended to cause any customer or prospective customer of the Business to use the services or purchase or license the products of any competitor of the Business.

The covenants of the Major Stockholders set forth in this Section 6.7(b) are referred to herein as the “Covenant Not to Compete.”

The Covenant Not to Compete shall cover all of the counties and other political subdivisions of the states of the United States. The Covenant Not to Compete shall bind each Major Stockholder for the three year period immediately following the Closing Date, as the same may be extended pursuant to the terms of Section 6.7(f) (the “Restrictive Period”). The Major Stockholders agree that the duration and area for which the Covenant Not to Compete set forth in this Section 6.7(b) is to be effective are reasonable.

Notwithstanding the foregoing, nothing herein shall prohibit Travis Bond from rendering services to Bond Medical Corp., Inc., a Florida corporation (“Bond Medical Group”) for so long as the business of Bond Medical Group is solely that of (A) acting as a reseller of products and services of MediNotes and (B) limited servicing of products competitive with those of MediNotes pursuant to servicing arrangements entered into prior to the date of the Bond Agreement (which Travis Bond represents is the sole business of Bond Medical Group as conducted on the Closing Date).

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Each of the Major Stockholders hereby acknowledges and agrees that the benefit of the Covenant Not to Compete may be assigned by Eclipsys to any Subsidiary of Eclipsys in connection with any corporate restructuring or reorganization of Eclipsys of the Business, without the further consent of such Major Stockholder.

(c) In addition, and not in limitation of the prohibitions described in Section 6.7(b), for the Restrictive Period, each of the Major Stockholders shall not, and shall cause such Major Stockholder’s Affiliates and family members not to, directly or indirectly, and shall not cause, encourage or assist any other Person to, divert or attempt to divert or take advantage of or attempt to take advantage of any actual or potential business or opportunities of Eclipsys, MediNotes or their Affiliates of which any of the Major Stockholders become aware which relate to the Business, or any part thereof and which are located in any county or any other political subdivision of the states of the United States of America.

(d) During the Restrictive Period, each of the Major Stockholders shall not, and each Major Stockholder shall cause its Affiliates not to, and shall not, cause or encourage or assist any other Persons to, directly or indirectly:

(i) perform any action, activity or course of conduct consisting of or encouraging the following: (A) soliciting, recruiting or hiring any employees of Eclipsys, MediNotes or their Affiliates; or (B) soliciting or encouraging any such employee of Eclipsys, MediNotes or their Affiliates to leave the employment of Eclipsys, MediNotes or their Affiliates; or

(ii) cause, solicit or encourage any customer, or contractor, subcontractor or other supplier of Eclipsys, MediNotes or their Affiliates to terminate or adversely alter any relationship such customer or supplier may have with any of Eclipsys, MediNotes or their Affiliates.

Notwithstanding the foregoing, nothing herein shall prohibit general solicitations by the Major Stockholders or their Affiliates not directed at any specific employees of Eclipsys or MediNotes or their respective Affiliates, including any newspaper advertisements.

(e) The covenants set forth in this Section 6.7 are in addition to and not by way of limitation of any other duties any Major Stockholder may have to Eclipsys, MediNotes or their Affiliates. The Major Stockholders acknowledge that the covenants contained in this Section 6.7 impose a reasonable restraint on the Major Stockholders in light of the activities and business and future plans of Eclipsys. The Major Stockholders acknowledge that if they violate any of the covenants contained in this Section 6.7 (collectively, the “Restrictive Covenants”), it will be difficult to determine the resulting damages to Eclipsys, MediNotes and their Affiliates and, in addition to any other remedies Eclipsys, MediNotes and their Affiliates may have, Eclipsys, MediNotes and their Affiliates shall be entitled to temporary injunctive relief and permanent injunctive relief without the necessity of proving actual damages in the event of any breach or threatened breach of such covenants. The non-prevailing party or parties shall be

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liable to pay all costs, including reasonable attorneys’ fees and expenses, that the prevailing party or parties may incur in enforcing or defending, to any extent, any of the Restrictive Covenants, whether or not litigation is actually commenced and including litigation of any appeal. Eclipsys, MediNotes and their Affiliates may elect to seek one or more remedies at their discretion on a case by case basis. Failure to seek any or all remedies in one case shall not restrict Eclipsys, MediNotes and their Affiliates from seeking any remedies in another situation or for a continuing breach. Such action by Eclipsys, MediNotes and their Affiliates shall not constitute a waiver of any of their rights.

(f) Each of the Restrictive Covenants will be read and interpreted with every reasonable inference given to its enforceability. However, if any term, provision or condition of the Restrictive Covenants is held by a court or arbitrator to be invalid, void or unenforceable, the remainder of the provisions thereof shall remain in full force and effect and shall in no way be affected, impaired or invalidated. If a court or arbitrator determines that any of the Restrictive Covenants are unenforceable, in whole or in part, then the court or arbitrator shall modify such covenant so as to make it enforceable to the fullest extent the court or arbitrator deems enforceable under the prevailing circumstances. As to each Major Stockholder, the Covenant Not to Compete shall be deemed to be a series of separate covenants, one for each and every county or other political subdivision of the states of the United States of America, which is where the Covenant Not to Compete is intended to be effective. Any violation of the provisions of this Section 6.7 shall automatically toll the passage of the three year period with respect to the breaching Stockholder and extend the Restrictive Period for the duration of such violations with respect to the breaching Stockholder.

(g) At any time during the Restrictive Period, each or any of the Major Stockholders shall, within five (5) days of the written request of Eclipsys, certify to Eclipsys in writing (in form and substance reasonably satisfactory to Eclipsys) that such Major Stockholder is in full compliance with the covenants contained in this Section 6.7.

(h) Notwithstanding the foregoing, the Restrictive Covenants shall not apply to any Institutional Major Stockholder and its Affiliates to the extent that such Restrictive Covenants would prevent such Institutional Major Stockholder and its Affiliates from conducting its business in the ordinary course as such business was conducted in the past; provided that this Section 6.7(h) shall not apply to any Affiliates of such Institutional Major Stockholders, if such Affiliates are also Major Stockholders.

(i) Nothing contained in this Section 6.7 is intended to confer upon any individual Major Stockholder any right to employment with Eclipsys, MediNotes or their Affiliates at any time after the Closing Date.

6.8 Directors. Effective as of the Closing Date, the Major Stockholders shall cause each director to resign from their position as a director of the Board of Directors of MediNotes.

6.9 Stockholders’ Representative. The Stockholders shall at all times maintain a representative (the “Stockholders’ Representative”) for purposes of taking certain actions and giving certain consents on behalf of the Major Stockholders prior to the Closing, and the Effective Time Company Holders from and after the Closing, as specified herein. The Major

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Stockholders hereby appoint Danny R. Wipff as the initial Stockholders’ Representative, and immediately upon the approval of this Agreement by the requisite vote or written consent of the Stockholders, each Stockholder shall be deemed to have consented to such appointment (or any then acting successor pursuant to the terms hereof) and the terms hereof. Another person shall be appointed as the Stockholders’ Representative if the person so designated (or any successor thereof) is unwilling or unable to so act. The Stockholders’ Representative hereby accepts such appointment. Each of the Stockholders acknowledges that actions taken, consents given and representations made by the Stockholders’ Representative on behalf of the Stockholders pursuant hereto shall be binding upon the Major Stockholders and the Effective Time Company Holders, as applicable, including all actions under Section 7.2(b) and under the Holdback Escrow Agreement. This appointment and grant of power and authority by each Stockholder is coupled with an interest and is irrevocable and shall not be terminated by any act of any Stockholder or by operation of law, whether by the death or incapacity of any individual Stockholder, or by the occurrence of any other event. The Stockholders’ Representative is authorized to take any action on behalf of the Major Stockholders or the Effective Time Company Holders, as applicable, to facilitate or administer the transactions contemplated hereby, including, without limitation, amending this Agreement, and executing such other documents or instruments as the Stockholders’ Representative deems appropriate. The Stockholders’ Representative may resign at any time, and may be removed for any reason or no reason by the vote or written consent of, as applicable, (i) if prior to the Effective Time, the Major Stockholders holding a majority of the then outstanding aggregate fully diluted Shares held by the Major Stockholders, or (ii) from and after the Effective Time, the Effective Time Company Holders holding a majority of the outstanding aggregate fully diluted Shares at the Effective Time.

6.10 Employee Matters.

(a) The employees of MediNotes listed on Schedule 6.10(a) will, subject to Section 6.10(b), continue as at-will employees of MediNotes or Eclipsys or another Subsidiary of Eclipsys following the Closing, on terms to be determined by Eclipsys in consultation with MediNotes. If employment is continued by Eclipsys or another Subsidiary of Eclipsys other than MediNotes, the new employer shall assume any accrued but unused vacation benefits as listed on Schedule 6.10(a). Employees of MediNotes who continue in the employ of MediNotes, or Eclipsys or a Subsidiary of Eclipsys, following a reasonable transition period determined by Eclipsys in consultation with the Stockholders’ Representative, will have benefits and be employed on terms consistent with those provided by Eclipsys to its other employees at comparable levels in the organization, including annual base compensation, as applicable based on employment level, plus an opportunity to receive equity based compensation and an annual bonus pursuant to the performance-based corporate bonus plan, if established by Eclipsys’s Board of Directors. Following the Closing, to the extent permitted by Legal Requirements, applicable tax qualification requirements and the terms of the applicable employee benefit plans and policies of Eclipsys, and subject to any generally applicable break in service or similar rule, Eclipsys shall recognize the years of service of each continuing employee of MediNotes with MediNotes prior to the Closing Date for purposes of vesting and eligibility to participate (but not benefit accrual) under the employee benefit plans and policies of Eclipsys; provided, however, that such service will not be recognized if recognition would result in a duplication of benefits for the same period of service or to the extent that such service was not recognized under the corresponding Company Benefit Plan.

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(b) Nothing contained in this Agreement confers upon any employee of MediNotes any right to continued employment or participation in any Company Benefit Plan or any employee benefit plan or policy of Eclipsys or its Subsidiaries at any time after the Closing Date, nor shall anything contained herein be deemed an amendment or modification of any Company Benefit Plan or any employee benefit plan or policy of Eclipsys or its Subsidiaries.

(c) Eclipsys shall be solely responsible for any required notice and payments under the Worker Adjustment Retraining and Notification Act of 1988 (the “WARN Act”) and any similar state statutes, and otherwise to comply with any such statute with respect to any “plant closing” or “mass layoff” (as defined in the WARN Act) or group termination or similar event affecting any continuing employees of MediNotes occurring after the Closing Date. MediNotes shall provide any required notice and payments under the WARN Act, and any similar state statutes, and otherwise to comply with any such statute with respect to any “plant closing” or “mass layoff” (as defined in the WARN Act) or group termination or similar event affecting any employees of MediNotes on or before the Closing Date.

6.11 Release. In consideration of the payments to the Major Stockholders by Eclipsys of their share of the Purchase Price and as a condition to the execution and delivery of this Agreement by Eclipsys, each Major Stockholder hereby gives the following general release effective as of the Closing Date:

(a) Each Major Stockholder on behalf of such Major Stockholder and such Major Stockholder’s agents, heirs, successors and assigns, hereby irrevocably and unconditionally releases, acquits and forever discharges MediNotes, Eclipsys, each of their respective Affiliates and their respective partners, members, managers, stockholders, directors, officers and agents, and their respective successors and assigns (collectively, the “Released Parties”), to the fullest extent permitted by applicable Legal Requirements, from any and all charges, complaints, claims, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, remedies, costs, losses, debts, expenses and fees, of every type, kind, nature, description or character, whether known or unknown, suspected or unsuspected, liquidated or unliquidated, that such Major Stockholder has, owns or holds, or claims to have, hold or own, including but not limited to those arising out of or in connection with (i) the Major Stockholder’s employment, or other relationship with MediNotes, (ii) the Major Stockholder’s right to or interest in any Intellectual Property or other assets or properties of MediNotes, or (iii) the Major Stockholder’s right to or any interest in any Contract with MediNotes, and (iv) any equity or other interests the Major Stockholder may have or claim to have in, or any other claims the Major Stockholder may have against, MediNotes or its predecessors (collectively, the “Claims”). Each Major Stockholder represents that such Major Stockholder has not assigned or transferred or purported to have assigned or transferred to any Person any Claims. This general release set forth in this Section 6.11 shall not affect any rights that the Major Stockholder may have which arise solely under this Agreement (including payment of the Purchase Price), or that arise after the Closing Date.

(b) Each Major Stockholder acknowledges and agrees that the releases made herein constitute final and complete releases of the Released Parties with respect to all Claims. Each Major Stockholder expressly acknowledges and agrees that this general release is intended to include in its effect, without limitation, all Claims which such Major Stockholder does not

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know or suspect to exist at the time hereof, and this general release contemplates the extinguishment of any and all such Claims. Furthermore, each Major Stockholder hereby expressly waives and relinquishes any rights and benefits that such Major Stockholder may have under any Legal Requirements, including any state law or any common law principles limiting waivers of unknown claims. Each Major Stockholder understands that the facts and circumstances under which such Major Stockholder gives this full and complete release and discharge of the Released Parties set forth herein may hereafter prove to be different than now known or believed by such Major Stockholder and such Major Stockholder hereby accepts and assumes the risk thereof and agrees that such Major Stockholder’s full and complete release and discharge of the Released Parties with respect to the Claims shall remain effective in all respects and not be subject to termination, rescission or modification by reason of any such difference in facts and circumstances.

(c) Each Major Stockholder represents and agrees that such Major Stockholder has not filed with any Governmental Entity or arbitrator or any other Person any complaint, charge or lawsuit against any of the Released Parties involving any Claims, and that such Major Stockholder will not do so at any time hereafter.

(d) Each Major Stockholder represents and acknowledges that in executing this general release such Major Stockholder does not rely and has not relied upon any representation or statement not set forth herein made by any of the Released Parties or by any of the Released Parties’ Affiliates, agents, representatives or attorneys with regard to the subject matter, basis or effect of this general release or otherwise.

(e) Without limiting the foregoing general release, each Major Stockholder agrees that such Major Stockholder will not, directly or indirectly, (i) bring or cause to be brought, or encourage or participate in the prosecution of, any action, proceeding or suit seeking recovery by or on behalf of any Person from any Released Party of any amount in respect of, or Damages with respect to, any of the Claims, or (ii) defend any action, proceeding or suit in whole or in part on the grounds that any or all of the terms or provisions of this Section 6.11 violate any Legal Requirements, or are illegal, invalid, inequitable, not binding, unenforceable or against public policy.

6.12 Confidentiality.

(a) Each party and such party’s representatives shall use any Confidential Information of any other party solely for the purpose of pursuing the transactions contemplated hereby, and shall not directly or indirectly use or exploit the Confidential Information of any other party for its own benefit or the benefit of another Person, including to create, adopt or modify products or services which would compete with the disclosing party’s products or services. For purposes of this Agreement, Confidential Information of Eclipsys shall, from and after the Closing Date, include the Confidential Information of MediNotes and the Business, and the Stockholders shall be subject to all obligations set forth herein with respect to such Confidential Information of Eclipsys and MediNotes. This provision is not intended to restrict independent business activities, in each case undertaken without use of the other party’s Confidential Information and without violating the Restrictive Covenants, employment terms, or other legal or contractual duties (but this sentence does not limit the Restrictive Covenants or any employment terms or other legal or contractual duties).

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(b) Each party agrees that (i) the Confidential Information of any other party received or otherwise held by it or generated by it or its representatives based upon such Confidential Information shall be kept confidential, (ii) except as permitted hereunder, such party and its advisors and other representatives will not disclose any of the Confidential Information of any other party in any manner whatsoever, and (iii) such party and its representatives will use the same level of care to prohibit disclosure of the other party’s Confidential Information as such party uses to protect its own confidential information, but in no event using less than reasonable care and diligence; provided, however, that (A) such party may make any disclosure of such information to which the other party gives its prior written consent, and (B) any of such information may be disclosed to such party’s representatives who need to know such information for the sole purpose of pursuing the transactions contemplated hereby, and who agree to keep such information confidential. In any event, each party shall be responsible for any breach of this Agreement by its representatives and shall, at its sole expense, take all reasonable measures (including but not limited to court proceedings) to restrain its representatives from prohibited or unauthorized disclosure or use of the Confidential Information of any other party.

(c) The receiving party shall immediately notify the disclosing party upon any loss or unauthorized disclosure of the other party’s Confidential Information.

(d) In the event that any party or any of its representatives are requested or required (by oral questions, interrogatories, requests for information or documents in legal proceedings, subpoena, civil investigative demand or other similar process) to disclose any of the Confidential Information of any other party, it shall provide the disclosing party with prompt written notice of any such request or requirement so that the disclosing party may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement. If, in the absence of a protective order or other remedy or the receipt of a waiver by the disclosing party, the receiving party or any of its representatives are nonetheless, in the opinion of its outside counsel, legally compelled to disclose Confidential Information of the disclosing party to any tribunal or else stand liable for contempt or suffer other similar censure or penalty, the receiving party or its representative may, without liability hereunder, disclose to such tribunal only that portion of the Confidential Information of the disclosing party that such counsel advises is legally required to be disclosed, provided that the receiving party exercises its commercially reasonable efforts to preserve the confidentiality of such Confidential Information, including, without limitation, by cooperating with the disclosing party to obtain an appropriate protective order or other reliable assurance that confidential treatment will be accorded such Confidential Information by such tribunal.

(e) Each party acknowledges that the Confidential Information of the other parties has tangible value and it is further understood and agreed that money damages would not be a sufficient remedy for any breach of the provisions set forth herein by any party or any of their representatives and that the parties hereto shall be entitled to equitable relief, including injunction and specific performance, as a remedy for any such breach or threatened breach. Such remedies shall not be deemed to be the exclusive remedies for a breach of the provisions set forth herein, but shall be in addition to all other remedies available at law or equity to the parties.

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(f) Nothing herein shall limit the obligations of the parties under the Confidentiality Agreement, and to the extent of any inconsistency between this Section 6.12 and the Confidentiality Agreement, the Confidentiality Agreement shall govern with respect to the parties thereto.

6.13 Covenants Regarding Contracts. On or before the Closing Date, unless waived by Eclipsys, MediNotes shall use reasonable efforts to obtain, and Eclipsys shall use reasonable efforts to assist MediNotes in obtaining, all Consents required under the Material Contracts in connection with the execution, delivery and performance of this Agreement, the other Transaction Documents or the consummation of the transactions contemplated hereby and thereby, on terms that are not materially burdensome to Eclipsys or MediNotes, and MediNotes shall deliver copies of such Consents to Eclipsys.

6.14 Stockholder Meeting. As soon as practicable following the date of this Agreement, MediNotes shall take all action necessary in accordance with Iowa law and the MediNotes Articles of Incorporation and by-laws to duly call, give notice of, convene and hold the Company Stockholders’ Meeting for Stockholders to consider and vote upon the adoption and approval of this Agreement and the transactions contemplated hereby, including the appointment of the Stockholders’ Representative, or solicit the written consent of Stockholders thereto. MediNotes will, through its Board of Directors, recommend to the Stockholders the adoption and approval of this Agreement, shall not withdraw, modify or change such recommendation, and shall use reasonable efforts to obtain Company Stockholders’ Approval. The Major Stockholders will use reasonable efforts to secure the Company Stockholder Approval.

6.15 Tax-Free Reorganization Status.

(a) Each of Eclipsys, Merger Sub, and MediNotes shall use its best efforts to cause the Merger followed by the Second Merger to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. None of Eclipsys, Merger Sub, and MediNotes, or their respective Subsidiaries shall take, or agree to take, any action that could prevent or impede the Merger followed by the Second Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.

(b) Unless otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of the Code, each of Eclipsys, Merger Sub, and MediNotes shall report the Merger followed by the Second Merger as a “reorganization” within the meaning of Section 368(a) of the Code within the manner described in Revenue Ruling 2001-46.

6.16 Second Merger. As soon as reasonably practicable after the Effective Time, Eclipsys shall cause the Second Merger to be effected by, among other things, approving the Second Merger as the sole shareholder of the Surviving Corporation, adopting and causing the Surviving Corporation to adopt an agreement and plan of merger pursuant to which the Surviving Corporation shall be merged with and into a wholly owned limited liability company Subsidiary of Eclipsys that is treated as a disregarded entity for tax purposes, with such Subsidiary being the entity surviving the Second Merger as a wholly owned Subsidiary of Eclipsys. There shall be no conditions to the Second Merger, other than the consummation of

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the Merger. It is intended that the Second Merger shall occur as described in this Section 6.16, and that the Merger and the Second Merger together qualify as a reorganization under the provisions of Section 368(a) of the Code, and that this Agreement constitute a “plan of reorganization” within the meaning of section 1.368-2(g) of the regulations promulgated under the Code.

6.17 Indemnification of Directors and Officers.

(a) Prior to the Effective Time, MediNotes may purchase tail coverage under its directors’ and officers’ liability insurance and fiduciary insurance policies covering MediNotes’ directors, officers and fiduciaries, with respect to claims arising from facts or events that occur at or before the Effective Time. Eclipsys shall use, and cause MediNotes to use, commercially reasonable efforts to keep any such tail coverage in effect for the term thereof, provided that neither Eclipsys nor MediNotes shall in any event be obligated to make payments with respect to any such policy beyond the premiums paid by MediNotes prior to the Closing.

(b) This Section 6.17 is intended for the irrevocable benefit of, and to grant third-party rights to, the directors, officers and fiduciaries of MediNotes at or prior to the Effective Time, to the extent such persons are covered by any such tail policies purchased by MediNotes prior to the Effective Time, and shall be binding on all successors and assigns of Eclipsys. Each director, officer or fiduciary of MediNotes so covered shall be entitled to enforce the post-closing covenants of Eclipsys and MediNotes contained in this Section 6.17.

6.18 Compliance with Rule 144(c)(1). For so long as resales of shares of Eclipsys Common Stock issued as part of the Merger Consideration are subject to the resale restrictions set forth in Rule 145 under the Securities Act, Eclipsys will use commercially reasonable efforts to comply with Rule 144(c)(1) under the Securities Act.

6.19 Termination of 401(k) Plan. Effective no later than the Business Day immediately preceding the Closing Date, MediNotes shall terminate any and all Company Employee Plans intended to include a Code Section 401(k) arrangement (each such plan, a “Company 401(k) Plan”) pursuant to resolutions of MediNote’s Board of Directors that are substantially in the form attached hereto as Schedule 6.19. MediNotes shall provide Eclipsys with evidence that all Company 401(k) Plans have been terminated (effective no later than the Business Day immediately preceding the Closing Date) and shall take such other actions in furtherance of terminating any Company 401(k) Plans as Eclipsys may reasonably require.

6.20 Bond Agreement Escrow. Travis Bond, as the owners’ representative under the Bond Agreement, hereby represents and covenants as follows:

(a) He is authorized to make the representations, warranties and covenants in this Section 6.20 under Section 11.01 of the Bond Agreement.

(b) The Merger Consideration received for the shares of Series C Preferred Stock (or any shares of Company Common Stock into which such shares are converted) held in escrow pursuant to Sections 2.03 and 10.05 of the Bond Agreement (the “Bond Escrow Fund”) shall be held in escrow by Eclipsys to serve as a fund for the potential payment to MediNotes for claims for indemnification pursuant to Article X of the Bond Agreement. This escrow shall

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terminate on March 13, 2009, the first anniversary of the closing date of the transaction contemplated by the Bond Agreement, except that any amounts in escrow are subject to then pending claims for indemnification will continue to be held in escrow until such claims are resolved. With respect to any such claims, the portion of the Bond Escrow Fund that is shares of Eclipsys Common Stock Merger shall be valued at the Average Market Price.

(c) Each of the Sellers (as defined in the Bond Agreement) shall:

(i) Duly execute and deliver to the Paying Agent a letter of transmittal pursuant to Section 2.9(c) with respect to such shares, directing the Paying Agent to pay the Merger Consideration with respect to such shares to Eclipsys as provided hereunder; and

(ii) Duly execute and deliver to Eclipsys, on or before the Closing Date, three stock powers in blank providing for the transfer of any or all of the shares of Eclipsys Common Stock held in the name of such Person in the Bond Escrow Fund to MediNotes in respect of any claims for indemnification pursuant to Article X of the Bond Agreement.

(d) Notwithstanding anything contained herein, as an accommodation to the Sellers under the Bond Agreement, promptly, but in no event more than 10 days after Eclipsys receives (i) the Merger Consideration for all shares of Series C Preferred Stock (or any shares of Company Common Stock into which such shares are converted) held in escrow pursuant to Sections 2.03 and 10.05 of the Bond Agreement, as set forth in Section 6.20(c)(i), and (ii) the letters of transmittal and stock powers described in Section 6.20(c), Eclipsys shall deliver to Travis Bond, as owners’ representative under the Bond Agreement, fifty percent (50%) of the cash portion of the Merger Consideration received therefor, provided that Travis Bond has provided Eclipsys with wire instructions for such transfer at least one Business Day prior to such payment. Such payment shall not limit the indemnification obligations of the Sellers under the Bond Agreement.

(e) Promptly after March 13, 2009, or promptly after settlement of all open claims against such escrowed funds, if later, Eclipsys shall deliver to Travis Bond, as owners’ representative under the Bond Agreement, all Merger Consideration not paid to MediNotes for indemnification pursuant to Article X of the Bond Agreement.

(f) Allocation of amounts distributed from the Bond Escrow Fund as described in Sections 6.20(d) and 6.20(e) is the responsibility of Travis Bond as owners’ representative under the Bond Agreement, and MediNotes, Eclipsys and the Paying Agent, and their successors and transferees have no obligations with respect to such allocation or any actions taken or not taken by Travis Bond.

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ARTICLE VII

SURVIVAL; INDEMNIFICATION; REMEDIES

7.1 Survival of Representations and Warranties and Covenants.

(a) The representations and warranties made in this Agreement shall survive for 456 days after the Closing Date (the “Survival Period”). Notwithstanding the foregoing, the representations and warranties set forth in Sections 3.1, 3.2, 3.5, 4.3, 4.6(a), 4.9, 4.10, 4.11(b), 4.14 and 4.16 shall survive until the earlier of (i) 90 days after the expiration of the applicable statute of limitations period or (ii) the seventh anniversary of the Closing Date. The right to indemnification, reimbursement or other remedy based upon such representations, warranties, covenants and obligations shall not be affected by any investigation conducted with respect to, or knowledge acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement or the Closing Date.

(b) The covenants and agreements of the parties contained in this Agreement shall survive the Closing indefinitely, except as expressly provided otherwise herein.

7.2 Indemnification and Other Rights.

(a) If the Closing occurs, each of the Stockholders shall, jointly and severally (except as stated in Section 7.4(d) below), indemnify and defend Eclipsys, and its Affiliates (including MediNotes following the Closing), each of their respective officers, directors, employees, stockholders, agents and representatives, and each of their respective successors and assigns (the “Eclipsys Indemnified Parties”) against and hold them harmless, reimburse and make them whole from and against any loss, claim, Liability, cost, damage or expense (including reasonable legal and expert fees and expenses incurred in investigation or defense (including any appeal) of any of the same, or in asserting, preserving or enforcing its rights hereunder) actually incurred or claims suffered by any such indemnified party (collectively “Damages”), to the extent arising from or in connection with any of the following:

(i) any breach or inaccuracy of any representation or warranty of MediNotes or the Major Stockholders, or any of them, contained in this Agreement, as modified by the Disclosure Schedule or any of the other Transaction Documents (without giving effect to any supplement to the Disclosure Schedule after the date hereof, except for the Capitalization Update), provided that disclosures set forth in the Disclosure Schedules shall be disregarded with respect to any claims arising from or in connection with any breach or inaccuracy of any of the representations set forth in Schedules 4.7(d)(i), 4.7(d)(iii), 4.11(a), 4.14(e) or 4.19(b);

(ii) any breach of any covenant of MediNotes prior to the Closing, or any breach of any covenant of the Major Stockholders, or any of them, contained in this Agreement;

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(iii) a Third-Party Claim arising from or in connection with the operations of the Business before the Closing Date, including but not limited to (A) errors and omissions in design, creation, implementation or maintenance of any of the Software Products, (B) any failure of any of the Software Products to conform to commitments made by or on behalf of MediNotes to customers or third parties before the Closing Date, and (C) any failure by MediNotes prior to the Closing Date to perform all material obligations under the Material Contracts, and in each case notwithstanding disclosures set forth in the Disclosure Schedule;

(iv) any claims by any current or former employees of MediNotes or any of its predecessors arising from or in connection with events or circumstances preceding the Closing, or arising from or in connection with the employment policies of MediNotes in place at any time prior to the Closing; and

(v) (A) any and all Taxes of MediNotes with respect to (x) taxable periods ending on or before the Closing Date or (y) any taxable period that commences before and ends after the Closing Date to the extent attributable to the period prior to Closing, (B) any and all Taxes arising as a result of the transactions contemplated by this Agreement; (C) any and all costs and expenses incurred by MediNotes in connection with compliance matters relating to Taxes covered by this clause (v), including costs and expenses relating to disputes with taxing authorities,

provided that Eclipsys shall not be entitled to recover duplicate Damages under clauses (i) through (v), to the extent claims could be made under more than one of such clauses.

The express written waiver by Eclipsys of any condition set forth in Section 8.2 based on the inaccuracy of any representation or warranty, or on the nonperformance of or noncompliance with any covenant or obligation, will not preclude any right of Eclipsys or any other Eclipsys Indemnified Party to indemnification, payment of Damages, or other remedy based on such representation, warranty, covenant, or obligation to the extent arising from a Third-Party Claim. For purposes of this Agreement, Damages shall include, but not be limited to, the amount by which the value of MediNotes and the Business is less than it would have been but for a breach or inaccuracy of the representations and warranties of MediNotes or the Major Stockholders, or the failure by MediNotes or the Major Stockholders to fulfill their obligations hereunder.

(b) Each of the Stockholders hereby (i) irrevocably appoints the Stockholders’ Representative as such Stockholder’s agent for service of any and all legal process, summons, notices and documents which may be served in any action or proceeding under or pursuant to this Agreement, (ii) waives any requirement of personal notice or any claim that service on the Stockholders’ Representative is invalid or insufficient to constitute valid personal service on such Stockholder, and (iii) ratifies and confirms, and agrees to be bound by, all actions taken by the Stockholders’ Representative on its behalf pursuant to the foregoing authorization.

(c) Eclipsys shall indemnify the Stockholders and their Affiliates and each of their respective officers, directors, employees, stockholders, agents and representatives against and hold them harmless from any Damages to the extent arising from (i) any breach or inaccuracy of any representation or warranty of Eclipsys contained in this Agreement or any of the other Transaction Documents; and (ii) any breach of any covenant of Eclipsys contained in this Agreement. The express written waiver by MediNotes of any condition set forth in

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Section 8.3 based on the inaccuracy of any representation or warranty, or on the nonperformance of or noncompliance with any covenant or obligation, will not preclude any right of the Stockholders to indemnification, payment of Damages, or other remedy based on such representation, warranty, covenant, or obligation to the extent arising from a Third-Party Claim. Any indemnity payment under this Section 7.2(c) shall be satisfied, subject to compliance with Legal Requirements, with Eclipsys Common Stock to the extent necessary to preserve the status of the Merger followed by the Second Merger as a reorganization within the meaning of Section 368(a) of the Code.

(d) Any payments made pursuant to this Article VII shall, except as may otherwise be required by applicable Legal Requirements, be treated for all purposes as an adjustment to the Merger Consideration for Tax purposes. For purposes of this Article VII, shares of Eclipsys Common Stock held by the Escrow Agent and released to Eclipsys or representing a portion of the Merger Consideration returned to Eclipsys by the Stockholders as indemnification for Damages shall be valued at the Average Market Price.

(e) For the sole purpose of appropriately apportioning any Taxes relating to a period that includes (but that would not end on) the Closing Date, the portion of such Tax that is attributable to MediNotes for the part of such taxable period that ends on the Closing Date shall be (i) in the case of any Taxes other than Taxes based upon income or receipts, the amount of such Tax for the entire Tax period multiplied by a fraction the numerator of which is the number of days in the Tax period ending on the Closing Date and the denominator of which is the number of days in the entire Tax period, and (ii) in the case of any Taxes based upon or related to income or receipts, the amount which would be payable if the relevant Tax period ended as of the close of business on the Closing Date. Any Taxes that are the responsibility of the Stockholders pursuant to Section 7.2(a)(v) shall be paid to Eclipsys or MediNotes no later than five (5) days prior to the due date for the payment of such Taxes and, to the extent such Taxes are not paid to Eclipsys or MediNotes on or prior to the applicable due date, the amount of such Taxes shall bear interest at the rate of ten percent (10%) per annum or the applicable underpayment rate (if higher), commencing on the applicable due date until the date of payment.

7.3 Time Limitations.

(a) Neither Eclipsys, nor the Stockholders will have any liability (for indemnification or otherwise) with respect to any representation or warranty contained in this Agreement, other than those in Sections 3.1, 3.2, 3.5, 4.3, 4.6(a), 4.9, 4.10, 4.11(b), 4.14 and 4.16, except to the extent that on or before the last day of the Survival Period, the party seeking recovery for Damages provides notice in writing pursuant to Section 7.6 or Section 7.7 of a claim for Damages specifying the factual basis of that claim in reasonable detail to the extent then known by such party. In such event, the party giving such notice shall continue to have the right to recover hereunder, and to all other rights and remedies under this Agreement, with respect to the matter or matters to which such claim relates until such claim has been finally resolved and payment made, if any.

(b) Subject to Section 7.4, a claim with respect to Sections 3.1, 3.2, 3.5, 4.3, 4.6(a), 4.9, 4.10, 4.11(b), 4.14 and 4.16, must be made at any time prior to the earlier of (i) 90 days after the expiration of the applicable statute of limitations period or (ii) the seventh anniversary of the

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Closing Date, except to the extent that on or before such date, the party seeking recovery for Damages provides the notice in writing pursuant to Section 7.6 or Section 7.7 of a claim for Damages specifying the factual basis of that claim in reasonable detail to the extent then known by such party. In such event, the party seeking recovery for Damages shall continue to have the right to recover hereunder, and to all other rights and remedies under this Agreement, with respect to the matter or matters to which such claim relates until such claim has been finally resolved and payment made, if any.

(c) Subject to Section 7.4, a claim made under Section 7.2(a)(ii), with respect to actions of MediNotes or the Major Stockholders prior to the Closing, or Sections 7.2(a)(iii), (iv) or (v), must be made at any time prior to the earlier of (i) 90 days after the expiration of the applicable statute of limitations period or (ii) the seventh anniversary of the Closing Date, except to the extent that on or before such date, the party seeking recovery for Damages provides the notice in writing pursuant to Section 7.6 or Section 7.7 of a claim for Damages specifying the factual basis of that claim in reasonable detail to the extent then known by such party. In such event, the party seeking recovery for Damages shall continue to have the right to recover hereunder, and to all other rights and remedies under this Agreement, with respect to the matter or matters to which such claim relates until such claim has been finally resolved and payment made, if any.

7.4 Other Limitations.

(a) The Stockholders shall have no liability (for indemnification or otherwise) with respect to any matters under this Agreement (except for all claims, rights or causes of action arising from (i) Stockholder Fraud or (ii) a breach of any of the representations and warranties contained in Section 3.1, 3.2, 3.5, 4.3, 4.6(a), 4.9, 4.10, 4.11(b), 4.14, 4.16 and 4.23, as to which the threshold described in this Section 7.4(a) shall be inapplicable) unless the total Damages for matters hereunder exceed $300,000; once such amount has been met, the Stockholders shall be liable for all amounts of such Damages, in excess of $200,000.

(b) Eclipsys will have no liability (for indemnification or otherwise) with respect to any matters under this Agreement (except for Fraud by Eclipsys, or the representations made in Section 5.4, as to which the threshold described in this Section 7.4(b) shall be inapplicable) unless the total Damages for matters hereunder exceed $300,000; once such amount has been met, Eclipsys shall be liable for all amounts of such Damages, in excess of $200,000.

(c) For purposes of this Article VII, the representations and warranties contained herein shall not be deemed qualified by any references herein to materiality generally or to whether any such breach results or may result in a Material Adverse Effect or if a matter be or may not be “reasonably likely” to occur.

(d) Any claims by the Eclipsys Indemnified Parties for claims under Section 7.2(a)(i) though (v) shall be first made against the Escrow Account for the Indemnification Amount, which shall be funded from the Purchase Price by all Effective Time Company Holders; provided, however that any claim by the Eclipsys Indemnified Parties against a Major Stockholder under Section 7.2(a)(i), with respect to a breach or inaccuracy of any

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representation or warranty of such Major Stockholder, or Section 7.2(a)(ii), with respect to a breach of any covenant of such Major Stockholder, in the discretion of Eclipsys, may first be made directly against the Major Stockholder. Once the Escrow Account for the Indemnification Amount is exhausted, no Stockholder, other than the Major Stockholders, shall have any further liability under this Article VII, but each Major Stockholder shall continue to be liable, provided however that each Major Stockholders’ liability (for indemnification or otherwise) with respect to any Damages (i) relating to (A) any breach or inaccuracy of a representation or warranty contained in Article III or Article IV, other than those in Sections 3.1, 3.2, 3.5, 4.3, 4.6(a), 4.9, 4.10, 4.11(b), 4.14 and 4.16, or (B) any matters under this Agreement described in Section 7.2(a)(ii), with respect to actions of MediNotes or the Major Stockholders prior to the Closing, or Section 7.2(a)(iii) and (iv), shall not exceed, in the aggregate, twenty five percent (25%) of the portion of the Purchase Price payable to such Major Stockholder, and provided, further that with respect to a breach or inaccuracy of the representations and warranties of a Major Stockholder under Article III, such Major Stockholder shall only be liable for such Major Stockholder’s breaches or inaccuracies. Subject to the second proviso to the foregoing sentence, each Major Stockholder shall be liable for up to one hundred percent of the portion of the Purchase Price payable to such Major Stockholder with respect to a breach of any of the representations and warranties contained in Sections 3.1, 3.2, 3.5, 4.3, 4.6(a), 4.9, 4.10, 4.11(b), 4.14 and 4.16 (and such Major Stockholder’s liability shall not be limited by anything contained in clause (i) above, even if such liability may also relate to a claim under Sections 7.2(a)(ii), (iii) or (iv)). For purposes of calculating such caps on the liability of a Major Stockholder, any amount contributed by such Major Stockholder to the Indemnification Amount paid to Eclipsys shall be counted towards the amount paid by such Major Stockholder. The Major Stockholders’ liability arising from claims or causes of actions arising from Stockholder Fraud, and with respect to claims arising under Section 7.2(a)(ii) with respect to actions of a Major Stockholder after the Closing, or Section 7.2(a)(v), shall not be subject to any cap or limitation on amount, provided that (1) with respect to claims arising under Section 7.2(a)(ii) with respect to actions of a Major Stockholder, each Major Stockholder shall only be liable for breaches by such Major Stockholder or breaches arising from the concerted action of such Major Stockholder, and (2) with respect to Stockholder Fraud, each Major Stockholder shall only be liable if such Major Stockholder committed, or conspired to commit, such Stockholder Fraud.

(e) Notwithstanding anything herein to the contrary, payments to Eclipsys for Damages shall be limited to the amount of Damages, if any, that remains after deducting therefrom (i) any insurance proceeds received by Eclipsys or MediNotes under policies in place prior to the Effective Time and any indemnity contribution or other similar payment actually recovered by Eclipsys or MediNotes from any third-party with respect thereto, and (ii) any provision or reserve with respect to such Damages reflected as a Current Liability. Notwithstanding anything herein to the contrary, Eclipsys shall not be entitled to punitive damages unless assessed in connection with a Third-Party Claim.

(f) After Eclipsys receives indemnification as provided in this Agreement, Eclipsys shall rebate to the Escrow Agent, the Stockholders, or the Major Stockholders, as applicable, the actual cash tax benefits, if any, realized on account of the Damages to which such claim relates by Eclipsys in the first tax year in which such Damages are reflected on Eclipsys’s Tax Returns, to the extent such benefits are readily identifiable, and provided that the tax position producing such tax benefits has not been challenged by any tax authority within

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eighteen months after the filing of the initial Tax Return reflecting the tax benefit. Any such rebate shall be paid within thirty (30) days after the expiration of such eighteen month period, provided that any such rebate paid by Eclipsys may be recovered to the extent that the cash benefit upon which the rebate was based is subsequently invalidated by any tax authority. Notwithstanding the foregoing, nothing in this Agreement shall limit Eclipsys’s right to determine its tax position in its sole discretion.

(g) The Stockholders’ remedies (for indemnification or otherwise, whether such claim is based in contract, tort or any other theory) with respect to any breach or inaccuracy of Eclipsys’s representations, warranties or covenants in this Agreement shall be limited to those available under federal securities laws in connection with a private placement of securities under SEC Rule 506.

(h) Nothing herein shall limit, or be deemed to limit, the rights of Eclipsys against any Stockholder arising under the Investor Questionnaire delivered by such Stockholder prior to the date hereof or the letter of transmittal delivered by such Stockholder as described in Section 2.9(c).

(i) In no event shall any Stockholder be entitled to require that any claim be made or brought against any other Person, including MediNotes, before any claim for Damages is brought or claim is made by any Eclipsys Indemnified Party against such Stockholder or the Escrow Account for the Indemnification Amount hereunder.

7.5 Set-Off. In addition to any rights of set-off, off-set or other rights that Eclipsys may have at common law, by statute or otherwise, Eclipsys shall have the right to set-off against (i) the Escrow Account for the Indemnification Amount held by the Escrow Agent pursuant to the Holdback Escrow Agreement and (ii) any amount that Eclipsys would otherwise be required to pay to any Major Stockholder, any amounts owing by any Major Stockholder to Eclipsys pursuant to this Article VII; provided, however, that (A) notwithstanding the exercise by Eclipsys of the right to set-off described in this Section 7.5, Eclipsys and the Stockholders shall remain obligated to first comply with their respective obligations described in Section 7.6 and Section 7.7 and (B) with respect to a breach or inaccuracy of the representations and warranties of a Major Stockholder under Article III, Eclipsys shall only have the right to set-off against the Escrow Account for the Indemnification Amount held by the Escrow Agent pursuant to the Holdback Escrow Agreement or any amounts that Eclipsys would be required to pay such Major Stockholder. Neither the exercise of nor failure to exercise any such right of set-off will constitute an election of remedies or limit Eclipsys in any manner in the enforcement of other remedies available to it hereunder and the exercise by Eclipsys of the right of set-off against the Escrow Account for the Indemnification Amount held under the Holdback Escrow Agreement or other amounts Eclipsys would otherwise be required to pay to any Major Stockholder shall not be the sole or exclusive remedy of Eclipsys for recovery of any amounts owed by the Stockholders to Eclipsys under this Article VII.

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7.6 Procedures Relating to Indemnification Involving Third-Party Claims.

(a) In order for a party to be entitled to any indemnification provided for under this Agreement in respect of, arising out of or involving a claim or demand made by any Person not a party to this Agreement against such party (a “Third-Party Claim”), such indemnified party must promptly notify the indemnifying party in writing, and in reasonable detail, of the Third-Party Claim after receipt by such indemnified party of written notice of the Third-Party Claim; provided, however, that failure to give such notification will not affect the indemnification provided hereunder except to the extent that the indemnifying party is actually prejudiced as a result of such failure. Thereafter, the indemnified party shall promptly deliver to the indemnifying party after the indemnified party’s receipt thereof, copies of all notices and documents (including court papers) received by the indemnified party relating to the Third-Party Claim. In the event that more than one Major Stockholder is an indemnifying party hereunder, the indemnified party may provide the notices and other communications required pursuant to this Section 7.6 solely to the Stockholders’ Representative.

(b) If a Third-Party Claim is made against an indemnified party, the indemnifying party shall be entitled to participate in the defense thereof and, if it promptly so chooses and acknowledges its obligation to indemnify the indemnified party therefor, to assume the defense thereof with counsel selected by the indemnifying party, provided that such counsel is not reasonably objected to by the indemnified party. Should the indemnifying party assume the defense of a Third-Party Claim, the indemnifying party shall not be liable to the indemnified party for legal expenses subsequently incurred by the indemnified party in connection with the defense thereof. If the indemnifying party assumes such defense, the indemnified party shall have the right to participate in the defense thereof and to employ counsel (not reasonably objected to by the indemnifying party), at its own expense, separate from the counsel employed by the indemnifying party, it being understood that the indemnifying party shall control such defense. However, notwithstanding the foregoing, if Eclipsys or any of its Affiliates is an indemnified party in connection with a Third-Party Claim involving any then current employee, any then current client or supplier (including the owner of any Intellectual Property then used in the Business), Eclipsys may control the defense, at the cost of the indemnifying party, subject to reasonable input from the indemnifying party, with reasonableness determined by reference, among other things, to any conflicting interests between the indemnified party and indemnifying party.

(c) The indemnifying party shall be liable for the reasonable fees and expenses of counsel employed by the indemnified party in connection with a Third-Party Claim for any period during which the indemnifying party has failed to assume or is not entitled to assume the defense thereof; provided, however, that the indemnifying party shall not, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to one local counsel, where applicable). In connection with any Third-Party Claim, the indemnified party and the indemnifying party shall cooperate with each other in the defense or prosecution thereof. Such cooperation shall include the retention and (upon the indemnified or indemnifying party’s request) the provision to such party of records and information which are reasonably relevant to such Third-Party Claim, and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder, including deposition or trial testimony.

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(d) If the indemnifying party shall have assumed the defense of a Third-Party Claim, the indemnified party shall not have the right to settle or compromise such claim, and shall agree to any settlement, compromise or discharge of a Third-Party Claim that the indemnifying party may recommend and which by its terms obligates the indemnifying party to pay the full amount of the liability in connection with such Third-Party Claim, which releases the indemnified party completely in connection with such Third-Party Claim, which does not impose any equitable remedies and which the indemnified party reasonably determines would not otherwise adversely affect the indemnified party. If the indemnifying party shall not have assumed the defense of a Third-Party Claim, the indemnified party may settle, compromise or discharge, such Third-Party Claim in good faith without the indemnifying party’s prior consent.

(e) Notwithstanding the foregoing, the indemnifying party shall not be entitled to assume the defense of any Third-Party Claim (and shall be liable for the reasonable fees and expenses of counsel incurred by the indemnified party in defending such Third-Party Claim) if:

(i) the Third-Party Claim seeks an Order or other equitable relief or relief for other than money damages against the indemnified party which the indemnified party reasonably determines, after conferring with its outside counsel, cannot be separated from any related claim for money damages, or

(ii) the indemnified party reasonably determines, after conferring with its outside counsel, that joint representation would be expected to give rise to a conflict of interest.

If such equitable relief or other relief portion of the Third-Party Claim can be so separated from that for money damages, the indemnifying party shall be entitled to assume the defense of the portion relating to money damages. All claims under Section 7.2 other than Third-Party Claims shall be governed by Section 7.7.

(f) Notwithstanding the foregoing, Eclipsys and MediNotes shall have the sole right to represent the interests of MediNotes in all Tax audits and administrative and court proceedings and to employ counsel of its choice (and, to the extent relating to Taxes for which the Major Stockholders are liable pursuant to this Agreement, at the Major Stockholders’ expense); provided, however, that, to the extent relating to Taxes for which the Major Stockholders are liable pursuant to Section 7.2, the Stockholders’ Representative shall have the opportunity to participate, subject to the control of Eclipsys and MediNotes, at its own cost in any defense of such proceeding. Eclipsys and MediNotes shall not settle any Tax claim to the extent relating to Taxes for which the Major Stockholders are liable pursuant to Section 7.2 without the prior written consent of the Stockholders’ Representative, which consent shall not be unreasonably withheld or delayed. If the Stockholders’ Representative consents to any such settlement, neither the Stockholders’ Representative nor any Major Stockholder shall have any power or authority to object to the amount or validity of any claim by or on behalf of any indemnified party for indemnity with respect to such settlement.

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7.7 Other Claims. A claim by any party for reimbursement, make whole or other recovery for Damages arising from any event, circumstance or condition not involving a Third-Party Claim may be asserted by written notice to the party or parties from whom such recovery is sought (or to the Stockholders’ Representative, if such recovery is sought from more than one of the Major Stockholders) and shall be paid promptly after receipt of such notice. Notwithstanding the foregoing, no party shall be liable to any other for any punitive damages pursuant to this Section 7.7.

7.8 Recovery in the Case of Strict Liability or Negligence. THE PROVISIONS IN THIS ARTICLE VII SHALL BE ENFORCEABLE REGARDLESS OF WHETHER THE DAMAGES ARE BASED ON PAST, PRESENT OR FUTURE CLAIMS OR LEGAL REQUIREMENTS (INCLUDING ANY ENVIRONMENTAL LAW OR PRODUCTS LIABILITY LAW), AND REGARDLESS OF WHETHER ANY PERSON (INCLUDING THE PERSON FROM WHOM INDEMNIFICATION OR OTHER RECOVERY IS SOUGHT) ALLEGES OR PROVES THE CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OF THE PERSON SEEKING SUCH INDEMNIFICATION OR OTHER RECOVERY, OR THE SOLE OR CONCURRENT STRICT LIABILITY IMPOSED ON THE PERSON SEEKING SUCH INDEMNIFICATION OR OTHER RECOVERY.

7.9 Sole and Exclusive Remedy.

(a) Should the Closing occur (i) the sole and exclusive remedies of Eclipsys and Merger Sub for any breach or inaccuracy of the representations and warranties of MediNotes and the Major Stockholders under this Agreement and any other Transaction Documents (except to the extent expressly provided in such Transaction Documents), whether such claims be in contract, tort or otherwise, shall be the remedies provided in this Article VII, and Eclipsys and Merger Sub hereby waive, from and after the Closing, any and all other remedies which may be available at law or equity for any breach or inaccuracy or alleged breach or inaccuracy of the representations and warranties of MediNotes and the Major Stockholders hereunder, and (ii) the Stockholders’ sole and exclusive remedies for any breach or inaccuracy of the representations and warranties of Eclipsys and Merger Sub under this Agreement and any other Transaction Documents (except to the extent expressly provided in such Transaction Documents), whether such claims be in contract, tort or otherwise, shall be the remedies provided in this Article VII, and each of the Stockholders hereby waives, and by approval hereof by the Stockholders, shall be deemed to have waived, from and after the Closing, any and all other remedies which may be available at law or equity for any breach or inaccuracy or alleged breach or inaccuracy of the representations and warranties of Eclipsys and Merger Sub hereunder. If the Closing does not occur, the sole and exclusive remedy of the parties shall be as set forth in Section 9.5, and the provisions of this Article VII shall be inapplicable.

(b) Nothing in this Article VII will (i) limit the right of any party to seek injunctive or other equitable relief for any breach or alleged or threatened breach of any covenant in this Agreement or any other Transaction Document, provided that the exercise of any equitable relief shall be subject to Section 10.11, or (ii) limit the rights of the Major Stockholders to seek any remedies with respect to Fraud by Eclipsys, or Eclipsys to seek any remedies with respect to Stockholder Fraud in connection herewith or transactions contemplated hereby (including limiting the time such claims can be made, or making such claims subject to any deductibles set forth herein).

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(c) For the avoidance of doubt, the concept of “indemnity” as used in this Article VII is intended to include claims between or among the parties to this Agreement and not involving any third-party, as well as Third-Party Claims, and the limitation set forth in this Section 7.9 of remedies for breach or inaccuracies of representations and warranties under this Agreement is not intended to preclude claims between or among the parties, including but not limited to claims for breach of contract or Fraud, which claims are, however, intended to be governed by this Article VII.

ARTICLE VIII

CONDITIONS

8.1 Conditions to Each Party’s Obligation to Effect the Closing. The respective obligations of each party to effect the Closing and the other transactions contemplated hereby are subject to the satisfaction or waiver at or prior to the Closing Date of each of the following conditions:

(a) All filings with any Governmental Entity required to be made prior to the Closing Date by MediNotes, the Major Stockholders, Eclipsys, Merger Sub or any of their respective Affiliates, and all other Consents of any Governmental Entity required to be obtained prior to the Closing Date by MediNotes, the Major Stockholders, Eclipsys, Merger Sub or any of their respective Affiliates in connection with the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated herein and therein by MediNotes, the Major Stockholders, Eclipsys and Merger Sub shall have been made or obtained (as the case may be).

(b) No court or other Governmental Entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any Legal Requirement or Order, whether temporary, preliminary or permanent that is in effect and restrains, enjoins or otherwise prohibits, materially delays, makes illegal, or would be violated (provided that with respect to any Legal Requirement, such violation is not immaterial in light of the transactions contemplated hereby) by consummation of the transactions contemplated by this Agreement or the other Transaction Documents.

(c) The Company Stockholder Approval shall have been validly obtained under Iowa state law, MediNotes Articles of Incorporation and the by-laws of MediNotes.

8.2 Conditions to Obligations of Eclipsys. The obligations of Eclipsys to effect the Closing are also subject to the satisfaction or waiver by Eclipsys at or prior to the Closing Date of the following conditions:

(a) each of the representations and warranties of MediNotes and the Major Stockholders set forth in this Agreement qualified as to materiality shall be true and correct, and those not so qualified shall each be true and correct in all material respects, as of the date of this Agreement and as of the Closing Date (without giving effect to any amendment or supplement to the Disclosure Schedule after the date hereof, except for the Capitalization Update), except to the extent such representations and warranties speak as of an earlier date, in which case such representation or warranty shall be true and correct as of such earlier date;

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(b) MediNotes and the Major Stockholders shall have performed in all material respects all obligations required to be performed by them under this Agreement at or prior to the Closing Date;

(c) Eclipsys shall have been furnished with a certificate, executed by MediNotes and the Stockholders’ Representative, dated the Closing Date, certifying as to the fulfillment of the conditions in Sections 8.2(a) and (b);

(d) each of the other Transaction Documents, and such further instruments of sale, transfer, conveyance, assignment, delivery or confirmation, or any part thereof, as Eclipsys may reasonably require, shall have been fully executed and delivered by MediNotes or the Major Stockholders to Eclipsys and shall remain in full force and effect, and there shall be no default thereunder;

(e) all Consents required under the Material Contracts in connection with the execution, delivery and performance of this Agreement and the other Transaction Documents, and the consummation of the transactions contemplated hereby or thereby, shall have been obtained by MediNotes on terms that are not materially burdensome to MediNotes or Eclipsys, shall be in full force and effect and shall have been delivered to Eclipsys;

(f) there shall not be pending or threatened by any Governmental Entity any suit, action or proceeding (or by any other Person any suit, action or proceeding which Eclipsys determines in good faith has a reasonable likelihood of success): (A) seeking to obtain from Eclipsys, Merger Sub or any Affiliate thereof, in connection with the Merger or the other transactions contemplated hereby or by the other Transaction Documents any money damages; (B) seeking to prohibit or limit the ownership or operation by Eclipsys or MediNotes, of any material portion of the Business, or to compel Eclipsys or MediNotes to dispose of or hold separate any material portion of the Business in each case as a result of the Merger or any of the other transactions contemplated by this Agreement or by the other Transaction Documents; (C) seeking to impose limitations on the ability of Eclipsys to acquire or hold, or exercise full rights of ownership of the Capital Stock of MediNotes, including the right to vote such Capital Stock on all matters properly presented to the equityholders of MediNotes; (D) seeking to prohibit Eclipsys from effectively controlling in any material respect the Business; (E) claiming that such Person is a beneficial owner of, or has the right to acquire or to obtain beneficial ownership of, any Capital Stock or assets of MediNotes or is entitled to any portion of the Purchase Price; (F) affecting a material portion of the Business, as determined by Eclipsys, in good faith; or (G) that may otherwise have the effect of preventing, materially delaying, or otherwise materially interfering with the transactions contemplated by this Agreement and the other Transaction Documents;

(g) since the date of this Agreement, there shall have been no event, change, occurrence, condition or circumstance that Eclipsys determines, in good faith, has had or is reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on MediNotes or the Business;

(h) Eclipsys shall have received the resignations of the directors of MediNotes pursuant to Section 6.8;

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(i) [deliberately deleted]

(j) the Escrow Agent, the Major Stockholders and the Stockholders’ Representative shall have executed the Holdback Escrow Agreement;

(k) Eclipsys shall be reasonably assured that each of the Key Employees and other employees of MediNotes of a quantity and having the skills sufficient for the operation of the Business are continuing their affiliation with the Business through employment with Eclipsys or MediNotes, after the Closing Date;

(l) each of the Key Employees shall have entered into an employment agreement, on the terms set forth in Exhibit C-4, and in the applicable form attached hereto as Exhibit C-1, Exhibit C-2, or Exhibit C-3, or another form acceptable to Eclipsys and such Key Employee, with Eclipsys or, in the discretion of Eclipsys, a Subsidiary of Eclipsys (including MediNotes) (the “Employment Agreements”);

(m) Eclipsys’ review of the Contracts, capital structure and other legal due diligence materials provided or to be provided hereunder by MediNotes shall not have revealed any fact not disclosed in this Agreement or on the face of the Disclosure Schedule hereto that represents or could reasonably be expected to result in a material cost or risk to Eclipsys, or a material reduction in value to Eclipsys, resulting from the Merger, and such review shall not have revealed that the Material Contracts with customers (including resellers) vary in any material respect from the forms provided to Eclipsys on or before the date hereof;

(n) Eclipsys shall have received an opinion of counsel to MediNotes in the form attached hereto as Exhibit D;

(o) all required corporate action on the part of MediNotes and the Stockholders, including without limitation, approval by the board of directors of MediNotes, shall have been taken (and not rescinded) to approve the execution, delivery and performance of this Agreement and the other Transaction Documents;

(p) the Merger shall be effective;

(q) the issuance of the Stock Consideration shall not, in the sole judgment of Eclipsys, violate any Legal Requirement;

(r) Eclipsys shall have received an executed Spousal Consent from the spouse of each Major Stockholder who is married on the Closing Date, and residing in a community property state;

(s) the Dissenting Shares shall constitute no more than five percent (5%) of the Shares outstanding as of the Effective Date;

(t) Eclipsys shall have received a certificate from MediNotes, in form and substance reasonably satisfactory to Eclipsys, to the effect that MediNotes is not a U.S. real property holding company meeting the requirements of Treasury Regulations 1.1445-2(c)(3) and 1.897-2(h);

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(u) the Stockholders Agreement shall have been terminated effective on or before the Closing, and the Stockholders party thereto shall have waived all rights thereunder with respect to the transactions contemplated hereby;

(v) the Consulting Agreement, dated September 5, 2007, between MediNotes and Joseph R. Dunham II shall have been terminated effective as of the Closing pursuant to a Consulting Agreement Termination in the form attached hereto as Exhibit I;

(w) the Bond Entities shall have executed and delivered the Royalty Termination Agreement, in the form attached herein as Exhibit G;

(x) the parties to the Bond Agreement shall have executed and delivered the stock powers referenced in Section 6.20; and

(y) Eclipsys shall have received such other documents as Eclipsys reasonably requests evidencing the satisfaction of any condition referred to in this Section 8.2.

8.3 Conditions to the Obligations of MediNotes and the Stockholders. The obligations of MediNotes and the Stockholders to effect the Closing are also subject to the satisfaction or waiver by the Stockholders prior to the Closing Date of the following conditions:

(a) each of the representations and warranties of Eclipsys and Merger Sub set forth in this Agreement qualified as to materiality shall be true and correct, and those not so qualified shall each be true and correct in all material respects, as of the date of this Agreement and as of the Closing Date (except to the extent such representations and warranties speak as of an earlier date, in which case such representation or warranty shall be true and correct as of such earlier date);

(b) Eclipsys and Merger Sub shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date;

(c) the Stockholders’ Representative shall have been furnished with a certificate, executed by a duly authorized officer of Eclipsys, dated the Closing Date, certifying as to the fulfillment of the conditions in Sections 8.3(a) and (b);

(d) the Escrow Agent and Eclipsys shall have executed the Holdback Escrow Agreement;

(e) Eclipsys shall have delivered the Closing Payment to the Paying Agent;

(f) Eclipsys shall have delivered the Holdback Amount to the Escrow Agent;

(g) since the date of this Agreement, there shall have been no event, change, occurrence, condition or circumstance that MediNotes and the Stockholders’ Representative determines, in good faith, has had or is reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on Eclipsys;

(h) [deliberately deleted]

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(i) there shall not be pending or threatened by any Governmental Entity any suit, action or proceeding (or by any other Person (other than a Stockholder or any third-party alleging rights as a holder of Capital Stock of MediNotes), any suit, action or proceeding which MediNotes determines in good faith has a reasonable likelihood of success to enjoin or prohibit the consummation of the transactions contemplated hereby, or to materially limit the rights of the Stockholders hereunder): (A) seeking to obtain from the Stockholders in connection with the Merger or the other transactions contemplated hereby or by the other Transaction Documents money damages in excess of $100,000 that Eclipsys does not commit to pay; (B) claiming that such Person is an owner of, or has the right to acquire or to obtain ownership of, any assets of MediNotes with a value in excess of $100,000; or (C) that may otherwise have the effect of preventing, materially delaying, or otherwise materially interfering with the transactions contemplated by this Agreement and the other Transaction Documents;

(j) all required corporate action on the part of Eclipsys and Merger Sub, including without limitation approval by the boards of directors of Eclipsys and Merger Sub, shall have been taken (and not rescinded) to approve the execution, delivery and performance of this Agreement and the other Transaction Documents;

(k) Eclipsys shall have executed a Commission Agreement in the form of Exhibit H and delivered such agreement to Bond Medical Group;

(l) the Major Stockholders shall have received such other documents as the Stockholders’ Representative reasonably requests evidencing the satisfaction of any condition referred to in this Section 8.3.

ARTICLE IX

TERMINATION

9.1 Termination by Mutual Consent. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing Date, by mutual written consent of MediNotes and Eclipsys.

9.2 Termination by Eclipsys or MediNotes. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing Date by either Eclipsys or MediNotes if any Order permanently restraining, enjoining or otherwise prohibiting the Merger or the Second Merger shall be entered and such Order is or shall have become nonappealable, provided that (i) the party seeking to terminate this Agreement shall have complied with its obligations under Section 6.2 with respect to the removal or lifting of such Order (including, with respect to MediNotes, the Major Stockholders), and (ii) the noncompliance with this Agreement by the party seeking to terminate this Agreement (including, with respect to MediNotes, the Major Stockholders) shall not have been the proximate cause of the issuance of the Order.

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9.3 Termination by MediNotes. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing Date, by MediNotes if:

(a) (i) the Closing shall not have been consummated on or before November 15, 2008 (the “Termination Date”), or

(ii) any of the conditions (other than absence of material breach as addressed in Section 9.3(b)) set forth in Section 8.1 or 8.3 shall have become incapable of fulfillment;

provided, however, that the right to terminate this Agreement pursuant to this subsection (a) shall not be available to MediNotes if MediNotes or the Major Stockholders or any of them has breached in any material respect their obligations under this Agreement in any manner that shall have proximately contributed to the failure referenced in this subsection (a); or

(b) there has been a material breach by Eclipsys or Merger Sub of any representation, warranty, covenant or agreement of Eclipsys or Merger Sub contained in this Agreement that is not curable or, if curable, is not cured prior to the earlier of (i) 30 days after written notice of such breach is given by MediNotes to Eclipsys and (ii) the Termination Date.

9.4 Termination by Eclipsys. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing Date by Eclipsys if:

(a) (i) the Closing shall not have been consummated on or before the Termination Date, or

(ii) any of the conditions (other than absence of material breach as addressed in Section 9.4(b)) set forth in Section 8.1 or Section 8.2 shall have become incapable of fulfillment;

provided, however, that the right to terminate this Agreement pursuant to this subsection (a) shall not be available to Eclipsys if Eclipsys or Merger Sub has breached in any material respect its obligations under this Agreement in any manner that shall have proximately contributed to the failure referred to in this subsection (a); or

(b) there has been a material breach of any representation, warranty, covenant or agreement of MediNotes or the Major Stockholders or any of them contained in this Agreement that is not curable or, if curable, is not cured prior to the earlier of (i) 30 days after written notice of such breach is given by Eclipsys to MediNotes, and (ii) the Termination Date.

9.5 Effect of Termination. Except for termination under Section 9.1, any termination shall be effective upon receipt of written notice thereof given to Eclipsys or MediNotes, as applicable. If this Agreement is terminated, all obligations of the parties under this Agreement will terminate, without any Liability on the part of any party hereto to any Person in respect hereof or the transactions contemplated hereby and the other Transaction Documents, and no party shall have any claim against another, whether under contract, tort or otherwise, except that (i) Sections 6.3(ii), 6.5 and 6.12 and Article X hereof and the Confidentiality Agreement will survive, and (ii) if this Agreement is terminated by a party because of the breach of this Agreement by another party or parties or because one or more of the conditions to the terminating party’s obligations under this Agreement is not satisfied as a result of another party’s or parties’ failure to comply with its obligations under this Agreement, the terminating party’s

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right to pursue all legal remedies for such breach will survive such termination unimpaired, provided that MediNotes and the Major Stockholders each agree that to the extent they have incurred any Damages in connection with termination of this Agreement as set forth in the preceding clause, the maximum liability of Eclipsys and Merger Sub (and the sole and exclusive remedy of MediNotes and the Stockholders) for such Damages shall be limited in the aggregate to $800,000. The remedies set forth in this Section 9.5 are the sole and exclusive remedies of the parties if this Agreement is terminated, and MediNotes and the Major Stockholders shall not be entitled to specific performance hereof.

ARTICLE X

MISCELLANEOUS

10.1 Entire Agreement; Assignment.

(a) This Agreement, including the schedules and exhibits hereto (which are incorporated herein by this reference), the other Transaction Documents and the Confidentiality Agreement constitute the entire agreement, and supersede all prior agreements, understandings and other Contracts, both written and oral, and all contemporaneous oral agreements, understandings and other Contracts, among the parties with respect to the subject matter hereof. Except for express representations, warranties and covenants of Eclipsys, Merger Sub, MediNotes and the Major Stockholders contained herein, or in the other Transaction Documents, there are no representations or warranties whatsoever by or on behalf of MediNotes, the Major Stockholders, their Affiliates or agents relating to MediNotes or their ownership interests therein, on the one hand, and Eclipsys, Merger Sub and their Affiliates or agents relating to Eclipsys or Merger Sub, on the other hand.

(b) Neither this Agreement nor any of the rights, interests or obligations hereunder will be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of each of the other parties hereto; provided, however, that Eclipsys may assign all or a portion of its rights and obligations, or those of Merger Sub, under this Agreement to any other Subsidiary of Eclipsys without the consent of MediNotes or the Major Stockholders (which assignment shall not relieve Eclipsys of any obligation or liability under this Agreement).

(c) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

10.2 Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, each of which shall remain in full force and effect and in lieu of such invalid or unenforceable provision there shall be automatically added as part of this Agreement a valid and enforceable provision as similar in terms to the invalid or unenforceable provision as possible, provided that this Agreement as amended, (i) reflects the intent of the parties hereto, and (ii) does not change the bargained for consideration or benefits to be received by each party hereto.

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10.3 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by overnight courier or facsimile (provided that such notice is delivered during regular business hours in the location of receipt, and if not, then on the next Business Day) to the respective parties as follows:

If to Eclipsys:

Eclipsys Corporation

Three Ravinia Drive

Suite 1000

Atlanta, GA 30348

Fax: (404) 847-5777

Attn.: General Counsel

with a copy to (which copy shall not constitute notice):

Gibson, Dunn & Crutcher LLP

3161 Michelson Drive

Irvine, CA 92612

Fax: (949) 475-4703

Attn.: Michelle Hodges

If to MediNotes or the Major Stockholders (prior to the Closing):

MediNotes Corporation

1025 Ashworth Road, Suite 222

West Des Moines, IA 50265

Fax: (515) 327-8856

Attn.: Donald G. Schoen

If to the Stockholders’ Representative:

Danny R. Wipff

8866 Gulf Freeway, Ste. 335

Houston, TX 77017

dwipf@aol.com

in each case, with a copy to (which copy shall not constitute notice):

Fredrikson & Byron, P.A.

200 South Sixth Street, Suite 4000

Minneapolis, MN 55402

Fax: (612) 492-7077

Attn.: Steven J. Dickinson

or to such other address as the Person to whom notice is given may have previously furnished to the others in writing in the manner set forth above.

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10.4 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, regardless of the laws or rules that might otherwise govern under applicable principles of conflicts of laws thereof. In the event of the bringing of any action or suit by a party hereto against another party hereunder arising out of or relating to this Agreement, which claim or suit is not subject to arbitration, as determined pursuant to Section 10.14, then in that event, the sole forum for resolving such disputes shall be the state and federal courts located in Delaware, and each of the parties hereby irrevocably submits to such exclusive jurisdiction. This Section 10.4 shall survive any termination of this Agreement and the Closing.

10.5 Construction.

(a) The headings herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. Unless the context clearly requires otherwise “or” is not exclusive, and “includes” means “includes, but is not limited to.”

(b) Each of the parties acknowledges that it has been represented by counsel of its choice throughout all negotiations that have preceded the execution of this Agreement and that each party and its counsel cooperated in the drafting and preparation of this Agreement and the other Transaction Documents, and any and all drafts relating thereto exchanged between the parties shall not be construed against any party by reason of its preparation. Accordingly, any ambiguities in this Agreement will not be interpreted against any party that may have drafted this Agreement.

(c) For purposes of this Agreement, “commercially reasonable efforts” will not be deemed to require a Person to undertake extraordinary or unreasonable measures, including the payment of amounts in excess of normal and usual filing fees and processing fees.

10.6 Counterparts. This Agreement may be executed in counterparts, including facsimile counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile transmission or PDF by electronic transmission shall be effective delivery of a manually executed counterpart to this Agreement.

10.7 Parties In Interest. This Agreement shall be binding upon and inure solely to the benefit of each party hereto and, except for the Persons expressly set forth in Section 7.2 and Section 10.8, with respect to such sections, nothing in this Agreement, express or implied, is intended to confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of this Agreement, including any employee or former employee of MediNotes (or any beneficiary or dependent thereof).

10.8 Prior Review and Counsel. Eclipsys and Merger Sub, on the one hand, and MediNotes and the Major Stockholders jointly, on the other hand, each represents and warrants that: (a) it was provided a fair and reasonable time in which to evaluate this Agreement and the other Transaction Documents and to negotiate their respective terms and conditions; (b) it has regularly consulted with and received advice and counsel from one or more attorneys of its own

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choice regarding the Merger, this Agreement, the other Transaction Documents and the negotiation of each and every one of them, which attorney(s) is/are not and was/were not any of the other party’s attorneys; (c) it has not received any legal or other substantive advice or any attorney work product from any of the other party’s attorneys (including in-house attorneys), and it has not relied upon any comment, observation, remark, communication or information (whether oral or written) made or delivered by any of the other party’s attorneys (including in-house attorneys); and (d) it has read and fully understands this Agreement and each of the other Transaction Documents. Each party’s attorneys (including in-house attorneys) shall be entitled to rely on the other party’s representations and warranties made in this Section 10.8 as intended beneficiaries of such representations and warranties.

10.9 Waiver. No waiver of any breach of the provisions of this Agreement will be deemed to have been made by any party, unless such waiver is expressed in writing and signed by the party against which it is to be enforced (or the Stockholders’ Representative, with respect to matters relating to all Major Stockholders or all Stockholders). The waiver by any party of any right under this Agreement or to a remedy for the breach of any of the provisions herein shall not operate or be construed by the breaching party as a waiver of the non-breaching party’s remedies with respect to any other or continuing or subsequent breach.

10.10 Amendments. No amendment or modification in respect of this Agreement shall be effective unless it shall be in writing and signed by the parties hereto (or the Stockholders’ Representative, with respect to matters relating to all Major Stockholders or all Stockholders after the Closing Date).

10.11 Specific Performance. The parties agree that irreparable damage would occur in the event any provision of this Agreement were not performed by MediNotes or the Major Stockholders in accordance with the terms hereof and that Eclipsys shall be entitled to an injunction or injunctions to prevent breaches of this Agreement by MediNotes and the Major Stockholders and to enforce specifically the terms and provisions of this Agreement in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which it is entitled at law or in equity.

10.12 Further Assurances. The parties agree (a) to furnish upon request to each other such further information, (b) to execute and deliver to each other such other documents, and (c) to do such other acts and things, all as any other party hereto may reasonably request for the purpose of carrying out the transactions contemplated by this Agreement pursuant to the terms hereof.

10.13 Cumulative Remedies. Except as expressly limited herein, the rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any other rights, remedies, powers and privileges provided by law or equity.

10.14 Arbitration.

(a) Any dispute, claim or controversy arising out of or relating to this Agreement or any other Transaction Document (other than the Employment Agreements) or the breach, termination, enforcement, interpretation or validity thereof, including the determination

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of the scope or applicability of this Agreement to arbitrate, shall be determined by arbitration in Dallas, Texas, before a sole arbitrator; provided, however, if the claim and any counterclaim, in the aggregate, exceed $750,000, exclusive of interest and attorneys’ fees, the dispute shall be heard and determined by three arbitrators as provided herein. If any such dispute, claim or controversy arises at the same time and relates to the same or similar facts, claims or events as any one or more other disputes, claims or controversies, such disputes, claims or controversies (including any dispute, claim or controversy under Section 2.11), shall, to the extent practicable, be combined in one arbitration proceeding under this Section 10.14, and in such event, the provisions of this section governing dispute resolution shall supersede any other provisions relating to such matters in this Agreement or the other Transaction Documents. If any dispute, claim or controversy arising out of or relating to this Agreement or any other Transaction Document (other than the Employment Agreements) arises at the same time and relates to the same or similar facts, claims or events as a dispute, claim or controversy relating to or arising out of the Employment Agreement of any Stockholder, the employment of any Stockholder by Eclipsys or any of its Affiliates including MediNotes, such disputes, claims or controversies shall, to the extent practicable, be combined in one arbitration proceeding, and in such event, the provisions of this Agreement governing dispute resolution shall supersede any provisions relating to such matters in the Employment Agreement between any such Stockholder and Eclipsys or any Affiliate of Eclipsys. For the avoidance of doubt, no claim under any Employment Agreement shall be governed by this provision, unless it arises at the same time and relates to the same or similar facts, claims or events as a dispute, claim or controversy relating to or arising out of this Agreement or any other Transaction Document (other than the Employment Agreements).

(b) Notwithstanding the foregoing, if any dispute, claim or controversy arises out of or relates to this Agreement or any other Transaction Document (other than a dispute solely relating to any Employment Agreement), the parties shall first try to resolve their dispute through informal and good faith negotiation between an authorized officer of MediNotes (or, after the Closing, the Stockholders’ Representative) and an authorized officer of Eclipsys, with authority to settle such dispute claim or controversy, before resorting to arbitration. Such persons shall meet for the purpose of endeavoring to resolve such dispute, claim or controversy within ten Business Days after a written request from either MediNotes (or, after the Closing, the Stockholders’ Representative) or Eclipsys to the other. Such representatives shall discuss the problem and negotiate in good faith in an effort to resolve the dispute promptly and without the necessity of any formal arbitration proceeding relating thereto. The location, format and duration (not to exceed three Business Days, unless mutually agreed by such representatives) of these negotiations shall be left to the discretion of the representatives involved. If such negotiations do not lead to resolution of the underlying dispute, claim or controversy to the satisfaction of any party, then any party may provide notice of the election to pursue resolution by arbitration as set forth herein.

(c) The arbitration shall be conducted by JAMS pursuant to the Comprehensive Arbitration Rules of JAMS. All arbitrators shall be retired or former district court or appellate court judges of any United States District Court or United States Court of Appeals, other than courts in the States of Iowa or Georgia, or such other person with such other qualifications as Eclipsys and MediNotes (or, after the Closing, the Stockholders’ Representative) may agree, and shall be selected within seven Business Days after receipt of

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notice from one party to another that it intends to seek arbitration hereunder. The Federal Rules of Evidence shall govern the admissibility of evidence during the arbitration. The arbitrator(s) will have no authority to award punitive or other damages not measured by the prevailing party’s actual damages, except as may be required by statute. The determination of the arbitrator(s) shall be final and binding on the parties and a judgment on such award or determination may be entered in any court of competent jurisdiction and such judgment shall be final and non-appealable. The decision and award of the arbitrator(s) shall be accompanied by a reasoned opinion.

(d) All parties covenant not to appeal or otherwise litigate or file any court action that would seek to delay, amend, vacate or otherwise alter the determination of the arbitrator(s).

10.15 Costs and Fees. The prevailing party in any arbitration or court proceeding under this Agreement, including any related appeal, will be entitled to recover its fees and costs incurred in the arbitration or proceeding (including attorneys and arbitration fees and costs) from the non-prevailing party, provided that the arbitrator or judge has the discretion to determine that there is no prevailing party or to eliminate or reduce the prevailing party’s recovery of its costs and fees to the extent that the arbitrator or judge determines that full recovery thereof would be unreasonable or disproportionate to the harm suffered by the prevailing party. In absence of a determination of a prevailing party, the parties shall split equally all costs and fees. “Costs and fees” mean all reasonable pre-award expenses of the arbitration or other proceeding, including the arbitrators’ fees, administrative fees, travel expenses, out-of-pocket expenses such as copying and telephone, court costs, witness fees, expert costs and fees, and attorneys’ fees, costs and expenses and other costs incurred in enforcing, perfecting and executing such judgment or order. For the purposes of this section, attorneys’ fees, costs and expenses shall include all such fees, costs and expenses incurred in (i) appeals, (ii) post-judgment motions, (iii) contempt proceedings, (iv) garnishment, levy, and debtor and third-party examinations, (v) discovery, and (vi) bankruptcy litigation.

[Signature page follows]

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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed as of the day and year first above written.

“ECLIPSYS”		“MEDINOTES”
Eclipsys Corporation,		MediNotes Corporation,
a Delaware corporation		an Iowa corporation
By:	/s/ R. Andrew Eckert	By:	/s/ Donald G. Schoen
Name:	R. Andrew Eckert	Name:	Donald G. Schoen
Title:	Chief Executive Officer	Title:	CEO & President

“MERGER SUB”
Sirona Acquisition Corporation, an Iowa corporation
By:	/s/ R. Andrew Eckert
Name:		R. Andrew Eckert
Title:		Chief Executive Officer

“STOCKHOLDERS’ REPRESENTATIVE”

/s/ Danny R. Wipff

Danny R. Wipff

“MAJOR STOCKHOLDERS”
By:	/s/ Donald G. Schoen	Iowa Capital Corporation
By:	/s/ Madelyn K. Schoen	By:	/s/ Terry L. Sullivan
	Donald G. and Madelyn K. Schoen,	Name:	Terry L. Sullivan
	as JTWRS	Title:	Vice President
By:	/s/ Donald G. Schoen	Iowa Farm Bureau Federation
	Donald G. Schoen, an individual
By:	/s/ Madelyn K. Schoen	By:	/s/ Edward G. Parker
	Madelyn K. Schoen, an individual	Name:	Edward G. Parker
		Title:	General Counsel
By:	/s/ Travis Bond	IOWA FIRST CAPITAL FUND II LP
	Travis Bond, an individual	By:	Corridor Management Co. LLC, its General Partner
By:	/s/ Davin S. Hills	By:	/s/ Dennis C. Wangeman
	Davin S. Hills, an individual	Name:	Dennis C. Wangeman
		Title:	President
By:	/s/ Danny R. Wipff
	Danny R. Wipff, an individual
By:	/s/ Suzanne B. Schoen
	Suzanne B. Schoen,
	Sole Trustee of the Sophie B. Berlin Revocable Trust “B,” EIN #36-6702116
By:	/s/ Suzanne B. Schoen
	Suzanne B. Schoen,
	Sole Trustee of the Suzanne B. Schoen Revocable Trust U/A 10-08-75
By:	/s/ Robert C. Westlund
	Robert C. Westlund,
	Sole Trustee of the Robert C. Westlund Trust U/A dated December 28, 1993

EX-10.3

Exhibit 10.3

FIRST AMENDMENT TO THE AGREEMENT AND PLAN OF MERGER

Pursuant to this First Amendment to the Agreement and Plan of Merger, dated October 2, 2008 (this “Amendment”), the parties hereto hereby amend that certain Agreement and Plan of Merger, dated as of September 19, 2008, among Eclipsys Corporation, a Delaware corporation (“Eclipsys”), Sirona Acquisition Corporation, an Iowa corporation and a wholly owned Subsidiary of Eclipsys, MediNotes Corporation, an Iowa corporation (“MediNotes”), the stockholders of MediNotes named on the signature page hereto and Danny R. Wipff as the Stockholders’ Representative (the “Merger Agreement”), and Travis Bond as a party to the Merger Agreement and in his capacities as owners’ representative under the Bond Agreement and a duly authorized officer of each of the Sellers (as defined in the Bond Agreement).

WHEREAS, pursuant to Section 6.9 of the Merger Agreement, the Stockholders’ Representative has been appointed as the attorney-in-fact of the Major Stockholders prior to Closing, including amending the Merger Agreement; and

WHEREAS, the parties desire to amend the Merger Agreement to broaden the indemnification rights of the Eclipsys Indemnified Parties with respect to any breach or inaccuracy in the representations and warranties of MediNotes contained in Section 4.24(a) of the Merger Agreement, and to make certain other changes, including the agreement of Eclipsys to cause MediNotes to repay the Stockholder Notes and accrued dividends on the MediNotes preferred stock concurrent with, or promptly after, Closing.

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, and for other good and valuable consideration, intending to be legally bound, the parties hereto hereby agree as follows:

1. Definitions. Capitalized terms used herein and not otherwise defined shall have the meanings given such terms in the Merger Agreement.

2. Definition of Final Closing Date Cash. The definition of “Final Closing Date Cash” is hereby amended and restated in its entirety as follows:

“Final Closing Date Cash” means the amount of cash of MediNotes, as of 11:59 p.m. on the Closing Date, less $1,000,000, less the amount of all obligations under the Stockholder Notes payable pursuant to Section 6.21(a), and the aggregate liquidation preference payable pursuant to Section 6.21(b), in each case, whether or not they are unpaid as of such date and time. For the avoidance of doubt, any employee bonuses payable as a result of consummation of the Merger that are unpaid as of such date and time shall also be deducted from the amount of cash in determining the Final Closing Date Cash.”

3. Definition of Final Closing Date Debt. The definition of “Final Closing Date Debt” is hereby amended and restated in its entirety as follows:

“Final Closing Date Debt” means all Debt of MediNotes, as of 11:59 p.m. on the Closing Date, including capital lease obligations. For the avoidance of doubt, any obligations under the Stockholder Notes payable pursuant to Section 6.21(a), the

aggregate liquidation preference payable pursuant to Section 6.21(b), and employee bonuses payable as a result of consummation of the Merger that are unpaid as of such date and time shall not be included in the amount of Debt of MediNotes in determining the Final Closing Date Debt.”

4. Amendments to Section 6.20(c) of the Merger Agreement.

(a) The introductory clause of Section 6.20(c) is hereby amended and restated as follows: “Each of the Equity Owners (as defined in the Bond Agreement) shall:”

(b) The following provision is hereby added as a new Section 6.20(g) of the Merger Agreement:

“In his capacity as owners’ representative under the Bond Agreement, Travis Bond hereby represents and warrants that: (i) the entire Bond Escrow Fund may be retained by Eclipsys in accordance with Sections 2.03 and 10.05 of the Bond Agreement and Section 6.20(b) hereof; (ii) the Equity Owners were aware, at the time of the closing of the transactions contemplated by the Bond Agreement, that the shares of MediNotes Series C Preferred Stock issued to them were subject to Sections 2.03 and 10.05 of the Bond Agreement and formed part of the Bond Escrow Fund; and (iii) the Equity Owners are aware that all shares of Eclipsys Common Stock and cash in the Bond Escrow Fund issued in exchange for such shares of MediNotes Series C Preferred Stock (or any common stock of MediNotes into which such shares of Series C Preferred Stock were converted prior to the Effective Time) in the Merger remains subject to Sections 2.03 and 10.05 of the Bond Agreement. Travis Bond, in his capacity as an officer of each of the Sellers, agrees that the Sellers (as defined in the Bond Agreement) shall indemnify Eclipsys from and against any damages, costs or losses, including attorney’s fees, arising in connection with any claims by one or more of the Equity Owners that Eclipsys is not permitted to retain the Bond Escrow Fund, or set-off all or any portion thereof, in accordance with Sections 2.03 and 10.05 of the Bond Agreement and Section 6.20(b) hereof or any similar or related claim.”

5. New Section 6.21 of the Merger Agreement. The following provision is hereby added as a new Section 6.21 of the Merger Agreement:

“Section 6.21 Payment of Stockholder Notes and Unpaid Dividends.

(a) Eclipsys shall pay, or cause MediNotes, or the Surviving Corporation to pay, in full, all obligations owing on each of the Stockholder Notes concurrently with the Effective Time, or, if later, promptly after the receipt by Eclipsys of (i) wire transfer instructions for payment in respect of such Stockholder Note pursuant to this Section 6.21, and (ii) an acknowledgment of cancellation of such Stockholder Note and the related Security Agreement in form and substance acceptable to Eclipsys in its reasonable discretion.

(b) Eclipsys shall pay, or cause MediNotes, or the Surviving Corporation to pay, in full, all unpaid dividends accrued on all shares of Series A Preferred Stock and Series B Preferred Stock outstanding immediately prior to Closing, concurrently with the Effective Time or, if later, promptly after the receipt by Eclipsys of (i) wire transfer instructions for payment in respect of such dividends pursuant to this Section 6.21(b), and (ii) an acknowledgment of payment of accrued dividends in full.”

6. Amendment to Section 7.3(a) of the Merger Agreement. Section 7.3(a) is hereby amended and restated in its entirety to read as follows:

“(a) Neither Eclipsys, nor the Stockholders will have any liability (for indemnification or otherwise) with respect to any representation or warranty contained in this Agreement, other than those in Sections 3.1, 3.2, 3.5, 4.3, 4.6(a), 4.9, 4.10, 4.11(b), 4.14, 4.16 and 4.24(a), except to the extent that on or before the last day of the Survival Period, the party seeking recovery for Damages provides notice in writing pursuant to Section 7.6 or Section 7.7 of a claim for Damages specifying the factual basis of that claim in reasonable detail to the extent then known by such party. In such event, the party giving such notice shall continue to have the right to recover hereunder, and to all other rights and remedies under this Agreement, with respect to the matter or matters to which such claim relates until such claim has been finally resolved and payment made, if any.”

7. Amendment to Section 7.3(b) of the Merger Agreement. Section 7.3(b) is hereby amended and restated in its entirety to read as follows:

“(b) Subject to Section 7.4, a claim with respect to Sections 3.1, 3.2, 3.5, 4.3, 4.6(a), 4.9, 4.10, 4.11(b), 4.14, 4.16 and 4.24(a), must be made at any time prior to the earlier of (i) 90 days after the expiration of the applicable statute of limitations period or (ii) the seventh anniversary of the Closing Date, except to the extent that on or before such date, the party seeking recovery for Damages provides the notice in writing pursuant to Section 7.6 or Section 7.7 of a claim for Damages specifying the factual basis of that claim in reasonable detail to the extent then known by such party. In such event, the party seeking recovery for Damages shall continue to have the right to recover hereunder, and to all other rights and remedies under this Agreement, with respect to the matter or matters to which such claim relates until such claim has been finally resolved and payment made, if any.”

8. Amendment to Section 7.4(a) of the Merger Agreement. Section 7.4(a) is hereby amended and restated in its entirety to read as follows:

“(a) The Stockholders shall have no liability (for indemnification or otherwise) with respect to any matters under this Agreement (except for all claims, rights or causes of action arising from (i) Stockholder Fraud or (ii) a breach of any of the representations and warranties contained in Section 3.1, 3.2, 3.5, 4.3, 4.6(a), 4.9, 4.10, 4.11(b), 4.14, 4.16, 4.23 and 4.24(a), as to which the threshold described in this Section 7.4(a) shall be inapplicable) unless the total Damages for matters hereunder exceed $300,000; once such amount has been met, the Stockholders shall be liable for all amounts of such Damages, in excess of $200,000.”

9. New Section 10.16 of the Merger Agreement. The following provision is hereby added as a new Section 10.16 of the Merger Agreement:

“Final Distribution. All costs and expenses of the Paying Agent with respect to the distribution of all or any portion of the Holdback Amount shall be paid 50% by Eclipsys and 50% by the Holders (as defined in the Holdback Escrow Agreement), which amount payable by the Holders may be paid from the Stockholder Fund Amount to the extent funds are available and then from any remaining portion of the Indemnification Amount after the Holdback Termination Date, if any, if there are no Open Indemnification Claims (as defined in the Holdback Escrow Agreement), and after settlement of all Open Indemnification Claims, if such claims exist. Notwithstanding anything to the contrary in this Agreement, in the event that any portion of the Holdback Amount is released to the Paying Agent for distribution to the Holders after the Holdback Termination Date pursuant to the Holdback Escrow Agreement, the Stockholders’ Representative shall deliver to the Paying Agent instructions respecting the allocation of such portion of the Holdback Amount amongst the Holders, and the Paying Agent shall distribute the portion of the Holdback Amount to the Holders in accordance with such allocation. In connection with the preparation of such allocation, the Stockholders’ Representative may reallocate funds from the Stockholder Fund Amount remaining, if any, to compensate Holders whose nominal accounts under the Holdback Escrow Agreement were debited more than their Pro Rata Portion due to a reduction of the Escrow Shares (as defined in the Escrow Agreement) under Section 4.2 of the Escrow Agreement. Eclipsys shall have no responsibility or liability regarding the accuracy of any allocation amongst the Holders hereunder.”

10. Amendment to Disclosure Schedule. The following is hereby added to Section 4.4(a)(xiv) of the Disclosure Schedule, effective as of the initial delivery of the Disclosure Schedule: “Amended and Restated Stockholders Agreement, dated March 7, 2008 by and among MediNotes Corporation and the persons listed on the Schedules attached to the Stockholders Agreement.”

11. Capitalization. Notwithstanding the representation of MediNotes included in Section 4.3(a)(iv) of the Merger Agreement, the Articles of Amendment to designate 1,000 shares of MediNotes preferred stock as Series D Preferred Stock were not filed until October 1, 2008. Section 4.3(b) of the Disclosure Schedule is hereby supplemented by the addition of the following, effective as of the date hereof: “Fred Dawli and Phil Phillips were granted Company Options to purchase 8,000 and 10,000 shares of Company Common Stock, respectively, at an exercise price of $4.75 per share.”

12. Merger Agreement in Full Force and Effect. Except as expressly amended above, the Merger Agreement shall continue in full force and effect in accordance with its terms.

13. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware, regardless of the laws or rules that might otherwise govern under applicable principles of conflicts of laws thereof.

14. Arbitration. The parties agree that the any disputes, claims or controversies arising out of or relating to this Amendment shall be subject to arbitration as set forth in Section 24 of the Merger Agreement.

15. Headings. The headings contained in this Amendment are inserted for convenience only and do not constitute a part of this Agreement and shall not affect the meaning or interpretation hereof.

16. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which together shall be considered to be one document.

[Signature page follows]

IN WITNESS WHEREOF, each of the parties has caused this First Amendment to the Agreement and Plan of Merger to be executed as of the day and year first above written.

“ECLIPSYS”		“MEDINOTES”
Eclipsys Corporation,		MediNotes Corporation,
a Delaware corporation		an Iowa corporation
By:	/s/ Brian W. Copple	By:	/s/ Donald G. Schoen
Name:	Brian W. Copple	Name:	Donald G. Schoen
Title:	Secretary	Title:	CEO & President
“MERGER SUB”
Sirona Acquisition Corporation,
an Iowa corporation
By:	/s/ Brian W. Copple	/s/ Travis Bond
Name:	Brian W. Copple	Travis Bond, as Owners’ Representative and as a duly authorized officer of each of the Sellers under the Bond Agreement
Title:	Secretary
“STOCKHOLDERS’ REPRESENTATIVE”
/s/ Danny R. Wipff
Danny R. Wipff

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer pursuant to rule 13a-14(a), as adopted

pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, R. Andrew Eckert, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Eclipsys Corporation (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 10, 2008

/s/ R. Andrew Eckert

R. Andrew Eckert

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer pursuant to rule 13a-14(a), as adopted

pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Robert J. Colletti, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Eclipsys Corporation (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 10, 2008

/s/ Robert J. Colletti

Robert J. Colletti

Senior Vice President, Chief Financial Officer and

Chief Accounting Officer

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted

pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with this Quarterly Report on Form 10-Q of Eclipsys Corporation (the “Company”) for the period ended September 30, 2008 (the “Report”), the undersigned, R. Andrew Eckert, President and Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 10, 2008

/s/ R. Andrew Eckert

R. Andrew Eckert

President and Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted

pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with this Quarterly Report on Form 10-Q of Eclipsys Corporation (the “Company”) for the period ended September 30, 2008 (the “Report”), the undersigned, Robert J. Colletti, Senior Vice President, Chief Financial Officer and Chief Accounting Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 10, 2008

/s/ Robert J. Colletti

Robert J. Colletti

Senior Vice President, Chief Financial Officer and

Chief Accounting Officer