10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

COMMISSION FILE NUMBER: 000-24539

ECLIPSYS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	65-0632092
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

Three Ravinia Drive

Atlanta, GA

30346

(Address of principal executive offices)

(404) 847-5000

(Registrant’s telephone number, including area code)

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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    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 May 4, 2009
Common Stock, $0.01 par value	56,174,606

ECLIPSYS CORPORATION AND SUBSIDIARIES

FORM 10-Q

For the period ended March 31, 2009

Table of Contents

Part I.	Financial Information	1
Item 1.	Financial Statements - Unaudited	1
	Condensed Consolidated Balance Sheets (unaudited) - As of March 31, 2009 and December 31, 2008	1
	Condensed Consolidated Statements of Operations (unaudited) - For the Three Months Ended March 31, 2009 and March 31, 2008	2
	Condensed Consolidated Statements of Cash Flows (unaudited) - For the Three Months Ended March 31, 2009 and March 31, 2008	3
	Notes to Condensed Consolidated Financial Statements (unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	24
Part II.	Other Information	25
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 6.	Exhibits	39
Signatures		40

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ECLIPSYS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (unaudited)

(in thousands, except share data)

	March 31, 2009			December 31, 2008
Assets
Current assets:
Cash and cash equivalents	$	111,882		$	108,304
Marketable securities		—			154
Accounts receivable, net of allowance for doubtful accounts of $3,421 and $4,912, respectively		113,303			121,811
Prepaid expenses		26,417			23,975
Deferred tax asset		2,224			2,643
Other current assets		3,957			5,712
Total current assets		257,783			262,599
Long-term investments		105,232			107,215
Property and equipment:
Property and equipment		151,936			143,103
Accumulated depreciation and amortization		(93,902	)		(89,107	)
Property and equipment, net		58,034			53,996
Capitalized software development costs, net		41,323			37,718
Acquired technology, net		37,144			39,710
Intangible assets, net		9,546			10,258
Goodwill		97,695			96,973
Deferred tax asset		87,350			89,063
Other assets		12,064			11,343
Total assets	$	706,171		$	708,875
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	16,134		$	20,924
Deferred revenue		120,984			123,733
Accrued compensation costs		23,978			16,457
Other current liabilities		19,787			22,481
Total current liabilities		180,883			183,595
Deferred revenue		4,605			5,743
Long-term debt and capital leases		105,917			105,000
Other long-term liabilities		14,660			16,540
Total liabilities		306,065			310,878
Stockholders’ Equity:
Common stock, $0.01 par value, 200,000,000 shares authorized; 56,143,447 and 56,126,674 issued and oustanding, respectively		562			561
Additional paid-in capital		574,152			569,717
Accumulated deficit		(165,577	)		(164,712	)
Accumulated other comprehensive loss		(9,031	)		(7,569	)
Total stockholders’ equity		400,106			397,997
Total liabilities and stockholders’ equity	$	706,171		$	708,875

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

1

ECLIPSYS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share amounts)

	Three Months Ended March 31,
	2009			2008
Revenues:
Systems and services	$	128,137		$	119,138
Hardware		2,029			5,242
Total revenues		130,166			124,380
Costs and expenses:
Cost of systems and services (excluding depreciation and amortization shown below)		66,874			67,560
Cost of hardware		1,656			4,336
Sales and marketing		22,751			20,871
Research and development		13,493			17,154
General and administrative		12,021			10,962
In-process research and development charge		—			850
Restructuring		5,434			—
Depreciation and amortization		8,034			4,766
Total costs and expenses		130,263			126,499
Income (loss) from operations		(97	)		(2,119	)
Gain on sale of assets		400			2,064
Loss on investments		(158	)		—
Interest income		847			2,382
Interest expense		(1,143	)		(263	)
Income (loss) before income taxes		(151	)		2,064
Provision for income taxes		714			1,774
Net income (loss)	$	(865	)	$	290
Income allocated to participating securities		—			3
Net income (loss) available to common stockholders	$	(865	)	$	287
Earnings (loss) per common share:
Basic	$	(0.02	)	$	0.01
Diluted	$	(0.02	)	$	0.01
Shares used in computing earnings (loss) per common share:
Basic		55,470			53,548
Diluted		55,470			54,515

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

2

ECLIPSYS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

	Three Months Ended March 31,
	2009			2008
Operating activities:
Net income (loss)	$	(865	)	$	290
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		12,035			10,188
Provision for bad debt		1,046			950
In-process research and development		—			850
Stock compensation expense		4,408			3,347
Gain on sale of assets		(400	)		(2,064	)
Deferred provision for income taxes		452			68
Changes in operating assets and liabilities:
Accounts receivable		3,695			(2,092	)
Prepaid expenses and other current assets		(1,454	)		(6,000	)
Other assets		(237	)		534
Deferred revenue		(807	)		(3,351	)
Accrued compensation		7,465			(4,537	)
Accounts payable and other current liabilities		(6,596	)		5,952
Other long-term liabilities		751			2,343
Other reconciling items		243			427
Total adjustments		20,601			6,615
Net cash provided by operating activities		19,736			6,905
Investing activities:
Purchases of property and equipment		(7,273	)		(6,940	)
Purchase of marketable securities		—			(102,000	)
Proceeds from sales of marketable securities		150			134,791
Capitalized software development costs		(7,216	)		(2,923	)
Proceeds from sale of assets		—			698
Earnout on disposition		842			400
Cash paid for acquisitions, net of cash acquired		(2,763	)		(53,634	)
Net cash used in investing activities		(16,260	)		(29,608	)
Financing activities:
Proceeds from stock options exercised		74			1,486
Proceeds from employee stock purchase plan		242			169
Proceeds from secured financing		—			45,000
Net cash provided by financing activities		316			46,655
Effect of exchange rates on cash and cash equivalents		(214	)		(264	)
Net increase in cash and cash equivalents		3,578			23,688
Cash and cash equivalents — beginning of period		108,304			22,510
Cash and cash equivalents — end of period	$	111,882		$	46,198

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

3

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, 2008 that was filed with the SEC on February 24, 2009.

The Company manages its business as one reportable segment.

NOTE B – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Recently Adopted Standards

In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“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. We adopted SFAS 141R on January 1, 2009. SFAS 141R is to be applied prospectively to business combinations for which the acquisition date is on or after January 1, 2009.

In April 2008, the FASB issued FASB Staff Position (“FSP”) SFAS 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 SFAS 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 SFAS 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 adopted this FSP January 1, 2009. This FSP did not have a material impact on our condensed consolidated financial statements.

In June 2008, the FASB issued FSP Emerging Issues Task Force (“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 adoption of this FSP on January 1, 2009 did not materially affect our earnings per share and was applied retrospectively to all periods presented (see Note C for details).

Recently Issued Standards

In April 2009, the FASB issued FSP SFAS 115-2 and SFAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments.” This FSP changes existing guidance for determining whether an impairment of debt securities is other than temporary. The FSP requires other than temporary impairments to be separated into the amount representing the decrease in cash flows expected to be collected from a security (referred to as credit losses) which is recognized in earnings and the

4

ECLIPSYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

amount related to other factors which is recognized in other comprehensive income. This noncredit loss component of the impairment may only be classified in other comprehensive income if the holder of the security concludes that it does not intend to sell and it will not more likely than not be required to sell the security before it recovers its value. If these conditions are not met, the noncredit loss must also be recognized in earnings. When adopting the FSP, an entity is required to record a cumulative effect adjustment as of the beginning of the period of adoption to reclassify the noncredit component of a previously recognized other than temporary impairment from retained earnings to accumulated other comprehensive income. FSP SFAS 115-2 and SFAS 124-2 is effective for interim and annual periods ending after June 15, 2009. Management is currently evaluating the requirements of the FSP and has not yet determined the impact on Eclipsys’ condensed consolidated financial statements, which could be material.

In April 2009, the FASB issued FSP SFAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly.” This FSP provides additional guidance on estimating fair value when the volume and level of activity for an asset or liability have significantly decreased in relation to normal market activity for the asset or liability. The FSP also provides additional guidance on circumstances that may indicate that a transaction is not orderly. FSP SFAS 157-4 is effective for interim and annual periods ending after June 15, 2009. Eclipsys does not believe the adoption of this FSP will materially impact its condensed consolidated financial statements.

5

ECLIPSYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE C – EARNINGS (LOSS) PER SHARE

For all periods presented, basic and diluted earnings (loss) per common share (“EPS”) is presented in accordance with SFAS 128, “Earnings per Share,” as clarified by EITF Issue No. 03-6, “Participating Securities and the Two Class Method under FASB Statement No. 128, Earnings per Share” (“EITF 03-6”) as clarified by FSP EITF 03-6-1. Basic earnings (loss) 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 non-forfeitable dividend rights and is therefore a participating security, in accordance with FSP EITF 03-6-1 (See Note B - Recently Issued Accounting Pronouncements). The two-class method of computing earnings per share is required for companies with participating shares. Under this method, net income is allocated to common stock and participating securities to the extent that each security may share in earnings, as if all of the earnings for the period had been distributed. The Company has accounted for non-vested restricted stock as a participating security and used the two class method of computing earnings per share as of January 1, 2009, with retroactive application to all prior periods presented. Because the Company does not pay dividends, earnings allocated to each participating security and share of common stock is equal. For the period ended March 31, 2009, the Company was in a net loss position and therefore did not allocate any loss to participating securities.

Diluted earnings per common share reflect the potential dilution from assumed conversion of all dilutive securities 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 March 31, 2009 and 2008, 5,367,054 and 2,538,563 anti-dilutive shares were excluded from the calculation of diluted earnings per common share, respectively. The earnings (loss) amounts used for per-share calculations are the same for both the basic and diluted EPS calculations.

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

	Three Months Ended March 31,
	2009			2008
Basic EPS:
Net income (loss)	$	(865	)	$	290
Income allocated to participating securities (1)		—			3
Net income (loss) available to common stockholders	$	(865	)	$	287
Basic weighted average common shares outstanding		55,470			53,548
Basic earnings (loss) per common share	$	(0.02	)	$	0.01
Diluted EPS:
Net income (loss)	$	(865	)	$	290
Income allocated to participating securities (1)		—			3
Net income (loss) available to common stockholders	$	(865	)	$	287
Basic weighted average common shares outstanding		55,470			53,548
Dilutive effect of potential common shares (2)		—			967
Diluted weighted average shares common outstanding		55,470			54,515
Diluted earnings (loss) per common share	$	(0.02	)	$	0.01

⁽¹⁾ The Company has retroactively allocated earnings to 579 non-vested shares of restricted stock considered to be participating securities for the basic and diluted EPS calculation, in accordance with FSP EITF 03-6-1, for the three month period ended March 31, 2008. For the three month period ended March 31, 2009 the Company was in a net loss position and therefore did not allocate any loss to participating securities.

⁽²⁾ No potential common shares were included in weighted average diluted shares outstanding for the three month period ended March 31, 2009, as the Company has a net loss and potential common shares would create an antidilutive effect on earnings per share. If the company had net income, 131 potential common shares would be included in diluted weighted average shares outstanding.

6

ECLIPSYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE D – ACCOUNTS RECEIVABLE

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

	March 31, 2009		December 31, 2008
Accounts Receivable:
Billed accounts receivable, net	$	79,561	$	90,144
Unbilled accounts receivable		33,742		31,667
Total accounts receivable, net	$	113,303	$	121,811

NOTE E – INVESTMENTS

Investment balances consist of the following (in thousands):

	March 31, 2009		December 31, 2008
Security Type:
Auction rate securities
UBS purchased (1)	$	32,636	$	32,413
Goldman Sachs purchased (2)		69,675		71,499
Auction rate securities put option (3)		2,921		3,303
Other marketable securities		—		154
Total	$	105,232	$	107,369

⁽¹⁾ These securities are classified as trading, and the changes in fair value of these securities are included in earnings. For the three month period ended March 31, 2009, we have recorded a $0.2 million unrealized gain related to the increase in the fair value of these ARS.

⁽²⁾ As of March 31, 2009 the maturity dates of our Goldman Sachs purchased ARS range from August 1, 2027 to November 1, 2047. These securities are classified as available for sale, and the changes in fair value of these securities are included in accumulated other comprehensive income. For the three month period ended March 31, 2009, we recorded a $1.8 million unrealized loss to accumulated other comprehensive income in the balance sheet.

⁽³⁾ Our auction rate securities put option is exercisable from June 30, 2010 to July 30, 2012. We have accounted for the put option as a freestanding financial instrument and elected to record the value under the fair value option of SFAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities”. Therefore, the changes in fair value of the put option are included in earnings. For the three month period ended March 31, 2009, we recorded a $0.4 million unrealized loss related to the decrease in the fair value of the put option.

As of March 31, 2009 the Company held approximately $116.6 million par value of investments in auction-rate securities (“ARS”) of which $36.3 million was purchased through UBS Financial Services (“UBS”) and $80.3 million was purchased through Goldman Sachs. As of March 31, 2009, our ARS purchased through UBS are comprised of $32.2 million triple-A rated pools of student loans and $4.1 million “A3” rated pools of student loans, and our ARS purchased through Goldman Sachs are comprised of $64.8 million triple-A rated pools of student loans and $15.5 million “B3” rated pools of student loans. These investments have long-term nominal maturities for which the interest rates are supposed to be reset through a Dutch auction each month. Prior to February 2008, monthly auctions historically provided a liquid market for these securities. However, in February 2008, the broker-dealers managing the Company’s ARS portfolio experienced failed auctions in which the amount of ARS submitted for sale exceeded the amount of purchase orders. Our ARS continued to fail to settle at auctions through the first quarter of 2009. The Company continues to earn interest on these investments at the contractual rate.

7

ECLIPSYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

On November 12, 2008, we entered into a settlement agreement with UBS pursuant to which the Company (1) received the right (the “put option”) to sell its ARS, originally purchased through UBS, at par value, to UBS between June 30, 2010 and July 2, 2012 and (2) gave UBS the right to purchase the ARS, originally purchased through UBS, from the Company any time after the acceptance date of the settlement agreement as long as the Company receives the par value of the securities.

As of March 31, 2009, the Company has recorded these investments, including the put option, at their estimated fair value of $105.2 million. All of our ARS were at an unrealized loss position as of March 31, 2009. Due to events in the credit markets, quoted prices in active markets are not readily available at this time. The Company estimated the fair value of these ARS and the put option as of March 31, 2009 based on various factors such as credit quality, duration, insurance wraps, assumptions about future cash flows and likelihood of redemption. We accounted for illiquidity by using a discount rate within the valuation, with an additional spread representing the additional required rates of return investors would have for certain securities to hold those securities in an illiquid environment.

The Company has accounted for the put option as a freestanding financial instrument and elected to record the value under the fair value option of SFAS No. 159. The Company has classified the related UBS purchased auction rate securities as trading securities pursuant to SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities” (“SFAS 115”). Although the underlying credit quality of UBS will impact the future value of the put option and could cause the put option to decrease in fair value and not offset the change in fair value of the UBS purchased ARS, the Company expects that the future changes in the fair value of the put option will generally offset the fair value movements in the related UBS purchased ARS.

We have recorded a temporary loss on the ARS purchased through Goldman Sachs of $10.6 million, as of March 31, 2009, in accumulated other comprehensive income, reflecting the decline in the fair value of these securities, as these securities remain classified as available for sale. In evaluating our ARS purchased from Goldman Sachs for other than temporary impairment, as of March 31, 2009, we considered several factors in accordance with FSP FAS 115-1 and FAS 124-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments” and Staff Accounting Bulletin (“SAB”) Topic 5M, “Other Than Temporary Impairment Of Certain Investments In Debt And Equity Securities” including the duration of time and the extent to which the market value has been less than cost, the credit ratings of the securities, the Company’s intent and ability to retain the investments for a period of time sufficient to allow for any anticipated recovery in market value, and the cause of the impairment. We believe these investments continue to be of high credit quality, and we currently have the intent and ability to hold the ARS until such time as successful auctions occur, secondary markets allow for a sufficient price to recover substantially all of our par value, or our put option becomes exercisable. Accordingly, we have classified these securities as long-term investments in our condensed consolidated balance sheet. The Company has concluded that no other-than-temporary impairment losses occurred for the three month period ended March 31, 2009. The Company will continue to analyze its ARS purchased from Goldman Sachs each reporting period for impairment and it may be required to record an impairment charge in the condensed consolidated statement of operations if the decline in fair value of the Goldman Sachs purchased ARS are determined to be other-than-temporary.

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ECLIPSYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE F – ACQUIRED TECHNOLOGY AND INTANGIBLE ASSETS, INCLUDING GOODWILL

The changes in the carrying amount of goodwill for the three month period ended March 31, 2009 were as follows:

Beginning Balance December 31, 2008	$	96,973
Acquisition adjustments		722
Ending Balance March 31, 2009	$	97,695

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

	March 31, 2009							December 31, 2008							Estimated Life
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Amortization			Net Book Value
Intangibles subject to amortization:
Acquired technology	$	45,027	$	(7,883	)	$	37,144	$	45,027	$	(5,317	)	$	39,710	3-4 years
Ongoing customer relationships		9,409		(1,814	)		7,595		9,409		(1,382	)		8,027	5-6 years
Non-compete agreements		2,640		(749	)		1,891		2,640		(470	)		2,170	2 years
Total	$	57,076	$	(10,446	)	$	46,630	$	57,076	$	(7,169	)	$	49,907
Intangibles not subject to amortization:
Trade names						$	60						$	60
Goodwill							97,695							96,973
Total						$	97,755						$	97,033

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ECLIPSYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE G – TOTAL COMPREHENSIVE INCOME

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

	Three Months Ended March 31,
	2009			2008
Net income (loss)	$	(865	)	$	290
Foreign currency translation adjustments		(358	)		(868	)
Unrealized holding losses arising during period		(1,826	)		(4,873	)
Income tax expense related to other comprehensive income		722			—
Total comprehensive income (loss)	$	(2,327	)	$	(5,451	)

NOTE H – RESTRUCTURING

During the first quarter 2009, the Company executed a workforce reduction which included terminating approximately 175 employees. As previously announced, we reduced staff in our services and client solutions organizations to better align with current and projected business volumes, and we also made other workforce reductions across various business and back office divisions. These reductions, together with severance costs resulting from the departure of an executive officer of approximately $0.6 million, resulted in a total charge of $5.4 million for severance related costs to our consolidated statement of operations. As of March 31, 2009, $1.3 million of these costs have been paid by the Company and the accrued liability is $4.1 million. Payments for these obligations will continue through early 2010 with the majority of payments occurring in the second quarter 2009.

In January 2006, we effected a restructuring of our operations which included a reduction in headcount of approximately 100 employees and the reorganization of our Company. In December 2006, we realigned certain management resources and consolidated some facilities to eliminate excess office space. These activities resulted in total restructuring charges of $14.7 million, which were incurred in the year ended December 31, 2006. Severance charges were $12.2 million, of which $2.8 million was for non-cash stock-based compensation. The excess office space consolidation resulted in charges of $2.5 million related to the closing of three of our facilities. A summary of the restructuring activity related to our 2006 initiatives for the three month period ended March 31, 2009 is as follows (in thousands):

	One - time Employee - Related Benefits			Facility Closures			Total
Balance at December 31, 2008	$	17		$	297		$	314
Payments		(17	)		(126	)		(143	)
Balance at March 31, 2009	$	—		$	171		$	171

The remaining liability as of March 31, 2009 is expected to be paid out during 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.

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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 March 31, 2009 (in thousands):

	Balance as of March 31, 2009		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	$	102,239	$	102,239	$	—	$	—
Long-term investments:
Auction rate securities (1)		102,311						102,311
Put option (2)		2,921						2,921
	$	207,471	$	102,239	$	—	$	105,232

⁽¹⁾ Our auction rate securities, categorized as Level 3, were $103.9 million as of December 31, 2008. We recorded a net unrealized loss of $1.6 million on our ARS for the three months ended March 31, 2009 to adjust the investment to fair value. The $1.6 million net unrealized loss is comprised of an unrealized gain of $0.2 million recorded in the statement of operations within the line item “Loss on Investments” and an unrealized loss of $1.8 million recorded in the balance sheet as a component of other comprehensive income. See Note E for further information.

⁽²⁾ Our put option, categorized as Level 3, had a carrying value of $3.3 million as of December 31, 2008. We recorded an unrealized loss of $0.4 million on our put option for the three months ended March 31, 2009 to adjust the put option to fair value. This adjustment has been recorded in the statement of operations within the line item “Loss on Investments”.

As of March 31, 2009, the Company has recorded these investments at their estimated fair value of $207.5 million. Due to events in the credit markets, quoted prices in active markets are not readily available for the ARS and put option at this time. The Company estimated the fair value of these ARS and the put option as of March 31, 2009 based on various factors such as credit quality, duration, insurance wraps, assumptions about future cash flows and likelihood of redemption. We accounted for illiquidity by using a discount rate within the valuation, with an additional spread representing the additional required rates of return investors would have for certain securities to hold those securities in an illiquid environment. The assumptions that were used to determine the fair value estimates were highly subjective and therefore considered Level 3 unobservable inputs in the fair value hierarchy. The fair value of these assets represents $105.2 million or 50.7% of total assets measured at fair value in accordance with SFAS 157. The estimate of the fair value of the ARS we hold could change significantly based on future market conditions.

As of March 31, 2009, $58.3 million of our money market funds held at Evergreen Investments have been guaranteed by the U.S. Treasury Money Market Guarantee Program. The plan ensures that if a participating fund’s share value declines under $1.00 and a decision is made to liquidate by the fund’s Board of Trustees, the U.S. Treasury would cover any shortfall between the share price at the time of liquidation and $1.00 for investors as of September 19, 2008. This guarantee is effective until September 18, 2009.

NOTE L – INCOME TAXES

In the quarter ended March 31, 2009, the Company recorded income tax expense of $0.7 million as compared to income tax expense of $1.8 million for the first quarter of 2008. The difference in the expense, quarter over quarter, is primarily due to the tax effect of share-based compensation shortfalls recorded in the first quarter of 2009 of $0.5 million and the accrual of tax, interest and penalties 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”) recorded in the first quarter of 2008 of $1.5 million.

A shortfall exists for a share-based compensation award to the extent that the cumulative recognized book stock compensation expense for that award exceeds the associated tax deduction. Substantial amounts of share-based compensation shortfalls could occur during the remainder of the year due to the recent volatility of the Company’s stock price. However, we are not able to predict the amount of the shortfalls. The Company must reflect a tax provision for these shortfalls because it has no pool of windfall tax benefits, due to the fact the Company has historically used the “with-and-without” or “incremental” approach for ordering tax benefits derived from the share-based payment of awards.

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ECLIPSYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE M – CONTINGENCIES

On May 22, 2008, The McKenna System (“TMS”) filed in the 274th Judicial District Court, Comal County, Texas, 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. 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.

The Company or one of its subsidiaries is a defendant, and/or may be contractually obligated to indemnify defendants, in three separate patent actions; two are pending in Illinois and one in Texas. These actions, which name multiple defendants each, are based upon U.S. patents that allegedly cover various aspects of the creation of patient medical records and related reports. Each of the actions seeks damages for infringement, including treble damages. Plaintiffs also seek injunctive relief, attorneys’ fees and costs. Each case is in early stages, and the outcome of each 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 these matters vigorously. However, because the outcomes of such patent lawsuits are often uncertain and such lawsuits are typically expensive to litigate, such cases often settle and the Company would consider settlement on reasonable terms, if appropriate agreements with the plaintiffs could be reached.

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 March 31, 2009. However, based on our knowledge as of March 31, 2009, 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.

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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 performance management software, and professional services that help healthcare organizations improve clinical, financial, and operational 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 clinical and financial planning and analysis; and

• provides information 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:

• Systems and services revenues include revenues derived from a variety of sources, including software licenses and contractual software maintenance, and professional services, which include implementation, training and consulting services. Our systems and services revenues include both “subscription” software license revenues and software maintenance 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 represent less than 10% of total revenues). For some clients, we host the software applications licensed from

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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 revenue are generally significantly higher than margins 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 margins 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 continue to focus on expanding our international business, including our operations in India and sales of our solutions outside of North America, such as the Asia-Pacific region and the Middle East. As of March 31, 2009, our India operations have expanded to include two offices and approximately 700 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, and also represents a potential new market for our software.

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 our solutions as compared to the offerings of our competitors, our marketing effectiveness, and the success of our research and development of new and enhanced 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.

Recent disruptions in U.S. and international financial markets have adversely affected the availability of capital for our clients and potential clients, which could negatively impact our sales. In addition, current economic conditions are motivating some clients and potential clients to prefer software subscription contracting to traditional licensing arrangements and we try to be flexible in accommodating clients’ needs, including through structuring transactions as subscriptions. Given that periodic revenue from traditional license arrangements carries high margins and contributes significantly to overall profitability in the transaction period, this client contracting preference may affect our profitability in 2009.

Economic factors contributed to disappointing results for us in the fourth quarter of 2008, and we have responded with various initiatives to reduce and control our expenses, including headcount reductions to better align with current anticipated business conditions. However, the difficult economy, client financial challenges, and significant development requirements, combined with the positive effects of the HITECH Act have resulted in an unusual business environment that makes planning and forecasting challenging.

Initiatives and Challenges for 2009

The HITECH Act

On February 17, 2009, the American Recovery and Reinvestment Act of 2009 (ARRA) was signed into law. This was an important event for Eclipsys and the health information technology industry in general because a portion of ARRA known as the HITECH Act provides financial incentives for hospitals and doctors that are “meaningful EHR users,” which includes use of health information technology systems that are “certified” according to technical standards developed under the supervision of the Secretary of Health and Human Services. In addition, the HITECH Act (i) requires governmental agencies that implement, acquire or upgrade health information technology systems used for the exchange of individually identifiable health information between federal entities and agencies and with non-federal entities to utilize systems that are certified according to such standards, and (ii) requires governmental agencies to require in contracts with health care providers, health plans, and insurers that as the providers, health plans, and insurers implement, acquire or upgrade health information technology systems, they use systems that are certified according to such standards. Although the HITECH Act says that private entities are not legally required to adopt or comply with the standards adopted by the Secretary of Health and Human Services, we believe that the HITECH Act’s requirements for Federal agencies and financial incentives for healthcare providers make compliance with these standards a de facto business requirement for us and our competitors.

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The HITECH Act provides the potential for aggregate payments over a period of approximately four or five years beginning in 2011 of up to approximately $10 million to qualifying hospitals (based upon a formula that takes into account various factors including total discharges and Medicare and charity patient volumes) and $44,000 to qualifying physicians. These are significant sums for many of those qualified to receive them, particularly in what is otherwise a challenging economic environment, and have provided a strong incentive for many hospitals and doctors to consider implementing HIT systems. We have noticed some increased interest in our offerings in response to this stimulus and we are hopeful that as the regulations to be implemented pursuant to the HITECH Act are written and the practical parameters of these programs come into focus, we will share in a demonstrable increase in market activity.

In order to take advantage of this opportunity, we will need to ensure that our software meets the certification standards described above. This will require additional development investments, which could displace other important initiatives due to the short timeline before stimulus funds become available to meaningful EHR users. If we falter in our efforts to meet the certification standards, we may breach some client commitments and find ourselves at a competitive disadvantage.

CCHIT

The Certification Commission for Healthcare Information Technology (CCHIT^SM) is a private non-profit organization formed to accelerate the adoption of robust, interoperable healthcare information technology throughout the United States by creating an efficient, credible, sustainable mechanism for the certification of healthcare IT products. CCHIT develops criteria for healthcare IT products based upon standards for such products established by various standards development organizations, and then tests products for adherence to the criteria. Products that pass the test are CCHIT “certified.” Certification for a product lasts for two years and must then be renewed, and the standards applicable to products evolve and become more demanding over time. CCHIT has published certification criteria for only a limited number of products to date, but will continue to add products to its certification list. CCHIT certification is an important factor to many clients and potential clients in our target market and we believe that failure to have certified products and to demonstrate compliance plans for products that are not certified could put us at a competitive disadvantage. In addition, CCHIT criteria may be used as, and/or overlap with, standards for certification of health information technology systems under the HITECH Act. Accordingly, we are devoting significant resources to conforming our software to current and anticipated CCHIT criteria. This requires us to allocate scarce resources and may mean that other important development initiatives are delayed or foregone.

Performance Management

To help clients address their needs to operate more efficiently in today’s challenging environment, and to differentiate our capabilities, we plan to emphasize development and marketing of our performance management suite of solutions, comprising of Sunrise EPSi ^TM, Sunrise Patient Flow ^TMand Sunrise Clinical Analytics ^TM. These solutions help healthcare organizations streamline and automate manual processes required to gather, analyze and display enterprise-wide information. They also enable hospital senior and department level management to more easily identify areas requiring intervention and to improve clinical quality, regulatory compliance, cost-efficiency, resource utilization and patient satisfaction. We think an integrated performance management offering can be a competitive differentiator for us, but it will require an investment to develop what were designed as independent applications into an integrated solution.

Speed to Value

Some of our software is complex and highly configurable and many clients value our ability to adapt the software to their specific needs. However, this high degree of configurability can result in significant implementation costs, which can make our offering too expensive for some clients. Our ability to reach our goals for expansion into smaller clients and in the international market, and to sell to clients with budgetary constraints, depends upon our ability to develop less costly ways of implementing our most complex software. We are currently deploying a new “speed to value” implementation methodology that we have recently developed to address this issue.

International Initiatives

We continue to focus on expanding our international business, including our operations in India and sales of our solutions outside of North America, such as the Asia-Pacific region and the Middle East. We achieved some initial success with our sale of Sunrise Clinical Manager to SingHealth, the largest healthcare provider in Singapore. Our performance at SingHealth is being closely monitored in the region, and could prove to be a catalyst to help us drive business in new international

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markets. These international initiatives are important to our ability to grow our business and require that we oversee development and client support capabilities in a high quality and cost-effective manner. We expect to face challenges building brand-name recognition and adapting our software solutions to new international markets.

Acquisitions Integration

Integrating the three companies we acquired in 2008 will present challenges. The anticipated benefits from these acquisitions may not be achieved, and the diversion of management’s attention and any difficulties encountered in the transition process could negatively impact our business. These companies are relatively small and the Peak Practice and Patient Flow offerings in particular are not yet well established in the market, so additional investment is required and there is risk that our expectations for these companies may not be met. However, with Peak Practice, we now have a solution for the independent physician practice market, which we believe has potential to be a high growth area for us, especially given the ARRA, as discussed above.

Recent Performance and Outlook

We recorded $11.0 million of software license revenues in the quarter representing a 32.1% increase compared to the first quarter in 2008. These positive results were impacted by large enterprise deals closed in the quarter and by $2.1 million of contribution from our 2008 acquisitions. This revenue stream can fluctuate dramatically from quarter to quarter depending on whether we are able to record the license revenue at contract signing, which is dependent on each individual customer’s contract terms. Therefore it is difficult to project license revenues in future quarters.

Due to the strong license revenues noted above, we had a great mix of higher margin sales activity in the quarter. Our sales team produced in the quarter as we signed new enterprise clients, closed significant renewal contracts, and added many new performance management clients. In terms of the new contracts we signed in the quarter measured in dollars, 52% were from new clients and 80% in our core clinical business.

We had a very strong collections quarter which sequentially decreased our days sales outstanding by 8 days to 78 days. Operating cash flows were $19.7 million compared to $6.9 million in the first quarter 2008, which was negatively impacted by payouts from our corporate bonus plan.

We continue to improve our customer ratings as evidenced in April 2009 when KLAS released its CPOE Digest for 2009 which highlighted Eclipsys leadership position in: (1) total number of physicians who utilize our computerized physician order entry (“CPOE”) solution (2) percentage of our CPOE client base using the solution and (3) the highest physician satisfaction from clients who use our CPOE solution.

Our total revenues of $130.2 million in the first quarter 2009 were 4.7% higher than the first quarter 2008. The net loss for the quarter of $0.9 million includes a $5.4 million restructuring charge. Overall, we are pleased with the results and remain cautiously optimistic about results for 2009. Although we were pleased with the quarter, we note results by quarter can vary due to the timing of license revenues and capitalized software labor deferrals, which also can fluctuate based on project activity and release dates. We expect the positive impact of these two areas in the first quarter to decrease in the second quarter 2009.

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Consolidated Results of Operations (unaudited)

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

	March 31, 2009			March 31, 2008			Change ($)			Change (%)
Revenues
Systems and services	$	128,137		$	119,138		$	8,999		7.6	%
Hardware		2,029			5,242			(3,213	)	-61.3	%
Total revenues		130,166			124,380			5,786		4.7	%
Costs and expenses
Cost of systems and services (excluding depreciation and amortization shown below)		66,874			67,560			(686	)	-1.0	%
Cost of hardware		1,656			4,336			(2,680	)	-61.8	%
Sales and marketing		22,751			20,871			1,880		9.0	%
Research and development		13,493			17,154			(3,661	)	-21.3	%
General and administrative		12,021			10,962			1,059		9.7	%
In-process research and development charge		—			850			(850	)	*
Restructuring		5,434			—			5,434		*
Depreciation and amortization		8,034			4,766			3,268		68.6	%
Total costs and expenses		130,263			126,499			3,764		3.0	%
Income (loss) from operations		(97	)		(2,119	)		2,022		-95.4	%
Gain on sale of assets		400			2,064			(1,664	)	-80.6	%
Loss on investments		(158	)		—			(158	)	*
Interest income		847			2,382			(1,535	)	-64.4	%
Interest expense		(1,143	)		(263	)		(880	)	334.6	%
Income (loss) before income taxes		(151	)		2,064			(2,215	)	-107.3	%
Provision for income taxes		714			1,774			(1,060	)	-59.8	%
Net income (loss)	$	(865	)	$	290		$	(1,155	)	-398.3	%
Basic net income (loss) per common share	$	(0.02	)	$	0.01		$	(0.03	)	-300.0	%
Diluted net income (loss) per common share	$	(0.02	)	$	0.01		$	(0.03	)

* Not meaningful

Revenues

Total revenues increased by $5.8 million, or 4.7%, for the quarter ended March 31, 2009 as compared to the first quarter of 2008. The increase was driven by a $9.0 million increase in systems and services revenues, net of a $3.2 million decrease in hardware revenues. The 2008 acquisitions contributed an increase of $6.4 million in total revenue for the three month period ended March 31, 2009 as compared to the same period in 2008.

Systems and Services Revenues

Systems and services revenues increased by $9.0 million, or 7.6%, for the quarter ended March 31, 2009 as compared with the same period of 2008. The overall increase resulted from increases of $7.4 million in revenues recognized on a ratable basis and $2.2 million in periodic revenues partially offset by a decrease of $0.6 million in professional services revenues.

• Revenues Recognized Ratably - Revenues recognized ratably from software, maintenance, outsourcing and remote hosting were $88.1 million, an increase of $7.4 million, or 9.2%, as compared to the same period in 2008. The increase was due to previous period sales of our solutions, remote hosting related services, and outsourcing, resulting in growth in our recurring revenue base. In addition, the 2008 acquisitions contributed an increase of $2.9 million in revenues recognized ratably for the three month period ended March 31, 2009 as compared to the same period in 2008.

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• Periodic Revenues - Periodic revenues for software related fees and third party software related fees were $12.5 million for the quarter ended March 31, 2009 as compared to $10.3 million for the quarter ended March 31, 2008, an increase of $2.2 million. The table below summarizes the components of periodic revenues (in thousands):

	Three Months Ended March 31,
	2009		2008		$ Change			% Change
Eclipsys software related fees	$	11,017	$	8,337	$	2,680		32.1	%
Third party software related fees		1,445		1,916		(471	)	-24.6	%
Total periodic revenues	$	12,462	$	10,253	$	2,209		21.5	%

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. We expect these periodic revenues to continue to 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. The 2008 acquisitions contributed an increase of $2.2 million in periodic revenues for the three month period ended March 31, 2009 as compared to the same period in 2008.

• Professional Services Revenues - Professional services revenues, which include implementation, training and consulting related services, were $27.6 million for the three month period ended March 31, 2009, a decrease of $0.6 million, as compared to the three month period ended March 31, 2008. The decrease was primarily related to a reduction in education services, customer reimbursed travel, and consulting services. Education services and customer reimbursed travel, exclusive of revenues from acquisitions, decreased $0.7 million for the three month period ended March 31, 2009 as compared to the same period in 2008 reflecting a decrease in new licensed clients. In addition, consulting services, exclusive of revenues from acquisitions, decreased $1.3 million due to the streamlining of our services offering in the first quarter of 2009 as compared to the same period in 2008. The decrease was partially offset by professional services revenues provided by our 2008 acquisitions of EPSi, MediNotes, and Premise. The 2008 acquisitions contributed an increase of $1.3 million in professional services revenues for the three month period ended March 31, 2009 as compared to the same period in 2008.

Hardware Revenues

Hardware revenues decreased by $3.2 million, or 61.3%, for the three month period ended March 31, 2009, as compared to the three month period ended March 31, 2008. The decrease in hardware revenue is primarily attributable to net new customers signing remote hosting contracts as opposed to buying hardware. In addition, there have been increased existing customers who are migrating to our remote hosting services which results in decreased hardware sales to existing clients. The Company anticipates hardware sales to increase in the second half of 2009 related to customer planned Sunrise Clinical Manager release upgrades later in 2009.

Operating Expenses

Cost of Systems and Services

Our cost of systems and services decreased $0.7 million, or 1.0%, for the three months ended March 31, 2009 as compared to the three months ended March 31, 2008. The decrease for the three months ended March 31, 2009 reflects:

• Lower amortization of capitalized software of $1.1 million impacted by the timing of previous releases as the amortization of SunriseXA 4.5, which was released in January 2006, ceased during the first quarter 2009

• Lower third-party royalty fees of $0.7 million reflecting lower volumes under certain contractual obligations

• Higher third party software cost of services of $1.1 million primarily as a result of continued growth in third party revenue activity

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Cost of Hardware

Cost of hardware decreased $2.7 million or 61.8% for the three months ended March 31, 2009 as compared to the three months ended March 31, 2008. This decrease was directly due to the 61.3% decrease in our hardware revenues for the same periods.

Sales and Marketing

Our sales and marketing expenses increased $1.9 million, or 9.0%, for the three months ended March 31, 2009 as compared to the three months ended March 31, 2008. The increase in sales and marketing expenses included higher labor related compensation of $2.8 million partially offset by a $0.8 million decrease in sales trade show related expenses. Higher labor related costs include $2.2 million of additional costs due to our three acquisitions during 2008. Trade show activity decreased in the first quarter of 2009 as compared to the same period in 2008 due to the timing of the 2009 HIMSS trade show. The trade show occurred in April in 2009 versus February in 2008; therefore, expenses related to the trade show will be incurred in the second quarter of 2009.

Research and Development

Our research and development expenses decreased $3.7 million, or 21.3%, for the three months ended March 31, 2009, as compared to the three months ended March 31, 2008. The decrease primarily reflects higher internal labor cost capitalization associated with Sunrise XA 5.5 during 2009 and to a lesser extent capitalized labor in the first quarter of 2009 supporting Patient Flow release 5.0, an acquired product in our Premise acquisition.

Our gross research and development spending, which consists of research and development expenses and capitalized software development costs, was $20.7 million in the first quarter of 2009, an increase of $0.6 million compared to $20.1 million in the first quarter of 2008. This increase reflects continued investment in our product development activities in India.

In summary, research and development expense for the three months ended March 31 was as follows

(in thousands):

	2009		2008		$ Change			% Change
Research and development expenses	$	13,493	$	17,154	$	(3,661	)	-21.34	%
Capitalized software development costs	$	7,216	$	2,923	$	4,293		146.87	%
Gross research and development expenditures	$	20,709	$	20,077	$	632		3.15	%
Amortization of capitalized software development costs	$	3,752	$	4,832	$	(1,080	)	-22.35	%

Based on current development plans, we anticipate capitalized software costs will be less accretive to earnings in the second and third quarters of 2009, and we expect amortization of capitalized software to exceed amounts capitalized by the fourth quarter 2009.

General and Administrative

Our general and administrative expenses increased $1.1 million, or 9.7%, in the three months ended March 31, 2009 as compared to the three months ended March 31, 2008. The increase primarily reflects higher labor costs of $1.1 million impacted by higher stock compensation. The increase for the quarter also included various other increases including higher recruiting costs, substantially offset by lower legal fees of $1.4 million due to higher costs in the first quarter 2008 related to our derivative litigation that was ultimately settled in September 2008.

In-Process Research and Development Charge

Approximately $0.9 million of the purchase price of our acquisition of EPSi was allocated to in-process research and development and was charged to our income statement in the first quarter of 2008. The $0.9 million acquired in-process research and development was valued using the Multi-Period Excess Earnings Method. The material assumptions, underlying the purchase price allocation, were as follows: projected revenue assumptions, decay rate, cost assumptions, operating expense assumptions, charge assumptions for the use of contributory assets, and discount rate assumptions. At the time of acquisition, the technology was still in the research and development phase and had not yet been completed to a point of an existing or current product offering. At the time of acquisition, the projected cost to complete the project was $0.2 million. The in-process technology was incorporated within an EPSi product module that was released in January 2009.

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Restructuring

During the first quarter 2009 the Company executed a workforce reduction which included terminating approximately 175 employees. As previously announced, we reduced staff in our services and client solutions organizations to better align with current and projected business volumes, and we also made other workforce reductions across various business and back office divisions. These reductions, together with severance costs resulting from the departure of an executive officer of approximately $0.6 million, resulted in a total charge of $5.4 million for severance related costs to our consolidated statement of operations.

Depreciation and Amortization

Depreciation and amortization expense increased $3.3 million, or 68.6%, for the three months ended March 31, 2009 as compared to the three months ended March 31, 2008. The increase in depreciation and amortization is attributable primarily to amortization related to intangible assets acquired in our acquisition of EPSi in February 2008, MediNotes in October 2008, and Premise in December 2008 and to a lesser extent an increased asset base to support our growing operations.

Gain on Sale of Assets

In the first quarter of 2009, we recorded an additional gain on sale of assets of $0.4 million resulting from the completion of post-closing milestones associated with the fourth quarter 2007 sale of our Clinical Practice Model Resource Center (CPMRC) business.

Loss on Investments

In the first quarter of 2009, we recorded an unrealized loss of $0.4 million on our put option to adjust the put option to fair value. This loss was partially offset by an unrealized gain of $0.2 million reflecting an increase in the fair value of our ARS purchased through UBS. During the first quarter of 2008, our ARS purchased through UBS were classified as available-for-sale securities, and therefore changes in the fair value were recorded in accumulated other comprehensive income on the balance sheet.

Interest Income

Interest income decreased $1.5 million, or 64.4%, for the three month period ended March 31, 2009 as compared to the same period in 2008. The decrease was primarily attributable to lower interest rates in 2009 as compared to 2008 on our ARS due to failed Dutch auctions beginning in February 2008. Although the auctions failed, we continued to earn interest on the ARS, but only at the contractual rate. In addition, we had lower ARS investment balances in first quarter of 2009 as compared to the same period in 2008. While our cash balances earning interest were higher in the first quarter of 2009, as compared to the same period in 2008, interest rates decreased, and the interest earned on our cash balances remained relatively flat for the first three months of 2009 as compared to the first three months of 2008.

Interest Expense

For the three month period ended March 31, 2009, we incurred interest expense of $1.1 million as compared to $0.3 million for the same period in 2008. In the first quarter of 2009, we incurred interest on borrowings of $105.0 million outstanding under the $125.0 million long-term revolving line of credit financing arrangement we entered into in August 2008. The interest rate applicable to the borrowed amount is based, at our option, on the prime rate, one-month LIBOR rate, three-month LIBOR rate, six-month LIBOR rate or 12-month LIBOR rate at the initial debt draw date and interest rate contract end date plus an applicable margin. The applicable margin is based on our leverage ratio and as of March 31, 2009 was 2.0%. The leverage ratio, as defined in the credit agreement, is the ratio of (i) funded debt to (ii) earnings before interest, taxes, depreciation and amortization plus or minus certain other adjustments, for the four consecutive fiscal quarters as of the last day of each current fiscal quarter. The effective interest rate for the first quarter of 2009 was 3.66%.

In the first quarter of 2008 we incurred interest expense on borrowings under the $45.0 million short-term financing arrangement we entered into in February 2008 and repaid in May 2008.

Provision for Income Taxes

In the quarter ended March 31, 2009, the Company recorded income tax expense of $0.7 million as compared to income tax expense of $1.8 million for the first quarter of 2008. The difference in the expense, quarter over quarter, is primarily due to the tax effect of share-based compensation shortfalls recorded in the first quarter of 2009 of $0.5 million and the accrual of tax, interest and penalties 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”) recorded in the first quarter of 2008 of $1.5 million.

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LIQUIDITY AND CAPITAL RESOURCES

Cash and marketable securities at March 31, 2009 were $111.9 million representing a $3.4 million increase from December 31, 2008. During the three month period ended March 31, 2009, operating activities provided $19.7 million of cash. Cash flow from operating activities reflected income generated from operations of $16.9 million, after adjusting for non-cash items of $17.8 million, which included depreciation and amortization, stock compensation, provision for bad debt, non-cash deferred tax provision, gain on sale of assets, loss on investments, and other reconciling items. Cash flow from operating activities after non-cash items, described above, for the three month period ended March 31, 2009 as compared to the same period in 2008 increased by $2.9 million primarily due to higher revenues and increased cash collections in 2009.

Net changes in operating assets and liabilities contributed $2.8 million to reconcile net income to cash provided by operating activities. This primarily comprises the following changes in working capital from December 31, 2008:

• a decrease in accounts receivable of $3.7 million related to cash collections that were greater than current period billings and revenue recognized;

• an increase in prepaid expenses and other current assets of $1.5 million related to timing of cash payments;

• a decrease in accounts payable and other current liabilities of $6.6 million related to timing of cash payments;

• an increase in accrued compensation of $7.5 million due primarily to an accrual of $4.1 million related to restructuring severance activity in 2009 and an increase in the payroll accrual of $2.8 million related to timing of the last pay period in the first quarter of 2009; and

• a decrease in deferred revenue of $0.8 million due to recognition of software license and maintenance fees greater than those billed and unrecognized.

Investing activities used $16.3 million of cash which included $2.8 million related to prior year acquisitions, $7.3 million of capital expenditures and $7.2 million for investment in software development, partially offset by $0.8 million received as additional earn out on the December 2007 disposition of our CPMRC business and $0.2 million of principal received for a bond that matured in the first quarter of 2009.

Financing activities provided cash inflow of $0.3 million. We received $0.1 million from stock option exercises. Stock-option exercises continue to subside due to the downturn in the economy and related decrease in our stock price. The amount of cash that will be provided by future stock option exercises is uncertain. We also received $0.2 million from employees related to our employee stock purchase plan.

Future Capital Requirements

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. As of March 31, 2009, our principal source of liquidity is our cash and cash equivalents balances of $111.9 million. We also have $18.1 million available for borrowings under the $125.0 million credit facility. We believe that our current cash and cash equivalents combined with our anticipated cash flows from operations and available borrowings under our credit facility will be sufficient to fund our current operations and capital requirements for the next twelve months.

As of March 31, 2009, $58.3 million of our money market funds held at Evergreen Investments have been guaranteed by the U.S. Treasury Money Market Guarantee Program. The plan ensures that if a participating fund’s share value declines under $1.00 and a decision is made to liquidate by the fund’s Board of Trustees, the U.S. Treasury would cover any shortfall between the share price at the time of liquidation and $1.00 for investors as of September 19, 2008. This guarantee is effective until September 18, 2009.

As of March 31, 2009, the Company held approximately $116.6 million par value of investments in auction-rate securities (“ARS”) of which $36.3 million was purchased through UBS Financial Services (“UBS”) and $80.3 million was purchased through Goldman Sachs. As of March 31, 2009, our ARS purchased through UBS are comprised of $32.2 million triple-A

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rated pools of student loans and $4.1 million “A3” rated pools of student loans, and our ARS purchased through Goldman Sachs are comprised of $64.8 million triple-A rated pools of student loans and $15.5 million “B3” rated pools of student loans. These investments have long-term nominal maturities for which the interest rates are supposed to be reset through a Dutch auction each month. Prior to February 2008, monthly auctions historically provided a liquid market for these securities. However, in February 2008, the broker-dealers managing the Company’s ARS portfolio experienced failed auctions in which the amount of ARS submitted for sale exceeded the amount of purchase orders. Our ARS continued to fail to settle at auctions through the first quarter of 2009. The Company continues to earn interest on these investments at the contractual rate.

On November 12, 2008, we entered into a settlement agreement with UBS pursuant to which the Company (1) received the right (the “put option”) to sell its ARS, originally purchased through UBS, at par value, to UBS between June 30, 2010 and July 2, 2012 and (2) gave UBS the right to purchase the ARS, originally purchased through UBS, from the Company any time after the acceptance date of the settlement agreement as long as the Company receives the par value of the securities.

As of March 31, 2009, the Company has recorded these investments, including the put option, at their estimated fair value of $105.2 million. All of our ARS were at an unrealized loss position as of March 31, 2009. Due to events in the credit markets, quoted prices in active markets are not readily available at this time. The Company estimated the fair value of these ARS and the put option as of March 31, 2009 based on various factors such as credit quality, duration, insurance wraps, assumptions about future cash flows and likelihood of redemption. We accounted for illiquidity by using a discount rate within the valuation, with an additional spread representing the additional required rates of return investors would have for certain securities to hold those securities in an illiquid environment.

The Company has accounted for the put option as a freestanding financial instrument and elected to record the value under the fair value option of SFAS No. 159. This resulted in the recording of a $0.4 million adjustment to the asset with a corresponding charge to earnings for the decrease in the value of the put option for the three month period ended March 31, 2009. The Company has classified the related UBS purchased auction rate securities as trading securities pursuant to SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities” (“SFAS 115”). The Company recorded a $0.2 million unrealized gain to earnings for the change in fair value of the ARS purchased through UBS for the three month period ended March 31, 2009. The Company expects that the future changes in the fair value of the put option will generally offset the fair value movements in the related UBS purchased ARS. The underlying credit quality of UBS will impact the future value of the put option and could cause the put option to decrease in fair value and not offset the change in fair value of the UBS purchased ARS. We have recorded a temporary loss on the ARS purchased through Goldman Sachs of $10.6 million, as of March 31, 2009 in accumulated other comprehensive income, reflecting the decline in the fair value of these securities, as these securities remain classified as available for sale.

In evaluating our ARS purchased from Goldman Sachs for other than temporary impairment, as of March 31, 2009, we considered several factors in accordance with FSP FAS 115-1 and Staff Accounting Bulletin (“SAB”) Topic 5M including the duration of time and the extent to which the market value has been less than cost, the credit ratings of the securities, the Company’s intent and ability to retain the investments for a period of time sufficient to allow for any anticipated recovery in market value, and the cause of the impairment. We believe these investments continue to be of high credit quality, and we currently have the intent and ability to hold the ARS until such time as successful auctions occur, secondary markets allow for a sufficient price to recover substantially all of our par value, or our put option becomes exercisable. Accordingly, we have classified these securities as long-term investments in our consolidated balance sheet. The Company has concluded that no other-than-temporary impairment losses occurred for the three month period ended March 31, 2009. The Company will continue to analyze its ARS purchased from Goldman Sachs each reporting period for impairment and it may be required to record an impairment charge in the consolidated statement of operations if the decline in fair value of the Goldman Sachs purchased ARS are determined to be other-than-temporary.

In April 2009, the FASB issued FSP SFAS 115-2 and SFAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments.” This FSP changes existing guidance for determining whether an impairment of debt securities is other than temporary. The FSP requires other than temporary impairments to be separated into the amount representing the decrease in cash flows expected to be collected from a security (referred to as credit losses) which is recognized in earnings and the amount related to other factors which is recognized in other comprehensive income. This noncredit loss component of the impairment may only be classified in other comprehensive income if the holder of the security concludes that it does not intend to sell and it will not more likely than not be required to sell the security before it recovers its value. If these conditions are not met, the noncredit loss must also be recognized in earnings. When adopting the FSP, an entity is required to record a cumulative effect adjustment as of the beginning of the period of adoption to reclassify the noncredit component of a previously recognized other than temporary impairment from retained earnings to accumulated other comprehensive

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income. FSP SFAS 115-2 and SFAS 124-2 is effective for interim and annual periods ending after June 15, 2009. Management is currently evaluating the requirements of the FSP and has not yet determined the impact on Eclipsys’ condensed consolidated financial statements, which could be material.

SFAS 157 “Fair Value Measurements”

Due to events in credit markets, quoted prices in active markets are not readily available at this time for our ARS and put option; therefore, the Company estimated the fair value of these ARS and the put option as of March 31, 2009 based upon various factors such as credit quality, duration, insurance wraps, assumptions about future cash flows and likelihood of redemption. We accounted for illiquidity by using a discount rate within the valuation, with an additional spread representing the additional required rates of return investors would have for certain securities to hold those securities in an illiquid environment. The assumptions that were used to estimate the fair value of the securities were highly subjective and therefore considered Level 3 unobservable inputs in the fair value hierarchy. The fair value of these assets represents $105.2 million or 50.7% of total assets measured at fair value in accordance with SFAS 157. 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 K – Fair Value Measurement.

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, 2008 filed with the SEC on February 24, 2009.

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 March 31, 2009 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. 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 the impact of 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 in which the amount of ARS submitted for sale exceeded the amount of related purchase orders. Our ARS continued to fail to settle at auctions through the first quarter of 2009. The Company continues to earn interest on these investments at the contractual rate, and the ARS that the Company holds have not been placed on credit watch by credit rating agencies. The average interest rate earned on these investments for the three months ended March 31, 2009 was 2.2%. As of March 31, 2009, the Company held approximately $116.6 million par value of investments in ARS of which $36.3 million was purchased through UBS Financial Services (“UBS”) and $80.3 million was purchased through Goldman Sachs. As of March 31, 2009, our ARS purchased through UBS are comprised of $32.2 million triple-A rated pools of student loans and $4.1 million “A3” rated pools of student loans, and our ARS purchased through Goldman Sachs are comprised of $64.8 million triple-A rated pools of student loans and $15.5 million “B3” rated pools of student loans.

During the year ended December 31, 2008 and the first quarter of 2009, we adjusted the carrying amount of our ARS to estimated fair market value. If uncertainties in the credit and capital markets continue and these markets deteriorate further or the Company experiences any additional 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.

As discussed further in Liquidity and Capital Resources, in November 2008 we entered into a put option to sell our UBS purchased ARS to UBS between June 30, 2010 and July 2, 2012. Associated with this put, we classified $32.4 million of our ARS as trading as of December 31, 2008. This classification results in fair value changes recorded to income. Although the underlying credit quality of UBS will impact the future value of the put option and could cause the put option to decrease in fair value and not offset the change in fair value of the UBS purchased ARS, the Company expects that the future changes in the fair value of the put option will be generally offset by the fair value movements in the related ARS.

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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 declined 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
0.0%		—		—		—
0.5%		475		525		575
1.0%		950		1,050		1,150
1.5%		1,425		1,575		1,725
2.0%		1,900		2,100		2,300
2.5%		2,375		2,625		2,875

We estimate that a one-percentage point decrease in interest rates for our long-term investment securities portfolio as of March 31, 2009 would have resulted in a decrease in interest income of $0.3 million for a three month period or $1.1 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. Hypothetical interest rates used in the table above are significantly lower than the analysis in the first quarter of 2008 due to changes in market conditions.

Based upon our balance of cash and cash equivalents as of March 31, 2009, a decrease in interest rates of 1.0% would cause a corresponding decrease in our annual interest income of approximately $1.1 million, based upon simplifying assumptions as described above.

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. As of March 31, 2009, borrowings under the credit facility totaled $105.0 million. The interest rate applicable to the borrowed amount is based, at our option, on the prime rate, one-month LIBOR rate, three-month LIBOR rate, six-month LIBOR rate or 12-month LIBOR rate at the initial debt draw date and interest rate contract end date plus an applicable margin. The applicable margin is based on our leverage ratio and as of March 31, 2009 was 2.0%. The leverage ratio, as defined in the credit agreement, is the ratio of (i) funded debt to (ii) earnings before interest, taxes, depreciation and amortization plus or minus certain other adjustments, for the four consecutive fiscal quarters as of the last day of each current fiscal quarter. As of March 31, 2009, our weighted average interest rate was calculated at 3.66%. Based on borrowings of $105.0 million, as of March  31, 2009, for each percentage point increase in the interest rate, annual interest expense would increase $1.0 million.

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 March 31, 2009. 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

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effectively under all circumstances. Based upon the evaluation described above our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2009, 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 March 31, 2009 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. The occurrence of 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 our annual report on Form 10-K for the year ended December 31, 2008 a risk factor titled “The HITECH Act will result in new business imperatives and failure to provide our clients with health information technology systems that are “certified” under the HITECH Act could result in breach of some client obligations and put us at a competitive disadvantage,” related to costs and risk associated with the need to comply with the provisions of the American Recovery and Reinvestment Act of 2009, or ARRA, that call for health information technology systems that are “certified” according to technical standards developed under the supervision of the Secretary of Health and Human Services.

In addition, we updated the risk factor titled “Changes in federal and state regulations relating to patient data could increase our compliance costs, depress the demand for our software and impose significant software redesign costs on us” to reflect provisions of ARRA subject us to certain provisions of the Health Insurance Portability and Accountability Act of 1996, or HIPAA, as well as additional data restrictions and disclosure and reporting requirements.

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 additional problems that prevent our software from operating properly. Client environments and practice patterns are widely divergent; consequently, there is significant variability in the configuration of our software from client to client, and we are not able to identify, test for, and resolve in advance all issues that may be encountered by clients. 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 we have enough experience with the software to have addressed issues that are discovered in disparate client circumstances and environments, and for new installations, until potential issues associated with each new client’s particular environment and configurability are identified and addressed. Due to our ongoing development efforts, at any point in time, we generally have significant software that could be considered relatively new and therefore more vulnerable to these risks. 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 is introduced into 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.

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

We face intense competition in the marketplace and are confronted by rapidly changing technology, evolving user needs and the frequent introduction of new software and enhancements by our competitors to meet the needs of clients. As a result, 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. 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. This can take longer than we expect. We may encounter unanticipated difficulties that require us to re-direct or scale-back our efforts and we may need to modify our plans in response to changes in client requirements, market demands, resource availability, regulatory requirements, or other factors. These factors place significant demands upon our software development organization, require complex planning and decision making, and can result in acceleration of some initiatives and delay of others. If we do not manage our development efforts efficiently and effectively, we may fail to produce, or timely produce, software that responds appropriately to our clients’ needs, or we may fail to meet client expectations regarding new or enhanced features and functionality.

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. In addition, 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 healthcare information technology market requirements and standards in a timely manner, demand for our software could suffer.

Market changes 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. If our products rapidly become obsolete, it makes it more difficult to recover the cost of product development, which could adversely affect our operating results.

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 that we use, 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, loss of functionality, client costs associated with platform changes, unanticipated development expenses and harm our reputation, and would cause our financial results and business to suffer.

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 software. 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 liabilities 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, fines, penalties and other liabilities for violation of applicable laws or regulations, significant costs for remediation and re-engineering to prevent future occurrences, and serious harm to our reputation.

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RISKS RELATED TO SALES AND IMPLEMENTATION OF OUR SOFTWARE

Our sales process can be long and expensive and may not result in revenues, and the length of our sales and implementation cycles may adversely affect our operating results.

Some of our software, particularly our hospital enterprise software, requires significant capital expenditures by our clients and involves long sales and implementation cycles. The sales cycle for our hospital software ranges from 6 to 18 months or more from initial contact to contract execution. Our hospital 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. Our sales efforts may not result in a sale, in which case, we will not realize any revenues to offset these expenditures. If we do complete a sale, accounting principles may not allow us to recognize revenues in the same periods in which corresponding sales and implementation expenses were incurred. Additionally, any decision by our clients to delay purchasing or implementing our software or reduce the scope of products purchased would likely adversely affect our results of operations.

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

Some of our software, particularly our hospital enterprise software, is complex, requires a lengthy and expensive implementation process, and requires our clients to make a substantial commitment of their own time and resources and to make significant organizational and process changes. If our clients are unable to fulfill their implementation responsibilities in a timely fashion, our projects may be delayed or become less profitable. 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 successful and timely completion of implementation and successful use of our software in live environments by clients who are willing to become reference sites for us.

Implementation costs may exceed our 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. As a result, 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. Similarly, our operating results will be negatively affected if our personnel take longer than budgeted to implement our solutions.

Some of our software is complex and highly configurable and many clients value our ability to adapt the software to their specific needs. However, this high degree of configurability has resulted in significant implementation costs, which have made our offering too expensive for some clients. Our ability to reach our goals for expansion into smaller clients and in the international market, and to sell to clients with budgetary constraints, depends upon our ability to develop less costly ways of implementing our most complex software.

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Our earnings can vary significantly depending on periodic software revenues.

In any financial reporting period, the periodic software revenues include traditional license fees associated with sales made in the financial reporting period, 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. Although these periodic software revenues represent a relatively small portion of our overall revenue in any period, they generally have high margins, and are therefore an important element of our earnings in any period. These periodic revenues can fluctuate because economic conditions, market factors, client-specific situations, and other issues can result in significant variations in the type and magnitude of sales and other contract and client activity in any period. These variations make it difficult to predict the nature and amount of these periodic revenues. We believe economic conditions, and resulting cash conservation by clients, adversely affected our periodic software revenues in the second half of 2008, and if these conditions and client reactions continue in 2009, or if for other reasons periodic software revenues in any period decline from prior periods or fall short of our expectations, our earnings 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 and other liabilities.

We provide remote hosting services that involve running our software and third-party vendors’ 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 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 fail to fulfill our contractual service commitments, which could result in a loss of revenue and liability under our client contracts. Furthermore, 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 and other liabilities 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 transition difficult, including geographic dispersion of client facilities and variation in client needs, IT environments, and system configurations. Also, under some circumstances, we may incur significant costs as a successor employer by inheriting obligations of that client for which we may not be indemnified. 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 operating results will be adversely affected.

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Inability to obtain consents needed from third party software providers 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.

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 and enhanced 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., and 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. In addition, 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 clients using legacy software to our newer generation software, but such conversions may require significant investments of time and resources by clients. As the marketplace becomes more saturated and technology advances, there will be competition to retain existing clients, particularly those using older generation products, and loss of this business would adversely affect our results of operations.

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 and payor requirements have reduced reimbursements to healthcare organizations. For example, the Inpatient Prospective Payment System rules, published by the Centers for Medicare & Medicaid in the U.S., identified several “hospital-acquired conditions” for which treatment will no longer be reimbursed by Medicare. Federal, state and local governments and private payors are imposing other requirements that may have the effect of reducing payments to healthcare organizations. 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 financial market disruptions have adversely affected the availability of external financing, and led to tighter lending standards and interest rate concerns. These factors can reduce access to cash for our clients and potential clients. In addition, many of our clients’ budgets rely in part on investment earnings, which decrease when portfolio investment values decline. Economic factors are causing many clients to take a conservative approach to investments, including the purchase of systems like we sell. 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 fall short of our expectations. 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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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, each of 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.

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 our products. Healthcare delivery and ultimately the functionality demands of the electronic health record, or EHR, 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 us to undertake 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 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.

U.S. government initiatives, such as the HITECH Act described below, 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, including Medicare and Medicaid reimbursement. Various state and foreign governments are also developing similar standards which may be different and even more demanding.

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. 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. 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.

The HITECH Act will result in new business imperatives and failure to provide our clients with health information technology systems that are “certified” under the HITECH Act could result in breach of some client obligations and put us at a competitive disadvantage.

The HITECH Act, which is a part of the American Recovery and Reinvestment Act of 2009, provides financial incentives for hospitals and doctors that are “meaningful EHR users,” which includes use of health information technology systems that are “certified” according to technical standards to be developed under the supervision of the Secretary of Health and Human Services. In addition, the HITECH Act imposes certain requirements upon governmental agencies to use, and require health care providers, health plans, and insurers contracting with such agencies to use, systems that are certified according to such standards. This has at least four important implications for us. First, we will have to further invest in development of our applicable clinical software so that it can be used by clients to achieve compliance with these standards. Second, because the HITECH Act authorizes provider incentive payments to be made available beginning in calendar year 2011 and some lead time is required to implement the technologies and for clients to satisfy any associated use requirements, the work to comply with the standards will need to be done quickly and consequently may displace other important initiatives. Third, new client

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prospects are requiring us to agree that our software will be certified according to applicable HITECH technical standards so that, assuming clients satisfy the meaningful use and other requirements of the HITECH Act, they will qualify for available incentive payments. We plan to meet these requirements as part of our normal software maintenance obligations, and failure to comply could result in contract breach. Fourth, if for some reason we are not able to comply with these standards in a timely fashion after their promulgation, we will be at a competitive disadvantage to other providers of health information technology who do comply.

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 and standards, 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. In 2008 we settled related stockholder derivative litigation. 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. We believe the settlement of the derivative suit effectively ends litigation of this matter. However, as with other aspects of our financial statements, the results of our stock option review are subject to regulatory review and additional claims and there is a risk that we may have to further restate prior period results or incur additional costs as a result of such a review or proceeding.

We have a history of operating losses and future profitability is not assured.

We experienced operating losses in the years ended December 31, 2003 through 2006. Although we reported operating income for the years ended December 31, 2007 and 2008, we may incur losses in the future, and it is not certain that we will sustain or increase our recent profitability.

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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;

• variations in periodic software license revenues;

• 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;

• investment required to support our international expansion efforts;

• 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, and current economic conditions are motivating some clients to prefer subscription contracting to traditional licenses, which can result in commensurate decreases in, or failure to achieve our expectations for, in-period license revenue and associated margin. 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.

In addition, prices for our common stock may be influenced by investor perception of us and our industry in general, research analyst recommendations, and our ability to meet or exceed quarterly performance expectations of investors or analysts.

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, declining general economic conditions 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 may negatively affect our revenues and profitability in future quarters. In addition, we may be unable

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to rapidly adjust our cost structure to compensate for 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, 2008, approximately 40% of our revenues were attributable to our 20 largest clients. In addition, approximately 39% of our accounts receivable as of December 31, 2008 were attributable to 20 clients. One client represented 10.7% 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 invested in auction rate securities may not be liquid or accessible for in excess of 12 months, and our auction rate securities may experience further fair value adjustments or other-than-temporary declines in value, which would adversely affect our financial condition, cash flow and reported earnings.

Our long-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. The ratings on some of the ARS in our portfolio have been downgraded, and there may be further deterioration in creditworthiness in the future. As of December 31, 2008, we recorded changes in fair value of these securities of $8.8 million in accumulated other comprehensive income and $3.9 million as a charge to earnings. We reevaluate the fair value of these securities on a quarterly basis. See Note B – “Recently Issued Accounting Pronouncements” and Note E – “Investments” in Notes to the Consolidated Financial Statements for further information. If uncertainties in the credit and capital markets continue, these markets deteriorate further or we experience further deterioration in creditworthiness on any investments in our portfolio, funds associated with these securities may not be liquid or available to fund current operations for in excess of 12 months. This could result in further fair value adjustments or other-than-temporary impairments in the carrying value of our investments, which could negatively affect our financial condition, cash flow and reported earnings.

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, providing for a senior secured revolving credit facility in the aggregate principal amount of $125 million. This credit facility is subject to certain financial ratio and other covenants that could restrict our ability to conduct business as we might otherwise deem to be in our 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.

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

The U.S. and international credit markets 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 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.

Although 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 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. In addition, if credit is available, 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. Alternatively, we may be forced to obtain additional financing by selling equity, and this could be dilutive to our existing stockholders.

RISKS OF LIABILITY TO THIRD PARTIES

Our software and content are used by clinicians in the course of treating patients. 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 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. 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.

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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 are unable or unwilling 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 any or 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 identify and 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, including as a result of loss of customers or personnel of the target.

• The identification, acquisition and integration of acquired businesses require substantial attention from management. The diversion of management’s attention and any difficulties encountered in the transition process could hurt our business.

• The identification, acquisition and integration of acquired businesses requires significant investment, including to harmonize product and service offerings, expand management capabilities and market presence, and improve or increase development efforts and software features and functions.

• 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 known and unknown liabilities.

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

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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 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/or

• 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 increase our compliance costs, 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 or costly to apply.

Federal regulations under the Health Insurance Portability and Accountability Act of 1996, or HIPAA, and related laws and regulations, 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 and entities providing certain services to these organizations. The American Recovery and Reinvestment Act of 2009, or ARRA, includes provisions specifying additional HIPAA requirements for such organizations, including more detailed penalty and enforcement provisions and provisions specifying additional data restrictions, and disclosure and reporting requirements. The HIPAA standards, as modified by ARRA, require, among other things, transaction formats and code sets for electronic health transactions; protect individual privacy by limiting the uses and disclosures of individually identifiable health information; 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; and require notification to individuals in the event of a security breach with respect to unsecured protected health information. Most of our clients are covered by these regulations and require that our software and services adhere to HIPAA standards. In addition, ARRA includes provisions that apply several of HIPAA’s security and privacy requirements to us in our role as a “business associate” to certain of the organizations mentioned above, and business associates will now also be subject to certain penalties and enforcement proceedings for violations of applicable HIPAA standards. Any failure or perception of failure of our software or services to meet HIPAA standards and related regulations could expose us to certain notification, penalty and/or enforcement risks and 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, and we may be required to provide 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 us and our clients.

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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. In the future, 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.

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.

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, 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 stockholder rights plan 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.

We are also subject to provisions of Section 203 of the Delaware General Corporation Law which prohibits us from engaging in any business combination with an interested stockholder for a period of three years from the date the person became an interested stockholder, unless certain conditions are met. These provisions make it more difficult for stockholders or potential acquirers to acquire us without negotiation and may apply even if some of our stockholders consider the proposed transaction beneficial to them. For example, these provisions might discourage a potential acquisition proposal or tender offer, even if the acquisition proposal or tender offer is at a premium over the then current market price for our common stock. These provisions could also limit the price that investors are willing to pay in the future for shares of our common stock.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The following table sets forth information with respect to purchases by Eclipsys of its equity securities registered pursuant to Section 12 of the Exchange Act during the quarter ended March 31, 2009:

	(a)		(b)		(c)	(d)
Period	Total Number of Shares of Common Stock Purchased		Average Price Paid Per Share of Common Stock		Total Number of Shares of Common Stock Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares of Common Stock that May Yet Be Purchased Under the Plans or Programs
January 1-31, 2009	309	(1)	$	13.26	—	—
February 1-28, 2009	32,624	( 1)		8.74	—	—
March 1-31, 2009	—			—	—	—
Total	32,933		$	8.78	—	—

⁽¹⁾ These shares were tendered to the Company by employees holding common stock initially issued to them in the form of restricted stock awards in order to reimburse the Company for income tax deposits paid by the Company on their behalf in respect of taxable income resulting from scheduled vesting of restricted shares.

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ITEM 6. EXHIBITS

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 *	Employment Agreement between the Registrant and John E. Deady dated December 22, 2005			Filed herewith (1)
10.2 *	Agreement re Specified Acts between the Registrant and John E. Deady dated December 22, 2005			Filed herewith (1)
31.1	Certification of R. Andrew Eckert			Filed herewith
31.2	Certification of W. David Morgan III			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 plan or arrangement.

⁽¹⁾ Confidential treatment for these exhibits has expired; therefore, these exhibits are being re-filed in their entirety. These exhibits were originally filed on March 7, 2006 with the Registrant’s annual report on Form 10-K for the year ended December 31, 2005. The Employment Agreement was subsequently amended on February 7, 2008. See Exhibit 10.3 filed on May 12, 2008 with the Registrant’s quarterly report on Form 10-Q for the three month period ended March 31, 2008.

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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: May 7, 2009

ECLIPSYS CORPORATION

Registrant

/s/    W. David Morgan III

W. David Morgan III

Chief Financial Officer

(Principal Financial and Accounting Officer)

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EX-10.1

EXHIBIT 10.1

This Employment Agreement was originally filed on March 7, 2006 with Eclipsys Corporation’s annual report on Form 10-K for the year ended December 31, 2005. Confidential treatment for this Employment Agreement has expired; therefore, this Employment Agreement is being re-filed in its entirety. This Employment Agreement was subsequently amended on February 7, 2008. See Exhibit 10.3 filed on May 12, 2008 with Eclipsys Corporation’s quarterly report on Form 10-Q for the three month period ended March 31, 2008.

EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”) is entered into by and between Eclipsys Corporation, a Delaware corporation (the “Company”) and John E. Deady, an individual (the “Executive”), effective immediately upon the signatures of the parties below, with the Executive’s employment commencing on January 9, 2006 (such commencement of employment being the “Effective Date”).

WHEREAS, the Company desires to employ the Executive, and the Executive desires to be employed by the Company, on the terms set forth herein;

NOW THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties to this Agreement, the parties agree as follows:

Section 1 - Employment.

(a) The Company shall employ Executive as of the Effective Date. Executive will serve as the Company’s Executive Vice President – Sales & Marketing, and in that capacity shall (i) have the customary powers, responsibilities and authorities of an executive officer of the Company and such other powers, responsibilities and authorities as may be delegated to Executive by the Company’s Chief Executive Officer (the “CEO”) or the Company’s Board of Directors (the “Board”) from time to time, and (ii) report to, and be subject to review and control by, the CEO. Executive shall devote his reasonable best efforts to the performance of his duties and responsibilities hereunder.

(b) Nothing in this Agreement shall preclude Executive from engaging in charitable and community affairs; from managing any passive investment (i.e., an investment with respect to which Executive is in no way involved with the management or operation of the entity in which Executive has invested) made by him in publicly traded equity securities or other property (provided that no such investment may exceed five percent (5%) of the equity of any entity, without the prior approval of the Board); or from serving as a member of boards of directors or as a trustee of any other corporation, association or entity, to the extent that any of the above activities do not interfere with his ability to discharge his duties hereunder and the subject entity does not directly compete with the Company, and provided that Executive will not serve as a director of any for-profit entity without approval of the Board.

Section 2 - Term of Employment. Executive’s employment is at-will, subject to the severance benefits specified herein. The period from the Effective Date until the date Executive’s employment terminates is referred to herein as the “Term of Employment”.

Section 3 - Compensation.

(a) Salary. During the period from the Effective Date through December 31, 2006 (the “Initial Period”), the Company shall pay the Executive at the annualized rate of $450,000.00 (“Base Salary”) in accordance with the ordinary payroll practices of the Company, and subject to all applicable federal, state and local withholding and reporting requirements. The Executive’s Base Salary shall not be decreased during the Initial Period. During the Term of Employment, the Board or the Compensation Committee of the Board (the “Compensation Committee”) shall review, and may, subject to the immediately preceding sentence and subject to Executive’s right to terminate employment for Good Reason pursuant to Section 6(a) as a result of any reduction in Base Salary, adjust the Executive’s Base Salary annually, in accordance with the Company’s customary procedures and practices for reviewing compensation of senior executives. In the event the Base Salary is so adjusted, the adjusted amount shall become the Base Salary for purposes of this Agreement.

(b) Bonus Plan. Executive shall be eligible to participate in the Company’s standard bonus plan for executive officers, subject to all terms and conditions of such plan. The executive bonus plan will be established and may be modified from time to time by the CEO, the Board or the Compensation Committee of the Board (the “Compensation Committee”). Executive’s annual target bonus will be $200,000 (the “Target Bonus”), but except as set forth in the following sentence no bonus payments are guaranteed and all bonus payments will be contingent upon achievement of such Company and individual performance targets and management objectives (including objectives specific to Executive, objectives common to other executives as well, and Company objectives) as may be established by the CEO, the Board or the Committee. However, notwithstanding the foregoing, without regard to Executive’s performance against any bonus plan, Executive shall receive the Target Bonus for 2006, payable $50,000 by April 15, 2006 if Executive is employed continuously as the Company’s Executive Vice President from the Effective Date until March 31, 2006, and $150,000 at the time 2006 bonuses are paid to other executive officers and consistent with the ordinary payroll practices of the Company, if Executive is employed continuously as the Company’s Executive Vice President from the Effective Date until December 31, 2006. The Board or Compensation Committee may provide in any year’s bonus plan that Executive may earn more than the Target Bonus upon achievement of specified performance criteria, but in no event will Executive’s cash bonus for any year exceed two times the Target Bonus. Executive’s bonuses will be earned as of December 31 of each year, if and to the extent that performance criteria applicable to that year’s bonus plan are met, and paid thereafter consistent with the timing of payment of bonuses to other executives. All bonus payments shall be subject to all applicable federal, state and local withholding and reporting requirements.

Section 4 - Employee Benefits.

(a) Employee Retirement Benefit Programs, Welfare Benefit Programs, Plans and Practices. The Company shall provide Executive with coverage during the Term of Employment under any retirement benefit programs, welfare benefit programs, and other compensatory and benefit

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programs, plans and practices, that the Company makes generally available to its senior executives, including, but not limited to, its life and short- and long-term disability insurance, hospitalization and major medical insurance, the Company’s 401(k) Plan, Employee Stock Purchase Plan, dental insurance, directors and officers liability insurance, and any other nonqualified compensation program (including deferred compensation or supplemental retirement programs) as in effect from time to time.

(b) Vacation. Executive shall be entitled to five weeks of paid vacation each calendar year, which shall be taken at such times as are consistent with the Executive’s responsibilities hereunder; provided, however, subject to applicable law, that the Executive shall not be entitled to carry over unused vacation from year to year in an amount exceeding that which the Executive would be entitled to carry over in accordance with the Company’s standard vacation policy as applied to employees of the Executive’s longevity with the Company.

(c) Stock Options and Restricted Stock Grants. As a material inducement to Executive’s entering into employment with the Company, the Company is granting to Executive as inducement grants under NASD Rule 4350(i)(1)(A)(iv), effective as of the Effective Date, (1) a non-qualified stock option to purchase 400,000 shares of the Company’s common stock at an exercise price equal to the closing price of the common stock on Nasdaq on the trading day immediately preceding the Effective Date, and (2) a restricted stock grant of 100,000 shares of the Company’s common stock, for which the Executive must pay an initial price of $.01 per share (together, the “Initial Grants”). The terms of these stock options are specified in a Notice of Grant being issued to Executive and the Company’s 2005 Inducement Grant Stock Incentive Plan, and the terms of these shares of restricted stock are specified a Restricted Stock Agreement between the Company and Executive, a Notice of Grant being issued to Executive, and in the Company’s 2005 Inducement Grant Stock Incentive Plan (collectively, the “Equity Documents”). The forms of the Equity Documents are attached as Exhibits A-1 through A-4 to this Agreement. The Initial Grants are also subject to certain provisions of this Agreement, and the Agreement re Specified Acts being entered into between the Company and Executive concurrently with this Agreement in the form of Exhibit B to this Agreement (the “Agreement re Specified Acts”). The Initial Grants are considered to be multiple-year awards and thus regular additional annual equity awards should not be anticipated even if other executives receive annual equity awards.

(d) Other Benefits. Executive will be entitled to reimbursement of reasonable expenses incurred by him for an annual physical examination, to the extent such an examination is not otherwise covered or provided by the health insurance or health benefits provided by the Company to Executive pursuant to Section 4(a) above; and reimbursement of up to $25,000 in legal expenses incurred by Executive in negotiation and preparation of his initial employment documents, together with a gross-up if necessary so that net of any income taxes payable on reimbursement of such legal fees, Executive’s expense for these legal expenses is effectively covered.

Section 5 - Expenses. Subject to prevailing Company policy or such guidelines as may be established by the CEO or the Board or Compensation Committee from time to time, the Company shall reimburse the Executive for all reasonable expenses incurred by the Executive in carrying out his duties.

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Section 6 - Termination of Employment.

(a) Termination Without Cause or Termination for Good Reason. Subject to Section 6(i), if Executive’s employment is terminated by the Company for any reason other than Cause (as defined in Section 6(c)), Executive’s Disability (as defined in Section 6(e)), or Executive’s death, or if Executive’s employment is terminated by Executive for Good Reason (as defined in Section 6(a)(2)), then the Company shall pay Executive (x) the Accrued Amounts (as defined below) and (y) subject to the limitations described in this Agreement, the Severance Package. The payment of the Severance Package to Executive under this Section 6(a) shall (i) be contingent upon the execution by Executive of a general release in favor of the Company in substantially the form attached hereto as Exhibit C, provided that if changes or expansions of relevant laws and regulations would result in Exhibit C in the form thereof as of the date of this Agreement failing to achieve the intent thereof as reflected by the form thereof as of the date of this Agreement (the “Initial Intent”), and if it is possible to modify Exhibit C so as to effect the Initial Intent notwithstanding such changes or expansions of relevant laws or regulations, then Exhibit C will be modified to the extent necessary to preserve the Initial Intent (the “Release”); (ii) constitute the sole remedy of Executive in the event of a termination of Executive’s employment in the circumstances set forth in this Section 6(a); and (iii) be subject to the Agreement re Specified Acts. Except as expressly provided herein or in the Agreement re Specified Acts or in another agreement between the Company and Executive, the Severance Package shall not be subject to any duty to mitigate damages by Executive, nor any set off or reduction due to Executive’s post-termination employment, provided such post-termination employment does not contravene any agreement between the Company and Executive. The Accrued Amounts shall be payable in a lump sum within ten (10) days of termination of employment, or earlier if required by applicable law.

(1) For purposes of this Agreement, the “Accrued Amounts” shall mean Executive’s earned but unpaid Base Salary, any declared but unpaid bonus, any accrued but unused vacation and any other earned but unpaid amounts payable to him hereunder, in each case as accrued through the last day of his actual employment by the Company.

(2) For purposes of this Agreement, a termination of employment by Executive for “Good Reason” shall be a termination by Executive following the occurrence of any of the following events unless the Company has cured as provided below:

(A) Subject to Section 6(d)(2), removal from the position of Executive Vice President of the Company or any material diminution in Executive’s duties, responsibilities, authority, or participation in management, except for Cause or following Executive’s death or Disability, provided that a change in Executive’s duties that is approved by the Board or Compensation Committee and that is commensurate with his role as an Executive Vice President of the Company will not constitute Good Reason;

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(B) A reduction in the Base Salary or Target Bonus then in effect or a material reduction in the other benefits provided to Executive by the Company;

(C) Any material breach by the Company of this Agreement or any other legal obligation owed by the Company to Executive;

(D) Failure of any successor of the Company to assume this Agreement as required by Section 11; or

(E) A required relocation of Executive’s primary residence other than as described in Section 8(c).

Executive must notify the Company in writing specifically identifying any event constituting Good Reason within thirty (30) days after Executive becomes aware of such event or such event shall not constitute Good Reason for purposes of this Agreement; provided that the Company shall have thirty (30) days from the date of such notice to cure the Good Reason event. A termination by Executive following cure shall not be a termination for Good Reason. A failure of Executive to notify the Company after the first occurrence of an event constituting Good Reason shall not preclude any subsequent occurrences of such event (or similar event) from constituting Good Reason.

(3) For purposes of this Agreement, “Severance Package” shall mean:

(A) Base Salary continuation for eighteen (18) months following the date of termination at Executive’s annual Base Salary rate in effect on the date of termination, subject to all applicable federal, state and local withholding and reporting requirements. These salary continuation payments shall be paid in accordance with usual Company payroll practices.

(B) A bonus equal to one hundred fifty percent (150%) of Executive’s Target Bonus in effect on the date of termination (but not less than $200,000), payable in equal installments over the eighteen (18) month period described in Section 6(a)(3)(A), subject to the same withholding and reporting requirements. In addition, to the extent not included in the Accrued Amounts, Executive shall receive a pro rata bonus for the bonus period during which the date of termination occurs calculated at one hundred percent (100%) of the Target Bonus then in effect, multiplied by a fraction the numerator of which is the number of days that Executive was employed during such bonus term and the denominator of which is 365. Such prorated bonus shall be paid in accordance with the Company’s customary practices for payment of executive bonuses but with no additional performance requirements or contingencies.

(C) For the avoidance of confusion, the parties acknowledge that in the event Executive terminates his employment for Good Reason as a result of a

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decrease in his Base Salary or Target Bonus as contemplated in clause (B) of Section 6(a)(2), then the Base Salary and Target Bonus used for purposes of the calculation of the Severance Package shall be the Base Salary and Target Bonus in effect immediately prior to such reduction.

(D) Executive shall be entitled to twelve (12) months of vesting of all stock, stock options and other equity-based awards granted to him, including the Initial Grants, in addition to vesting that had occurred at the date of termination (i.e., vesting as would have occurred if Executive had remained employed until the first anniversary of the date of termination of his employment), provided (i) that if the Severance Package becomes payable as a result of a termination of employment occurring before June 1, 2006, then in lieu of the 12 months of vesting of restricted stock included in the Initial Grants as described above, Executive shall be entitled to vesting of 20% of the restricted stock included in the Initial Grants, plus an additional 1.667% of the restricted stock included in the Initial Grants for each complete calendar month, if any, that elapses from the date of this Agreement until the date of termination of employment, and (ii) provided further that if the Severance Package becomes payable as a result of a termination of employment occurring before February 1, 2006, then in lieu of the 12 months of vesting of the stock options included in the Initial Grants as described above, Executive shall be entitled to vesting of 20.0% of the stock options included in the Initial Grants.

(E) Continuation of benefits under any life, group health, and dental insurance benefits substantially similar to those which Executive (and, if applicable, his family) was receiving immediately prior to termination of employment until the earlier of:

(i) the end of the eighteen (18) month period following the date of termination, or

(ii) the date on which Executive becomes eligible to receive substantially similar benefits under any plan or program of any other employer.

The continuing coverage provided under this Section 6(a)(3)(E) is subject to the availability of such continuation under the terms of the applicable plan documents and all provisions of applicable law, including the requirements of the federal “COBRA” law, 29 U.S.C. § 1161 et seq. with respect to group health and dental insurance. If Executive is not eligible for such continued coverage under one of the Company-provided benefit plans noted in this paragraph (E) that he was participating in during his employment, the Company shall pay the Executive the cash equivalent of the cost of replacement insurance for the duration of the applicable period, up to a maximum of the Company’s cost of providing the coverage before the termination of employment, which payments shall be made pro-rata in accordance with the Company’s customary payroll practices.

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(4) To the extent that this Employment Agreement is treated as a nonqualified deferred compensation arrangement within the meaning of Section 409A of the Internal Revenue Code (“Section 409A”), neither the Company nor Executive may accelerate the timing of the payments under this Section 6(a) (for example, no part of the Severance Package may be paid in a lump sum at the time of termination) unless such acceleration does not trigger the application of interest and penalty taxes under Section 409A. In addition, to the extent that this Employment Agreement is treated as a nonqualified deferred compensation arrangement within the meaning of Section 409A and the Treasury Regulations under Section 409A require a delay in the commencement of any payments under the Severance Package due to Executive’s status as a “specified employee”, the Severance Package payments shall be delayed to the minimum extent and in the minimum amount necessary so as to comply with the Code and any regulations thereunder and avoid interest and penalties, and otherwise paid on the schedule set forth in this Section 6(a).

(b) Voluntary Termination by Executive Without Good Reason. If Executive terminates his employment with the Company without Good Reason, then the Company shall pay Executive only the Accrued Amounts in a lump sum within ten (10) days of termination of employment, or earlier if required by applicable law. Retirement shall be considered a termination of employment by Executive without Good Reason.

(c) Termination for Cause. If Executive’s employment is terminated for Cause, the Company shall pay Executive only the Accrued Amounts in a lump sum within ten (10) days of termination of employment, or earlier if required by applicable law. As used herein, the term “Cause” shall be limited to the following, and to the causes described in Section 8(b):

(1) Executive’s conviction of or plea of guilty or nolo contendere to a felony under the laws of the United States or any state thereof or any other jurisdiction in which the Company conducts business;

(2) Executive’s willful misconduct or gross negligence in the performance of his duties that causes material harm to the Company;

(3) Executive’s willful and continued failure to follow the reasonable and lawful instructions of the Board;

(4) Executive’s willful and continued neglect of duties (other than any such neglect resulting from incapacity of Executive due to physical or mental illness); or

(5) a material breach of this Agreement by Executive;

provided, however, that Cause shall arise under items (2), (3), (4) or (5) only following thirty (30) days written notice thereof from the Company which specifically identifies such

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misconduct, failure, neglect or breach and only if Executive continues to engage in or fails to cure (if the misconduct, failure, neglect or breach can be cured) such misconduct, failure, neglect or breach during such notice period. During any such notice period, Executive shall have the right to be heard by the Board and Cause shall not be deemed to exist without a finding by a majority of the Board that Cause exists and, if the misconduct, failure, neglect or breach can be cured, has not been cured during the thirty (30) day cure period. A termination by the Company after cure shall not be a termination for Cause. A failure of the Company to notify Executive after the first occurrence of an event constituting Cause shall not preclude any subsequent occurrences of such event (or similar event) from constituting Cause.

(d) Certain Terminations Following a Change in Control. Subject to Section 6(i), in the event Executive’s employment with the Company or its successor terminates by reason of a Qualifying Termination (as defined below) within two (2) years after a Change in Control of the Company (as defined below) that occurs during the Term of Employment, then the Company shall pay to the Executive (x) the Accrued Amounts in a lump sum within ten (10) days of termination of employment, or earlier if required by applicable law, and (y) in lieu of the Severance Package, and subject to the limitations described in this Agreement, the Company shall provide the Executive the Change in Control Benefits (as defined below). The provision of the Change in Control Benefits to Executive under this Section 6(d) shall (i) be contingent upon the execution by Executive of the Release or a release in another form reasonably acceptable to the Company and Executive; (ii) constitute the sole remedy of Executive in the event of a termination of Executive’s employment in the circumstances set forth in this Section 6(d); and (iii) be subject to the Agreement re Specified Acts. In addition, all payments under this Section 6(d) are subject to the timing rules, calculations and adjustments described in Section 7. Anything in this Agreement to the contrary notwithstanding, if (q) a Change in Control occurs, (r) Executive’s employment with the Company is terminated by the Company without Cause or by Executive for Good Reason within 180 days prior to the date on which the Change in Control occurs, and (s) it is reasonably demonstrated by Executive that such termination of employment or events constituting Good Reason (u) was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or (v) otherwise arose in connection with or in anticipation of a Change in Control, then for all purposes of this Agreement such Change in Control shall be deemed to have occurred during the Term of Employment and the termination shall be deemed to have occurred after the Change in Control, so that Executive is entitled to the Change in Control Benefits. It is recognized that options and restricted stock not vested at the time of or as a result of termination of employment may be cancelled, and further that following such cancellation Executive may become entitled to vesting of those cancelled stock options or shares of restricted stock in connection with a subsequent Change in Control pursuant to this section. In that case, the Company or its successor shall deliver to Executive the consideration Executive would have received in the Change in Control for (i) the shares of restricted stock that were cancelled as if those shares had been owned by and fully vested in Executive at the time of the Change in Control, less an amount equal to the product of $.01 per share and the number of such shares to represent the par value thereof; and (ii) the stock options that were cancelled as though such options had been vested at the time of the Change in Control, to the extent that unexercised vested stock options were cashed out in the Change in Control, and otherwise for a number of shares of the Company’s

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common stock having a value at the time of the Change in Control equal to the aggregate amount by which those stock options were in-the-money at the time of the Change in Control, using for purposes of this calculation the value of a share of the Company’s common stock in the Change in Control transaction.

(1) “Change of Control Benefits” shall mean:

(A) Base Salary continuation for twenty four (24) months following the date of termination at Executive’s annual Base Salary rate in effect on the date of termination, subject to all applicable federal, state and local withholding and reporting requirements. These salary continuation payments shall be paid in accordance with usual Company payroll practices;

(B) A bonus equal to two hundred percent (200%) of Executive’s Target Bonus in effect on the date of termination, payable in equal installments over the twenty four (24) month period described in Section 6(d)(1)(A), subject to the same withholding and reporting requirements. In addition, to the extent not included in the Accrued Amounts, Executive shall receive a pro rata bonus for the bonus period during which the date of termination occurs calculated at one hundred percent (100%) of the Target Bonus then in effect, multiplied by a fraction the numerator of which is the number of days that Executive was employed during such bonus term and the denominator of which is 365. Such prorated bonus shall be paid in accordance with the Company’s customary practices for payment of executive bonuses but with no additional performance requirements or contingencies;

(C) Acceleration in full of the vesting of all stock, stock options and other equity-based awards granted to him, including the Initial Grants; and

(D) Continuation of life, group health and dental insurance benefits substantially similar to those which Executive (and, if applicable, his family) was receiving immediately prior to the Qualifying Termination until the earlier of:

(i) the end of the twenty four (24) month period following Executive’s termination of employment, or

(ii) the date on which Executive becomes eligible to receive substantially similar benefits under any plan or program of any other employer.

The continuing coverage provided under this Section 6(d)(1)(D) is subject to the availability of such continuation under the terms of the applicable plan documents and all provisions of applicable law. If Executive is not eligible for such continued coverage under one of the Company-provided benefit plans noted in this paragraph (D) that he was participating in during his

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employment, the Company shall pay Executive the cash equivalent of the cost of replacement insurance for the duration of the applicable period, up to a maximum of the Company’s cost of providing the coverage before the termination of employment, which payments shall be made pro-rata in accordance with the Company’s customary payroll practices.

(2) Qualifying Termination. For purposes of this Agreement, the term “Qualifying Termination” means a termination by the Company or its successor of Executive’s employment with the Company or its successor for any reason other than Cause, Disability or death, or a termination by Executive of Executive’s employment with Good Reason. However, if following a Change in Control the Company or its successor in the Change in Control offers to retain Executive in a Comparable Position, then Executive shall not be entitled to resign his employment for Good Reason pursuant to Section 6(a)(2)(A). For these purposes, “Comparable Position” means (i) Executive Vice President of the successor organization or the portion of the successor organization that succeeds to the business of the Company (whether organized as a subsidiary, division, or otherwise) (in either case, the “Successor Business”), or if the Successor Business does not use that title, then a title within the Successor Business’s organizational structure that is comparable to Executive Vice President in the Company’s organizational structure, with duties, responsibilities, authority and participation in management commensurate with that role, if (A) the Successor Business is the natural successor to the business of the Company following the Change in Control and continues in the same basic business as the Company; and (B) Executive’s role with the Successor Business would not result in a material diminution of the substantive operational scope of Executive’s role from the substantive operational scope of his role with the Company. In each case, it is recognized that following a Change in Control, the evolution of the Company to the Successor Business can result in various changes resulting from integration, efforts to capture synergy opportunities or address new markets, and changes in business strategy, and as a result Executive’s duties, responsibilities, authority or participation in management in a Comparable Position may not be exactly the same as his duties, responsibilities, authority or participation in management with the Company prior to the Change in Control. However, whether a role with the successor offered to Executive qualifies as a Comparable Position will be judged with a view to the overall quality of the opportunity represented by that role from a professional point of view, with the understanding that the intention of this Agreement is that a Comparable Position, in light of all relevant factors including the size and complexity of the successor organization, would not represent a material diminution to Executive in the overall quality of his professional stature, experience and opportunity compared to the professional stature, experience and opportunity represented by Executive’s role with the Company.

(3) Change of Control Defined. For purposes of this Agreement, a “Change of Control” shall have the meaning set forth in Exhibit D.

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(4) To the extent that this Employment Agreement is treated as a nonqualified deferred compensation arrangement within the meaning of Section 409A, neither the Company nor Executive may accelerate the timing of the payments under this Section 6(d) (for example, no part of the Change in Control Benefits may be paid in a lump sum at the time of termination) unless such acceleration does not trigger the application of interest and penalties under Section 409A. In addition, to the extent that this Agreement is treated as a nonqualified deferred compensation arrangement within the meaning of Section 409A and the Treasury Regulations issued under Section 409A require a delay in the commencement of any payments under the Change in Control Benefits due to Executive’s status as a “specified employee”, the Change in Control Benefit payments shall be delayed to the minimum extent necessary so as to comply with the code and any regulations thereunder and to avoid interest and penalties, and otherwise paid on the schedule set forth in this Section 6(d).

(e) Disability. In the event that Executive suffers a Disability, the Company may, in its discretion, terminate Executive’s employment hereunder. For purposes of this Agreement, “Disability” shall be defined to occur at such time as Executive becomes eligible to receive benefits under the terms of the Company’s then applicable long-term disability policy, or, in the absence of such policy, shall be defined as a physical or mental disability that prevents Executive from performing his duties under this Agreement for ninety (90) consecutive days or more, or for an aggregate of one hundred twenty (120) days in any period of twelve (12) months. The Company may only terminate Executive on account of Disability after giving due consideration to whether reasonable accommodations can be made under which Executive is able to fulfill his duties under this Agreement. The commencement date and expected duration of any physical or mental condition that prevents Executive from performing his duties hereunder shall be determined by a medical doctor mutually acceptable to Executive and the Company. In the event Executive’s employment is terminated by the Company pursuant to this Section 6(e), then the Company shall pay Executive only the Accrued Amounts in a lump sum within ten (10) days of termination of employment, or earlier if required by applicable law.

(f) Death. In the event of Executive’s death during the Term of Employment, all obligations of the Company to make any further payments, including the obligation to pay the Accrued Amounts, shall be paid to Executive’s estate, and in any event all Accrued Amounts shall be paid in a lump sum within ten (10) days of the Executive’s death, or earlier if required by applicable law. In addition, to the extent not included in the Accrued Amounts, Executive’s estate shall receive a payment or payments reflecting a pro rata bonus for Executive for the bonus period during which the date of termination pursuant to this Section 6(f) occurs calculated at one hundred percent (100%) of the Target Bonus then in effect, multiplied by a fraction the numerator of which is the number of days that Executive was employed during such bonus term and the denominator of which is 365. Such prorated bonus shall be paid in accordance with the Company’s customary practices for payment of executive bonuses but with no additional performance requirements or contingencies, provided, however, that to the extent that this Agreement is treated as a nonqualified deferred compensation arrangement within the meaning of Section 409A, the payment of such bonus may not be accelerated by either the Company or Executive unless such acceleration does not trigger the application of interest and penalty taxes under Section 409A.

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(g) Payments as Compensable Compensation. Any participation by Executive in, and any terminating distributions and vested rights under, Company-sponsored retirement or deferred compensation plans, regardless of whether such plans are qualified or nonqualified for tax purposes, shall be governed by the terms of those respective plans.

(h) Executive’s Duty to Provide Materials. Upon the termination of the Term of Employment for any reason, Executive or his estate shall surrender to the Company all computer files and electronic data and records, correspondence, letters, files, contracts, mailing lists, customer lists, advertising material, ledgers, supplies, equipment, checks, and all other materials and records of any kind that are the property of the Company or any of its subsidiaries or affiliates, that may be in Executive’s possession or under his control, including all copies of any of the foregoing.

(i) Certain Contingencies and Limitations.

(1) Notwithstanding anything herein to the contrary, Executive may lose his rights to the Severance Package or the Change in Control Benefits pursuant to the Agreement re Specified Acts.

(2) As of the date of any termination of employment as a result of which Executive would be entitled to either (i) the Severance Package or (ii) the Change in Control Benefits, the Company shall calculate the Total Equity Value, and for each Dollar by which the Total Equity Value exceeds $4.0 million, the amount of cash severance otherwise payable to Executive as part of the Severance Package or Change in Control Benefits will be reduced by one Dollar, with the total amount of such reductions spread evenly over the term that such cash severance would otherwise be payable. In addition, as of the date of any termination of employment as a result of which Executive would be entitled to the Severance Package (but not as a result of which Executive would be entitled to Change in Control Benefits), the Company shall calculate the Vested Equity Value, and for each Dollar by which the Vested Equity Value exceeds $4.0 million, the accelerated vesting of the Initial Grants or other stock options, restricted stock or other equity-based awards that would otherwise occur as a part of the Severance Package or pursuant to any plan or agreement governing such awards will be reduced by one Dollar in value, with such reductions coming first from stock options and then from restricted stock and then from other awards, and with such reductions measured by the gross spread on options that would otherwise accelerate and the gross value of shares of restricted stock or other awards that would otherwise accelerate. For these purposes, “Vested Equity Value” means (i) the value of vested restricted stock and other vested awards (other than stock options) owned beneficially by Executive, plus (ii) the spread on vested stock options owned beneficially by Executive, plus (iii) the gross proceeds received by Executive or his transferee from sales of restricted stock and payment of other awards (other than stock options) in the four-year period ending on the date of

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termination of employment, plus (iv) the amount by which gross proceeds from sales by Executive or his transferee, in the four-year period ending on the date of termination of employment, of shares obtained upon exercise of stock options exceeded the exercise price thereof, plus (v) the amount by which the value of shares obtained upon exercise of stock options and still beneficially owned by Executive or his transferee exceeds the exercise price paid for those shares. “Total Equity Value” means Vested Equity Value plus (i) the value of restricted stock and other awards (other than stock options) that would vest as a part of Severance Package or Change in Control Benefits, plus (ii) the spread on stock options that would vest as a part of Severance Package or Change in Control Benefits, calculated as the aggregate of the amount by which the value of a share of stock issuable upon exercise of each stock option vesting as part of the Severance Package or Change in Control Benefits exceeds the exercise price payable therefor. Measures of value of stock options, restricted stock and other awards will be taken at fair market value on the date of termination of employment.

(3) If any Change in Control occurs within 365 days following the date of this Agreement, or a definitive agreement for a Change in Control is signed within 365 days following the date of this Agreement and pursuant to that definitive agreement a Change in Control is subsequently consummated within 180 days following the execution thereof, and in connection with that Change in Control a Qualifying Termination occurs so that Executive would be entitled to the Change in Control Benefits, then notwithstanding any other provision of this Agreement or any other agreement between Executive and the Company or any plan pursuant to which equity awards are made to Executive, the Total Realization shall not exceed the Special Limit. If the Total Realization would otherwise exceed the Special Limit, then the Change in Control Benefits other than continuation of insurance benefits shall be reduced to the extent necessary to limit the Total Realization to the Special Limit, first by reduction of the continuation of salary, then if necessary by reduction of the continuation of bonus, then if necessary by reduction of acceleration of vesting of stock options, then if necessary by reduction of acceleration of vesting of restricted stock, and finally if necessary by reduction of vesting of any other awards. However, if the Total Realization exceeds the Special limit without any Change in Control Benefits, the Executive will not be required to make any payment to the Company in respect of that excess. For these purposes, (i) “Total Realization” means the sum of the Total Equity Value plus all cash payable as part of the Change in Control Benefits (but excluding the value of continuation of insurance benefits); (ii) “Special Limit” means $5.0 million; and (iii) the value of the Change in Control Benefits shall be the gross amount of salary continuation and bonus continuation, the gross spread on stock options that would vest as a part of the Change in Control Benefits, and the gross value of restricted stock and other awards (other than stock options) that would vest as a part of the Change in Control Benefits. Measures of value of stock options, restricted stock and other awards will be taken at fair market value on the date of termination of employment.

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Section 7 - Gross-up Payments.

(a) If Executive becomes obligated to pay any excise tax on excess parachute payments under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) or any similar or successor law or regulation, whether as a result of benefits provided to Executive under this Agreement or another agreement by or plan of the Company, the Company shall pay an additional amount (the “Gross-Up Payment”) to Executive at the time specified in the following paragraph. The Gross-Up Payment shall be equal to the amount necessary so that the net amount retained by Executive, after subtracting the parachute excise tax imposed by Section 4999 of the Code or any successor statute then in effect (the “Excise Tax”), and after also subtracting all federal, state or local income tax, FICA tax and Excise Tax on the Gross-Up Payment, shall be equal to the net amount Executive would have retained if no Excise Tax had been imposed and no Gross-Up Payment had been paid. The amount of the Gross-Up Payment shall be determined in good faith by independent accountants or tax counsel selected by the Company and acceptable to Executive, who shall apply the following assumptions: (i) Executive shall be treated as paying federal income taxes at the highest marginal rate in the calendar year in which the Gross-Up Payment is made, and (ii) Executive shall be treated as paying state and local income taxes at the highest marginal rate(s) in the calendar year in which the Gross-Up Payment is made in the locality of Executive’s residence as of the effective date of Executive’s termination or resignation, net of the maximum reduction in federal income taxes that could be obtained from deducting those state and local taxes.

(b) The Gross-Up Payment shall be made within thirty days after the event that triggered the Company’s obligation to provide the benefits upon which taxes as described in this Section 7 are payable (the “Triggering Event”), provided that if the Gross-Up Payment cannot be determined within that time, the Company shall pay Executive within that time an estimate, determined in good faith by the Company, of the minimum amount of the Gross-Up Payment and shall pay the remainder (plus interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount can be determined but in no event later than the 60th day after the Triggering Event. If the estimated payment is more than the amount later determined to have been due, the excess (plus interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall be repaid by Executive within five business days after written demand.

(c) If the actual Excise Tax imposed is less than the amount that was taken into account in determining the amount of the Gross-Up Payment, Executive shall repay at the time that the amount of the reduced Excise Tax is finally determined the portion of the Gross-Up Payment attributable to that reduction (plus the portion of the Gross-Up Payment attributable to the Excise Tax, FICA tax and federal, state and local income tax imposed on the portion of the Gross-Up Payment being repaid by Executive, to the extent the repayment results in a reduction in or refund of the Excise Tax, FICA tax or federal, state or local income tax), plus interest on the amount of the repayment at the rate provided in Section 1274(b)(2)(B) of the Code. If the actual Excise Tax imposed is more than the amount that was taken into account in determining the amount of the Gross-Up Payment, the Company shall make an additional gross-up payment in respect of such excess (plus interest at the rate provided in Section 1274(b)(2)(B) of the Code) at the time that the amount of the excess is finally determined.

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(d) Notwithstanding anything to the contrary herein, the parties agree that if the payments under this Section 7 are treated as nonqualified deferred compensation under Section 409A of the Code, the parties will negotiate this section in good faith to avoid adverse tax consequences to Executive.

Section 8 - Other Agreements.

(a) Non-Solicitation; Non-Disclosure, etc. In consideration for the provisions of this Agreement, among other things, Executive is separately entering into a Confidentiality, Non-Disclosure and Developments Agreements in the form of Exhibit E (the “Confidentiality Agreement”).

(b) No Violation of Other Agreements. Executive hereby represents that he is not bound by the terms of any agreement with any previous employer or other party to refrain from using or disclosing any trade secret or confidential or proprietary information in the course of his employment with the Company or to refrain from competing, directly or indirectly, with the business of such previous employer or any other party, except for any such agreement that could not reasonably be expected to compromise Executive’s ability to perform his duties to the Company as contemplated by this Agreement. Executive further represents that, to his knowledge and belief, he has not breached any agreement not to compete or any agreement to keep in confidence proprietary information, knowledge or data acquired by him in confidence or in trust prior to his employment with the Company, and Executive acknowledges the Company’s desire and direction that he not breach any such agreement in the performance of his services hereunder. Accordingly, the Company agrees that any failure or refusal of the Executive to perform his duties to the Company as contemplated by this Agreement shall not constitute “Cause” to the extent such failure or refusal is attributable to the Executive’s compliance with any agreement to keep in confidence proprietary information, knowledge or data acquired by him in confidence or in trust prior to his employment with the Company. Without limiting the foregoing, Executive has provided to Eclipsys an executed copy of an Agreement Respecting Non-disclosure, Non-competition and Non-solicitation with his immediately preceding employer. Executive represents that this agreement is the only agreement he has entered into with his immediately preceding employer and the only such restrictive agreement in effect with any prior employer. Executive acknowledges that under the terms of that agreement, he is required to maintain certain confidential information, which covenant he shall honor in his employment with the Company. In connection with any new duties he undertakes for Eclipsys, Executive will use his best efforts to maintain such confidentiality and notify Eclipsys when, in his judgment, he believes that any assigned task might cause a breach of such covenants. If Executive’s immediately preceding employer brings a claim against him or attempts to enjoin him from performing or continuing his duties to Eclipsys, in either case based upon an assertion of, or protection of, confidential information or trade secrets (any such claim or attempt referred to in this paragraph as an “Action”), then the Company will provide at its expense a good faith defense to Executive in the Action, which the Company shall direct and control, provided that Executive shall cooperate in such defense as reasonable and appropriate in an effort to minimize expense and delay, and provided further that the obligation of the Company to provide a defense shall not extend beyond the earlier of June 1, 2007 or the date that a court of competent jurisdiction

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finds that Executive has violated any legal or contractual obligation to any prior employer. The Company will not seek to terminate Executive’s employment with Cause solely as a result of an Action, nor shall Company deem the commencement of an Action to be a breach by Executive of this Agreement, and Company will not seek to recover from Executive any damages to Company resulting from any Action, provided that this will not limit the Company’s rights if Executive violates any legal or contractual obligation to any prior employer. If as a result of an Action a court of competent jurisdiction imposes a temporary or permanent injunction that prevents Executive from fulfilling his obligations under this Agreement, then the Company will, as part of the defense it is obligated to provide pursuant to this paragraph, undertake to have that injunction lifted, provided that if such injunction remains in effect for more than 180 days, then the Company may cease its defense of Executive and terminate Executive’s employment for Cause and without any obligation to pay any severance benefits, provided that if there has at the time of termination of employment been no finding by a court of competent jurisdiction that Executive has violated any legal or contractual obligation to any prior employer, then the Company will pay to Executive any portion of the first year guaranteed bonus that may remain unpaid at the time of termination. If as a result of an Action a court of competent jurisdiction does not enjoin Executive from fulfilling his obligations under this Agreement but imposes limitations on Executive’s work with the Company: (i) if Executive can substantially fulfill his obligations under this Agreement while complying with those limitations, then such limitations will not constitute a basis for termination of Executive’s employment by the Company with Cause or by Executive with Good Reason and Executive and the Company will cooperate in good faith to structure Executive’s role to comply with those limitations; and (ii) if Executive cannot substantially fulfill his obligations under this Agreement while complying with those limitations, then the Company may cease its defense of Executive and terminate Executive’s employment for Cause and without any obligation to pay any severance benefits, provided that if there has at the time of termination of employment been no finding by a court of competent jurisdiction that Executive has violated any legal or contractual obligation to any prior employer, then the Company will pay to Executive any portion of the first year guaranteed bonus that may remain unpaid at the time of termination

(c) Headquarters and Location and Travel. Executive currently resides in Atlanta, Georgia. The Company does not have a conventional headquarters due to distribution of its executive management. The Board and CEO will consider establishing a conventional headquarters, and if the Company establishes a conventional headquarters and the CEO or the Board determines that Executive’s relocation to that headquarters would be in the Company’s best interests, then Executive may be required to relocate his residence to the area in which the headquarters is located. If Executive is required to relocate, the Company shall provide him with executive-level relocation benefits, consistent with Company policies, designed to defray all reasonable out-of-pocket costs of the relocation incurred by Executive, provided that Executive will not be entitled to any adjustment to his compensation to defray any increase in his cost of living resulting from relocation. If Executive does not wish to relocate, and consequently he resigns or the Company terminates his employment, he will not be entitled to any severance benefits (including without limitation the Severance Package or the Change in Control Benefit, each as defined in Article 6), except that if this occurs before his first-year guaranteed bonus is paid in full then he will be entitled to any portions of his guaranteed first

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year bonus that have not been paid. Whether or not Executive relocates his residence, Executive must spend significant time traveling, as is consistent with his role and necessary or appropriate to execute fully his responsibilities.

(d) Registration. Executive will use reasonable efforts to utilize the safe harbor provided by Rule 144 under the Securities Act of 1933 to exempt from registration sales by Executive of shares derived from the Initial Grants. If and to the extent that Executive cannot implement and execute a plan to achieve reasonable liquidity from sales of shares derived from the Initial Grants pursuant to Rule 144, the Company will use reasonable efforts to provide an effective registration statement to cover sales by Executive of such shares, provided that Executive and the Company will cooperate to determine timing and duration for such registration that is not adverse to the Company’s interests.

(e) Conduct. Executive will observe the Company’s policies, conduct himself in a manner befitting an executive officer of a public company, and provide reasonable cooperation with legal authorities in any investigation or proceeding involving the Company or his service to the Company, to the extent legally required or reasonably directed by the Board.

Section 9 - Notices. All notices or communications hereunder shall be in writing, addressed as follows, or otherwise as directed in a written notice from the party wishing to make changes hereto:

To the Company:	Eclipsys Corporation
	ATTN: CEO
	Address, Telephone and Facsimile numbers then listed in the Company’s directory
with a copy to:	the Company’s General Counsel
	Address, Telephone and Facsimile numbers then listed in the Company’s directory
To the Executive:	To the address, telephone number and facsimile number then reflected in the Company’s payroll records
With a copy to:	J. Morrow Otis, Esq.
	Otis Canli & Duckworth, LLP 180 Montgomery St., Ste. 1240 San Francisco, CA 94104 Telephone (415) 362-4442 Facsimile (415) 362-7332

Any such notice or communication shall be delivered by hand or sent certified or registered mail, return receipt requested, postage prepaid, or by reputable overnight courier addressed as above (or to such other address as such party may designate in a notice duly delivered as described above), and the time of actual delivery, if delivered by hand, the next business day, if sent by overnight courier, or the third (3^rd) business day after the actual date of mailing, if sent by mail, shall constitute the time at which notice was given.

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Section 10 - Severability. If any part of this Agreement as applied to any party or to any circumstance is adjudged by a court of competent jurisdiction to be invalid, illegal, void or unenforceable for any reason, then (i) the invalidity of that part shall in no way affect (to the maximum extent permissible by law) the application of such part under circumstances different from those adjudicated by the court, the application of any other part of this Agreement, or the enforceability or invalidity of this Agreement as a whole; and (ii) such part shall be deemed amended to the extent necessary to conform to applicable law so as to be valid, legal, effective and enforceable or, if such part cannot be so amended without materially altering the intention of the parties, then such part will be stricken and the remainder of this Agreement shall continue in full force and effect.

Section 11 - Assignment and Assumption. This Agreement shall be binding upon and inure to the benefit of the heirs and representatives of Executive and the assigns and successors of the Company, but neither this Agreement nor any rights or obligations hereunder shall be assignable or otherwise subject to hypothecation by Executive (except by will or by operation of the laws of intestate succession) or by the Company, except that the Company may assign this Agreement to any successor (whether by merger, purchase or otherwise) to all or substantially all of the stock, assets or business of the Company and shall cause such successor to assume this Agreement, which assumption shall not relieve the Company of its obligations to Executive hereunder unless so agreed in writing by Executive. The Company’s successor, or the Company’s assignee following such an assignment, shall have all the rights of the Company hereunder, and Executive’s obligations hereunder will be to the successor or assignee thereafter.

Section 12 - Amendment. This Agreement may only be amended by written agreement of the parties hereto.

Section 13 - Survivorship. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations. The provisions of this Section 13 are in addition to the survivorship provisions of any other section of this Agreement.

Section 14 - Governing Law; Venue and Jurisdiction. This Agreement shall be governed by and construed under and in accordance with the laws of the State of Florida (without reference to the conflicts of law provisions thereof). Subject to the following sentence, if any judicial or administrative proceeding or claim relating to or pertaining to this Agreement is initiated by either party hereto, such proceeding or claim shall and must be filed in a state or federal court located in Palm Beach County or Miami-Dade County, Florida, and the Company and Executive each consents to the jurisdiction of such a court. If Executive brings any judicial or administrative proceeding or claim relating to or pertaining to his right to receive payment or provision of compensation (including without limitation salary, bonuses or equity-based awards) or benefits from the Company, other than a claim arising in connection with the Company’s enforcement of its rights under the Agreement re Specified Acts, such proceeding or claim may, in Executive’s discretion, be filed in a state or federal court located in district in which Executive then resides, and if so filed the Company and the Executive each consents to the jurisdiction of such a court, which shall be the exclusive jurisdiction therefor, and the Company shall not contest such jurisdiction or seek to remove the matter to any other jurisdiction.

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Section 15 - Prior Agreement; Coordination of Benefits. This Agreement including the exhibits hereto, and the indemnity provisions of the Company’s charter to the extent applicable, contain the entire understanding between the parties hereto regarding terms of Executive’s employment (other than any agreements that may be entered into after the date hereof between the Company and Executive) and supersedes in all respects any prior or other employment agreement or understanding, both written and oral. In the event of a conflict between this Agreement and any policy or plan that applies generally to employees or executives of the Company regarding compensation, employee benefits, performance bonuses, healthcare, retirement, severance, change in control, relocation, or equity programs such as Restricted Stock or Option awards, this Agreement shall control unless the generally applicable plan or program would provide a greater benefit or award to Executive, in which case the terms of such plan or program shall control over this Agreement.

Section 16 - Withholding. The Company shall be entitled to withhold from payment any amount of withholding required by law.

Section 17 - Section Headings and Construction. The headings of sections in this Agreement are provided for convenience only and will not effect its construction or interpretation. All references to “Sections” or “Exhibits” refer to the corresponding section or exhibit of this Agreement unless otherwise specified. All words used in this Agreement will be construed to be of such gender or number as circumstances require.

Section 18 - Counterparts. This Agreement may be executed in one (1) or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same Agreement.

Section 19 - Acknowledgement. Executive states and represents that he has had an opportunity to fully discuss and review the terms of this Agreement including its exhibits with an attorney. Executive further states and represents that he has carefully read this Agreement including its exhibits, understands the contents herein, freely and voluntarily assents to all of the terms and conditions hereof, and signs his name of his own free act.

Section 20 - Attorneys’ Fees. In the event that either party brings a legal action against the other in connection with the employment relationship between them, including without limitation an action to enforce this Agreement or any of the exhibits hereto, the party, if either, that is judicially determined to be the prevailing party in such action shall be entitled to recover his or its reasonable attorney’s fees and legal costs incurred in connection with such action.

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Intending to be immediately legally bound hereby, the parties have executed this Agreement on the date beside their respective signatures.

Date: December 22, 2005		Date: December 22, 2005
ECLIPSYS CORPORATION
By:	/s/    Brian W. Copple	/s/    John E. Deady
Name:	Brian W. Copple	John E. Deady
Title:	Secretary

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EXHIBIT A-1 TO EMPLOYMENT AGREEMENT

Notice of Grant of Stock Option

Notice of Grant of Stock Option Employee	Eclipsys Corporation ID: 65-0632092
John E. Deady “StreetAddress“ “CityStateZip“	Option Number: “Option Number“ Plan: 2005 Inducement Grant Stock Incentive Plan Employee ID: “IDNumber“

Effective January     , 2006 (the “Grant Date”), you have been granted a non-statutory option to buy 400,000 shares of common stock of Eclipsys Corporation (the “Company”) at an exercise price of $         per share. This option will vest and become exercisable with respect to 20% of the underlying shares on February 1, 2007 (the “First Vesting Date”); and (ii) with respect to the remaining 80% of the underlying shares in 48 equal consecutive monthly installments on the first day of each calendar month following the First Vesting Date, provided that vesting will not occur if you are not employed with the Company (as defined in the Plan) (or serving as a member of the Company’s Board of Directors) on the scheduled vesting date.

The option is granted under and governed by the terms and conditions of this Notice, the Company’s 2005 Inducement Grant Stock Incentive Plan (the “Plan”), the Employment Agreement between you and the Company dated January     , 2006 (the “Employment Agreement”), the Agreement re Specified Acts between you and the Company dated January     , 2006 (the “Agreement re Specified Acts”), and any other applicable written agreement between you and the Company. The agreements referenced in this paragraph are referred to in this Notice as the “Applicable Agreements .” By your acceptance of this option, and also by its exercise, you agree to such terms and conditions and confirm that your receipt and exercise of this option is voluntary.

Unless otherwise provided in the Plan or the Applicable Agreements , (i) no vesting will occur before the First Vesting Date; (ii) vesting will occur only on scheduled vesting dates, without any ratable vesting for periods of time between vesting dates; (iii) notwithstanding the foregoing, vesting will be suspended during the portion of any leave of absence (LOA) you have in excess of 60 days, and if you return to work following such a LOA, any scheduled vesting dates that passed during the suspension of vesting will be added to the end of the original vesting schedule, with vesting on each such additional vesting date in the amount of shares not vested on the corresponding vesting date during the period of the suspension ; (iv) the Company may in its discretion cancel this option in whole or part, whether or not vested, and whether or not your employment is continuing, if you breach in any material respect any material contractual obligation or legal duty to the Company and fail to cure that breach within 30 days of receipt of written notice thereof from the Company, provided that a final determination that such a breach has occurred and not been cured within the 30 day notice period must be made by the Company’s Board of Directors after giving you an opportunity to be heard by the Board, and provided further than a failure of the Company to assert any breach shall not waive any subsequent breach; and (v) this option and the underlying shares are subject to the Agreement re Specified Acts, which may result in loss of some of all of the benefit of this grant.

Except as otherwise provided in the Plan or the Applicable Agreements, any termination of your employment for any reason or no reason will result in cessation of vesting and lapse of the option to the extent not yet vested at the time of termination (unless you are then or are becoming a member of the Board of Directors of the Company), and vested options may be exercised only for a period of 90 days following termination of your employment (or Board service if you are a member of the Company’s Board of Directors at the time of termination of your employment) (or 365 days following termination if your employment ends as a result of death).

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Unless otherwise permitted by the Company’s Board of Directors, you must pay the exercise price and meet any tax obligations in cash. The option expires on the tenth anniversary of the Grant Date or such earlier date as the Plan provides.

For purposes of this option, the definition of “Good Reason” under the Plan shall be the same as the definition of Good Reason in the Employment Agreement, notwithstanding any Plan provision to the contrary.

The Plan, the Company’s Annual Report on Form 10-K, and other filings made by the Company with the Securities and Exchange Commission are available for your review on the Company’s internal employee web site. You may also obtain paper copies of these documents upon request to the Company’s HR department.

No representations or promises are made regarding the duration of your employment or service, vesting of the option, the value of the Company’s stock or this option, or the Company’s prospects. The Company provides no advice regarding tax consequences or your handling of this option; you agree to rely only upon your own personal advisors.

ECLIPSYS CORPORATION

By:

Name

Title

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EXHIBIT A-2 TO EMPLOYMENT AGREEMENT

Notice of Grant of Restricted Stock

Notice of Grant of Restricted Stock	Eclipsys Corporation ID: 65-0632092
Employee
John E. Deady [address of recipient]	Grant Number: _________________ Plan: 2005 Inducement Grant Stock Incentive Plan Employee ID: ______________________

Effective January     , 2006 (the “Grant Date”), you have been granted the right to purchase, at a price of $0.01 per share, 100,000 shares (the “Shares” ) of common stock of Eclipsys Corporation (the “Company”). You must pay the aggregate purchase price for the Shares to the Company by cash, check or other method acceptable to the Company within 30 days of the date of this Notice or the Company may cancel the grant.

This notice is a “Grant Notice” as described in the Restricted Stock Agreement between you and the Company dated January     , 2006 (the “Restricted Stock Agreement” ). This grant is made under, and this grant and the Shares are subject to and governed by the terms and conditions of, this Notice, the Restricted Stock Agreement including the restrictions on transfer set forth therein, the Company’s 2005 Inducement Grant Stock Incentive Plan (the “Plan” ), the Employment Agreement between you and the Company dated January     , 2006 (the “Employment Agreement”), the Agreement re Specified Acts between you and the Company dated January     , 2006 (the “Agreement re Specified Acts” ), and any other applicable written agreement between you and the Company. The agreements referenced in this paragraph are referred to in this Notice as the “Applicable Agreements .” By your acceptance and payment for the Shares, you agree to such terms and conditions and confirm that your receipt of and payment for the Shares is voluntary.

For purposes of this Notice, “Vesting Date” means each June 1 and December 1. Subject to the Applicable Agreements, 26.666% of the total number of Shares shall vest on June 1, 2007 (the “First Vesting Date”), and an additional 10% of the total number of Shares shall vest on each of the seven Vesting Dates next succeeding the First Vesting Date, and the final 3.334% of the total number of Shares shall vest on June 1, 2011.

Unless otherwise provided in the Plan or the Applicable Agreements, (i) no Shares will vest before the First Vesting Date; (ii) vesting of Shares will occur only on Vesting Dates, without any ratable vesting for periods of time between Vesting Dates; (iii) notwithstanding the foregoing, vesting will be suspended during the portion of any leave of absence (LOA) you have in excess of 60 days, and if you return to work following such a LOA, any Vesting Dates that passed during the suspension of vesting will be added to the end of the original vesting schedule, with vesting on each such additional Vesting Date in the amount of shares not vested on the corresponding Vesting Date during the period of the suspension, contingent upon your continued employment; (iv) the Company may in its discretion cancel this grant in whole or part, whether or not vested, and whether or not your employment is continuing, and repurchase the cancelled Shares you own on the date of the breach (whether or not vested) at the purchase price you paid, if you breach in any material respect any material contractual obligation or legal duty to the Company and fail to cure that breach within 30 days of receipt of written notice thereof from the Company, provided that a final determination that such a breach has occurred and not been cured within the 30 day notice period must be made by the Company’s

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Board of Directors after giving you an opportunity to be heard by the Board, and provided further that a failure of the Company to assert any breach shall not waive any subsequent breach; and (v) the Shares are subject to the Agreement re Specified Acts, which may result in loss of some of all of the benefit of this grant.

Except as otherwise provided in the Plan or the Applicable Agreements, any termination of your employment for any reason or no reason will result in cessation of vesting, cancellation of this grant, and forfeiture to the Company of any Shares not vested at the time your employment terminates (unless you are then or are becoming a member of the Board of Directors of the Company).

For purposes of this grant and the Shares, the definition of Good Reason under the Plan shall be the same as the definition of Good Reason in the Employment Agreement, notwithstanding any Plan provision to the contrary.

The Plan, the Company’s Annual Report on Form 10-K, and other filings made by the Company with the Securities and Exchange Commission are available for your review on the Company’s internal employee web site. You may also obtain paper copies of these documents upon request to the Company’s HR department.

No representations or promises are made regarding the duration of your employment or service, vesting of the Shares, the value of the Company’s stock or this grant, or the Company’s prospects. The Company provides no advice regarding tax consequences or your handling of the Shares; you agree to rely only upon your own personal advisors.

ECLIPSYS CORPORATION

By:

Name & Title

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EXHIBIT A-3 TO EMPLOYMENT AGREEMENT

Restricted Stock Agreement

RESTRICTED STOCK AGREEMENT

This Restricted Stock Agreement (this “Agreement”) is made as of January     , 2006 by Eclipsys Corporation, a Delaware corporation (“Eclipsys”) and John E. Deady (“Recipient”) to govern awards of restricted stock by Eclipsys to Recipient made from time to time pursuant to Grant Notices (as defined below) that reference this Agreement as governing the awards reflected therein.

1. Grants of Restricted Stock. From time to time in its discretion, Eclipsys may grant and issue to Recipient shares of Eclipsys’s common stock that are subject to the restrictions described in, and other provisions of, this Agreement (the “Restricted Stock”). No grants of Restricted Stock are promised by this Agreement. Each grant of Restricted Stock will be documented by a written notice delivered by Eclipsys to Recipient (a“Grant Notice”) stating: (i) that the Restricted Stock described therein is subject to this Agreement, (ii) the number of shares of Restricted Stock subject to the grant, (iii) the schedule and any other conditions for vesting of the Restricted Stock, and (iv) such other terms and conditions applicable to the Restricted Stock as Eclipsys may determine. As a condition to each grant of Restricted Stock, Recipient is required to pay to Eclipsys $.01 by cash or check for each share of Restricted Stock (the “Acquisition Consideration”).

2. Governing Plan. The Restricted Stock shall be granted pursuant to and (except as specifically set forth herein or in another written agreement between Eclipsys and Recipient) subject in all respects to the applicable provisions of the Eclipsys Corporation 2005 Stock Incentive Plan (or, for inducement grants made in connection with commencement of Recipient’s employment, the Eclipsys Corporation 2005 Inducement Grant Stock Incentive Plan) or its successor plan (the “Plan”), which are incorporated herein by reference. Terms not otherwise defined in this Agreement have the meanings ascribed to them in the Plan.

3. Restrictions on the Restricted Stock.

(a) Limitation on Transfer. No share of Restricted Stock (including any shares received by Recipient with respect to shares of Restricted Stock as a result of stock dividends, stock splits or any other form of recapitalization or a similar transaction affecting Eclipsys’s securities without receipt of consideration) may be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, alienated or encumbered unless and until the conditions to vesting of that share set forth in the Grant Notice are met and any additional requirements or restrictions contained in this Agreement, the Grant Notice or the Plan have been satisfied, terminated or expressly waived by Eclipsys in writing. However, this will not prohibit nominal transfers of Restricted Stock for estate planning purposes that do not effect a change in beneficial ownership, if the transferee agrees in writing to the terms of this Agreement. Satisfaction of the conditions to vesting set forth in the Grant Notice and any additional requirements or restrictions contained in this Agreement, and the resulting removal of the restrictions imposed hereunder from particular shares of Restricted Stock, is also referred to as “vesting” of those shares and shares from which the restrictions have been removed are referred to as “vested.”

(b) Cancellation of Restricted Stock. Notwithstanding Section 3(a), but subject to the Plan, any applicable Grant Notice, and any other separate written agreement between Eclipsys and Recipient, if any Cancellation Event occurs, then (i) vesting of any shares of Restricted Stock originally scheduled to vest after the time that Cancellation Event occurred will cease; (ii) any grant insofar as it relates to Restricted Stock that has not yet vested will be cancelled; (iii) unvested Restricted Stock will be forfeited to Eclipsys and all rights of Recipient as a stockholder of such shares will cease; (iv) Eclipsys shall be obligated to pay to Recipient, by cash or equivalent or by cancellation of amounts owed by Recipient to Eclipsys or any Affiliate, the Acquisition Consideration per share

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previously received from Recipient in respect of all shares of Restricted Stock that are forfeited to Eclipsys; and (v) Recipient shall have no rights to or in respect of shares of Restricted Stock that are forfeited to Eclipsys except the right to receive the Acquisition Consideration in respect thereof. In case of a Cancellation Event, any partially vested share will be rounded up to the nearest whole share for purposes of determining the number of shares that are forfeited to Eclipsys. For these purposes, if Recipient is an employee of Eclipsys or any of its present or future parent or subsidiary corporations (each an “Affiliate”) as defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”), a “Cancellation Event” means, and shall be deemed to occur upon, the cessation of Recipient’s employment with Eclipsys or any of its Affiliates or its successor (other than in situations in which the Recipient is or is becoming a member of the Board of Directors of Eclipsys) for any reason, including without limitation resignation by Recipient with or without good reason, or termination of employment by Eclipsys or any Affiliate or its successor with or without cause. If Recipient is a member of the Board of Directors of Eclipsys, a Cancellation Event means, and shall be deemed to occur upon, cessation of Recipient’s service as a director of Eclipsys, unless at the time of such cessation Recipient is then an employee of Eclipsys or any of its Affiliates, in which case Recipient shall thereafter be treated as an employee for these purposes.

4. Voting and Other Rights. During the period prior to vesting, except as otherwise provided herein, Recipient will have all of the rights of a stockholder with respect to all of the Restricted Stock, including without limitation the right to vote such Restricted Stock and the right to receive all dividends or other distributions with respect to such Restricted Stock. In connection with the payment of such dividends or other distributions, Eclipsys will be entitled to deduct from any amounts otherwise payable by Eclipsys to Recipient (including without limitation salary or other compensation), except to the extent prohibited by applicable law or regulation, any taxes or other amounts required by any governmental authority to be withheld and paid over or deposited to such authority for Recipient’s account.

5. Handling of Shares.

(a) Certificates or Book Entries. Eclipsys may in its discretion issue physical certificates representing Restricted Stock, or cause the Restricted Stock to be recorded in book entry form and reflected in records maintained by or for Eclipsys. Each certificate or data base entry representing any unvested portion of any Restricted Stock may be endorsed with a legend substantially as set forth below, as well as such other legends as Eclipsys may deem appropriate to comply with applicable laws and regulations:

The securities evidenced by this certificate are subject to certain limitations on transfer and other restrictions as set forth in that certain Restricted Stock Agreement, dated as of January     , 2006, between Eclipsys and the holder of such securities, the Eclipsys Corporation 2005 Stock Incentive Plan or 2005 Inducement Grant Stock Incentive Plan (copies of which are available for inspection at the offices of Eclipsys), and the notice of grant applicable to the securities.

(b) Escrow. With respect to each unvested share of Restricted Stock (including any shares received by Recipient with respect to shares of Restricted Stock that have not yet vested as a result of stock dividends, stock splits or any other form of recapitalization or a similar transaction affecting Eclipsys’s securities without receipt of consideration), the Secretary of Eclipsys, or such other escrow holder as the Secretary may appoint, will retain physical custody of any certificate representing such share until such share vests.

(c) Delivery of Certificates. As soon as practicable after the vesting of any Restricted Stock and upon request by Recipient, but subject to Section 5(d), Eclipsys will deliver to Recipient or Recipient’s designee a certificate(s) free of restrictive legends representing such vested Restricted Stock, or cause appropriate book entry or other electronic changes to be made to reflect Recipient’s ownership of such vested Restricted Stock free of restrictions, in any case net of the number of shares withheld by Eclipsys in payment of tax pursuant to Section 6(a).

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(d) Conditions to Vesting. At the time for vesting of any shares of Restricted Stock, and as a condition to vesting, Recipient must, if requested by Eclipsys, make appropriate representations in a form satisfactory to Eclipsys that such Restricted Stock will not be sold other than (A) pursuant to an effective registration statement under the Securities Act of 1933, as amended, or an applicable exemption from the registration requirements of such Act; (B) in compliance with all applicable state securities laws and regulations; and (C) in compliance with all terms and conditions of the Plan, the applicable Grant Notice, any applicable policy of Eclipsys or any of its Affiliates, and any other written agreement between Recipient and Eclipsys or any of its Affiliates.

6. Tax Matters.

(a) Recipient’s Tax Obligations. The vesting of Restricted Stock generally results in taxable income for employees and is subject to appropriate income tax withholding, deposits, or other deductions required by applicable laws or regulations. Subject to any separate written agreement between Recipient and Eclipsys, Recipient and Recipient’s successors will be responsible for all income and other taxes payable as a result of grant or vesting of Restricted Stock or otherwise in connection with this Agreement. All obligations of Eclipsys or its Affiliates to pay tax deposits to any federal, state or other taxing authority as a result of grant or vesting of Restricted Stock will result in a commensurate obligation of Recipient to reimburse Eclipsys or its Affiliate the amount of such tax deposits. Such obligation of Recipient shall, unless otherwise specified in the applicable Grant Notice or in a separate written agreement between Eclipsys and Recipient, be satisfied by the Recipient forfeiting and Eclipsys deducting and retaining from the shares vesting at any particular time that number of shares with a value equal to the amount of the required minimum tax withholdings that Eclipsys or its Affiliate is required to pay as a result of such vesting, with such value measured by the same value per share used by Eclipsys or its Affiliate to determine its tax deposit obligation and based on the minimum statutory withholding rates for federal and state income and payroll tax purposes that are applicable to supplemental wages. If Eclipsys or its Affiliate is required to pay additional tax deposits after the initial issuance to Recipient of the net number of vested shares, Eclipsys or its Affiliate may require Recipient to make up the difference in cash. If the tax deposits paid are less than Recipient’s tax obligations, Recipient is solely responsible for any additional taxes due. If Eclipsys or its Affiliate pays tax deposits in excess of Recipient’s tax obligations, Recipient’s sole recourse will be against the relevant taxing authorities, and Eclipsys and its Affiliates will have no obligation to issue additional shares or pay cash to Recipient in respect thereof. Recipient is responsible for determining Recipient’s actual income tax liabilities and making appropriate payments to the relevant taxing authorities to fulfill Recipient’s tax obligations and avoid interest and penalties.

(b) Section 83(b) Election. Recipient understands that Recipient may make an election pursuant to Section 83(b) of the Code (by filing an election with the Internal Revenue Service within thirty (30) days after the date Recipient acquired the Restricted Stock) to include in Recipient’s gross income the fair market value (as of the date of acquisition) of the Restricted Stock. Recipient may make such an election under Section 83(b), or comparable provisions of any state tax law, only if, prior to making any such election, Recipient (a) notifies Eclipsys of Recipient’s intention to make such election, by delivering to Eclipsys a copy of the fully-executed Section 83(b) Election Form attached hereto as Exhibit A, and (b) pays to Eclipsys an amount sufficient to satisfy any taxes or other amounts required by any governmental authority to be withheld or paid over to such authority for Recipient’s account, or otherwise makes arrangements satisfactory to Eclipsys for the payment of such amounts through withholding or otherwise. Recipient understands that if Recipient has not made a proper and timely Section 83(b) election, at the time the forfeiture restrictions applicable to the Restricted Stock lapse, Section 83 will generally provide that Recipient will recognize ordinary income and be taxed in an amount equal to the fair market value (as of the date the forfeiture restrictions lapse) of the Restricted Stock less the Acquisition Consideration paid for the Restricted Stock. For this purpose, the term “forfeiture restrictions” includes the right of Eclipsys to cancel the Restricted Stock pursuant to Section 3 of this Agreement. Recipient acknowledges that it is Recipient’s sole responsibility, and not the responsibility of Eclipsys or any of its Affiliates, to file a timely election under Section 83(b), even if Recipient requests Eclipsys or its representative to make this filing on Recipient’s behalf. Recipient is relying solely on Recipient’s advisors with respect to the decision as to whether or not to file a Section 83(b) election.

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7. Additional Agreements

(a) Independent Advice; No Representations. Recipient acknowledges that (i) Recipient was and is free to use professional advisors of Recipient’s choice in connection with this Agreement and any grant of Restricted Stock, that Recipient understands this Agreement and the meaning and consequences of receiving grants of Restricted Stock, and is entering into this Agreement freely and without coercion or duress; and (ii) Recipient has not received and is not relying, and will not rely, upon any advice, representations or assurances made by or on behalf of Eclipsys or any Affiliate or any employee of or counsel to Eclipsys or any Affiliate regarding any tax or other effects or implications of the Restricted Stock or other matters contemplated by this Agreement or any Grant Notice.

(b) Value of Restricted Stock. No representations or promises are made to Recipient regarding the value of the Restricted Stock or the business prospects of Eclipsys or any Affiliate. Recipient acknowledges that information about investment in Eclipsys stock, including financial information and related risks, is contained in Eclipsys’s SEC reports on Form 10-Q and Form 10-K, which have been made available from Eclipsys’s Human Resources department and/or on Eclipsys’s internal web site for Recipient’s review at any time before Recipient’s acceptance of this Agreement or at any time during Recipient’s employment or service. Further, Recipient understands that Eclipsys and its Affiliates and their respective employees, counsel and other representatives do not provide tax or investment advice and acknowledges Eclipsys’s recommendation that Recipient consult with independent specialists regarding such matters. Sale or other transfer of Eclipsys stock may be limited by and subject to policies of Eclipsys or its Affiliates as well as applicable securities laws and regulations.

(c) Merger, Consolidation or Reorganization. In the event of a Reorganization of Eclipsys in which holders of shares of Common Stock of Eclipsys are entitled to receive in respect of such shares any additional shares or new or different shares or securities, cash or other consideration (including, without limitation, a different number of shares of Common Stock) (“Exchange Consideration”), then Recipient will be entitled to receive a proportionate share of the Exchange Consideration in exchange for any Restricted Stock that is then still owned by Recipient and not cancelled; provided that, subject to any Grant Notice or other separate written agreement between Eclipsys and Recipient, any Exchange Consideration issued to Recipient in respect of unvested Restricted Stock will be subject to the same restrictions and vesting provisions that were applicable to the Restricted Stock in exchange for which the Exchange Consideration was issued.

(d) No Right to Continued Employment or Service; No Positive Inference. Neither this Agreement nor any grant of Restricted Stock confers upon Recipient any right to continue as an employee, director or consultant of, or in any other relationship with, Eclipsys or its Affiliates, or to any particular employment or service tenure or minimum vesting of Restricted Stock, or limits in any way the right of Eclipsys or its Affiliates to terminate Recipient’s services to Eclipsys or any of its Affiliates at any time, with or without cause. Restricted Stock is to motivate and reward future performance, and no grant of Restricted Stock will be interpreted as a reward for past performance that dictates vesting in advance of the vesting schedule specified in the applicable Grant Notice, or an indication that the Recipient has performed well or is entitled to any particular employment or service tenure.

8. General.

(a) Successors and Assigns. This Agreement is personal in its nature and Recipient may not assign or transfer Recipient’s rights under this Agreement, except as specifically provided herein or permitted by Eclipsys in writing.

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(b) Notices. Any notices, demands or other communications required or desired to be given by any party shall be in writing and shall be validly given to another party if served personally or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication shall be served personally, service shall be conclusively deemed made at the time of such personal service. If such notice, demand or other communication is given by mail, such notice shall be conclusively deemed given forty-eight (48) hours after the deposit thereof in the United States mail addressed to the party to whom such notice, demand or other communication is to be given as hereinafter set forth:

To Eclipsys:	Eclipsys, Inc.
	1750 Clint Moore Road
	Boca Raton, Florida 33487
	Attention: General Counsel
To Recipient:	At Recipient’s address of record as maintained in Eclipsys’s employment files

Any party may change its address for the purpose of receiving notices, demands and other communications by providing written notice to the other party in the manner described in this paragraph.

(c) Entire Agreement. Except as this Agreement and/or another written agreement between Eclipsys and Recipient may expressly provide otherwise, this Agreement, the Plan, and any Grant Notices constitute the entire agreement and understanding of Eclipsys (together with its Affiliates) and Recipient with respect to Restricted Stock, and supersede all prior written or verbal agreements and understandings between Recipient and Eclipsys (together with its Affiliates) relating to such subject matter. Recipient has not received and is not relying upon, and will not rely upon, any representations by any employee of or counsel to or other representative of Eclipsys or any of its Affiliates in connection with this Agreement or any grant of Restricted Stock hereunder. This Agreement may only be amended by written instrument signed by Recipient and an authorized officer of Eclipsys.

(d) Governing Law; Severability. This Agreement will be construed and interpreted under the laws of the State of Delaware applicable to agreements executed and to be wholly performed within the State of Delaware. If any part of this Agreement as applied to any party or to any circumstance is adjudged by a court of competent jurisdiction to be invalid, illegal, void or unenforceable for any reason, then (i) the invalidity of that part shall in no way affect (to the maximum extent permissible by law) the application of such part under circumstances different from those adjudicated by the court, the application of any other part of this Agreement, or the enforceability or invalidity of this Agreement as a whole; and (ii) such part shall be deemed amended to the extent necessary to conform to applicable law so as to be valid, legal, effective and enforceable or, if such part cannot be so amended without materially altering the intention of the parties, then such part will be stricken and the remainder of this Agreement shall continue in full force and effect.

(e) Remedies. All rights and remedies provided pursuant to this Agreement or by law shall be cumulative, and no such right or remedy shall be exclusive of any other. A party may pursue any one or more rights or remedies hereunder or may seek damages or specific performance in the event of another party’s breach hereunder or may pursue any other remedy by law or equity, whether or not stated in this Agreement.

(f) Interpretation. Headings herein are for convenience of reference only, do not constitute a part of this Agreement, and will not affect the meaning or interpretation of this Agreement. References herein to Sections are references to the referenced Section hereof, unless otherwise specified.

(g) Waivers; Amendments. The waiver by either party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any later breach of that provision. This Agreement may be modified only by written agreement signed by Recipient and Eclipsys.

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(h) Counterparts. This Agreement may be executed in more than one counterpart, each of which shall be deemed an original, but all of which together shall constitute but one and the same instrument. Facsimile or photographic copies of originally signed copies of this Agreement will be deemed to be originals.

ECLIPSYS CORPORATION
By:
Name:	John E. Deady
Title:

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EXHIBIT A

to Restricted Stock Agreement

ELECTION TO INCLUDE VALUE OF RESTRICTED PROPERTY

IN GROSS INCOME IN YEAR OF TRANSFER

INTERNAL REVENUE CODE § 83(b)

The undersigned hereby elects pursuant to Section 83(b) of the Internal Revenue Code with respect to the property described below, and supplies the following information in accordance with the regulations promulgated thereunder:

1. Name, address and taxpayer identification number of the undersigned:

Taxpayer I.D. No.:

2. Description of property with respect to which the election is being made:

             shares of Common Stock of Eclipsys Corporation, a Delaware corporation (the “Company”)

3. Date on which property was transferred:             

4. Taxable year to which this election relates:             

5. Nature of the restrictions to which the property is subject:

If the taxpayer’s service to the Company terminates for any reason before the Common Stock vests, the Company will repurchase the Common Stock from the taxpayer at $.01 per share. The Common Stock vests according to the following schedule:                                         

The Common Stock is non-transferable in the taxpayer’s hands, by virtue of language to that effect stamped on the stock certificate.

6. Fair market value of the property:

The fair market value at the time of transfer (determined without regard to any restrictions other than restrictions that by their terms will never lapse) of the property with respect to which this election is being made is $         per share.

7. Amount paid for the property:

The amount paid by the taxpayer for said property is $.01 per share.

8. Furnishing statement to employer:

A copy of this statement has been furnished to                                         

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Date:

Signature:                                                                              

Printed Name:

This election must be filed with the Internal Revenue Service Center with which taxpayer files his or her Federal income tax returns and must be made within thirty (30) days after receipt of the Restricted Stock. This filing should be made by registered or certified mail, return receipt requested. The taxpayer must retain two (2) copies of the completed form, one for filing with his or her Federal and state tax returns for the current tax year and an additional copy for his or her records.

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EXHIBIT A-4 TO EMPLOYMENT AGREEMENT

2005 Inducement Grant Stock Incentive Plan

ECLIPSYS CORPORATION

2005 INDUCEMENT GRANT STOCK INCENTIVE PLAN

1. Purpose

The purpose of this 2005 Inducement Grant Stock Incentive Plan (the “Plan”) of Eclipsys Corporation, a Delaware corporation (the “Company”), is to provide terms and conditions to govern inducement grants made by the Company under Section 4350(i)(1)(A)(iv) of the NASD Marketplace Rules (“Inducement Grants”). Such grants are intended to advance the interests of the Company’s stockholders by enhancing the Company’s ability to recruit, retain and motivate persons who are expected to make important contributions to the Company and by providing such persons with equity ownership opportunities and performance-based incentives that are intended to align their interests with those of the Company’s stockholders. Except where the context otherwise requires, the term “Company” shall include any of the Company’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”) and any other business venture (including, without limitation, joint venture or limited liability company) in which the Company has a controlling interest, as determined by the Board of Directors of the Company (the “Board”).

2. Eligibility

Prospective and newly hired employees of the Company are eligible to receive Inducement Grants in the form of options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards and commitments therefore (each an “Award”) under the Plan. Each person who receives an Award under the Plan is deemed a “Participant”.

3. Administration and Delegation

(a) Administration by Board of Directors. The Plan will be administered by the Board. The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency. All decisions by the Board shall be made in the Board’s sole discretion and shall be final and binding on all persons having or claiming any interest in the Plan or in any Award. No director or person acting pursuant to the authority delegated by the Board shall be liable for any action or determination relating to or under the Plan made in good faith.

(b) Appointment of Committees. To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to one or more committees or subcommittees of the Board (a “Committee”). All references in the Plan to the “Board” shall mean the Board or a Committee of the Board or the officers referred to in Section 3(c) to the extent that the Board’s powers or authority under the Plan have been delegated to such Committee or officers.

(c) Delegation to Officers. To the extent permitted by applicable law, the Board may delegate to one or more officers of the Company the power to grant Awards to employees or officers of the Company or any of its present or future subsidiary corporations and to exercise such other powers under the Plan as the Board

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may determine, provided that the Board shall fix the terms of the Awards to be granted by such officers (including the exercise price of such Awards, which may include a formula by which the exercise price will be determined) and the maximum number of shares subject to Awards that the officers may grant; provided further, however, that no officer shall be authorized to grant Awards to any “executive officer” of the Company (as defined by Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or to any “officer” of the Company (as defined by Rule 16a-1 under the Exchange Act).

4. Stock Available for Awards

(a) Number of Shares. Subject to adjustment under Section 9, Awards may be made under the Plan for 1,200,000 shares of common stock, $.01 par value per share, of the Company (the “Common Stock”). The Board may in its discretion increase the number of shares of Common Stock available for Awards under the Plan from time to time. If any Award expires or is terminated, surrendered or canceled without having been fully exercised or is forfeited in whole or in part (including as the result of shares of Common Stock subject to such Award being repurchased by the Company at the original issuance price pursuant to a contractual repurchase right) or results in any Common Stock not being issued, the unused Common Stock covered by such Award shall again be available for the grant of Awards under the Plan. However, in the case of Incentive Stock Options (as hereinafter defined), the foregoing provisions shall be subject to any limitations under the Code. SARs (as hereinafter defined) to be settled in shares of Common Stock shall be counted in full against the number of shares available for award under the Plan, regardless of the number of shares of Common Stock issued on settlement of the SAR; provided, however, that SARs to be settled only in cash shall not be so counted. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.

(b) Section 162(m) Sub-limit. Subject to adjustment under Section 9, the maximum number of shares of Common Stock with respect to which Awards may be granted to any Participant under the Plan shall be 1,000,000 per calendar year. For purposes of the foregoing limit, the combination of an Option (as hereafter defined) in tandem with an SAR shall be treated as a single Award. The per-Participant limit described in this Section 4(b)(1) shall be construed and applied consistently with Section 162(m) of the Code or any successor provision thereto, and the regulations thereunder (“Section 162(m)”).

5. Stock Options

(a) General. The Board may grant options to purchase Common Stock (each, an “Option”) and determine the number of shares of Common Stock to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable. An Option which is not intended to be an Incentive Stock Option (as hereinafter defined) shall be designated a “Nonstatutory Stock Option”.

(b) Incentive Stock Options. An Option that the Board intends to be an “incentive stock option” as defined in Section 422 of the Code (an “Incentive Stock Option”) shall only be granted to employees of Eclipsys Corporation, any of Eclipsys Corporation’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Code, and any other entities the employees of which are eligible to receive Incentive Stock Options under the Code, and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code. The Company shall have no liability to a Participant, or any other party, if an Option (or any part thereof) that is intended to be an Incentive Stock Option is not an Incentive Stock Option or for any action taken by the Board pursuant to Section 10(f), including without limitation the conversion of an Incentive Stock Option to a Nonstatutory Stock Option.

(c) Exercise Price. The Board shall establish the exercise price of each Option and specify such exercise price in the applicable option agreement; provided, however, that the exercise price shall not be less than 100% of the Fair Market Value (as defined below) at the time the Option is granted.

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(d) Duration of Options. Each Option shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable option agreement, provided, however, that no Option will be granted for a term in excess of 10 years.

(e) Exercise of Option. Options may be exercised by delivery to the Company of a written notice of exercise signed by the proper person or by any other form of notice (including electronic notice) approved by the Board together with payment in full as specified in Section 5(f) for the number of shares for which the Option is exercised. Shares of Common Stock subject to the Option will be delivered by the Company following exercise either as soon as practicable or, subject to such conditions as the Board shall specify, on a deferred basis (with the Company’s obligation to be evidenced by an instrument providing for future delivery of the deferred shares at the time or times specified by the Board).

(f) Payment Upon Exercise. Common Stock purchased upon the exercise of an Option granted under the Plan shall be paid for as follows:

(1) in cash or by check, payable to the order of the Company;

(2) except as the Board may otherwise provide in an option agreement, by (i) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price and any required tax withholding or (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price and any required tax withholding;

(3) when the Common Stock is registered under the Securities Exchange Act of 1934 (the “Exchange Act”), by delivery of shares of Common Stock owned by the Participant valued at their fair market value as determined by (or in a manner approved by) the Board (“Fair Market Value”), provided (i) such method of payment is then permitted under applicable law, (ii) such Common Stock, if acquired directly from the Company, was owned by the Participant for such minimum period of time, if any, as may be established by the Board in its discretion and (iii) such Common Stock is not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements;

(4) to the extent permitted by applicable law and by the Board, by (i) delivery of a promissory note of the Participant to the Company on terms determined by the Board, or (ii) payment of such other lawful consideration as the Board may determine; or

(5) by any combination of the above permitted forms of payment.

(g) Substitute Options. In connection with a merger or consolidation of an entity with the Company or the acquisition by the Company of property or stock of an entity, the Board may grant Options in substitution for any options or other stock or stock-based awards granted by such entity or an affiliate thereof. Substitute Options may be granted on such terms as the Board deems appropriate in the circumstances, notwithstanding any limitations on Options contained in the other sections of this Section 5 or in Section 2. Substitute Options shall not count against the overall share limit set forth in Section 4(a), except as may be required by reason of Section 422 and related provisions of the Code.

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6. Stock Appreciation Rights

(a) General. A stock appreciation right, or “SAR”, is an Award entitling the holder, upon exercise, to receive an amount in Common Stock determined by reference to appreciation, from and after the date of grant, in the fair market value of a share of Common Stock. The base price from which such appreciation is measured shall not be less than 100% of the Fair Market Value on the date of grant. The date as of which such appreciation or other measure is determined shall be the exercise date. SARs granted hereunder shall expire no later than 10 years after the date of grant.

(b) Grants. SARs may be granted in tandem with, or independently of, Options granted under the Plan.

(1) Tandem Awards. When SARs are expressly granted in tandem with Options, (i) the SAR will be exercisable only at such time or times, and to the extent, that the related Option is exercisable (except to the extent designated by the Board in connection with a Reorganization Event or a Change in Control Event) and will be exercisable in accordance with the procedure required for exercise of the related Option; (ii) the SAR will terminate and no longer be exercisable upon the termination or exercise of the related Option, except to the extent designated by the Board in connection with a Reorganization Event or a Change in Control Event and except that a SAR granted with respect to less than the full number of shares covered by an Option will not be reduced until the number of shares as to which the related Option has been exercised or has terminated exceeds the number of shares not covered by the SAR; (iii) the Option will terminate and no longer be exercisable upon the exercise of the related SAR; and (iv) the SAR will be transferable only with the related Option.

(2) Independent SARs. A SAR not expressly granted in tandem with an Option will become exercisable at such time or times, and on such conditions, as the Board may specify in the SAR Award.

(c) Exercise. SARs may be exercised by delivery to the Company of a written notice of exercise signed by the proper person or by any other form of notice (including electronic notice) approved by the Board, together with any other documents required by the Board.

7. Restricted Stock; Restricted Stock Units

(a) General. The Board may grant Awards entitling recipients to acquire shares of Common Stock (“Restricted Stock”), subject to the right of the Company to repurchase all or part of such shares at their issue price or other stated or formula price from the recipient in the event that conditions specified by the Board in the applicable Award are not satisfied prior to the end of the applicable restriction period or periods established by the Board for such Award. Instead of granting Awards for Restricted Stock, the Board may grant Awards entitling the recipient to receive shares of Common Stock to be delivered at the time such shares of Common Stock vest (“Restricted Stock Units”) (Restricted Stock and Restricted Stock Units are each referred to herein as a “Restricted Stock Award”).

(b) Terms and Conditions. The Board shall determine the terms and conditions of a Restricted Stock Award, including the conditions for repurchase and the issue price.

(c) Stock Certificates. Any stock certificates issued in respect of a Restricted Stock Award shall be registered in the name of the Participant and, unless otherwise determined by the Board, deposited by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the applicable restriction periods, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the Participant or if the Participant has died, to the beneficiary designated, in a manner

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determined by the Board, by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant’s death (the “Designated Beneficiary”). In the absence of an effective designation by a Participant, “Designated Beneficiary” shall mean the Participant’s estate.

8. Other Stock-Based Awards

Other Awards of shares of Common Stock, and other Awards that are valued in whole or in part by reference to, or are otherwise based on, shares of Common Stock or other property, may be granted hereunder to Participants (“Other Stock Unit Awards”), including without limitation Awards entitling recipients to receive shares of Common Stock to be delivered in the future. Such Other Stock Unit Awards shall also be available as a form of payment in the settlement of other Awards granted under the Plan or as payment in lieu of compensation to which a Participant is otherwise entitled. Other Stock Unit Awards may be paid in shares of Common Stock or cash, as the Board shall determine. Subject to the provisions of the Plan, the Board shall determine the conditions of each Other Stock Unit Awards, including any purchase price applicable thereto.

9. Adjustments for Changes in Common Stock and Certain Other Events

(a) Changes in Capitalization. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any distribution to holders of Common Stock other than an ordinary cash dividend, (i) the number and class of securities available under this Plan, (ii) the sub-limit set forth in Section 4(b), (iii) the number and class of securities and exercise price per share of each outstanding Option, (iv) the share- and per-share provisions of each SAR, (v) the repurchase price per share subject to each outstanding Restricted Stock Award and (vi) the share- and per-share-related provisions of each outstanding Other Stock Unit Award, shall be appropriately adjusted by the Company (or substituted Awards may be made, if applicable) to the extent determined by the Board.

(b) Reorganization and Change in Control Events

(1) Definitions

(a) A “Reorganization Event” shall mean:

(i) any merger or consolidation of the Company with or into another entity as a result of which all of the Common Stock of the Company is converted into or exchanged for the right to receive cash, securities or other property or is cancelled;

(ii) any exchange of all of the Common Stock of the Company for cash, securities or other property pursuant to a share exchange transaction; or

(iii) any liquidation or dissolution of the Company.

(b) A “Change in Control Event” shall mean:

(i) the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership of any capital stock of the Company if, after such acquisition, such Person beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) 30% or more of either (x) the then-outstanding shares of Common Stock of the Company (the “Outstanding Company Common Stock”) or (y) the combined voting power of the then-outstanding securities of the Company

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entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control Event: (A) any acquisition directly from the Company (excluding an acquisition pursuant to the exercise, conversion or exchange of any security exercisable for, convertible into or exchangeable for Common Stock or voting securities of the Company, unless the Person exercising, converting or exchanging such security acquired such security directly from the Company or an underwriter or agent of the Company), (B) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, (C) any acquisition by any corporation pursuant to a Business Combination (as defined below) which complies with clauses (x) and (y) of subsection (iii) of this definition or (D) any acquisition by General Atlantic Partners 28, L.P., General Atlantic Partners 38, L.P., General Atlantic Partners 47, L.P., GAP Coinvestment Partners, L.P. and any other entities controlled by or under common control with any of the foregoing entities, within the meaning of the Exchange Act (each such party is referred to herein as an “Exempt Person”); or

(ii) such time as the Continuing Directors (as defined below) do not constitute a majority of the Board (or, if applicable, the Board of Directors of a successor corporation to the Company), where the term “Continuing Director” means at any date a member of the Board (x) who was a member of the Board on the date of the initial adoption of this Plan by the Board or (y) who was nominated or elected subsequent to such date by at least a majority of the directors who were Continuing Directors at the time of such nomination or election or whose election to the Board was recommended or endorsed by at least a majority of the directors who were Continuing Directors at the time of such nomination or election; provided, however, that there shall be excluded from this clause (y) any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board; or

(iii) the consummation of a merger, consolidation, reorganization, recapitalization or share exchange involving the Company or a sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), unless, immediately following such Business Combination, each of the following two conditions is satisfied: (x) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors, respectively, of the resulting or acquiring corporation in such Business Combination (which shall include, without limitation, a corporation which as a result of such transaction owns the Company or substantially all of the Company’s assets either directly or through one or more subsidiaries) (such resulting or acquiring corporation is referred to herein as the “Acquiring Corporation”) in substantially the same proportions as their ownership of the Outstanding Company Common Stock and Outstanding Company Voting Securities, respectively, immediately prior to such Business Combination and (y) no Person (excluding the Exempt Persons and any employee benefit plan (or related trust) maintained or sponsored by the Company or by the Acquiring Corporation) beneficially owns, directly or indirectly, 30% or more of the then-outstanding shares of common stock of the Acquiring Corporation, or of the combined voting power of the then-outstanding securities of such corporation entitled to vote generally in the election of directors (except to the extent that such ownership existed prior to the Business Combination); or

(iv) the liquidation or dissolution of the Company.

(c) “Good Reason” shall have the meaning set forth in any employment agreement or severance agreement between the Company and the Participant, or in the absence of such a definition, shall mean any significant diminution in the Participant’s title, authority, or responsibilities from and after such Reorganization Event or Change in Control Event, as the case may be, or any reduction in the annual cash compensation payable to the Participant from and after such Reorganization Event or Change in Control Event, as the case may be.

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(d) “Cause” shall have the meaning set forth in any employment agreement or severance agreement between the Company and the Participant, or in the absence of such a definition, shall mean any (i) willful failure by the Participant, which failure is not cured within 30 days of written notice to the Participant from the Company, to perform his or her material responsibilities to the Company or (ii) willful misconduct by the Participant which affects the business reputation of the Company. The Participant shall be considered to have been discharged for “Cause” if the Company determines, within 30 days after the Participant’s resignation, that discharge for Cause was warranted.

(2) Effect on Options

(a) Reorganization Event. Upon the occurrence of a Reorganization Event (regardless of whether such event also constitutes a Change in Control Event), or the execution by the Company of any agreement with respect to a Reorganization Event (regardless of whether such event will result in a Change in Control Event), the Board shall provide that all outstanding Options shall be assumed, or equivalent options shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof); provided that if such Reorganization Event also constitutes a Change in Control Event, except to the extent specifically provided to the contrary in the instrument evidencing any Option or any other agreement between a Participant and the Company, such assumed or substituted options shall be immediately exercisable in full if, on or prior to the first anniversary of the date of the consummation of the Reorganization Event, the Participant’s employment with the Company or the acquiring or succeeding corporation is terminated for Good Reason by the Participant or is terminated without Cause by the Company or the acquiring or succeeding corporation. For purposes hereof, an Option shall be considered to be assumed if, following consummation of the Reorganization Event, the Option confers the right to purchase, for each share of Common Stock subject to the Option immediately prior to the consummation of the Reorganization Event, the consideration (whether cash, securities or other property) received as a result of the Reorganization Event by holders of Common Stock for each share of Common Stock held immediately prior to the consummation of the Reorganization Event (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if the consideration received as a result of the Reorganization Event is not solely common stock of the acquiring or succeeding corporation (or an affiliate thereof), the Company may, with the consent of the acquiring or succeeding corporation, provide for the consideration to be received upon the exercise of Options to consist solely of common stock of the acquiring or succeeding corporation (or an affiliate thereof) equivalent in value (as determined by the Board) to the per share consideration received by holders of outstanding shares of Common Stock as a result of the Reorganization Event.

Notwithstanding the foregoing, if the acquiring or succeeding corporation (or an affiliate thereof) does not agree to assume, or substitute for, such Options, or in the event of a liquidation or dissolution of the Company, the Board shall, upon written notice to the Participants, provide that all then unexercised Options will become exercisable in full as of a specified time prior to the Reorganization Event and will terminate immediately prior to the consummation of such Reorganization Event, except to the extent exercised by the Participants before the consummation of such Reorganization Event; provided, however, in the event of a Reorganization Event under the terms of which holders of Common Stock will receive upon consummation thereof a cash payment for each share of Common Stock surrendered pursuant to such Reorganization Event (the “Acquisition Price”), then the Board may instead provide that all outstanding Options shall terminate upon consummation of such Reorganization Event and that each Participant shall receive, in exchange therefor, a cash payment equal to the amount (if any) by which (A) the Acquisition Price multiplied by the number of shares of Common Stock subject to such outstanding Options (whether or not then exercisable), exceeds (B) the aggregate exercise price of such Options.

(b) Change in Control Event that is not a Reorganization Event. Upon the occurrence of a Change in Control Event that does not also constitute a Reorganization Event, except to the extent specifically provided to the contrary in the instrument evidencing any Option or any other agreement between a Participant and the Company, all Options then outstanding shall automatically become immediately exercisable in full if, on or prior to the first anniversary of the date of the consummation of the Change in Control Event, the Participant’s employment with the Company or the acquiring or succeeding corporation is terminated for Good Reason by the Participant or is terminated without Cause by the Company or the acquiring or succeeding corporation.

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(3) Effect on Restricted Stock Awards

(a) Reorganization Event that is not a Change in Control Event. Upon the occurrence of a Reorganization Event that is not a Change in Control Event, the repurchase and other rights of the Company under each outstanding Restricted Stock Award shall inure to the benefit of the Company’s successor and shall apply to the cash, securities or other property which the Common Stock was converted into or exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as they applied to the Common Stock subject to such Restricted Stock Award.

(b) Change in Control Event. Upon the occurrence of a Change in Control Event (regardless of whether such event also constitutes a Reorganization Event), except to the extent specifically provided to the contrary in the instrument evidencing any Restricted Stock Award or any other agreement between a Participant and the Company, all restrictions and conditions on all Restricted Stock Awards then outstanding shall automatically be deemed terminated or satisfied if, on or prior to the first anniversary of the date of the consummation of the Change of Control Event, the Participant’s employment with the Company or the acquiring or succeeding corporation is terminated for Good Reason by the Participant or is terminated without Cause by the Company or the acquiring or succeeding corporation.

(4) Effect on Stock Appreciation Rights and Other Stock Unit Awards. The Board may specify in an Award at the time of the grant the effect of a Reorganization Event and Change in Control Event on any SAR and Other Stock Unit Award.

10. General Provisions Applicable to Awards

(a) Transferability of Awards. Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution or, other than in the case of an Incentive Stock Option, pursuant to a qualified domestic relations order, and, during the life of the Participant, shall be exercisable only by the Participant; provided, however, that the Board may permit or provide in an Award for the gratuitous transfer of the Award by the Participant to or for the benefit of any immediate family member, family trust or family partnership established solely for the benefit of the Participant and/or an immediate family member thereof if, with respect to such proposed transferee, the Company would be eligible to use a Form S-8 for the registration of the sale of the Common Stock subject to such Award under the Securities Act of 1933, as amended; provided, further, that the Company shall not be required to recognize any such transfer until such time as the Participant and such permitted transferee shall, as a condition to such transfer, deliver to the Company a written instrument in form and substance satisfactory to the Company confirming that such transferee shall be bound by all of the terms and conditions of the Award. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees.

(b) Documentation. Each Award shall be evidenced in such form (written, electronic or otherwise) as the Board shall determine. Each Award may contain terms and conditions in addition to those set forth in the Plan.

(c) Board Discretion. Except as otherwise provided by the Plan, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award need not be identical, and the Board need not treat Participants uniformly.

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(d) Termination of Status. The Board shall determine the effect on an Award of the disability, death, retirement, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, or the Participant’s legal representative, conservator, guardian or Designated Beneficiary, may exercise rights under the Award.

(e) Withholding. Each Participant shall pay to the Company, or make provision satisfactory to the Company for payment of, any taxes required by law to be withheld in connection with an Award to such Participant. Except as the Board may otherwise provide in an Award, for so long as the Common Stock is registered under the Exchange Act, Participants may satisfy such tax obligations in whole or in part by delivery of shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their Fair Market Value; provided, however, except as otherwise provided by the Board, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income). Shares surrendered to satisfy tax withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements. The Company may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to a Participant.

(f) Amendment of Award. The Board may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option, provided that the Participant’s consent to such action shall be required unless the Board determines that the action, taking into account any related action, would not materially and adversely affect the Participant.

(g) Conditions on Delivery of Stock. The Company will not be obligated to deliver any shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations.

(h) Acceleration. The Board may at any time provide that any Award shall become immediately exercisable in full or in part, free of some or all restrictions or conditions, or otherwise realizable in full or in part, as the case may be.

(i) Performance Conditions.

(1) This Section 10(i) shall be administered by a Committee approved by the Board, all of the members of which are “outside directors” as defined by Section 162(m) (the “Section 162(m) Committee”).

(2) Notwithstanding any other provision of the Plan, if the Section 162(m) Committee determines, at the time a Restricted Stock Award or Other Stock Unit Award is granted to a Participant, that such Participant is, or may be as of the end of the tax year in which the Company would claim a tax deduction in connection with such Award, a Covered Employee (as defined in Section 162(m)), then the Section 162(m) Committee may provide that this Section 10(i) is applicable to such Award.

(3) If a Restricted Stock Award or Other Stock Unit Award is subject to this Section 10(i),

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then the lapsing of restrictions thereon and the distribution of cash or Shares pursuant thereto, as applicable, shall be subject to the achievement of one or more objective performance goals established by the Section 162(m) Committee, which shall be based on the relative or absolute attainment of specified levels of one or any combination of the following: (a) earnings per share, (b) return on average equity or average assets with respect to a pre-determined peer group, (c) earnings, (d) earnings growth, (e) revenues, (f) expenses, (g) stock price, (h) market share, (i) return on sales, assets, equity or investment, (j) regulatory compliance, (k) improvement of financial ratings, (l) achievement of balance sheet or income statement objectives, (m) total shareholder return, (n) net operating profit after tax, (o) pre-tax or after-tax income or (p) cash flow, and may be absolute in their terms or measured against or in relationship to other companies comparably, similarly or otherwise situated. Such performance goals may be adjusted to exclude any one or more of (i) extraordinary items, (ii) gains or losses on the dispositions of discontinued operations, (iii) the cumulative effects of changes in accounting principles, (iv) the writedown of any asset, and (v) charges for restructuring and rationalization programs. Such performance goals: (i) may vary by Participant and may be different for different Awards; (ii) may be particular to a Participant or the department, branch, line of business, subsidiary or other unit in which the Participant works and may cover such period as may be specified by the Section 162(m) Committee; and (iii) shall be set by the Section 162(m) Committee within the time period prescribed by, and shall otherwise comply with the requirements of, Section 162(m).

(4) Notwithstanding any provision of the Plan, with respect to any Restricted Stock Award or Other Stock Unit Award that is subject to this Section 10(i), the Section 162(m) Committee may adjust downwards, but not upwards, the cash or number of Shares payable pursuant to such Award, and the Section 162(m) Committee may not waive the achievement of the applicable performance goals except in the case of the death or disability of the Participant.

(5) The Section 162(m) Committee shall have the power to impose such other restrictions on Awards subject to this Section 10(i) as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for “performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Code, or any successor provision thereto.

11. Miscellaneous

(a) No Right To Employment or Other Status. No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award or another written agreement between the Company and the Participant.

(b) No Rights As Stockholder. Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be distributed with respect to an Award until becoming the record holder of such shares. Notwithstanding the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to such Option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then an optionee who exercises an Option between the record date and the distribution date for such stock dividend shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such Option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend.

(c) Effective Date and Term of Plan. The Plan shall become effective on the date on which it is adopted by the Board. No Awards shall be granted under the Plan after the completion of 10 years from the date on which the Plan was adopted by the Board, but Awards previously granted may extend beyond that date.

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(d) Amendment of Plan. The Board may amend, suspend or terminate the Plan or any portion thereof at any time, subject to any requirements of Section 162(m) for an Award granted to a Participant that is intended to comply with Section 162(m), and subject to any applicable laws or regulations. In addition, if at any time the approval of the Company’s stockholders is required as to any other modification or amendment, the Board may not effect such modification or amendment without such approval.

(e) Provisions for Foreign Participants. The Board may modify Awards or Options granted to Participants who are foreign nationals or employed outside the United States or establish subplans or procedures under the Plan to recognize differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employee benefit or other matters.

(f) Compliance With Code Section 409A. No Award shall provide for deferral of compensation that does not comply with Section 409A of the Code, unless the Board, at the time of grant, specifically provides that the Award is not intended to comply with Section 409A of the Code.

(g) Governing Law. The provisions of the Plan and all Awards made hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, excluding choice-of-law principles of the law of such state that would require the application of the laws of a jurisdiction other than such state.

Adopted by the Board of Directors

on October     , 2005

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EXHIBIT B TO EMPLOYMENT AGREEMENT

Agreement re Specified Acts

Agreement Re Specified Acts

This Agreement re Specified Acts is made effective as of January     , 2006 by and between Eclipsys Corporation, a Delaware corporation (hereinafter referred to collectively with any of its subsidiaries as the “Company”), and John E. Deady (“Executive”).

The Company and Executive are parties to that certain Employment Agreement of even date herewith (the “Employment Agreement”) pursuant to which the Company employs Executive as its Executive Vice President. Executive is receiving a grant of stock options to purchase up to 400,000 shares of Common Stock of the Company and a grant of 100,000 shares of Common Stock of the Company that are subject to contractual restrictions, as described in the Employment Agreement (the “Initial Grants”), and Executive may become entitled to certain severance benefits described in the Employment Agreement (the “Severance Package” or the “Change in Control Benefits”). In addition, Executive may receive additional grants of stock options, restricted stock, or other equity-based awards, and may become entitled to additional severance benefits. It is a condition of Executive’s employment that Executive enter into this Agreement with the Company. Accordingly, the Company and Executive hereby agree as follows:

1. Specified Acts.

(a) If, at any time during Executive’s employment with the Company or during the 730-day period following the termination or cessation of Executive’s employment with the Company for any reason, Executive commits any Specified Act (as defined below), then notwithstanding any agreement or plan provision to the contrary, the Company may in its discretion, at any time or from time to time during the Evaluation Period related to that Specified Act (as defined below), (i) cancel in whole or part the Initial Grants and/or any other award of stock options or restricted stock or any other award made at any time to Executive under any equity incentive plan of the Company (each an “Award”), whether or not vested, and/or (ii) rescind some or all of any vesting, exercise, payment or delivery that occurred or occurs or is scheduled to occur pursuant to the Initial Grants or any other Award within 730 days before the earlier of the Specified Act or the termination of Executive’s employment, or at any time after the Specified Act, and/or (iii) cease paying or providing any or all of the Severance Package or the Change in Control, and/or (iv) demand that Executive return to the Company any portion of the Severance Package or the Change in Control Benefits previously paid, provided that cessation of payment pursuant to item (iii) and/or demand for return pursuant to item (iv) shall only apply to portions of the Severance Package or Change in Control Benefits in excess of $150,000, which $150,000 shall be consideration for the release signed as required by the Employment Agreement as a condition to payment of the Severance Package or the Change in Control Benefits.

(b) The Company shall notify Executive in writing of any exercise of any of its rights under Section 1(a) within the Evaluation Period related to the Specified Act triggering the Company’s rights.

(c) If the Company rescinds some or all of any vesting, exercise or delivery pursuant to Section 1(a)(ii), then within ten days after receiving from the Company the notice described in Section 1(b), Executive shall be obligated to pay to the Company the gross amount of any gain realized or payment received as a result of the cancelled Award or rescinded vesting, exercise, payment or delivery. Such payment shall be made by returning to the Company all shares of capital stock that Executive purchased or otherwise received in connection with the cancelled Award or rescinded vesting, exercise, payment or delivery, or if such shares or any interest therein have been transferred by Executive, then by paying to the Company, by wire transfer of immediately available funds, the fair market value of such shares at the time of the transfer. For this purpose, in the case of publicly traded shares,

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the value of shares will be measured by the price for which Executive sold the shares in a bona fide arm’s length transaction, or if the shares or interests therein were transferred otherwise than by a bona fide arm’s length sale, then by the closing price of the shares on the Nasdaq National Market or other primary market or exchange upon which the shares trade on the trading day immediately preceding the date of the transfer. Executive will cease to have any rights under any Award, vesting, exercise, payment or delivery to the extent cancelled or rescinded pursuant to this Agreement. Any payment of the exercise price for stock options or purchase price for restricted stock previously made by Executive to the Company in connection with an Award or vesting, exercise, payment or delivery that is cancelled or rescinded pursuant to this Agreement will be returned by the Company to Executive (without interest), at the time Executive returns the shares or makes payment pursuant to Section 1(c), including, at the Company’s discretion, by offset against any amounts payable by Executive to the Company or any of the Company’s subsidiaries.

(d) If the Company demands return of previously paid portions of the Severance Package or the Change in Control Benefits pursuant to Section 1(a)(iv), then within ten days after receiving from the Company the notice described in Section 1(b), Executive shall pay to the Company, by wire transfer of immediately available funds, an amount equal to the aggregate cost to the Company of any parts of the Severance Package or the Change in Control Benefits previously provided to Executive by the Company that the Company demands be returned.

(e) Upon and as a condition to vesting, exercise, payment or delivery of shares or cash pursuant to any Award, a Recipient shall, if required by the Administrator, certify on a form acceptable to the Company that he has not committed any Specified Act. For purposes of this Agreement, the Company will be deemed to have been aware of Specified Act only after the completion of any investigation or inquiry and only when the Company has clear and convincing evidence thereof. For this purpose, suspicion is not awareness.

(f) For these purposes:

(i) “Evaluation Period” related to a Specified Act means the period beginning with that Specified Act and ending not later than the later of 365 days after such Specified Act, or, if later, 180 days after the Company became aware of such Specified Act.

(ii) “Specified Act” means Employee (A) has a Specified Relationship with a Designated Company (as those terms are defined below), or (B) violates in any material respect any material contractual obligation or legal duty to the Company and, if such violation of contractual obligation or legal duty is susceptible of cure fails to cure such violation within 30 days of written demand by the Company for cure, provided that the final determination that such a violation of contractual obligation or legal duty has occurred and not been cured within such 30-day notice period must be made by the Company’s board of directors after giving Executive an opportunity to be heard.

(iii) “Specified Relationship” with a Designated Company means acting as an owner, partner, officer, director, or employee of, or consultant or advisor (paid or unpaid) or lender to, or investor in, that Designated Company, except that ownership of not more than 1% of the outstanding stock of a Designated Company, in and of itself, will not be a Specified Relationship.

(iv) “Designated Company” means at any time of determination any of the entities listed on the Current Version of Schedule A to this Agreement and any Affiliate of any of such entities regardless of when formed. At no time may there be more than ten Designated Companies listed on Schedule A, and if any version of Schedule A lists more than ten companies, then only the first ten listed on Schedule A, reading left to right, top to bottom, will be Designated Companies pursuant to that schedule, but Affiliates of the listed entities will be Designated Companies but will not be counted for purposes of this ten-entity limit. In addition, each of the following shall be a Designated Company, in addition to the Designated Companies listed on Schedule A and not

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subject to the ten-entity limit: (i) any entity that is a successor to or transferee of any significant part of the business or assets of an entity listed on the Current Version; and (ii) any entity that first engages in competitive activity following the date of the Current Version. For this purpose, an entity first engages in competitive activity when it openly begins to provide or pursue any goods or services or line of business that is competitive in any material way with any goods or services or line of business provided or being pursued, or for which plans were being made, during Executive’s tenure with the Company. The “Current Version” of Schedule A is the version attached to this Agreement at the date of its execution unless and until Schedule A is modified as set forth in paragraph 1(f)(iv)(A) or 1(f)(iv)(B) below. The Current Version need not be the same as the list of competitors specified by the Company for any agreement entered into by the Company or any of its affiliates with any other employee that is similar to this Agreement.

(A) At any time and from time to time from the date hereof until the date seven days following the termination of Executive’s employment for any reason, but not more than once in any period of 180 days, the Company may, in its discretion, by written notice to Executive, modify the Current Version to include any company or companies that the Company in its discretion deems to be engaged in or planning any activity that is competitive with the Company’s business as conducted or planned, subject to the overall limit of ten, and that modified version of the schedule will then be the Current Version unless and until further modified pursuant to this paragraph 1(f)(iv)(A) or paragraph 1(f)(iv)(B).

(B) Not more than once in any period of 180 days, Executive may by written demand require the Company to provide an updated Current Version. In response, within seven days of receipt of Executive’s demand, the Company must deliver to Executive an updated Current Version or ratify in writing the then-existing Current Version. Any such updated Current Version may include, in the Company’s discretion, any company or companies that the Company in its discretion deems to be engaged in or planning any activity that is competitive with the Company’s business as conducted or planned, subject to the overall limit of ten. The Company may elect to deliver an updated Current Version in response to Executive’s demand even if the Company has modified the schedule in its own discretion within the preceding 180 days, but in any case the Current Version provided by the Company in response to Executive’s demand (whether updated or ratified) will trigger a new 180-day waiting period before the Company may again modify the schedule in its discretion pursuant to paragraph 1(f)(iv)(A). Any Current Version resulting from the process described in this paragraph 1(f)(iv)(B) will be the Current Version unless and until further modified pursuant to this paragraph 1(f)(iv)(B) or paragraph 1(f)(iv)(A).

(v) “Affiliate” of an entity means any controlling, controlled by or under common control with such entity.

(g) Executive understands and agrees that (i) his entering into this Agreement is a material inducement to the Company to employ him on the terms described in the Employment Agreement; (ii) the Initial Grants and any other equity that the Company may grant to Executive, the Severance Package and the Change in Control Benefits (other than the first $200,000 thereof) are intended not only to motivate and reward Executive’s performance, but also to compensate Executive for not engaging in any specified Act; (iii) Executive is not restricted by this Agreement from engaging in any Specified Act, and Executive is willing to accept the potential economic consequences under this Agreement of engaging in any Specified Act; (iv) Executive’s livelihood does not depend upon his ability to engage in any Specified Act; and (v) Executive shall not bring or participate in any action challenging the, validity, legality, effectiveness or enforceability of any part of this Agreement.

2. General Provisions.

(a) No Contract of Employment. This Agreement does not constitute a contract of employment, either express or implied, and does not imply that the Company will continue the Executive’s employment for any period of time. This Agreement shall in no way alter the Company’s policy of employment at

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will, under which both Executive and the Company remain free to terminate the employment relationship, with or without cause, at any time, with or without notice. Any change or changes in Executive’s duties, salary or compensation after the signing of this Agreement shall not affect the validity or scope of this Agreement.

(b) Entire Agreement. This Agreement sets forth the entire understanding of Executive and the Company regarding the subject matter hereof, and supersedes all prior agreements, written or oral, between the Executive and the Company relating to the subject matter hereof. However, it does not replace or supersede the Employment Agreement, any agreements documenting equity awards to Executive, any policies of the Company or agreements entered into by Executive providing for confidentiality, non-disclosure or assignment of developments, all of which remain in full force and effect. This Agreement may not be modified, changed or discharged in whole or in part, except by an agreement in writing signed by the Executive and the Company.

(c) Interpretation. If any provision of this Agreement is found by any court of competent jurisdiction to be unenforceable, it shall be interpreted to apply only to the extent that it is enforceable.

(d) Severability. If any part of this Agreement as applied to any party or to any circumstance is adjudged by a court of competent jurisdiction to be invalid, illegal, void or unenforceable for any reason, then (i) the invalidity of that part shall in no way affect (to the maximum extent permissible by law) the application of such part under circumstances different from those adjudicated by the court, the application of any other part of this Agreement, or the enforceability or invalidity of this Agreement as a whole; and (ii) such part shall be deemed amended to the extent necessary to conform to applicable law so as to be valid, legal, effective and enforceable or, if such part cannot be so amended without materially altering the intention of the parties, then such part will be stricken and the remainder of this Agreement shall continue in full force and effect.

(e) Waiver. No delay or omission by the Company in exercising any right under this Agreement will operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion is effective only in that instance and will not be construed as a bar to or waiver of any right on any other occasion.

(f) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any corporation or entity with which or into which the Company may be merged or which may succeed to its assets or business.

(g) Subsidiaries and Affiliates. Executive expressly consents to be bound by the provisions of this Agreement for the benefit of the Company or any subsidiary or affiliate thereof to whose employ the Executive may be transferred without the necessity that this Agreement be re-signed at the time of such transfer.

(h) Remedies not Limited. This Agreement and the Company’s enforcement hereof are not intended to be exclusive remedies and will not limit any other remedies that may be available to the Company at law or in equity as a result of or in connection with any violation by Executive of any contractual obligation or legal duty to the Company or any subsidiary or affiliate thereof.

(i) Governing Law, Forum and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida (without reference to its conflicts of law provisions). If any judicial or administrative proceeding or claim relating to or pertaining to this Agreement is initiated by either party hereto, such proceeding or claim shall and must be filed in a state or federal court located in Palm Beach County or Miami-Dade County, Florida, and the Company and Executive each consents to the jurisdiction of such a court.

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(j) Attorneys’ Fees. In the event that either party brings a legal action against the other in connection with this Agreement, the party, if either, that is judicially determined to be the prevailing party in such action shall be entitled to recover his or its reasonable attorney’s fees and legal costs incurred in connection with such action.

(k) Captions. The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement.

In witness whereof, the Company and Executive have entered into this Agreement as of the date above set forth.

ECLIPSYS CORPORATION
By:
Name:	R. Andrew Eckert	John E. Deady
Title:	Chairman & CEO

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Schedule A To Agreement Re Specified Acts

Designated Companies

Cerner

CPSI

Epic

IDX

iSoft

GE Healthcare

Keane

McKesson

Meditech

Siemens Medical Systems (Soarian)

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EXHIBIT C TO EMPLOYMENT AGREEMENT

Release

RELEASE

This Release (this “ Release”) is entered into as of                     , by John E. Deady (“Executive”) in favor of Eclipsys Corporation (“Eclipsys” or the “Company”) and certain other parties as set forth herein.

Contingent upon Executive’s execution and delivery to the Company of this Release, and the effectiveness of this Release following the lapse without revocation of any revocation period, the Company is obligated to provide to Executive the “Severance Package” as defined in and pursuant to that certain Employment Agreement entered into as of January __, 2006 by and between Executive and the Company (the “Employment Agreement”). In consideration of Executive’s right to receive the Severance Package, Executive hereby agrees as follows:

1. Termination Date. The effective date of Executive’s termination of employment with the Company is                     .

2. Release.

(a) As of the Effective Date (as defined below), Executive, for Executive and Executive’s assigns, heirs, executors, successors and administrators, hereby fully and unconditionally releases the Company, its subsidiaries and other affiliates, their respective successors, and the officers, directors, employees, stockholders, attorneys and agents of each of them (the “Released Parties”), from any and all claims, causes of action, rights, agreements, obligations, liabilities, and expenses (including attorneys’ fees and costs), of every kind and nature, whether known or unknown, suspected or unsuspected, liquidated or unliquidated, arising out of, relating to or in any way connected with Executive’s employment with or separation from the Company (the “Released Matters”). The Released Matters include, but are not limited to, claims for wrongful termination, breach of contract, breach of the covenant of good faith and fair dealing, tort, intentional or negligent infliction of emotional distress, defamation, invasion of privacy, fraud, negligent misrepresentation, violation of or rights under local, state or federal law, ordinance or regulation, all common law claims, and all claims to any non-vested ownership interest in the Company, contractual or otherwise, including but not limited to claims to non-vested stock or non-vested stock options. However, Released Matters do not include, and nothing in this Release waives or releases or prevents Executive from in any way pursuing any rights or claims Executive may have (i) to indemnity and defense from the Company pursuant to provisions of the Company’s charter documents, any contract of indemnity, or applicable law; (ii) to coverage under policies of insurance maintained by the Company (including without limitation insurance covering directors’ and officers’ liability, fiduciary liability, employment practices liability, general liability, and automobile damage and liability) according to the terms of such policies; (iii) to the Accrued Amounts and Severance Package [or substitute Change in Control Benefits, if appropriate] as defined in the Employment Agreement; (iv) to reimbursement of expenses properly incurred by Executive in the course of his service to the Company; (v) under plans or contracts governing equity awards made to Executive; (vi) as a former employee under the Company’s retirement and welfare plans under which Executive is a beneficiary or in which Executive is a participant, including without limitation the Company’s 401(k) plan and plans or policies or insurance providing for health care; or (vi) as a stockholder of the Company.

(b) Executive acknowledges and agrees that the releases made herein constitute final and complete releases of the Released Parties with respect to all Released Matters, and that by signing this Release, Executive is forever giving up the right to sue or attempt to recover money, damages or any other relief from the Released Parties for all claims Executive has or may have with respect to the Released Matters (even if any such claim is unforeseen as of the date hereof).

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(c) [insert the following or other state equivalent if appropriate] Executive represents and warrants that Executive understands California Civil Code Section 1542, which provides as follows:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

Executive, being aware of Section 1542, hereby expressly waives any and all rights Executive may have thereunder as well as under any other statute or common law principles of similar effect under the laws of any state or the United States. This Release shall act as a release of all future claims that may arise from the Released Matters, whether such claims are currently known or unknown, foreseen or unforeseen including, without limitation, any claims for damages incurred at any time after the date of this Release resulting from the acts or omissions which occurred on or before the date of this Release of any of the Released Parties.

Thus, notwithstanding the provisions of Section 1542, and for the purpose of implementing a full and complete release and discharge of the Released Parties, Executive expressly acknowledges that this Release is intended to include in its effect, without limitation, all Released Matters which Executive does not know or suspect to exist in his favor at the time of execution hereof, and that this Release contemplates the extinguishment of all such Released Matters.

3. No Claims. Executive represents and warrants that Executive has not instituted any complaints, charges, lawsuits or other proceedings against any Released Parties with any governmental agency, court, arbitration agency or tribunal. Executive further agrees that, except to the extent that applicable law prohibits such agreements, Executive will not, directly or indirectly, (i) file, bring, cause to be brought, join or participate in, or provide any assistance in connection with any complaint, charge, lawsuit or other proceeding or action against any Released Parties at any time hereafter for any Released Matters, (ii) assist, encourage, or support employees or former employees or stockholders or former stockholders of Eclipsys or any of its affiliates in connection with any lawsuit, charge, claim or action they may initiate, unless compelled to testify by appropriate civil processes; or (iii) 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 Release are illegal, invalid, not binding, unenforceable or against public policy. In addition, Executive will refrain from bringing or dismiss, as applicable, any claim against any third party if any Released Party would be required to defend or indemnify that third party in connection with such claim. If any agency or court assumes jurisdiction of any complaint, charge, or lawsuit against Eclipsys or any Released Party, on Executive’s behalf, Executive agrees to immediately notify such agency or court, in writing, of the existence of this Release, including providing a copy of it and to request, in writing, that such agency or court dismiss the matter with prejudice.

4. Non-Disclosure and Non-Solicitation. Executive acknowledges and reaffirms his obligation to keep confidential all non-public information concerning the Company which he acquired during the course of his employment with the Company and his post-employment obligations to refrain from soliciting the Company’s employees or clients, as stated more fully in the Confidentiality, Non-Disclosure and Developments Agreement Executive executed in connection with the inception of his employment, which remains in full force and effect. Executive also acknowledges the Agreement re Specified Acts entered into between Executive and the Company in connection with the inception of his employment, which remains in full force and effect.

5. Return of Company Property. Executive shall immediately return to the Company all keys, files, records (and copies thereof), equipment (including, but not limited to, computer hardware, software and printers, wireless handheld devices, cellular phones, pagers, etc.), Company identification, Company vehicles and any other Company-owned property in his possession or control. Executive confirms that he has left, and will continue to leave, intact all electronic Company documents, including but not limited to those Executive developed

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or helped develop during his employment. Executive further confirms that he has cancelled or shall immediately cancel all accounts for his benefit, if any, in the Company’s name, including but not limited to, credit cards, telephone charge cards, cellular phone and/or pager accounts and computer accounts.

6. Business Expenses and Compensation. Executive acknowledges that he has been reimbursed by the Company for all costs and business expenses incurred in conjunction with the performance of his employment and that no other reimbursements are owed to him, except for unreimbursed expenses properly incurred by him in the course of his service to the Company that he submits within 30 days after the date of this Release. Executive further acknowledges that he has received payment in full for all services rendered in conjunction with his employment by the Company and that no other compensation is owed to his, other than the Accrued Amounts and the Severance Package as defined in the Employment Agreement.

7. Non-Disparagement. Executive shall not make any false, disparaging or derogatory statements to any media outlet, industry group, financial institution or current or former employee, consultant, or customer of the Company, or any other third party, regarding any Released Party.

8. Amendment. This Release is binding upon Executive and may not be modified in any manner, except by an instrument in writing of concurrent or subsequent date signed by Executive and a duly authorized representative of Eclipsys. This Release is binding upon Executive and his assigns, heirs, executors, successors and administrators, and shall inure to the benefit of all the Released Parties.

9. Waiver of Rights. No delay or omission by the Company in exercising any right under this Release shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion.

10. Validity. If any part of this Release is determined by any court of competent jurisdiction to be void, illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining parts shall not be affected thereby and said void, illegal, invalid or unenforceable part shall be deemed not to be a part of this Release.

11. Nature of Agreement. This Release is part of a severance arrangement and does not constitute an admission of liability or wrongdoing on the part of Executive, the Company or any other person.

12. Acknowledgments. Executive acknowledges that he has been given at least twenty-one (21) days to consider this Release and that the Company advised him to consult with an attorney of his own choosing prior to signing this Release. Executive understands that he may revoke this Release for a period of seven (7) days after its execution and delivery. The eighth (8^th) day after Executive’s execution and delivery of this Release will be its “Effective Date.” This Release will be effective and enforceable beginning on the Effective Date unless Executive delivers written revocation of this Release to the Company’s Chief Executive Officer and General Counsel, or persons acting in those capacities, before the Effective Date, in which case this Release will be of no force or effect. Executive understands and agrees that by entering into this Release he is waiving any and all rights or claims he might have under The Age Discrimination in Employment Act, as amended by The Older Workers Benefit Protection Act, and that he has received consideration beyond that to which he was previously entitled.

13. Voluntary Assent. - Executive represents and agrees that he fully understands his right to discuss, and that Eclipsys has advised Executive to discuss, all aspects of this Release with Executive’s private attorney, that Executive has carefully read and fully understands all the provisions of the Release, that Executive understands its final and binding effect, that Executive is competent to sign this Release and that Executive is voluntarily entering into this Release. Executive specifically agrees not to claim, and has waived any right to claim, to have been under duress in connection with the review, negotiation, execution and delivery of this Release.

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14. Applicable Law. This Release shall be interpreted and construed in accordance with the laws of the State of Florida, without regard to conflict of laws provisions.

15. Entire Agreement. This Release contains and constitutes the entire understanding and agreement between Executive and the Company regarding the matters set forth herein, but provisions of other agreements between Executive and the Company (including without limitation the Employment Agreement, the Restricted Stock Agreement, the Agreement re Specified Acts, and grant notices for equity awards) that by their nature or terms are intended to survive termination of employment will continue in effect. Executive represents and agrees that in executing this Release Executive relies solely upon his own judgment, belief and knowledge, and the advice and recommendations of any independently selected counsel, concerning the nature, extent and duration of Executive’s rights and claims. Executive acknowledges that no other individual has made any promise, representation or warranty, express or implied, not contained in this Release, to induce Executive to execute this Release. Executive further acknowledges that Executive is not executing this Release in reliance on any promise, representation, or warranty not contained in this Release.

In witness whereof, Executive has executed this Release as of the date above written.

John E. Deady

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EXHIBIT D TO EMPLOYMENT AGREEMENT

Definition of Change in Control

“Change in Control” means an event or occurrence set forth in any one or more of subsections (a) through (d) below (including an event or occurrence that constitutes a Change in Control under one of such subsections but is specifically exempted from another such subsection) that occurs during the Term of Employment:

(a) the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership of any capital stock of the Company if, after such acquisition, such Person beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) 30% or more of either (x) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (y) the combined voting power of the then-outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change in Control: (i) any acquisition directly from the Company (excluding an acquisition pursuant to the exercise, conversion or exchange of any security exercisable for, convertible into or exchangeable for common stock or voting securities of the Company, unless the Person exercising, converting or exchanging such security acquired such security directly from the Company or an underwriter or agent of the Company), (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i) and (ii) of subsection (c) below; or (v) any acquisition by General Atlantic Partners 28, L.P., General Atlantic Partners 38, L.P., General Atlantic Partners 47, L.P., GAP Coinvestment Partners, L.P., General Atlantic Partners, LLC, and any person directly or indirectly controlled (within the meaning of Rule 12b-2 promulgated under the Exchange Act) by any of the foregoing entities described in this clause (v) (each such party is referred to herein as an “Exempt Person”) of any shares of Common Stock; or

(b) such time as the Continuing Directors (as defined below) do not constitute a majority of the Board (or, if applicable, the Board of Directors of a successor corporation to the Company), where the term “Continuing Director” means at any date a member of the Board (i) who was a member of the Board on the date of the execution of this Agreement or (ii) who was nominated or elected subsequent to such date by at least a majority of the directors who were Continuing Directors at the time of such nomination or election or whose election to the Board was recommended or endorsed by at least a majority of the directors who were Continuing Directors at the time of such nomination or election; provided, however, that there shall be excluded from this clause (ii) any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board; or

(c) the consummation of a merger, consolidation, reorganization, recapitalization or statutory share exchange involving the Company or a sale or other disposition of all or substantially all of the assets of the Company in one or a series of transactions (a “Business Combination”), unless, immediately following such Business Combination, each of the following two conditions is satisfied: (i) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors, respectively, of the resulting or acquiring corporation in such Business Combination (which shall include, without limitation, a corporation which as a result of such

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transaction owns the Company or substantially all of the Company’s assets either directly or through one or more subsidiaries) (such resulting or acquiring corporation is referred to herein as the “Acquiring Corporation”) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, respectively; and (ii) no Person (excluding the Acquiring Corporation, any employee benefit plan (or related trust) maintained or sponsored by the Company or by the Acquiring Corporation, or any Exempt Person) beneficially owns, directly or indirectly, 30% or more of the then outstanding shares of common stock of the Acquiring Corporation, or of the combined voting power of the then-outstanding securities of such corporation entitled to vote generally in the election of directors (except to the extent that such ownership existed prior to the Business Combination); or

(d) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

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EXHIBIT E TO EMPLOYMENT AGREEMENT

Confidentiality, Non-disclosure and Developments Agreement

CONFIDENTIALITY, NON-DISCLOSURE AND DEVELOPMENTS AGREEMENT

This Confidentiality, Non-Disclosure and Developments Agreement is made as of January     , 2006 by and between Eclipsys Corporation, a Delaware corporation headquartered in Florida (hereinafter referred to collectively with any of its subsidiaries as the “Company”), and John E. Deady (the “Employee”).

WHEREAS, the Company desires to employ the Employee;

THEREFORE, IN CONSIDERATION of the employment of the Employee by the Company, the Employee and the Company agree as follows:

1. Condition of Employment.

The Employee acknowledges that his employment with the Company is contingent upon his agreement to sign and adhere to the provisions of this Confidentiality, Non-Disclosure and Developments Agreement (“Agreement”).

2. Proprietary and Confidential Information.

(a) The Employee agrees that all information, whether or not in writing, of a private, secret or confidential nature concerning the Company’s business, business relationships or financial affairs (collectively, “Proprietary Information”) is and shall be the exclusive property of the Company. By way of illustration, but not limitation, Proprietary Information may include discoveries, inventions, products, product improvements, product enhancements, processes, methods, techniques, formulas, compositions, compounds, negotiation strategies and positions, projects, developments, plans (including business and marketing plans), research data, clinical data, financial data (including sales costs, profits, pricing methods), personnel data, computer programs (including software used pursuant to a license agreement), customer and supplier lists, and contacts at or knowledge of customers or prospective customers of the Company. The Employee will not disclose any Proprietary Information to any person or entity other than employees of the Company or use the same for any purposes (other than in the performance of his duties as an employee of the Company) without written approval by an officer of the Company, either during or after his employment with the Company, unless and until such Proprietary Information has become public knowledge without fault by the Employee.

(b) The Employee agrees that all files, documents, letters, memoranda, reports, records, data, sketches, drawings, models, laboratory notebooks, program listings, computer equipment or devices, computer programs or other written, photographic, or other tangible material containing Proprietary Information, whether created by the Employee or others, which shall come into his custody or possession, shall be and are the exclusive property of the Company to be used by the Employee only in the performance of his duties for the Company and shall not be copied or removed from the Company premises except in the pursuit of the business of the Company. All such materials or copies thereof and all tangible property of the Company in the custody or possession of the Employee shall be delivered to the Company, upon the earlier of (i) a request by the Company or (ii) termination of his employment. After such delivery, the Employee shall not retain any such materials or copies thereof or any such tangible property.

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(c) The Employee agrees that his obligation not to disclose or to use information and materials of the types set forth in paragraphs 2(a) and 2(b) above, and his obligation to return materials and tangible property set forth in paragraph 2(b) above also extends to such types of information, materials and tangible property of customers of the Company or suppliers to the Company or other third parties who may have disclosed or entrusted the same to the Company or to the Employee.

3. Developments.

(a) The Employee will make full and prompt disclosure to the Company of all inventions, creations, improvements, discoveries, trade secrets, secret processes, technology, know-how, methods, developments, software, and works of authorship or other creative works, whether patentable or not, which are created, made, conceived or reduced to practice by him or under his direction or jointly with others during his employment by the Company, whether or not during normal working hours or on the premises of the Company (all of which are collectively referred to in this Agreement as “Developments”).

(b) Employee agrees to assign and does hereby assign to the Company (or any person or entity designated by the Company) all his right, title and interest in and to all Developments and all related patents, patent applications, copyrights and copyright applications. However, this paragraph 3(b) shall not apply to Developments that do not relate to the present or planned business or research and development of the Company and which are made and conceived by the Employee not during normal working hours, not on the Company’s premises and not using the Company’s tools, devices, equipment or Proprietary Information. The Employee understands that, to the extent this Agreement shall be construed in accordance with the laws of any state that precludes a requirement in an employee agreement to assign certain classes of inventions made by an employee, this paragraph 3(b) shall be interpreted not to apply to any invention that a court rules and/or the Company agrees falls within such classes. In addition, for purposes of California law, this provision shall apply only to the maximum extent permitted by Section 2870 of the California Labor Code (attached hereto as Attachment A). The Employee understands that the provisions of this Agreement requiring assignment of Developments to the Company do not apply to any invention that qualifies fully under the provisions of California Labor Code Section 2870. The Employee agrees to advise the Company promptly in writing of any invention that he believes meets the criteria in Section 2870 that are not otherwise disclosed on Attachment B. The Employee also hereby waives all claims to moral rights in any Developments.

(c) The Employee agrees to cooperate fully with the Company and to take such further actions as may be necessary or desirable, both during and after his employment with the Company, with respect to the procurement, maintenance and enforcement of copyrights, patents and other intellectual property rights (both in the United States and foreign countries) relating to Developments. The Employee shall sign all papers, including, without limitation, copyright applications, patent applications, declarations, oaths, formal assignments, assignments of priority rights, and powers of attorney, which the Company may deem necessary or desirable in order to protect its rights and interests in any Development. The Employee further agrees that if the Company is unable, after reasonable effort, to secure the signature of the Employee on any such papers, any executive officer of the Company shall be entitled to execute any such papers as the agent and the attorney-in-fact of the Employee, and the Employee hereby irrevocably designates and appoints each executive officer of the Company as his agent and attorney-in-fact to execute any such papers on his behalf, and to take any and all actions as the Company may deem necessary or desirable in order to protect its rights and interests in any Development, under the conditions described in this sentence.

4. Other Agreements.

The Employee hereby represents that, except as the Employee has disclosed in writing to the Company, the Employee is not bound by the terms of any agreement with any previous employer or other party to refrain from

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using or disclosing any trade secret or confidential or proprietary information in the course of his employment with the Company, to refrain from competing, directly or indirectly, with the business of such previous employer or any other party, or to refrain from soliciting employees, customers or suppliers of such previous employer or other party. The Employee further represents that his performance of all the terms of this Agreement and the performance of his duties as an employee of the Company do not and will not breach any agreement with any prior employer or other party to which the Employee is a party (including without limitation any non-disclosure or non-competition agreement), and that the Employee will not disclose to the Company or induce the Company to use any confidential or proprietary information or material belonging to any previous employer or others.

5. United States Government Obligations.

The Employee acknowledges that the Company from time to time may have agreements with other persons or with the United States Government, or agencies thereof, which impose obligations or restrictions on the Company regarding inventions made during the course of work under such agreements or regarding the confidential nature of such work. The Employee agrees to be bound by all such obligations and restrictions that are made known to the Employee and to take all action necessary to discharge the obligations of the Company under such agreements.

6. Non-Solicitation.

While employed by the Company, the Employee shall devote all of his business time, attention, skill and effort to the faithful performance of his duties for the Company. F or a period of 1 year after the termination or cessation of Employee’s employment for any reason, the Employee will not, in the geographical areas that the Company or any of its subsidiaries does business or has done business at the time of Employee’s departure, directly or indirectly:

(a) Either alone or in association with others (i) solicit, recruit, induce, or attempt to solicit, recruit or induce, or permit any organization directly or indirectly controlled by the Employee to solicit, recruit, induce, or attempt to solicit, recruit or induce any employee of the Company to leave the employ of the Company, or (ii) solicit, recruit, induce, or attempt to solicit, recruit or induce for employment, or permit any organization directly or indirectly controlled by the Employee to solicit, recruit, induce, or attempt to solicit, recruit or induce for employment, any person who was employed by the Company at any time during the term of the Employee’s employment with the Company; provided, that this clause (ii) shall not apply to any individual’s employment with the Company, which has been terminated for a period of six months or longer; or

(b) Either alone or in association with others, solicit, divert or take away, or attempt to solicit, divert or take away, or permit any organization directly or indirectly controlled by the Employee to solicit, divert or take away, or attempt to solicit, divert or take away, the business or patronage of any of the clients, customers or accounts, or prospective clients, customers or accounts, of the Company, which were contacted, solicited or served by the Company at any time during the term of the Employee’s employment with the Company.

7. Not An Employment Contract.

The Employee acknowledges that this Agreement does not constitute a contract of employment, either express or implied, and does not imply that the Company will continue the Employee’s employment for any period of time. This Agreement shall in no way alter the Company’s policy of employment at will, under which both the Employee and the Company remain free to terminate the employment relationship, with or without cause, at any time, with or without notice.

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8. General Provisions.

(a) No Conflict. The Employee represents that the execution and performance by him of this Agreement does not and will not conflict with or breach the terms of any other agreement by which the Employee is bound.

(b) Entire Agreement. This Agreement supersedes all prior agreements, written or oral, between the Employee and the Company relating to the subject matter of this Agreement. This Agreement may not be modified, changed or discharged in whole or in part, except by an agreement in writing signed by the Employee and the Company. The Employee agrees that any change or changes in his duties, salary or compensation after the signing of this Agreement shall not affect the validity or scope of this Agreement.

(c) Interpretation. If the Employee violates the provisions of Section 6 of this Agreement, the Employee shall continue to be bound by the restrictions set forth in Section 6 until a period of 1 year has expired without any violation of such provisions. If any restriction set forth in Section 6 is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend only over the maximum period of time, range of activities or geographic area as to which it may be enforceable.

(d) Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect or impair the validity or enforceability of any other provision of this Agreement.

(e) Waiver. No delay or omission by the Company in exercising any right under this Agreement will operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion is effective only in that instance and will not be construed as a bar to or waiver of any right on any other occasion.

(f) Employee Acknowledgment and Equitable Remedies. The Employee acknowledges that the restrictions contained in this Agreement are necessary for the protection of the business and goodwill of the Company and considers the restrictions to be reasonable for such purpose. The Employee agrees that any breach of this Agreement is likely to cause the Company substantial and irrevocable damage and that therefore, in the event of any breach of this Agreement, the Employee agrees that the Company, in addition to such other remedies that may be available, shall be entitled to specific performance and other injunctive relief without posting a bond.

(g) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any corporation or entity with which or into which the Company may be merged or which may succeed to its assets or business, provided however that the obligations of the Employee are personal and shall not be assigned by the Employee.

(h) Subsidiaries and Affiliates. The Employee expressly consents to be bound by the provisions of this Agreement for the benefit of the Company or any subsidiary or affiliate thereof to whose employ the Employee may be transferred without the necessity that this Agreement be re-signed at the time of such transfer.

(i) Governing Law, Forum and Jurisdiction. This Agreement shall be governed by and construed as a sealed instrument under and in accordance with the laws of the State of California (without reference to the conflicts of law provisions thereof). Any action, suit, or other legal proceeding that is commenced to resolve any matter arising under or relating to any provision of this Agreement shall be commenced only in a court in the City and County of San Francisco, California (or, if appropriate, a federal court located within the City and County of San Francisco, California), and the Company and the Employee each consents to the jurisdiction of such a court.

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(j) Captions. The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement.

THE EMPLOYEE ACKNOWLEDGES THAT HE HAS CAREFULLY READ THIS AGREEMENT AND UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT.

ECLIPSYS CORPORATION
By:
Name:	R. Andrew Eckert	John E. Deady
Title:	Chairman & CEO

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Attachment A

CALIFORNIA LABOR CODE SECTION 2870

INVENTION ON OWN TIME - EXEMPTION FROM AGREEMENT

(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his rights in an invention to his employer shall not apply to an invention that the employee developed entirely on his own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:

(1) Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer, or

(2) Result from any work performed by the employee for his employer.

(b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.

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Attachment B

LIST OF PRIOR INVENTIONS

AND ORIGINAL WORKS OF AUTHORSHIP

Title Date Identifying Number or Brief Description

No inventions or improvements

Additional Sheets Attached

Signature of Employee:

Printed Name of Employee: John E. Deady

Date: January     , 2006

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EX-10.2

Exhibit 10.2

Agreement Re Specified Acts

This Agreement re Specified Acts is made effective as of January 6, 2006 by and between Eclipsys Corporation, a Delaware corporation (hereinafter referred to collectively with any of its subsidiaries as the “Company”), and John E. Deady (“Executive”).

The Company and Executive are parties to that certain Employment Agreement of even date herewith (the “Employment Agreement”) pursuant to which the Company employs Executive as its Executive Vice President. Executive is receiving a grant of stock options to purchase up to 400,000 shares of Common Stock of the Company and a grant of 100,000 shares of Common Stock of the Company that are subject to contractual restrictions, as described in the Employment Agreement (the “Initial Grants”), and Executive may become entitled to certain severance benefits described in the Employment Agreement (the “Severance Package” or the “Change in Control Benefits”). In addition, Executive may receive additional grants of stock options, restricted stock, or other equity-based awards, and may become entitled to additional severance benefits. It is a condition of Executive’s employment that Executive enter into this Agreement with the Company. Accordingly, the Company and Executive hereby agree as follows:

1. Specified Acts.

(a) If, at any time during Executive’s employment with the Company or during the 730-day period following the termination or cessation of Executive’s employment with the Company for any reason, Executive commits any Specified Act (as defined below), then notwithstanding any agreement or plan provision to the contrary, the Company may in its discretion, at any time or from time to time during the Evaluation Period related to that Specified Act (as defined below), (i) cancel in whole or part the Initial Grants and/or any other award of stock options or restricted stock or any other award made at any time to Executive under any equity incentive plan of the Company (each an “Award”), whether or not vested, and/or (ii) rescind some or all of any vesting, exercise, payment or delivery that occurred or occurs or is scheduled to occur pursuant to the Initial Grants or any other Award within 730 days before the earlier of the Specified Act or the termination of Executive’s employment, or at any time after the Specified Act, and/or (iii) cease paying or providing any or all of the Severance Package or the Change in Control, and/or (iv) demand that Executive return to the Company any portion of the Severance Package or the Change in Control Benefits previously paid, provided that cessation of payment pursuant to item (iii) and/or demand for return pursuant to item (iv) shall only apply to portions of the Severance Package or Change in Control Benefits in excess of $150,000, which $150,000 shall be consideration for the release signed as required by the Employment Agreement as a condition to payment of the Severance Package or the Change in Control Benefits.

(b) The Company shall notify Executive in writing of any exercise of any of its rights under Section 1(a) within the Evaluation Period related to the Specified Act triggering the Company’s rights.

(c) If the Company rescinds some or all of any vesting, exercise or delivery pursuant to Section 1(a)(ii), then within ten days after receiving from the Company the notice described in Section 1(b), Executive shall be obligated to pay to the Company the gross amount of any gain realized or payment received as a result of the cancelled Award or rescinded vesting, exercise, payment or delivery. Such payment shall be made by returning to the Company all shares of capital stock that Executive purchased or otherwise received in connection with the cancelled Award or rescinded vesting, exercise, payment or delivery, or if such shares or any interest therein have been transferred by Executive, then by paying to the Company, by wire transfer of immediately available funds, the fair market value of such

shares at the time of the transfer. For this purpose, in the case of publicly traded shares, the value of shares will be measured by the price for which Executive sold the shares in a bona fide arm’s length transaction, or if the shares or interests therein were transferred otherwise than by a bona fide arm’s length sale, then by the closing price of the shares on the Nasdaq National Market or other primary market or exchange upon which the shares trade on the trading day immediately preceding the date of the transfer. Executive will cease to have any rights under any Award, vesting, exercise, payment or delivery to the extent cancelled or rescinded pursuant to this Agreement. Any payment of the exercise price for stock options or purchase price for restricted stock previously made by Executive to the Company in connection with an Award or vesting, exercise, payment or delivery that is cancelled or rescinded pursuant to this Agreement will be returned by the Company to Executive (without interest), at the time Executive returns the shares or makes payment pursuant to Section 1(c), including, at the Company’s discretion, by offset against any amounts payable by Executive to the Company or any of the Company’s subsidiaries.

(d) If the Company demands return of previously paid portions of the Severance Package or the Change in Control Benefits pursuant to Section 1(a)(iv), then within ten days after receiving from the Company the notice described in Section 1(b), Executive shall pay to the Company, by wire transfer of immediately available funds, an amount equal to the aggregate cost to the Company of any parts of the Severance Package or the Change in Control Benefits previously provided to Executive by the Company that the Company demands be returned.

(e) Upon and as a condition to vesting, exercise, payment or delivery of shares or cash pursuant to any Award, a Recipient shall, if required by the Administrator, certify on a form acceptable to the Company that he has not committed any Specified Act. For purposes of this Agreement, the Company will be deemed to have been aware of Specified Act only after the completion of any investigation or inquiry and only when the Company has clear and convincing evidence thereof. For this purpose, suspicion is not awareness.

(f) For these purposes:

(i) “Evaluation Period” related to a Specified Act means the period beginning with that Specified Act and ending not later than the later of 365 days after such Specified Act, or, if later, 180 days after the Company became aware of such Specified Act.

(ii) “Specified Act” means Employee (A) has a Specified Relationship with a Designated Company (as those terms are defined below), or (B) violates in any material respect any material contractual obligation or legal duty to the Company and, if such violation of contractual obligation or legal duty is susceptible of cure fails to cure such violation within 30 days of written demand by the Company for cure, provided that the final determination that such a violation of contractual obligation or legal duty has occurred and not been cured within such 30-day notice period must be made by the Company’s board of directors after giving Executive an opportunity to be heard.

(iii) “Specified Relationship” with a Designated Company means acting as an owner, partner, officer, director, or employee of, or consultant or advisor (paid or unpaid) or lender to, or investor in, that Designated Company, except that ownership of not more than 1% of the outstanding stock of a Designated Company, in and of itself, will not be a Specified Relationship.

(iv) “Designated Company” means at any time of determination any of the entities listed on the Current Version of Schedule A to this Agreement and any Affiliate of any of such entities regardless of when formed. At no time may there be more than ten Designated Companies listed on Schedule A, and if any version of Schedule A lists more than ten companies, then only the first ten listed

on Schedule A, reading left to right, top to bottom, will be Designated Companies pursuant to that schedule, but Affiliates of the listed entities will be Designated Companies but will not be counted for purposes of this ten-entity limit. In addition, each of the following shall be a Designated Company, in addition to the Designated Companies listed on Schedule A and not subject to the ten-entity limit: (i) any entity that is a successor to or transferee of any significant part of the business or assets of an entity listed on the Current Version; and (ii) any entity that first engages in competitive activity following the date of the Current Version. For this purpose, an entity first engages in competitive activity when it openly begins to provide or pursue any goods or services or line of business that is competitive in any material way with any goods or services or line of business provided or being pursued, or for which plans were being made, during Executive’s tenure with the Company. The “Current Version” of Schedule A is the version attached to this Agreement at the date of its execution unless and until Schedule A is modified as set forth in paragraph 1(f)(iv)(A) or 1(f)(iv)(B) below. The Current Version need not be the same as the list of competitors specified by the Company for any agreement entered into by the Company or any of its affiliates with any other employee that is similar to this Agreement.

(A) At any time and from time to time from the date hereof until the date seven days following the termination of Executive’s employment for any reason, but not more than once in any period of 180 days, the Company may, in its discretion, by written notice to Executive, modify the Current Version to include any company or companies that the Company in its discretion deems to be engaged in or planning any activity that is competitive with the Company’s business as conducted or planned, subject to the overall limit of ten, and that modified version of the schedule will then be the Current Version unless and until further modified pursuant to this paragraph 1(f)(iv)(A) or paragraph 1(f)(iv)(B).

(B) Not more than once in any period of 180 days, Executive may by written demand require the Company to provide an updated Current Version. In response, within seven days of receipt of Executive’s demand, the Company must deliver to Executive an updated Current Version or ratify in writing the then-existing Current Version. Any such updated Current Version may include, in the Company’s discretion, any company or companies that the Company in its discretion deems to be engaged in or planning any activity that is competitive with the Company’s business as conducted or planned, subject to the overall limit of ten. The Company may elect to deliver an updated Current Version in response to Executive’s demand even if the Company has modified the schedule in its own discretion within the preceding 180 days, but in any case the Current Version provided by the Company in response to Executive’s demand (whether updated or ratified) will trigger a new 180-day waiting period before the Company may again modify the schedule in its discretion pursuant to paragraph 1(f)(iv)(A). Any Current Version resulting from the process described in this paragraph 1(f)(iv)(B) will be the Current Version unless and until further modified pursuant to this paragraph 1(f)(iv)(B) or paragraph 1(f)(iv)(A).

(v) “Affiliate” of an entity means any controlling, controlled by or under common control with such entity.

(g) Executive understands and agrees that (i) his entering into this Agreement is a material inducement to the Company to employ him on the terms described in the Employment Agreement; (ii) the Initial Grants and any other equity that the Company may grant to Executive, the Severance Package and the Change in Control Benefits (other than the first $200,000 thereof) are intended not only to motivate and reward Executive’s performance, but also to compensate Executive for not engaging in any specified Act; (iii) Executive is not restricted by this Agreement from engaging in any Specified Act, and Executive is willing to accept the potential economic consequences under this Agreement of engaging in any Specified Act; (iv) Executive’s livelihood does not depend upon his ability to engage in any Specified Act; and (v) Executive shall not bring or participate in any action challenging the, validity, legality, effectiveness or enforceability of any part of this Agreement.

2. General Provisions.

(a) No Contract of Employment. This Agreement does not constitute a contract of employment, either express or implied, and does not imply that the Company will continue the Executive’s employment for any period of time. This Agreement shall in no way alter the Company’s policy of employment at will, under which both Executive and the Company remain free to terminate the employment relationship, with or without cause, at any time, with or without notice. Any change or changes in Executive’s duties, salary or compensation after the signing of this Agreement shall not affect the validity or scope of this Agreement.

(b) Entire Agreement. This Agreement sets forth the entire understanding of Executive and the Company regarding the subject matter hereof, and supersedes all prior agreements, written or oral, between the Executive and the Company relating to the subject matter hereof. However, it does not replace or supersede the Employment Agreement, any agreements documenting equity awards to Executive, any policies of the Company or agreements entered into by Executive providing for confidentiality, non-disclosure or assignment of developments, all of which remain in full force and effect. This Agreement may not be modified, changed or discharged in whole or in part, except by an agreement in writing signed by the Executive and the Company.

(c) Interpretation. If any provision of this Agreement is found by any court of competent jurisdiction to be unenforceable, it shall be interpreted to apply only to the extent that it is enforceable.

(d) Severability. If any part of this Agreement as applied to any party or to any circumstance is adjudged by a court of competent jurisdiction to be invalid, illegal, void or unenforceable for any reason, then (i) the invalidity of that part shall in no way affect (to the maximum extent permissible by law) the application of such part under circumstances different from those adjudicated by the court, the application of any other part of this Agreement, or the enforceability or invalidity of this Agreement as a whole; and (ii) such part shall be deemed amended to the extent necessary to conform to applicable law so as to be valid, legal, effective and enforceable or, if such part cannot be so amended without materially altering the intention of the parties, then such part will be stricken and the remainder of this Agreement shall continue in full force and effect.

(e) Waiver. No delay or omission by the Company in exercising any right under this Agreement will operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion is effective only in that instance and will not be construed as a bar to or waiver of any right on any other occasion.

(f) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any corporation or entity with which or into which the Company may be merged or which may succeed to its assets or business.

(g) Subsidiaries and Affiliates. Executive expressly consents to be bound by the provisions of this Agreement for the benefit of the Company or any subsidiary or affiliate thereof to whose employ the Executive may be transferred without the necessity that this Agreement be re-signed at the time of such transfer.

(h) Remedies not Limited. This Agreement and the Company’s enforcement hereof are not intended to be exclusive remedies and will not limit any other remedies that may be available to the Company at law or in equity as a result of or in connection with any violation by Executive of any contractual obligation or legal duty to the Company or any subsidiary or affiliate thereof.

(i) Governing Law, Forum and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida (without reference to its conflicts of law provisions). If any judicial or administrative proceeding or claim relating to or pertaining to this Agreement is initiated by either party hereto, such proceeding or claim shall and must be filed in a state or federal court located in Palm Beach County or Miami-Dade County, Florida, and the Company and Executive each consents to the jurisdiction of such a court.

(j) Attorneys’ Fees. In the event that either party brings a legal action against the other in connection with this Agreement, the party, if either, that is judicially determined to be the prevailing party in such action shall be entitled to recover his or its reasonable attorney’s fees and legal costs incurred in connection with such action.

(k) Captions. The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement.

In witness whereof, the Company and Executive have entered into this Agreement as of the date above set forth.

ECLIPSYS CORPORATION
By:	/s/    Brian W. Copple	/s/    John E. Deady
Name:	Brian W. Copple	John E. Deady
Title:	Secretary

Schedule A To Agreement Re Specified Acts

Designated Companies

Cerner

CPSI

Epic

IDX

iSoft

GE Healthcare

Keane

McKesson

Meditech

Siemens Medical Systems (Soarian)

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: May 7, 2009

/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, W. David Morgan III, 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: May 7, 2009

/s/    W. David Morgan III

W. David Morgan III

Chief Financial 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 March 31, 2009 (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: May 7, 2009

/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 March 31, 2009 (the “Report”), the undersigned, W. David Morgan III, Chief Financial 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: May 7, 2009

/s/    W. David Morgan III

W. David Morgan III

Chief Financial Officer