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Exhibit 2.2
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made and entered into as of
December 22, 1999 (the "Effective Date"), by and among The TriZetto Group, Inc.,
a Delaware corporation ("TriZetto"), the parties listed on Exhibit A attached
hereto (collectively, the "Finserv Securityholders," and each individually, a
"Finserv Securityholder"), Xxxxxx Xxxxxxx as the representative of the Finserv
Securityholders (the "Representative"), and Bankers Trust Company of California,
N.A. as escrow agent (the "Escrow Agent").
RECITALS
WHEREAS, TriZetto, Finserv Health Care Systems, Inc., a New York
corporation ("Finserv"), and the Finserv Securityholders have entered into an
Agreement and Plan of Merger dated as of December 22, 1999 (the "Merger
Agreement"), pursuant to which Finserv Acquisition Corp., a Delaware corporation
and wholly-owned subsidiary of TriZetto ("Merger Sub"), shall be merged with and
into Finserv (the "Merger"), with Finserv to be the surviving corporation of the
Merger.
WHEREAS, the Merger Agreement provides that 20,000 shares of the Merger
Consideration (as defined in the Merger Agreement) will be withheld from the
Finserv Securityholders and will be placed in an escrow established in
accordance with this Agreement to secure the indemnification obligations under
Article 8 of the Merger Agreement and to secure adjustments to the Consideration
pursuant to Sections 2.5 and 2.6 of the Merger Agreement.
WHEREAS, the parties desire to enter into this Agreement to establish the
terms and conditions under which the escrow will be established and maintained.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual promises,
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. CERTAIN DEFINED TERMS.
1.1 TERMS DEFINED IN MERGER AGREEMENT. Capitalized terms used in
this Agreement and not otherwise defined herein shall have the same meanings
given to such terms in the Merger Agreement.
1.2 ESCROW. As used herein, the "Escrow" means the escrow and the
Escrow Account (as defined in Section 3.1 below) established pursuant to this
Agreement in which the Escrowed Property (as defined in Section 1.3 below) will
be held to secure the indemnification obligations of the Finserv Securityholders
in accordance with Article 8 of the Merger Agreement and to secure adjustments
to the Consideration pursuant to Sections 2.5 and 2.6 of the Merger Agreement.
1.3 ESCROWED PROPERTY. As used herein, the "Escrowed Property"
means, collectively: (a) 20,000 shares of TriZetto Common Stock issued in
respect of the conversion of all outstanding shares of Finserv Stock in the
Merger (the "Escrow Shares") and the Stock Powers (as defined in Section 3.1
below) executed and delivered by the Finserv Securityholders; and the Stock
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Powers executed and delivered by the Finserv Securityholders; (b) all interest
or other amounts paid with respect to such Escrow Shares; and (c) all other
property (not including cash dividends but including Distributions and Secondary
Distributions (as defined in Section 3.2 below)) other than cash dividends
issued or paid with respect to any Escrow Shares that are deposited in the
Escrow Account pursuant to this Agreement, all of which shall be deemed to be
"Escrowed Property" upon deposit in the Escrow Account. The number of Escrow
Shares of each Finserv Securityholder that will be placed in the Escrow Account
is equal to each Finserv Securityholder's proportionate share of the Escrowed
Property set forth on Exhibit A hereto (the "Pro Rata Share").
1.4 TERMINATION DATE. "Termination Date" means the one year
anniversary of the Effective Time of the Merger.
2. AGREEMENT.
2.1 INDEMNIFICATION BY FINSERV SECURITYHOLDERS. By virtue of the
Finserv Securityholders' execution and delivery of the Merger Agreement, the
Finserv Securityholders have agreed, and by executing this Agreement each
Finserv Securityholder hereby confirms that such Finserv Securityholder agrees,
subject to the terms and conditions of this Agreement, Article 8 of the Merger
Agreement and Sections 2.5 and 2.6 of the Merger Agreement:
(a) to indemnify and hold harmless TriZetto, its officers, directors,
stockholders, employees and agents from and against any and all Claims and
Liabilities to the extent provided in Article 8 of the Merger Agreement;
(b) to establish the Escrow pursuant to this Agreement to secure the
indemnification obligations of the Finserv Securityholders under Article 8 of
the Merger Agreement and to secure the adjustment to the Consideration which may
be made under Sections 2.5 and 2.6 of the Merger Agreement;
(c) without limiting such Finserv Securityholder's obligations under
paragraphs (a) and (b) above, that:
(i) in the event TriZetto, its officers, directors,
stockholders, employees and agents (hereinafter, collectively, "TriZetto")
incurs any Claims and Liabilities provided in Article 8 of the Merger Agreement,
the Escrowed Property shall, subject to the provisions of the Merger Agreement
and this Agreement, be transferred to TriZetto to compensate TriZetto for such
Claims and Liabilities, with the portion of the Escrowed Property to be so
transferred pro rata as to each Claim and Liability among the Finserv
Securityholders according to each Finserv Securityholder's Pro Rata Share; and
(ii) to the extent necessary under Sections 2.5 and 2.6 of the
Merger Agreement, the Escrowed Property with a value equal to the amount of the
necessary adjustment to the Consideration, subject to the provisions of the
Merger Agreement and this Agreement, shall be transferred to TriZetto to adjust
the Consideration accordingly, which Escrowed Property shall be pro rata based
on each Finserv Securityholder's Pro Rata Share;
(d) to appoint the Representative as the Finserv Securityholders'
representative, attorney-in-fact and agent for purposes of this Agreement to act
for and on behalf of each Finserv Securityholder as provided herein, and to the
taking by the Representative of any and all
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actions and the making of any decisions required or permitted to be taken or
made by the Representative on the Finserv Securityholders' behalf under this
Agreement; and
(e) to all of the other terms and conditions of this Agreement.
3. FORMATION OF ESCROW ACCOUNT.
3.1 DELIVERY AND DEPOSIT OF ESCROWED PROPERTY. Upon the execution of
this Agreement by all parties hereto: (a) TriZetto will promptly deliver to the
Escrow Agent the Escrow Shares in the form of duly authorized and executed stock
certificates issued in the respective names of the Finserv Securityholders,
representing each Finserv Securityholder's Pro Rata Share of the Escrow Shares
and (b) each Finserv Securityholder will promptly deliver to the Escrow Agent
duly executed Assignments Separate From Certificate for such Finserv
Securityholder's Escrow Shares in the form of Exhibit B ("Stock Powers"), signed
in blank by such Finserv Securityholder. The Escrow Agent agrees to accept
delivery of the above-mentioned Escrowed Property, which shall be clearly
designated by TriZetto as "Escrowed Property", and to hold the same in escrow in
an escrow account (the "Escrow Account"), subject to the terms and conditions of
this Agreement. The Escrow Agent shall deliver a Receipt and Acknowledgement to
the Representative upon receipt of any Escrowed Property.
3.2 DISTRIBUTIONS, CONVERSIONS, VOTING AND RIGHTS OF OWNERSHIP. So
long as the Escrow is in effect, dividends payable in stock or securities of
TriZetto or of any other person, firm or entity or any other property, other
than cash dividends which shall be distributed to Finserv Securityholders, or
other distributions of any kind (including without limitation shares of TriZetto
Stock issued in connection with a subdivision, split or recapitalization of
TriZetto Stock) that are paid, issued or made by TriZetto in respect of the
Escrow Shares that are issuable by TriZetto or a third party upon the conversion
or other exchange of Escrow Shares in a merger, consolidation, liquidation,
exchange of shares or other transaction affecting the Escrow Shares or other
Escrowed Property (the "Distributions"), or in respect of any such Distributions
("Secondary Distributions"), will be immediately delivered to the Escrow Agent
and will be held in the Escrow on the same terms and conditions as those applied
hereunder to the Escrow Shares and the Finserv Securityholders will promptly
sign and deliver to the Escrow Agent new Stock Powers or other applicable
instruments of transfer for such Distributions and/or Secondary Distributions
(duly executed in blank by the Finserv Securityholders) to be held in the Escrow
as Escrowed Property pursuant to this Agreement. As used herein, the terms
"Escrowed Property" includes all Distributions and Secondary Distributions on
Escrowed Property and the term "Escrow Shares" includes all Distributions and
Secondary Distributions on Escrowed Property consisting of stock or other
securities. The Finserv Securityholders will have the right to exercise any and
all rights to vote the Escrow Shares deposited in the Escrow Account for their
account so long as such Escrow Shares are held in the Escrow and have not been
released to TriZetto as provided herein and TriZetto will take all steps
necessary to allow the exercise of such rights. While the stock certificates
representing, and Stock Powers for, Escrow Shares remain in the Escrow Agent's
possession pursuant to this Agreement, the Finserv Securityholders, will
(subject to the provisions of Sections 3.3 and 3.4 below) retain and be able to
exercise all other incidents of ownership of the Escrow Shares that are not
inconsistent with the terms and conditions of this Agreement. If reasonably
requested to do so by TriZetto or the Escrow Agent, each Finserv Securityholder
shall promptly execute and deliver to the Escrow Agent (or to TriZetto, as to
Escrow Shares that are released to TriZetto as provided herein) replacement
Stock Powers for any Escrow Shares or other shares of stock or securities that
are or become Escrowed Property. If requested by TriZetto, due to the failure of
any Finserv Securityholder to promptly execute and
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deliver replacement Stock Powers as herein provided, the Representative, acting
as attorney-in-fact for each Finserv Securityholder, shall promptly execute on
behalf of such Finserv Securityholder, and deliver to the Escrow Agent,
replacement Stock Powers for any Escrow Shares or other shares of stock or
securities that are or become Escrowed Property.
3.3 NO TRANSFER OR ENCUMBRANCE. Except to the extent expressly
permitted by the provisions of this Section 3.3, no Escrowed Property or any
beneficial interest therein may be sold, assigned, pledged, encumbered or
otherwise transferred (including without limitation by operation of law, other
than an exchange or conversion of shares in a merger or consolidation) by any
Finserv Securityholder or be taken or reached by any legal or equitable process
in satisfaction of any debt or other liability of a Finserv Securityholder
(other than such Finserv Securityholder's obligations under this Agreement)
prior to the delivery and release to the Finserv Securityholders of the Escrowed
Property by the Escrow Agent in accordance with the provisions of Section 6
hereof; provided, however, that any Finserv Securityholder may transfer its
share of the Escrowed Property hereunder so long as such transfer is by (I)
gift, (ii) upon death or permanent incapacity to his guardian, conservator,
executor, administrator, trustees or beneficiaries under his will, (iii) to his
spouse, children, stepchildren, grandchildren, parents, siblings or legal
dependents, (iv) to a trust of which the beneficiary or beneficiaries of the
corpus and the income shall be such a person and all such persons agree to be
bound by the terms hereof, or (v) to partners of a Finserv Securityholder that
is a partnership, provided that all of such partners execute a joinder agreement
specifically agreeing to be bound by the terms hereof.
3.4 TREATMENT OF ESCROWED PROPERTY. The Escrowed Property shall be
held by the Escrow Agent as a trust fund and shall not be subject to any lien,
attachment, trustee process or any other judicial process of any creditor of any
party hereto.
3.5 INVESTMENT OF FUNDS. The cash portion of the Escrowed Property,
if any, shall be invested and reinvested by the Escrow Agent, upon the
instruction of the Representative, in U.S. Treasury obligations having a
maturity of not more than 90 days or in such other certificates of deposit or
instruments. All brokerage commissions and similar fees incurred in connection
with the investments shall be paid out of the Escrowed Property. All interest
income generated by such U.S. Treasury obligations, certificates of deposit or
instruments shall be deemed part of the Escrowed Property and at the Termination
Date, the income from the funds in the Escrow, if any, shall be paid to the
Finserv Securityholders in accordance with each Finserv Securityholder's Pro
Rata Share. Subject to the provisions of Section 9, the Escrow Agent shall not
have any liability for loss sustained as a result of (I) any investment made
pursuant to the instructions of the Representative, (ii) any liquidation of any
investment prior to its maturity, or (iii) the failure of the Representative to
give the Escrow Agent any instruction to invest or reinvest the cash portion of
the Escrowed Property or any earnings thereon.
4. ADMINISTRATION OF ESCROW ACCOUNT. The Escrow Agent shall administer the
Escrow Account as follows:
4.1 CLAIM NOTICE. If TriZetto asserts a claim for indemnification under
Article 8 of the Merger Agreement or a claim for adjustment to the Consideration
under Section 2.5 or 2.6 of the Merger Agreement on or prior to the Termination
Date, then TriZetto shall promptly give written noticeof such claim (a "Claim
Notice"), including a copy of such claim and/or process and all legal pleadings
in connection therewith, to the Representative in accordance with Article 8 of
the Merger
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Agreement and the Escrow Agent in accordance with this Section 4. Each Claim
Notice shall state the amount of claimed Claims and Liabilities (the "Claimed
Amount") and the basis for such claim.
4.2 RESPONSE NOTICE. Within 30 days after delivery of a Claim Notice
to the Representative, the Representative shall give to TriZetto, with a copy to
the Escrow Agent, a written response (the "Response Notice") in which the
Representative shall either:
(a) agree that such portions of the Escrowed Property having a
value (computed in accordance with Section 4.4 below) equal to the full Claimed
Amount may be released from the Escrow Account and delivered to TriZetto; or
(b) agree that a portion of the Escrowed Property having a value
(computed in accordance with Section 4.4 below) equal to a specified part, but
not all, of the Claimed Amount (the "Agreed Amount") may be released from the
Escrow Account to TriZetto and contest the remaining portion of the Escrowed
Property; or
(c) contest that any of the Escrowed Property may be released
from the Escrow Account to TriZetto.
The Representative may contest the release of Escrowed Property only based
upon a good faith belief that all or such portion of the Claimed Amount (I) does
not constitute Claims and Liabilities, or does not constitute the actual amount
of Claims and Liabilities incurred for which TriZetto is entitled to
indemnification under Article 8 of the Merger Agreement or (ii) does not
constitute an adjustment to the Consideration to which TriZetto is entitled
under Section 2.5 or 2.6 of the Merger Agreement. If no Response Notice is
delivered by the Representative within such 30 day period, then the
Representative shall be deemed to have agreed that the full Claimed Amount may
be released and delivered from the Escrow Account to TriZetto.
4.3 RELEASE WITHOUT CONTEST.
(a) If in his Response Notice the Representative agrees (or if
the Representative fails to deliver a Response Notice within the required time
period and as such is deemed to have agreed) that the Escrowed Property having a
value (computed in accordance with Section 4.4 below) equal to the full Claimed
Amount may be released from the Escrow Account to TriZetto, then the Escrow
Agent shall promptly thereafter deliver to TriZetto from the Escrow Account
Escrowed Property having a value (computed in accordance with Section 4.4 below)
equal to the Claimed Amount (or such lesser amount as is then held in the Escrow
Account).
(b) If the Representative in the Response Notice agrees that
Escrowed Property having a value (computed in accordance with Section 4.4 below)
equal to the Agreed Amount may be released from the Escrow Account to TriZetto
in the respective amounts set forth in the Response Notice, then the Escrow
Agent shall promptly thereafter deliver to TriZetto such Agreed Amount or such
lesser amount as is then held in the Escrow Account, and the provisions of
Section 5 shall apply to the contested portion of the Claimed Amount. The
amounts of Escrowed Property equal to the Agreed Amount that are to be released
by the Escrow Agent to TriZetto from the Escrow Account under this Section 4.3
shall be in such proportions of Escrow Shares, and other Escrowed Property as
may be requested by the Representative (subject to the availability of such
type(s) of Escrowed Property at such time and subject to whether such Claim and
Liability is assessed against the indemnification obligations of the Finserv
Securityholders set forth in Article 8
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of the Merger Agreement or the adjustments to the Consideration set forth in
Section 2.5 or 2.6 of the Merger Agreement).
4.4 VALUE OF ESCROWED PROPERTY. For purposes of determining the
amount of Escrowed Property to be delivered out of the Escrow to TriZetto as all
or part of any Claimed Amount hereunder and determining the value of any
Escrowed Property for any other purpose hereunder Escrowed Property that is cash
will be deemed to have a value equal to the amount of such cash in U.S. Dollars.
The Escrowed Shares of TriZetto Stock will be deemed to have a fair market value
determined as follows: (I) the average of the closing sales prices of TriZetto
Stock for the 20 trading days immediately preceding the anticipated date of
transfer of such shares as reported on the Nasdaq National Market System ("NMS")
(or such other exchange or similar market on which TriZetto Stock is regularly
traded if not then traded on the NMS), or (ii) if not traded on an exchange or
similar market, then as determined by the Board of Directors of TriZetto in good
faith. If the Representative disagrees with the fair market value as determined
by the Board of Directors, then the Representative may submit the dispute to
Arbitration pursuant to Section 5 below.
5. ARBITRATION OF CONTESTED RELEASES.
5.1 ARBITRATION OF DISPUTES OVER ESCROW RELEASE. If the Representative
gives a Response Notice contesting the release of Escrowed Property equal to all
or any part of the Claimed Amount set forth in the applicable Claim Notice, as
provided in Section 4.2 above (the "Contested Amount"), then such dispute shall
be settled by mandatory binding arbitration in Orange County, California in
accordance with the provisions of this Section 5 and the Commercial Arbitration
Rules of the American Arbitration Association then in effect (the "AAA Rules"),
unless TriZetto and the Representative settle such dispute in a written
settlement agreement executed by TriZetto and the Representative on behalf of
and binding on each of the Finserv Securityholders and TriZetto. Theprovisions
of this Section 5 shall prevail and govern in the event of any conflict between
such provisions and the AAA Rules.
5.2 ARBITRATOR. Unless otherwise mutually agreed by TriZetto and the
Representative, the arbitration will be heard and decided by a single arbitrator
who shall be selected as provided in Section 5.3.
5.3 SELECTION OF ARBITRATOR. TriZetto and the Representative will
mutually agree on an arbitrator selected from a list of arbitrators who are
attorneys-at-law who practice business law and have significant experience with
respect to the representation of companies which develop computer services and
technology; provided that the arbitrator cannot have represented either TriZetto
or any of the Finserv Securityholders in any previous matter. If TriZetto and
the Representative cannot agree on the selection of the arbitrator from the
above list of arbitrators, then the arbitrator shall be chosen by the American
Arbitration Association.
5.4 TIME FOR ARBITRATION DECISION; EFFECT. The arbitrator shall decide
each dispute to be arbitrated pursuant hereto within 90 days after the selection
of the arbitrator. The arbitrator's decision shall relate solely to whether
TriZetto is entitled to receive the Contested Amount (or a portion thereof)
pursuant to the applicable terms of the Merger Agreement and this Agreement. The
final decision of the arbitrator shall provide directions to the Escrow Agent as
provided in Section 5.5 and shall be furnished to TriZetto, the Representative,
and the Escrow Agent in writing and shall constitute a conclusive determination
of all issues in question, binding upon TriZetto, the Representative, the
Finserv Securityholders, and the Escrow Agent and shall not be
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contested by any of them. Upon the conclusion of any arbitration proceedings
hereunder, the arbitrator will render findings of fact and conclusions of law
and a written opinion setting forth the basis and reasons for any decision
reached and instructions (if applicable) to the Escrow Agent as to the release
of Escrowed Property and will deliver such documents to TriZetto, the
Representative and the Escrow Agent, along with a signed copy of the award and
the instructions (if any) to the Escrow Agent. The arbitrator chosen in
accordance with these provisions will not have the power to alter, amend or
otherwise affect the terms of this Section 5 or the provisions of this Agreement
or the Merger Agreement. Judgment upon the award rendered by the arbitrator may
be entered in any court having competent jurisdiction over the subject matter
thereof.
5.5 ACTIONS OF ESCROW AGENT PENDING ARBITRATION. After delivery of a
Response Notice in which any or all of the Claimed Amount is contested by the
Representative, the Escrow Agent shall continue to hold in the Escrow Account
Escrowed Property having a value (computed in accordance with Section 4.4 of
this Agreement) sufficient to cover the Contested Amount (but only to the extent
that there is Escrowed Property remaining in the Escrow after payment to
TriZetto of all uncontested Claimed Amounts), notwithstanding the occurrence of
the Termination Date, until: (a) delivery of a copy of a settlement agreement
executed by TriZetto and the Representative setting forth instructions to the
Escrow Agent as to the release of such Escrowed Property that shall be made with
respect to the Contested Amount; (b) delivery of a copy of the final decision of
the arbitrator setting forth instructions to the Escrow Agent as to the release
of Escrowed Property that shall be made with respect to the Contested Amount; or
(c) receipt of a court order or judgment directing Escrow Agent to act with
respect to the distribution of any Escrowed Property. The Escrow Agent shall
thereupon release Escrowed Property from the Escrow Account (to the extent
Escrowed Property is then held in the Escrow Account) in accordance with such
settlement agreement, arbitrator's instructions, court order or judgment, as
applicable. The Escrowed Property released by the Escrow Agent to TriZetto from
the Escrow Account shall be in such proportions of Escrow Shares and/or other
Escrowed Property, as may be requested by the Representative (subject to the
availability of such type(s) of Escrowed Property at such time).
5.6 NO RESPONSIBILITY OF ESCROW AGENT TO RESOLVE DISPUTE. If any
controversy arises involving any party to this Agreement (other than the Escrow
Agent) concerning the subject matter of this Agreement, including a Contested
Amount, the Escrow Agent will not be required to determine the controversy or to
take any action until such dispute has been resolved.
5.7 RIGHT TO COUNSEL. TriZetto (on behalf of itself and any
Indemnified Person(s)) and the Representative shall each have the right to
employ its or his own legal counsel to at its own expense represent such person
in any disputes arising under this Agreement.
5.8 COMPENSATION OF ARBITRATOR; ATTORNEYS' FEES. The arbitrator will
be compensated for his or her services at a rate to be determined by the parties
or by the American Arbitration Association, but based upon reasonable hourly or
daily consulting rates for the arbitrator in the event the parties are not able
to agree upon his or her rate of compensation. TriZetto, on the one hand, and
the Finserv Securityholders, on the other hand, will each pay 50% of the
compensation to be paid to the arbitrator in any such arbitration and 50% of the
costs of transcripts and other normal and regular expenses of the arbitration
proceedings (collectively, the "Arbitration Expenses"), with the portion of such
Arbitration Expenses required to be borne by the Finserv Securityholders to be
shared by the Finserv Securityholders based on the Finserv Securityholder's
respective Pro Rata Share of the Escrowed Property. Unless the Arbitrator
provides to the contrary in the decision, each side shall pay its own attorneys'
fees.
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5.9 BURDEN OF PROOF. For any claim submitted to an arbitration
hereunder, the burden of proof will be as it would be if the claim were
litigated in a judicial proceeding.
5.10 EXCLUSIVE REMEDY. Except to the extent provided in Article 8 of
the Merger Agreement, and except as specifically otherwise provided in this
Agreement, arbitration in accordance with this Section 5 will be the sole and
exclusive remedy of the parties for any dispute arising over the release of
Escrowed Property from the Escrow hereunder.
6. PAYMENT OF REMAINING ESCROWED PROPERTY TO FINSERV SECURITYHOLDERS.
6.1 ON TERMINATION DATE. On the Termination Date, the Escrow Agent
shall deliver to TriZetto and the Representative a statement of the value
(computed in accordance with Section 4.4 hereof) of the remaining balance of the
Escrowed Property then remaining in the Escrow Account, and the total amount of
all claims made pursuant to Sections 4 or 5 hereof in connection with the Escrow
Account which remain unresolved and unpaid (the excess, if any, of such
remaining balance in such Escrow Account over the total amount of such claims
against such Escrow Account shall be referred to as the "Final Escrow Balance").
TriZetto and the Representative each shall review the accuracy of the Final
Escrow Balance and notify the Escrow Agent and each other of any asserted
discrepancy within ten business days of receipt of the foregoing statement. If
the Escrow Agent has not been notified of any discrepancy by TriZetto or the
Representative within the ten business day period specified in the preceding
sentence, then within 20 business days after receipt by TriZetto and the
Representative of such statement, the Escrow Agent shall deliver to each of the
Finserv Securityholders an amount of the Escrowed Property representing such
Finserv Securityholder's Pro Rata Share of the Final Escrow Balance constituting
Escrowed Property, free and clear of the Escrow created by this Agreement. After
the last claim shall have been resolved pursuant to Sections 4 and 5 hereof and
all Escrowed Property deliverable to TriZetto upon the resolution of all such
claims has been delivered to TriZetto, the remaining balance, if any, of the
Escrowed Property shall promptly be delivered by the Escrow Agent to each
Finserv Securityholder pro rata, based on each Finserv Securityholder's Pro Rata
Share, free and clear of the Escrow created by this Agreement.
6.2 DISTRIBUTION OF THE ESCROWED PROPERTY. All distributions of
Escrowed Property to the Finserv Securityholders to be made by the Escrow Agent
under this Section shall be made so that each Finserv Securityholder receives
his Pro Rata Share of the total amount of each type of property (principally
TriZetto Stock) constituting the Escrowed Property held in the Escrow Account
immediately before such distribution.
6.3 DELIVERY METHODS. Delivery of Escrowed Property by the Escrow
Agent shall be by nationally recognized overnight courier. The Escrow Agent
shall not be responsible for obtaining insurance in connection with such
delivery.
6.4 POWER TO TRANSFER ESCROW AMOUNTS. The Escrow Agent is hereby
granted the power to effect any transfer of Escrowed Property permitted or
required by this Agreement in accordance with its terms.
7. FEES AND EXPENSES OF ESCROW AGENT AND REPRESENTATIVE.
7.1 ESCROW AGENT. TriZetto shall pay the fees of the Escrow Agent
for the services to be rendered by the Escrow Agent hereunder; provided,
however, that any extraordinary
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fees and expenses referred to in Section 7.3 below, including, without
limitation, any fees or expenses incurred by the Escrow Agent in connection with
a dispute over the distribution of Escrowed Property will be paid 50% by
TriZetto and 50% by the Finserv Securityholders.
7.2 REPRESENTATIVE. The Representative will not be entitled to
receive any compensation from TriZetto or the Finserv Securityholders in
connection with this Agreement; however, the Finserv Securityholders shall
indemnify and promptly reimburse the Representative for all reasonable expenses
actually incurred by the Representative in connection with the performance of
his duties hereunder (including, but not limited to, all losses, costs and
expenses which the Representative may incur as a result of involvement in any
legal proceedings arising from the performance of his duties hereunder) pro rata
according to the Finserv Securityholders' respective Pro Rata Share. TriZetto
shall not have any obligation to reimburse the Representative for any expenses
whatsoever.
7.3 ESCROW AGENT'S EXTRAORDINARY FEES. TriZetto and the
Representative hereby acknowledge that all fees and usual charges for services
of the Escrow Agent hereunder shall be considered compensation for ordinary
services as contemplated by this Agreement. In the event that the Escrow Agent
renders any service not provided for in this Agreement, or if the parties hereto
request a substantial modification of the terms of this Agreement, or if any
controversy arises and/or the Escrow Agent is made a party to any litigation
pertaining to this Agreement or its subject matter, then the Escrow Agent shall
be reasonably compensated for such extraordinary services (except to the extent
the Escrow Agent is not entitled to indemnification pursuant to Section 9.3
hereof) and reimbursed for all reasonable costs, attorney's fees and expenses
incurred by the Escrow Agent in rendering such extraordinaryservices, which
costs, fees and expenses shall be borne by TriZetto and the Finserv
Securityholders as provided in Section 7.1 above.
8. LIABILITY AND AUTHORITY OF REPRESENTATIVE; SUCCESSORS AND ASSIGNEES.
8.1 LIMITS ON LIABILITY. The Representative shall incur no liability
with respect to any action taken or suffered by him in his capacity as
Representative in reliance upon any note, direction, instruction, consent,
statement or other documents believed by him in good faith to be genuinely and
duly authorized, nor for other action or inaction except his own willful
misconduct or gross negligence. The Representative may, in all questions arising
under this Escrow Agreement, rely on the advice of counsel, and for anything
done, omitted or suffered in good faith by the Representative based on such
advice, the Representative shall not be liable to anyone.
8.2 SUCCESSOR REPRESENTATIVES. In the event of the death or
permanent disability of the Representative, or the resignation of Representative
as the representative of the Finserv Securityholders hereunder, a successor
Representative shall be elected by a majority vote of the Finserv
Securityholders, with each such Finserv Securityholder (or his or her successors
or assigns) to be given a weighted vote based on such Finserv Securityholder's
Pro Rata Share. Each successor Representative shall have all of the power,
authority, rights and privileges conferred by this Agreement upon the original
Representative, and the term "Representative" as used herein shall be deemed to
include each successor Representative.
8.3 AUTHORITY OF REPRESENTATIVE. The Representative shall have full
power and authority to represent the Finserv Securityholders and their
successors with respect to all matters arising under this Agreement or related
to the subject matter hereof and all actions taken by the Representative
hereunder shall be binding upon each and all of the Finserv Securityholders and
their
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successors, as if expressly confirmed and ratified in writing by each of them.
Without limiting the generality of the foregoing, the Representative shall have
full power and authority to interpret all of the terms and provisions of this
Agreement, to compromise and settle any claims asserted hereunder and to
authorize payments to be made with respect thereto, on behalf of the Finserv
Securityholders and their successors. The Finserv Securityholders have consented
to the appointment of the Representative as representative of the Finserv
Securityholders and as the attorney-in-fact and agent for and on behalf of each
Finserv Securityholder for the purposes of taking actions and executing
agreements and documents on behalf of any of the Finserv Securityholders as
provided in this Agreement, and, subject to the express limitations set forth
below, the taking by the Representative of any and all actions and the making of
any decisions required or permitted to be taken by him under this Agreement,
including, but not limited to, the exercise of the power to authorize delivery
to TriZetto of Escrowed Property and to take all actions necessary in the
judgment of the Representative for the accomplishment of the foregoing and all
of the other terms, conditions and limitations of this Agreement. The
Representative will have unlimited authority and power to act on behalf of each
Finserv Securityholder with respect to this Agreement and the disposition,
settlement or other handling of all claims, rights or obligations arising under
this Agreement with respect to Escrowed Property so long as all Finserv
Securityholders are treated in the same manner (unless the Finserv
Securityholders otherwise consent). The Finserv Securityholders will be bound by
all actions taken by the Representative in connection with this Agreement, and
TriZetto will be entitled to rely on any action or decision of the
Representative.
9. LIMITATION OF ESCROW AGENT'S RESPONSIBILITY AND LIABILITY.
9.1 LIMITATION OF RESPONSIBILITY. The Escrow Agent's duties are
limited to those set forth in this Agreement, and the Escrow Agent, acting as
such under this Agreement, is not charged with knowledge of or any duties or
responsibilities under any other document or agreement, including, without
limitation, the Merger Agreement. The Escrow Agent may execute any of its powers
or responsibilities hereunder and exercise any rights hereunder either directly
or by or through its agents or attorneys. Nothing in this Escrow Agreement will
be deemed to impose upon the Escrow Agent any duty to qualify to do business or
to act as a fiduciary or otherwise in any jurisdiction. The Escrow Agent will
not be responsible for, and will not be under a duty to examine into or pass
upon, the validity, binding effect, execution or sufficiency of this Escrow
Agreement or of any agreement mandatory or supplemental hereto.
9.2 LIMITATION OF LIABILITY. The Escrow Agent will incur no
liability with respect to any action taken, not taken or suffered by it in
reliance upon any notice, direction, instruction, consent, statement or other
document believed by it to be genuine and duly authorized, nor for any other
action or inaction, except its own gross negligence or willful misconduct . In
all questions arising under this Agreement, the Escrow Agent may rely on the
advice of counsel, and for anything done, omitted or suffered in good faith by
the Escrow Agent based on such advice, the Escrow Agent will not be liable to
anyone, provided that the Escrow Agent shall have used reasonable care in the
selection of such counsel. The Escrow Agent will not be required to take any
action hereunder involving any expense unless the payment of such expense is
made or provided for in a manner satisfactory to it. The Escrow Agent will not
be liable for any action taken or omitted to be taken by it in good faith unless
a court of competent jurisdiction determines that the Escrow Agent's gross
negligence or willful misconduct was the cause of any loss to TriZetto, the
Representative, or any Finserv Securityholder. The Escrow Agent makes no
representation or warranty with respect to, and is not responsible for, the
Escrowed Property, other than any losses resulting from its gross negligence or
willful misconduct. The Escrow Agent will have no duty to
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solicit the delivery from TriZetto of any Escrowed Property. The Escrow Agent
will have no obligation with respect to the Escrowed Property other than to (I)
keep safely all property held in escrow, (ii) withhold the release of Escrowed
Property to the Finserv Securityholders, or (iii) release the Escrowed Property
to TriZetto, as the case may be, to the extent expressly provided in this
Agreement.
9.3 INDEMNITY. TriZetto and each of the Finserv Securityholders
(each an "Indemnifying Party" and together the "Indemnifying Parties"), each
hereby jointly and severally covenants and agrees to reimburse, indemnify and
hold harmless the Escrow Agent and its employees, officers, directors and agents
from and against any loss, damage or liability suffered, incurred by or asserted
against the Escrow Agent (including amounts paid in settlement of any action,
suit, proceeding, or claim brought or threatened to be brought and including
reasonable expenses of legal counsel) arising out of, in connection with or
based upon any act or omission by the Escrow Agent relating in any way to this
Agreement or the Escrow Agent's services hereunder; provided, however, that the
liability of any Finserv Securityholder shall be limited to such Finserv
Securityholder's pro rata share of the liability of all of the Finserv
Securityholders hereunder, based on the number of shares of Finserv stock held
by such Finserv Securityholder. This indemnity will not apply to any such loss,
damage or liability arising from the gross negligence or willful misconduct on
the Escrow Agent's part. Anything in this Agreement to the contrary
notwithstanding, in no event will any party be liable for special, indirect or
consequential damage or loss of any kind whatsoever (including but not limited
to lost profits) suffered or incurred by any other party, even if such party has
been advised of the likelihood of such loss or damage and regardless of the form
of action.
9.4 PARTICIPATION IN DEFENSE OF THE ESCROW AGENT. Each Indemnifying
Party may participate at its own expense in the defense of any claim or action
that may be asserted against the Escrow Agent, and if the Indemnifying Parties
so elect, the Indemnifying Parties may assume the defense of such claim or
action; provided, however, that if there exists a conflict of interest that
would make it inappropriate for the same counsel to represent both the Escrow
Agent and the Indemnifying Parties, the Escrow Agent's retention of separate
counsel will be reimbursable as provided in Section 9.3. The Escrow Agent's
right to indemnification hereunder will survive the Escrow Agent's resignation
or removal as escrow agent hereunder and will survive the termination of this
Agreement by lapse of time or otherwise.
9.5 NOTICE OF CLAIMS AGAINST ESCROW AGENT. The Escrow Agent will
notify each Indemnifying Party by letter, or by telephone or telecopy confirmed
by letter sent U.S. first class mail, registered or certified, of any receipt by
the Escrow Agent of a written assertion of a claim against the Escrow Agent
related to this Agreement, or any action commenced against the Escrow Agent,
within ten business days after the Escrow Agent's receipt of written notice of
such claim. However, the Escrow Agent's failure to so notify each Indemnifying
Party will not operate in any manner whatsoever to relieve an Indemnifying Party
from any liability that it may have otherwise than on account of this Section 9;
provided, however, that in the event the Escrow Agent fails to so notify each
Indemnifying Party and an Indemnifying Party is prejudiced thereby, then such
Indemnifying Party will not have liability to Escrow Agent under this Section 9.
9.6 RELIANCE. The Escrow Agent shall be entitled to rely upon any
court order, judgment, certification, instruction, award, notice or other
writing delivered to it in compliance with the provisions of this Agreement
without being required to determine the authenticity or the correctness of any
fact stated therein or the propriety or validity thereof. The Escrow Agent may
act
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in reliance upon any instrument comporting with the provisions of this
Agreement or signature reasonably believed by it to be genuine, and may
reasonably assume that any person purporting to give notice or receipt or advice
or to make any statement or to execute any document in connection with the
provisions hereof has been duly authorized to do so.
9.7 NO IMPLIED DUTIES; COLLATERAL AGREEMENTS. The Escrow Agent shall
not be obligated to perform any duties that are not expressly set forth in this
Agreement, and no implied covenants or obligations shall be inferred from this
Agreement against the Escrow Agent. The Escrow Agent shall not be bound in any
way by any contract or agreement between the other parties or among the other
parties and any third parties, whether or not the Escrow Agent has knowledge of
any such contract or agreement or of its terms or conditions.
10. SUCCESSOR ESCROW AGENT. In the event the Escrow Agent becomes
unavailable or unwilling to continue in its capacity herewith, the Escrow Agent
may resign at any time and be discharged from its duties or obligations
hereunder by giving a written resignation to the parties to this Escrow
Agreement, specifying not less than 30 days prior written notice of the date
when such resignation shall take effect; provided, however, that no such
resignation shall become effective until the appointment of a successor Escrow
Agent and acceptance of such appointment by such successor Escrow Agent.
TriZetto and the Representative may appoint a successor Escrow Agent without the
consent of the Representative so long as such successor is a bank with assets of
at least $500,000,000 which has no direct depository or lending relationship
with TriZetto or any of the Finserv Securityholders and which is qualified to do
business in the State of California, and may appoint any other successor Escrow
Agentwith the written consent of the Representative, which shall not be
unreasonably withheld. If, within such notice period, TriZetto provides to the
Escrow Agent written instructions with respect to the appointment of a successor
Escrow Agent in accordance with this Section 10 and directions for the transfer
of any Escrowed Property then held by the Escrow Agent to such successor, the
Escrow Agent shall act in accordance with such instructions and promptly
transfer such Escrowed Property to such designated successor. If no successor
Escrow Agent is appointed within 60 days of the date specified for the Escrow
Agent's resignation to take effect, any party hereto (including the Escrow
Agent) shall have the right to apply to a court of competent jurisdiction for
such appointment at the expense of TriZetto. Each successor Escrow Agent shall
execute and deliver an instrument accepting such appointment and shall, without
further acts, be vested in all the estates, properties, rights, powers and
duties of the Escrow Agent or any other predecessor Escrow Agent as if
originally named as Escrow Agent hereunder.
11. TERMINATION. This Agreement shall terminate upon the earlier of (a)
the Termination Date, assuming there are no contests regarding the Escrowed
Property, or (b) the release by the Escrow Agent of all of the Escrowed Property
in accordance with this Agreement. In the event that a contest exists on the
Termination Date, the Escrow shall continue in place until the dispute is
resolved pursuant to Section 5.
12. MISCELLANEOUS.
12.1 NOTICES. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given: (a) upon personal delivery to
the party to be notified; (b) when sent by confirmed facsimile if sent during
normal business hours of the recipient, if not, then on the next business day;
(c) five business days after having been sent by registered or certified mail,
return receipt requested; or (d) two business days after deposit with a
nationally recognized overnight courier, specifying two day delivery, with
written verification of receipt. All communications shall
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be sent to the parties at the following addresses or facsimile numbers specified
below (or at such other address or facsimile number for a party as shall be
designated by ten business days advance written notice to the other parties
hereto):
(a) If to the Escrow Agent:
Bankers Trust Company of California N.A.
0000 Xxxx Xx. Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxx
(b) If to TriZetto or Merger Sub, to:
The TriZetto Group, Inc.
000 Xxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
Ph: (000) 000-0000
Fax: (000) 000-0000
Email: xxxx.xxxxxxxx@xxxxxxxx.xxx
With a copy to (which shall not constitute notice):
Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: X.X. Xxxxxx, Esq.
Ph: (000) 000-0000
Fax: (000) 000-0000
(c) If to Finserv, to:
Finserv Health Care Systems, Inc.
00 Xxxxxxx Xxxx
Xxxxx Xxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxx Xxxxxxx
Ph: (000) 000-0000
Fax: (000) 000-0000
with a copy to (which shall not constitute notice):
Lasser Xxxxxxx, L.L.C.
00 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxx Xxxxxx, Esq.
Ph: (000) 000-0000
Fax: (000) 000-0000
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(d) If to the Finserv Securityholders:
To the address set forth on Exhibit A.
Any party hereto may designate a different address by providing written
notice of such new address to the other parties hereto.
12.2 AMENDMENT. This Agreement may be amended by the written
agreement of TriZetto, the Escrow Agent and the Representative, provided that,
if the Escrow Agent does not agree to an amendment agreed upon by TriZetto and
the Representative, the Escrow Agent will resign (which resignation shall be
effective immediately and, in any event, prior to the effective date of the
amendment) and TriZetto will appoint a successor Escrow Agent in accordance with
Section 10 hereof. No such amendment may treat any one Finserv Securityholder
differently from the other Finserv Securityholders unless consented to in
writing by Finserv Securityholders having beneficial ownership of a majority of
the outstanding Escrowed Property, including the consent of any Finserv
Securityholder who is to be treated differently.
12.3 WAIVER. At any time prior to the Termination Date, any party
hereto may with respect to any other party hereto (a) extend the time for
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto, or (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
12.4 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
12.5 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
12.6 SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible, in an acceptable manner, to the end that
transactions contemplated hereby are fulfilled to the extent possible.
12.7 ENTIRE AGREEMENT. Except as otherwise set forth in the Merger
Agreement, this Agreement (and the schedules and exhibits attached hereto)
constitutes the entire understanding and agreement of the parties with respect
to the subject matter of this Agreement and supersedes all prior agreements or
understandings, both oral and written, among the parties, or any of them, with
respect to the subject matter hereof and, except as otherwise expressly provided
herein.
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12.8 BENEFITS; ASSIGNMENT. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
assigns, as permitted hereunder. No party may assign this Agreement or assign
its respective rights or delegate their duties (by operation of law or
otherwise), without the prior written consent of the other party (except as
expressly contemplated in Section 3.3).
12.9 GOVERNING LAW. This Agreement will be governed by, and
construed in accordance with the laws of the State of Delaware as applied to
contracts that are executed and performed in Delaware, without regard to choice
of law provisions thereof.
12.10 COUNTERPARTS. This Agreement may be executed and delivered in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed and delivered shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement. This Agreement shall become effective when counterparts have been
signed by each of the parties and delivered to all of the other parties hereto.
12.11 GENDER. For purposes of this Agreement, references to the
masculine gender shall include feminine and neuter genders and entities.
12.12 ADDITIONAL ACTIONS AND DOCUMENTS. Each of the parties hereby
agrees to take or cause to be taken such further actions to execute, deliver and
file or cause to be executed, delivered and filed such further documents and
instruments, and to use reasonable efforts to obtain such consents, as may be
necessary or as may be reasonably requested in order to fully effectuate the
purposes, terms and conditions of this Agreement.
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IN WITNESS WHEREOF, the parties have duly executed this Escrow Agreement
as of the day and year first above written.
THE TRIZETTO GROUP, INC., THE "COMPANY"
By: _____________________________________
Name: ___________________________________
Title: __________________________________
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
"ESCROW AGENT"
By: _____________________________________
Name: ___________________________________
Title: __________________________________
XXXXXX XXXXXXX, "REPRESENTATIVE" AND
"FINSERV SECURITYHOLDER"
________________________________________
"FINSERV SECURITYHOLDERS"
________________________________________
Franc Xxxxxxxxxx
________________________________________
Xxxx Xxxxx
________________________________________
Xxxxxxx Nice
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Exhibit A
LISTING OF FINSERV SECURITYHOLDERS AND ESCROWED AMOUNTS
[Omitted pursuant to Item 601 of Regulation S-K - Information is not material
to an investment decision]
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EXHIBIT B
STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers an
aggregate of ___________________ (______) shares of Common Stock of The TriZetto
Group, Inc., a Delaware corporation (the "Company"), standing in the
undersigned's name on the books of said Company represented by Certificate No.
___ to Bankers Trust of California N.A.
The undersigned further does hereby irrevocably constitute and appoint
_____________, its attorney-in-fact, with full power of substitution, to
transfer said stock on the books of the Company.
Dated: _______________________ _________________________________
