SECURED TERM NOTE
$6,000,000.00 September 14, 2001
FOR VALUE RECEIVED, and intending to be legally bound, the undersigned,
THE TRIZETTO GROUP, INC., a Delaware corporation, CREATIVE BUSINESS SOLUTIONS,
INC., a Texas corporation, FINSERV HEALTH CARE SYSTEMS, INC., a New York
corporation, HEALTHCARE MEDIA ENTERPRISES, INC., a Delaware corporation,
HEALTHWEB, INC., a Delaware corporation, XXXXXXXX HEALTH ENTERPRISES, INC., a
California corporation, XXXXXXX CORPORATION, a Delaware corporation, TRIZETTO
APPLICATION SERVICES, INC., a Colorado corporation, DIGITAL INSURANCE SYSTEMS
CORPORATION, an Ohio corporation, HEALTH NETWORKS OF AMERICA, INC., a Maryland
corporation, XXXXXXX DEVELOPMENT CORPORATION, a Delaware corporation, XXXXXXX
DEVELOPMENT & LICENSING CORPORATION, an Indiana corporation, XXXXXXX SERVICES
CORPORATION, a Delaware corporation, ERISCO, INC., a New York corporation,
RESOURCE INFORMATION MANAGEMENT SYSTEMS, INC., an Illinois corporation, WINTHROP
FINANCIAL GROUP, INC., an Illinois corporation, OPTION SERVICES GROUP, INC., an
Illinois corporation and INFOTRUST COMPANY, an Illinois corporation
(collectively, "Borrower"), jointly and severally, promise to pay, in lawful
money of the United States, to the order of XXXXXX HEALTHCARE FINANCE, INC., a
Delaware corporation, its successors and assigns ("Lender"), the principal sum
of SIX MILLION AND 00/100 DOLLARS ($6,000,000.00), or so much of such sum as
shall have been advanced by Lender (the "Principal Sum") in accordance with the
terms of this Secured Term Note (the "Note"), together with interest and other
fees as further set forth in this Note, to be paid in accordance with the terms
set forth below.
1. Principal and Interest.
(a) If not sooner repaid, Xxxxxxxx agrees to repay the
Principal Sum by making the following payments to Lender: (i) on the first
Business Day (as defined below) of each month hereunder beginning October 1,
2001, installment payments equal to Two Hundred Thousand and No/100 Dollars
($200,000.00) each; and (ii) a final payment, equal to the remaining amount of
the Principal Sum (including any amount of the Principal Sum not repaid pursuant
to Section 1(a)(i)), if any, plus all interest, fees and charges due Lender
hereunder, on March 31, 2004 (the "Maturity Date"). The Maturity Date shall not
be extended unless the term of the Loan and Security Agreement dated as of
September 11, 2000 by and among Borrower and Lender pursuant to which Borrower
and Lender have entered into a revolving credit arrangement in a principal
amount not to exceed $14,000,000.00 (as such agreement may be amended, modified
or restated from time to time, the "Loan Agreement"), is extended to the same
date.
(b) In addition to the repayment of the Principal Xxx,
Xxxxxxxx promises to pay to Lender interest on the total amount of the Principal
Sum on a monthly basis from the date of this Note until the Maturity Date.
Interest shall be at a fluctuating rate per annum compounded daily (on the basis
of the actual number of days elapsed over a year of 360 days) equal to the Prime
Rate plus
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one percent (1.0%) (the "Base Rate"), provided that after an Event of Default
(as defined below) such rate shall be equal to the Base Rate plus five percent
(5%) (the "Default Interest Rate"). For purposes of the foregoing, the term
"Prime Rate" means that rate of interest designated as such by Citibank, N.A.
(the "Bank"), or any successor to the Bank, as the rate may from time to time
fluctuate. If the Bank ceases to designate such a base lending rate, Lender
shall reasonably select an alternate, nationally recognized commercial bank as
the designator of such interest rate. Accrued interest shall be payable monthly
in arrears on the last Business Day of each month hereunder beginning October
31, 2001 and continuing through and including the Maturity Date. After the
Maturity Date, and until the entire Principal Sum plus any other amount due and
unpaid shall be paid in full, without limiting any of Lender's other rights and
remedies, all outstanding amounts of the Principal Sum shall bear interest,
payable on demand, at the Default Interest Rate, but in no event shall the
interest payable exceed the maximum lawful rate.
(c) Repayment of Borrower's obligations under this Note is
secured by, among other things, the Collateral defined and described in Section
7 of this Note.
2. Fees. In consideration for the extension of credit by Xxxxxx as
evidenced by this Note, Borrower shall pay to Lender a commitment fee (the
"Commitment Fee") in the amount of Fifty Thousand and No/100 Dollars
($50,000.00), which shall be due and payable on the date of execution and
delivery of this Note by Borrower making payment of such Commitment Fee in full
in immediately available funds to a bank account designated by Lender.
3. Additional Payments. Borrower further promises to pay to Lender,
immediately upon demand any and all other sums and charges that may at the time
become due and payable under this Note, and all reasonable costs and
disbursements in connection with the preparation of this Note (including without
limitation reasonable attorneys' fees (both in-house and outside counsel, as
applicable), audit fees and search fees), and in the collection of any payments
due under this Note and in any action, suit or proceeding to protect, sustain or
enforce the rights and remedies of Lender under this Note; provided that Xxxxxx
agrees that its attorneys' fees in connection with the preparation and
negotiation of this Note shall not in any event exceed $12,500.00. If Xxxxxx
uses in-house counsel for any of the above purposes other than the preparation
and negotiation of this Note (i.e., for any task in connection with the
enforcement, protection or preservation of any right or claim of Lender and the
collection of any amounts due under its Loan Documents), Borrower further agrees
that its obligations under this Note and under the Loan Documents include
reasonable charges for such work commensurate with the fees that would otherwise
be charged by outside legal counsel selected by Xxxxxx for the work performed.
Borrower shall pay all taxes (other than taxes based upon or measured by
Xxxxxx's income or revenues or any personal property tax), if any, in connection
with the issuance of the Note and the recording of the security documents
therefor. The obligations of Borrower under this Section 3 shall survive the
payment of Xxxxxxxx's indebtedness under this Note and the termination of this
Note.
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4. Conditions to Borrowing; Prepayment.
(a) Subject to the terms and conditions of this Note, Lender
shall make available to Borrower the Principal Sum in immediately available
funds not later than 12:00 Noon (Maryland time) on the Business Day on which the
following conditions precedent are satisfied:
(i) Borrower shall have executed and delivered or
caused to be executed and delivered to Lender the following documents
(collectively, the "Loan Documents"):
(A) This Note duly executed by an authorized
officer of each entity comprising Xxxxxxxx;
(B) That certain Amendment No. 3 to Loan and
Security Agreement dated of even date with this Note by and among the Borrower
and Xxxxxx (the "Amendment") duly executed by an authorized officer of each
entity comprising Borrower;
(C) That certain Third Amended and Restated
Revolving Credit Note dated of even date with the Amendment duly executed by an
authorized officer of each entity comprising Xxxxxxxx and made payable to
Lender;
(D) A certificate of the secretary of each
entity comprising Borrower certifying: (1) resolutions of Borrower or other
evidence reasonably satisfactory to Lender that the borrowing of the Loan and
the execution, delivery and performance of the Loan Documents have been duly and
properly authorized by all necessary action of the Borrowers and (2) the names
and signatures of the officers of the Borrowers authorized to execute documents
on its behalf in connection herewith; and
(E) All other documents, certificates and
agreements deemed reasonably necessary or appropriate by Lender to effectuate
the transactions described in this Note; and
(F) A certificate of the chief financial officer
of each entity comprising Xxxxxxxx, dated the Closing Date, certifying that all
of the conditions specified in this Section 4 have been fulfilled.
(ii) All representations, warranties and covenants
contained in this Note or otherwise made in writing in connection with this Note
or the other Loan Documents, or in connection with the Loan Agreement or the
documents entered into in connection with the Loan Agreement (collectively with
the Loan Agreement, the "Revolving Loan Documents"), by or on behalf of Borrower
shall be true and correct in all material respects;
(iii) No Event of Default or any event that, with the
giving of notice or the passage of time or both, could be a default or an Event
of Default, shall have occurred or be continuing under this Note or any other
Loan Documents; and
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(iv) No Event of Default (as defined therein) shall have
occurred or be continuing under the Loan Agreement or the Revolving Loan
Documents.
(b) Borrower hereby irrevocably authorizes Xxxxxx to disburse
the full amount of the Principal Sum by wire transfer to such bank account as
may be designated by Borrower from time to time or elsewhere if pursuant to
written direction from Borrower.
(c) Lender will account to Borrower monthly with a statement
of advances, charges and payments made pursuant to this Note, and the account
rendered by Xxxxxx shall be deemed final, binding and conclusive upon Borrower
absent manifest error.
(d) Borrower may prepay all or any part of the Principal Sum
outstanding (inclusive of the Commitment Fee) without penalty, together with all
interest accrued on the Principal Sum and all other sums that are payable
pursuant to this Note and terminate this Note without penalty.
(e) By completing the closing under this Note, Xxxxxx does not
waive a breach of any representation, warranty or covenant of Borrower under
this Note or under any other Loan Documents, and all of Lender's claims and
rights resulting from any breach or misrepresentation by Borrower are
specifically reserved by Xxxxxx.
(f) All outstanding principal, interest, fees and other
amounts due under this Note shall be prepaid in full simultaneously with
repayment of all Obligations under the Loan Agreement and/or the termination of
the Loan Agreement or the Revolving Loan Documents for any reason.
5. Payment Office. The Principal Sum, the interest on the Principal
Sum, and any other amounts payable under this Note are payable in lawful money
of the United States of America at the office of Lender, at 0 Xxxxxxxxx Xxxxxx,
0xx Xxxxx, Xxxxx Xxxxx, Xxxxxxxx 00000, Attention: Xxxxxxx Xxxxxxxxxx, Chief
Counsel, or at such other place as Lender may specify in writing to Borrower.
Any payment in other than immediately available funds shall be subject to
collection. Interest shall continue to accrue until the funds by which payment
is made are available to Lender for its use. Any payment stated to be due on a
day on which banks in Maryland are required or permitted to be closed for
business shall be due and payable on the next business day (each such day, a
"Business Day") and such extension of time shall be included in the computation
of interest in connection with such payment.
6. No Presentment; Acceleration. On the Maturity Date or upon the
occurrence of an Event of Default, the outstanding Principal Sum, accrued and
unpaid interest on the Principal Sum, and all other sums owed by Borrower to
Lender in connection with this Note (including without limitation the Commitment
Fee) or the other Loan Documents shall become and be immediately due and payable
upon declaration to that effect delivered by Lender to Borrower; provided that
on the happening of any event specified in Section 12(f), this Note shall be
immediately due and payable without declaration or other notice to Borrower.
Borrower hereby expressly waives any presentment for payment, demand for
payment, notice of nonpayment or dishonor, protest and notice of protest of any
kind.
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7. Security Agreement. This Note shall constitute a security
agreement as that term is used in the UCC and Borrower hereby grants to Lender,
to secure Borrower's obligations under this Note and the other Loan Documents,
and under the Loan Agreement and the Revolving Loan Documents, a security
interest in the following (collectively, the "Collateral"); provided that,
notwithstanding anything in this Section 7 to the contrary, the term
"Collateral" shall not include any assets described below to the extent such
assets are subject to a capital lease agreement if the grant of a security
interest in such property to Xxxxxx xxxxxxxxx would constitute a breach or
violation of such capital lease agreement:
(a) all of Borrower's now owned or hereafter acquired
machinery, equipment, computer equipment, tools, tooling, furniture, fixtures,
goods, supplies, materials, work in process, whether now owned or hereafter
acquired, together with all additions, parts, fittings, accessories, special
tools, attachments, and accessions now and hereafter affixed thereto and/or used
in connection therewith, all replacements thereof and substitutions therefor,
and all cash and non-cash proceeds and products thereof; provided that the
aggregate net book value of all such items of Collateral described in this
Section 7(a) shall at all times during the term of this Note equal or exceed
Twelve Million and No/100 Dollars ($12,000,000) (the "Minimum Net Book Value");
and
(b) the proceeds (including, without limitation, insurance
proceeds) of all of the foregoing.
8. Use of Funds. Borrower covenants and agrees that the loan of the
Principal Sum shall be used (a) to fund all or a portion of the purchase price
for those acquisitions or proposed acquisitions described generally in Schedule
8 attached hereto and (b) for working capital and for other costs of Borrower
arising in the ordinary course of Xxxxxxxx's business.
9. Representations. Each entity comprising Borrower hereby warrants
and represents to Lender that:
(a) Borrower is a corporation (i) duly incorporated, validly
existing, and in good standing under the laws of its state of incorporation,
(ii) is in good standing as a foreign corporation in each jurisdiction in which
the character of the properties owned or leased by it or the nature of its
business makes such qualification necessary except where the failure to so
qualify could not have a Material Adverse Effect (as defined below), (iii) has
the corporate power and authority to own its assets and transact the business in
which it is engaged, and (iv) has obtained all certificates, licenses and
qualifications required under all laws, regulations, ordinances, or orders of
public authorities necessary for the ownership and operation of all of its
properties and transaction of all of its business, except where the failure to
obtain such certificates, licenses and qualifications could not have a Material
Adverse Effect. For the purposes of this Note, "Material Adverse Effect" shall
mean any event or condition which, alone or when taken with other events or
conditions occurring or existing concurrently with such event or condition (v)
has or is reasonably expected to have a material adverse effect on the business,
operations, condition (financial or otherwise), assets, liabilities, or
properties of the Borrowers taken as a whole; (w) has or is reasonably expected
to have any material adverse effect on the validity or enforceability of this
Note or any Loan Document; (x)
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materially impairs or is reasonably expected to materially impair the ability of
Borrower to pay and perform the obligations under this Note; (y) materially
impairs or is reasonably expected to materially impair the ability of Lender to
enforce its rights and remedies under this Note or any of the Loan Documents; or
(z) has or is reasonably expected to have any material adverse effect on the
Collateral, the liens of Lender in the Collateral or the priority of such liens.
(b) Borrower has full corporate power and authority to borrow
the Loan and to enter into, execute, and deliver this Note, and to incur and
perform its obligations under this Note and the other Loan Documents, all of
which have been duly authorized by all necessary corporate action. Except as set
forth on Schedule 9(b), no consent or approval of stockholders of, or lenders
to, Borrower, and no consent, approval, filing or registration with any
governmental authority is required as a condition to the validity of this Note
or the other Loan Documents or the performance by Borrower of its obligations
under this Note or the other Loan Documents.
(c) This Note, when issued and delivered for value received,
and all other Loan Documents constitute the valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their respective
terms.
(d) The execution and delivery by Borrower of this Note and
the other Loan Documents do not, and the performance of Borrower's obligations
under this Note and the other Loan Documents will not, violate, conflict with,
constitute a default under, or result in the creation of a lien or encumbrance
(other than a lien, security interest, charge or other encumbrance in favor of
Lender) upon the property of Borrower under (i) any provision of Borrower's
certificate of incorporation or bylaws, (ii) any provision of any law, rule or
regulation applicable to Borrower, or (iii) any of the following (A) any
indenture or other agreement or instrument to which Borrower is a party or by
which Borrower or its property is bound (other than indentures, agreements and
instruments, the violation, conflicts, or defaults of which, individually or in
the aggregate, do not have a Material Adverse Effect), or (B) any judgment,
order or decree of any court, arbitration tribunal, or governmental entity which
is applicable to Borrower or Borrower's properties or assets, other than such
judgments, orders or decrees from such governmental entities, the violation of
which, individually or in the aggregate, do not have a Material Adverse Effect.
(e) Except as disclosed in Schedule 9(e), there are no
actions, suits, proceedings or investigations pending or threatened against
Borrower before any court or arbitrator or before or by any Governmental
Authority which, in any one case or in the aggregate, if determined adversely to
the interests of Borrower, could have a Material Adverse Effect on the business,
properties, condition (financial or otherwise) or operations, current or
prospective, of Borrower, or upon its ability to perform its obligations under
the Loan Documents. Borrower is not in default with respect to any order of any
court, arbitrator, or Governmental Authority applicable to Borrower or its
properties.
(f) The audited financial statements of Xxxxxxxx as of and for
the period ending December 31, 2000 and the unaudited financial statements of
Xxxxxxxx as of and for the period ending June 30, 2001, all certified by the
chief financial officer of Borrower, which were previously delivered to Lender,
are true, correct and complete and fairly present the financial condition of
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Borrower and the results of Xxxxxxxx's operations and changes in financial
condition as of the dates and for the periods referred to, and have been
prepared in accordance with generally accepted accounting principles. There are
no material unrealized or anticipated liabilities, direct or indirect, fixed or
contingent, of Borrower as of the dates of such financial statements that are
not reflected in the financial statements or the notes thereto. There has been
no material adverse change in the business, properties, condition (financial or
otherwise) of Borrower since December 31, 2000. Xxxxxxxx's fiscal year ends on
December 31.
(g) Borrower is not in default under or with respect to any
obligation in any respect that could have a Material Adverse Effect on its
business, operations, property or financial condition, or that could have a
Material Adverse Effect on the ability of Borrower to perform its obligations
under this Note or the other Loan Documents. No Event of Default or event that,
with the giving of notice or lapse of time, or both, could become an Event of
Default, has occurred and is continuing.
(h) Borrower has good and marketable title to its properties
and assets, including the Collateral and the properties and assets reflected in
the financial statements as described in paragraph (f) above, subject to no
lien, mortgage, pledge, encumbrance or charge of any kind, other than Permitted
Liens. Borrower has not agreed or consented to cause any of its properties or
assets, whether owned now or hereafter acquired, to be subject in the future
(upon the happening of a contingency or otherwise) to any lien, mortgage,
pledge, encumbrance or charge of any kind, other than Permitted Liens. For
purposes of this Agreement "Permitted Liens" shall mean: (i) deposits or pledges
to secure obligations under workmen's compensation, social security or similar
laws, or under unemployment insurance; (ii) deposits or pledges to secure bids,
tenders, contracts (other than contracts for the payment of money), operating
and capital leases, statutory obligations, surety and appeal bonds and other
obligations of like nature arising in the ordinary course of business; (iii)
mechanic's, workmen's, materialmen's or other like liens arising in the ordinary
course of business with respect to obligations which are not due, or which are
being contested in good faith by appropriate proceedings which suspend the
collection thereof and in respect of which adequate reserves have been made
(provided that such proceedings do not, in Xxxxxx's sole discretion, involve any
substantial risk of the sale, loss or forfeiture of such property or assets or
any interest therein); (iv) liens and encumbrances in favor of Xxxxxx; (v) liens
on equipment of Borrower to secure borrowed money incurred for the sole purpose
of financing all or a portion of the purchase price of the equipment subject to
such lien (i.e. purchase money security interests) in the ordinary course of
business; and (vi) liens set forth on Schedule 9(h).
(i) Borrower has filed, or has obtained extensions for the
filing of, all federal, state and other tax returns which are required to be
filed, and has paid all taxes shown as due on those returns and all assessments,
fees and other amounts due as of the date hereof. All tax liabilities of
Borrower were, as of December 31, 2000 and are now, adequately provided for on
Xxxxxxxx's books. No tax liability has been asserted by the Internal Revenue
Service or other taxing authority against Borrower for taxes in excess of those
already paid. Immaterial exceptions to this Section 9(i) are set forth on
Schedule 9(i)
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(j) The use of the proceeds of the Loan and Xxxxxxxx's
issuance of this Note will not, directly or indirectly, violate or result in a
violation of the Securities Act of 1933 or the Securities Exchange Act of 1934,
as amended, or any regulations issued pursuant thereto, including without
limitation Regulations U, T, or X of the Board of Governors of the Federal
Reserve System. Borrower is not engaged in the business of extending credit for
the purpose of the purchasing or carrying "margin stock" within the meaning of
those regulations. No part of the proceeds of the Loan will be used to purchase
or carry any margin stock or to extend credit to others for such purpose.
(k) Borrower is not an investment company within the meaning
of the Investment Company Act of 1940, as amended, nor is it, directly or
indirectly, controlled by or acting on behalf of any Person which is an
investment company within the meaning of that Act.
(l) Borrower is not in violation of any statute, rule or
regulation of any governmental authority (including, without limitation, any
statute, rule or regulation relating to employment practices or to
environmental, occupational and health standards and controls), the violation of
which could, individually or in the aggregate, have a Material Adverse Effect.
Borrower has obtained all licenses, permits, franchises, and other governmental
authorizations necessary for the ownership of its properties and the conduct of
its business, unless the failure to obtain such licenses, individually or in the
aggregate, could not have a Material Adverse Effect. Borrower is current with
all reports and documents required to be filed with any state or federal
securities commission or similar governmental authority and is in full
compliance with all applicable rules and regulations of such commissions, unless
the failure to comply, individually or in the aggregate, could not have a
Material Adverse Effect.
(m) To Borrower's best knowledge, no use, exposure, release,
generation, manufacture, storage, treatment, transportation or disposal of
hazardous material has occurred or is occurring on or from any real property on
which the Collateral is located (the "Premises") or which is owned, leased or
otherwise occupied by Borrower, or has occurred off the Premises as a result of
any action of Borrower. To Borrower's best knowledge, all hazardous material
used, treated, stored, transported to or from, generated or handled on the
Premises, or off the Premises by Xxxxxxxx, has been disposed of on or off the
Premises by or on behalf of Borrower in a lawful manner. To Borrower's best
knowledge, there are no underground storage tanks present on or under the
Premises owned or leased by Xxxxxxxx. To Borrower's best knowledge, no other
environmental, public health or safety hazards exist with respect to the
Premises.
(n) The only places of business of Borrower, and the places
where it keeps and intends to keep the Collateral and records concerning the
Collateral, are at the addresses set forth in Schedule 9(n), which also lists
the owner of record of each such property. Immaterial exceptions to this Section
9(n) are set forth on Schedule 9(n).
(o) Borrower exclusively owns or possesses all the patents,
patent applications, trademarks, trademark applications, service marks, trade
names, copyrights, franchises, licenses, and rights with respect to the
foregoing necessary for the current and planned future conduct of its business,
without any conflict with the rights of others, except to the extent that
failure to own or
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possess such property could not have a Material Adverse Effect. A list of all
such patents, patent applications, trademarks, trademark applications, service
marks, trade names, copyrights, franchises, licenses, and rights with respect to
the foregoing (indicating the nature of Borrower's interest), as well as all
outstanding franchises and licenses given by or held by Borrower, is attached as
Schedule 9(o), except for such patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, franchises,
licenses, and rights with respect to the foregoing (indicating the nature of
Borrower's interest) which in the aggregate could not have a Material Adverse
Effect. Borrower is not in default of any obligation or undertaking with respect
to such intellectual property or rights. Borrower is not infringing on any
patents, patent applications, trademarks, trademark applications, service marks,
trade names, copyrights, franchises, licenses, any rights with respect to the
foregoing, or any other intellectual property rights of others except for
infringement which individually or in the aggregate could not have a Material
Adverse Effect, and the Borrower is not aware of any infringement by others of
any such rights owned by Xxxxxxxx.
(p) The identity of the greater than five percent (5%)
stockholders of record of all classes of the outstanding stock of Borrower,
together with the respective ownership percentages held by such stockholders as
of February 28, 2001, are as set forth in the Annual Report on Form 10-K of The
TriZetto Group, Inc. ("TriZetto") filed with the Securities and Exchange
Commission on April 2, 2001 and certain changes in the beneficial ownership of
certain individuals or entities are reflected in the Prospectus of TriZetto
dated June 13, 2001.
(q) Neither this Note nor any other Loan Document nor any
other agreement, document, certificate, or statement furnished to Lender by or
on behalf of Borrower in connection with the transactions contemplated hereby
contains any untrue statement of material fact or omits to state a material fact
necessary to make the statements contained in this Note or in the other Loan
Documents or such other documents not misleading. Except as disclosed in the
"risk factors" section of the Borrower's Annual Report on Form 10-K and
subsequent filings with the Securities and Exchange Commission, there is no fact
known to Borrower that would have a Material Adverse Effect or in the future
could have a Material Adverse Effect on the business, operations, affairs or
financial condition of Borrower, or any of its properties or assets.
(r) Borrower does not own or hold any equity or long-term debt
investments in, have any outstanding advances to, have any outstanding
guarantees for the obligations of, or have any outstanding borrowings from, any
Person except as otherwise disclosed in the financial statements and except to
the extent such items, individually or in the aggregate, could not have a
Material Adverse Effect on Borrower. Except as otherwise disclosed in the
financial statements of the Borrower, Borrower is not a party to any contract or
agreement, or subject to any corporate restriction, which could have a Material
Adverse Effect.
(s) Within five (5) years before the date of this Note,
neither the business, property or assets, or operations of Borrower has been
adversely affected in any way by any strike, lockout, combination of workers, or
order of the United States of America or other governmental authority, directed
against Xxxxxxxx. There are no pending or, to Xxxxxxxx's best knowledge,
threatened labor disputes, strikes, lockouts, or similar occurrences or
grievances against Borrower
9
or its business, which individually or in the aggregate could have a Material
Adverse Effect on Borrower.
(t) Within five (5) years before the date of this Note,
Borrower has not conducted business under or used any other name (whether
corporate, partnership or assumed) except as listed on Schedule 9(t). Borrower
is the sole owner of all names listed on that Schedule and any and all business
done and invoices issued in such names are Borrower's sales, business, and
invoices. Each trade name of Xxxxxxxx represents a division of Borrower and not
an Affiliate (except for any Affiliate that is also a "Borrower" hereunder). For
purposes hereof, "Affiliate" means, with respect to any specified Person, any
Person directly or indirectly controlling, controlled by, or under common
control with the specified Person, including without limitation their
stockholders and any Affiliates thereof. A Person shall be deemed to control a
corporation or other entity if the Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and business of the
corporation or other entity, whether through the ownership of voting securities,
by contract or otherwise.
(u) Except for Borrower entities which are subsidiaries of
other Borrower entities and except as set forth on Schedule 9(u), Borrower has
no subsidiaries. None of the subsidiaries set forth on Schedule 9(u) has any
assets or operations.
10. Affirmative Covenants.
Each entity constituting Borrower covenants and agrees that
until this Note shall be repaid in full:
(a) Financial Statements and Collateral Reports. Borrower will
furnish to Lender (i) a sales and collections report and accounts receivable
aging schedule on a form acceptable to Lender within fifteen (15) Business Days
after the end of each calendar month, which shall include, but not be limited
to, a report of sales, credits issued, and collections received; (ii) payables
aging schedules within fifteen (15) Business Days after the end of each calendar
month; (iii) internally prepared unaudited monthly financial statements for
Borrower, certified by the chief financial officer (or other financial officer
if such other financial officer has executed the secretary's certificate on file
with Xxxxxx) of Borrower, within twenty (20) Business Days of the end of each
calendar month; (iv) all unaudited quarterly financial statements for Borrower,
certified by the chief financial officer of Borrower, within forty five (45)
calendar days of the end of each calendar month (including the last month of any
fiscal quarter or fiscal year); (v) INTENTIONALLY DELETED; (vi) to the extent
prepared and otherwise disclosed, annual projections, profit and loss
statements, balance sheets, and cash flow reports (prepared on a monthly basis)
for the succeeding fiscal year within forty-five (45) Business Days before the
end of each of Borrower's fiscal years; (vii) annual audited financial
statements for Borrower prepared by a firm of independent public accountants
satisfactory to Lender, within one hundred twenty (120) calendar days after the
end of each of Xxxxxxxx's fiscal years; (vii) promptly upon receipt thereof,
copies of any reports submitted to Borrower by the independent accountants in
connection with any interim audit of the books of Xxxxxxxx and copies of each
management control letter provided to Borrower by independent accountants,
unless the disclosure of such reports is prohibited by applicable laws; (ix) as
soon as available, copies of all financial
10
statements and notices provided by Borrower to all of its stockholders; and (x)
such additional information, reports or statements as Xxxxxx may from time to
time reasonably request. Annual financial statements shall set forth in
comparative form figures for the corresponding periods in the prior fiscal year.
All financial statements shall include a balance sheet and statement of earnings
and shall be prepared in accordance with GAAP.
(b) Payments Hereunder. Borrower will make all payments of
principal, interest, fees, and all other payments required under this Note, and
under any other agreements with Lender to which Borrower is a party, as and when
due.
(c) Existence, Good Standing, and Compliance with Laws.
Borrower will do or cause to be done all things necessary (except where the
failure to do so could not have a Material Adverse Effect), to (i) obtain and
keep in full force and effect all corporate existence, rights, licenses,
privileges, and franchises of Borrower necessary to the ownership of its
property or the conduct of its business, and comply with all applicable present
and future laws, ordinances, rules, regulations, orders and decrees of any
governmental authority having or claiming jurisdiction over Borrower; and (ii)
maintain and protect the properties used or useful in the conduct of the
operations of Borrower, in a prudent manner, including without limitation the
maintenance at all times of such insurance upon its insurable property and
operations as required by law or by subsection (e) below.
(d) Taxes and Charges. Borrower will timely file all tax
reports and pay and discharge all taxes, assessments and governmental charges or
levies imposed upon Borrower, or its income or profits or upon its properties or
any part thereof, before the same shall be in default and prior to the date on
which penalties attach thereto, as well as all lawful claims for labor,
material, supplies or otherwise which, if unpaid, might become a lien or charge
upon the properties or any part thereof of Borrower; provided, however, that
Borrower shall not be required to pay and discharge or cause to be paid and
discharged any such tax, assessment, charge, levy or claim so long as the
validity or amount thereof shall be contested in good faith and by appropriate
proceedings by Xxxxxxxx, as determined in the reasonable judgement of Lender,
and Borrower shall have set aside on their books adequate reserve therefor; and
provided further, that such deferment of payment is permissible only so long as
Borrower's title to, and its right to use, the Collateral is not adversely
affected thereby and Lender's lien and priority on the Collateral are not
adversely affected, altered or impaired thereby.
(e) Insurance. Borrower will carry adequate public liability
and professional liability insurance with responsible companies reasonably
satisfactory to Lender in such amounts and against such risks as is customarily
maintained by similar businesses and by owners of similar property in the same
general area.
(f) General Information. Borrower will furnish to Lender such
information as Lender may, from time to time, reasonably request with respect to
the business or financial affairs of Xxxxxxxx, and permit any officer, employee
or agent of Xxxxxx to visit and inspect (upon reasonable notice of not less than
two (2) Business Days) any of the properties during regular business hours, to
examine the minute books, books of account and other records, including
management letters prepared by Xxxxxxxx's auditors, of Borrower, and make copies
thereof or
11
extracts therefrom, and to discuss its and their business affairs, finances and
accounts with, and be advised as to the same by, the accountants and officers of
Borrower, all at such times and as often as Lender may reasonably require.
(g) Maintenance of Property. Borrower will maintain, keep and
preserve the Collateral in good repair, working order and condition, normal wear
and tear excepted, and from time to time make all reasonably needful and proper
repairs, renewals, replacements, betterments and improvements to the Collateral.
(h) Notification of Events of Default and Adverse
Developments. Borrower promptly will notify Lender upon the occurrence of: (i)
any Event of Default; (ii) any event which, with the giving of notice or lapse
of time, or both, is reasonably likely to constitute an Event of Default; (iii)
any event, development or circumstance whereby the financial statements
previously furnished to Lender hereunder fail in any material respect to present
fairly, in accordance with GAAP, the financial condition and operational results
of Borrower as of the dates of such financial statements; (iv) any judicial,
administrative or arbitration proceeding pending against Borrower, and any
judicial or administrative proceeding known by Borrower to be threatened against
it which, if adversely decided, could have a Material Adverse Effect on the
condition (financial or otherwise) or operations (present or prospective) of
Borrower or which may expose Borrower to uninsured liability of $500,000.00 or
more; (v) any default claimed by any other creditor for borrowed money of
Borrower other than Lender in excess of $200,000; and (vi) any other development
in the business or affairs of Borrower which may have a Material Adverse Effect;
in each case describing the nature thereof and (in the case of notification
under clauses (i) and (ii)) the action Borrower proposes to take with respect
thereto.
(i) Employee Benefit Plans. No employee benefit plan (a
"Plan") subject to the Employee Retirement Income Security Act of 1974 ("ERISA")
and regulations issued pursuant to ERISA that is maintained by Borrower or under
which Borrower could have any material liability under ERISA (i) has failed to
meet minimum funding standards established in Section 302 of ERISA, (ii) has
failed to substantially comply with all applicable requirements of ERISA and of
the Internal Revenue Code, including all applicable rulings and regulations
thereunder, or (iii) has engaged in or been involved in a prohibited transaction
(as defined in ERISA) under ERISA or under the Internal Revenue Code. Neither
Borrower nor any member of a Controlled Group that includes Xxxxxxxx has
assumed, or received notice of a claim asserted against Borrower or another
member of the Controlled Group for, withdrawal liability (as defined in the
Multi-Employer Pension Plan Amendments Act of 1980, as amended) with respect to
any multi-employer pension plan. Borrower has timely made when due all
contributions with respect to any multi-employer pension plan in which it
participates and no event has occurred triggering a material claim against
Borrower for withdrawal liability with respect to any multi-employer pension
plan in which Borrower participates.
(j) Financial Records. Borrower shall keep current and
accurate books of records and accounts in which full and correct entries will be
made of all of its business transactions, and will reflect in its financial
statements provided hereunder adequate accruals and appropriations to reserves,
all in accordance with GAAP.
12
(k) Places of Business. Borrower shall give fifteen (15)
calendar days' prior written notice to Lender of any change in the location of
any of its places of business, of the places where its records concerning its
Accounts are kept, of the places where the Collateral is kept, or of the
establishment of any new, or the discontinuance of any existing, places of
business.
(l) Business Conducted. Borrower shall continue in the
business presently conducted by it using its commercially reasonable best
efforts to maintain its customers and goodwill. Borrower shall not engage,
directly or indirectly, in any line of business substantially different from the
business conducted by it immediately prior to the Closing Date, or engage in
business or lines of business which are not reasonably related thereto.
(m) Litigation and Other Proceedings. Borrower shall give
prompt notice to Lender of any litigation, arbitration, or other proceeding
before any governmental authority against or affecting Borrower if the amount
claimed is more than $500,000.00.
(n) Licensure. Borrower will maintain all licenses necessary
to conduct its business as currently conducted, and take any steps required to
comply with any such new or additional requirements that may be imposed on
Borrower, except where failure to do so could not have a Material Adverse
Effect.
(o) Tangible Net Worth. TriZetto will not at any time allow
its "tangible net worth" to fall below $12,000,000. For purposes of this Section
10(r), "tangible net worth" shall be defined as TriZetto's net worth, on a
consolidated basis, minus all intangibles, including without limitation
goodwill, in each case calculated in accordance with GAAP; provided that, for
purposes of calculating "tangible net worth", TriZetto shall be entitled to
include deferred tax liability associated with any intangibles generated from
acquisitions made by it.
(p) Further Assurances. Borrower will defend its title to the
Collateral against all persons and will, upon request of the Lender, (i) furnish
such further assurances of title as may be reasonably required by the Lender,
(ii) deliver and execute or cause to be delivered and executed, in form and
content reasonably satisfactory to the Lender, any financing statements,
notices, certificates of title, and other documents and pay the cost of filing
or recording the same in all public offices deemed necessary by the Lender, as
well as any recordation, documentary, or transfer tax required by law to be paid
in connection with such filing or recording, and (iii) do such other acts as the
Lender may reasonably request in order to perfect, preserve, maintain, or
continue the perfection of the Lender's security interest in the Collateral
and/or its priority.
(r) Excess Cash Balance. At all times throughout the term of
this Note, Borrower shall maintain, in the accounts set forth on Schedule 10(r)
and incorporated herein by reference, an excess cash balance, not including the
proceeds of (i) the Loan made hereunder plus (ii) any and all Loans (as defined
in the Loan Agreement) made by Lender under the Loan Agreement, equal, in the
aggregate, to at least Six Million and No/100 Dollars ($6,000,000.00) (the "Cash
Balance"); provided that, if at any time Borrower shall fail to maintain the
Cash Balance as required hereunder, Borrower shall be required to notify Lender
in writing of such event. For purposes hereof, "excess cash" shall mean
Borrower's cash and cash equivalents, short-term
13
investments, and certificates of deposit and/or commercial paper with a maturity
date of greater than ninety (90) days that Borrower can sell on the open market
at any time.
11. Negative Covenants.
Each entity constituting Borrower covenants and agrees that
until this Note shall be repaid in full:
(a) Borrowing. Borrower will not create, incur, assume or
suffer to exist any liability for borrowed money except: (i) indebtedness to
Lender; (ii) indebtedness of Borrower secured by mortgages, encumbrances or
liens permitted by Section 11(b); (iii) accounts payable to trade creditors and
current operating expenses (other than for borrowed money) which are not aged
more than one hundred twenty (120) calendar days from the billing date or more
than thirty (30) calendar days from the due date, in each case incurred in the
ordinary course of business and paid within such time period, unless the same
are being contested in good faith and by appropriate and lawful proceedings, and
Borrower shall have set aside such reserves, if any, with respect thereto as are
required by GAAP and deemed adequate by Borrower and its independent
accountants; (iv) borrowings incurred in the ordinary course of its business and
not exceeding $100,000.00 in the aggregate outstanding at any one time; and (v)
the indebtedness set forth on Schedule 11(a). Borrower will not make prepayments
on any existing or future indebtedness for borrowed money to any third person or
entity (other than Lender, to the extent permitted by this Note or any
subsequent agreement between Borrower and Lender).
(b) Liens and Encumbrances. Borrower will not create, incur,
assume or suffer to exist any mortgage, pledge, lien or other encumbrance of any
kind (including the charge upon property purchased under a conditional sale or
other title retention agreement) upon, or any security interest in, any of the
Collateral, whether now owned or hereafter acquired, except for Permitted Liens.
(c) Restriction on Fundamental Changes; No Change in Operation
or Control. Borrower will not: (i) enter into any transaction of merger or
consolidation except as set forth on Schedule 11(c) hereof; (ii) liquidate,
wind-up or dissolve itself (or suffer any liquidation or dissolution); (iii)
convey, sell, lease, sublease (other than the subleases currently in existence
as reflected on Borrower's financial statements), transfer or otherwise dispose
of, in one transaction or a series of transactions, any of its assets, or the
capital stock of any subsidiary of Borrower, whether now owned or hereafter
acquired, other than in the ordinary course of business; or (iv) acquire by
purchase or otherwise all or any substantial part of the business or assets of,
or stock or other evidence of beneficial ownership of, any Person, other than
such acquisitions as may be approved in writing by Lender; provided that
Borrower shall be permitted to acquire by purchase or otherwise, on notice to
Lender only but without Lender's prior approval as required hereunder, any
business or assets of, or stock or other evidence of beneficial ownership of any
Person, to the extent that the purchase price for any such acquisition,
individually or together with all other acquisitions by Xxxxxxxx hereunder on or
after September 14, 2001, does not exceed $20,000,000. Xxxxxxxx agrees that
compliance with this Section 11(c) is a material inducement to Xxxxxx's
advancing credit under this Agreement. Xxxxxxxx further agrees that in addition
to all other remedies available to Xxxxxx,
14
Lender shall be entitled to specific enforcement of the covenants in this
Section 11(c), including without limitation injunctive relief.
(d) Sale and Leaseback. Borrower will not, directly or
indirectly, enter into any arrangement whereby Borrower sells or transfers all
or any part of its assets and thereupon and within one year thereafter rents or
leases the assets so sold or transferred without the prior written notice to,
and the prior express written consent of, Lender, which consent shall not be
unreasonably withheld.
(e) Dividends, Distributions, and Management Fees. Borrower
will not make, declare or pay any dividends or distributions with respect to,
purchase, redeem or otherwise acquire for value any of its outstanding stock now
or hereafter outstanding, or return any capital of its stockholders, except
pursuant to the Borrower's existing or future Restricted Stock Agreements or as
otherwise approved by the Board of Directors of the applicable Borrower
(provided, that such issuances, in the aggregate shall not exceed 10% of the
outstanding shares of the capital stock of any such Borrower), nor shall
Borrower pay management fees or fees of a similar nature to any person other
than to other entities which constitute the Borrower (in accordance with the
terms hereof); provided that, so long as no Event of Default is occurring or
continuing hereunder, Borrower shall be permitted to pay dividends to its
Affiliates (regardless of whether any such Affiliate is a "Borrower" hereunder).
(f) Loans. Borrower will not make loans or advances to any
Person, other than (i) trade credit extended in the ordinary course of its
business (including advances provided to Customers pursuant to their respective
Customer Contracts (as defined in the Loan Agreement) in the ordinary course of
business; provided, Borrower provides prior written notice of such advances
(i.e. which are in the ordinary course of business) at least five (5) Business
Days prior to such any such advance), and (ii) advances for business travel and
similar temporary advances made in the ordinary course of business to officers,
stockholders, directors, and employees.
(g) Contingent Liabilities. Borrower will not assume,
guarantee, endorse, contingently agree to purchase or otherwise become liable
upon the obligation of any Person, except by the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business (including advances provided to Customers pursuant to their
respective Customer Contracts in the ordinary course of business; provided,
Xxxxxxxx provides prior written notice of such advances (i.e. which are in the
ordinary course of business) at least five (5) Business Days prior to such any
such advance).
(h) Subsidiaries. Except for subsidiaries which are also
certain of the entities which constitute Borrower and those subsidiaries set
forth on Schedule 9(u), Borrower does not have, and will not form, any
subsidiary, or make any equity investment in or any loan in the nature of an
equity investment to, any other person, without the prior written consent of
Lender, which consent shall not be unreasonably withheld. In the event that any
subsidiary listed on Schedule 9(u) or any other subsidiary of a Borrower entity
which is not a Borrower hereunder at any time acquires or otherwise obtains any
assets or commences operations of any kind, Borrower shall immediately add such
entity as a "Borrower" entity under this Note and shall ensure that such
subsidiary as well
15
as the other Borrower entities execute all documents required to include the
collateral of such subsidiary in the Collateral hereunder.
(i) Transactions with Affiliates and Subsidiaries. Borrower
will not enter into any transaction, including without limitation the purchase,
sale, or exchange of property, or the loaning or giving of funds to any
Affiliate (except for any Affiliate that is also a "Borrower" hereunder) or
subsidiary, except in the ordinary course of business and pursuant to the
reasonable requirements of Borrower's business and upon terms substantially the
same and no less favorable to Borrower as it would obtain in a comparable arm's
length transaction with any Person not an Affiliate (except for any Affiliate
that is also a "Borrower" hereunder) or subsidiary, and so long as the
transaction is not otherwise prohibited under this Agreement. For purposes of
the foregoing, Lender consents to the transactions described on Schedule 11(i).
Notwithstanding the foregoing, no Borrower will transfer any assets to any
subsidiary of Borrower identified on Schedule 9(u) or any other subsidiary of a
Borrower entity which is not a Borrower hereunder nor cause any such subsidiary
to commence operations without the prior written consent of Lender until such
subsidiary is added as a "Borrower" entity hereunder as set forth in paragraph
11(h) above for purposes of including the assets of such subsidiary in the
Collateral (provided, however, that Lender shall not be required to lend against
the assets of such subsidiary added as a Borrower entity).
(j) Change in Capital Structure. Except as set forth on
Schedule 11(j)-1, there shall occur no change in Borrower's capital structure as
set forth in Schedule 11(j)-2 without the prior written consent of Lender, which
consent shall not be unreasonably withheld.
(k) Contracts and Agreements. Borrower will not become or be a
party to any contract or agreement which would breach this Note, or breach any
other instrument, agreement, or document to which Borrower is a party or by
which it is or may be bound, except for such breach which individually or in the
aggregate could have a Material Adverse Effect.
(l) Compliance with ERISA. Borrower will not permit with
respect to any Plan covered by Title IV of ERISA any Prohibited Transaction or
any Reportable Event.
(m) Qualifications. Borrower will not amend, alter or suspend
or terminate or make provisional in any material way, any qualification required
to operate its business without the prior written consent of Lender, except in
the event where such action could not have a Material Adverse Effect.
(n) Use of Xxxxxx's Name. Borrower will not use Xxxxxx's name
(or the name of any of Lender's affiliates) in connection with any of its
business operations, except as required by law (provided, Lender is given prior
notice of such usage). Borrower may disclose to third parties that Xxxxxxxx has
a borrowing relationship with Xxxxxx. Nothing contained in this Note is intended
to permit or authorize Borrower to make any contract on behalf of Xxxxxx.
(o) Margin Stock. Borrower will not carry or purchase any
"margin security" within the meaning of Regulations U, T or X of the Board of
Governors of the Federal Reserve System.
16
(p) Truth of Statements and Certificates. Borrower will not
furnish to Lender any certificate or other document that contains any untrue
statement of a material fact or that omits to state a material fact necessary to
make it not misleading in light of the circumstances under which it was
furnished.
12. Events of Default. The following events are each an "Event of
Default" under this Note:
(a) Borrower fails to make any payment of principal when due
or fails to make any payment of interest, fees or other amounts owed to or for
the account of Lender under this Note and such payment remains unpaid for ten
(10) calendar days after written notice of the default or breach from Lender to
Borrower; or
(b) Borrower has made any representations or warranties in
this Note, the other Loan Documents, any financial statement delivered to Lender
or otherwise in connection with this Note or the related transaction that
contains any untrue statement of a material fact or omits a material fact
necessary to make the statements contained in this Note or in such document or
financial statement not misleading; or
(c) Borrower shall fail to perform or observe, or cause to be
performed or observed, any other term, obligation, covenant, condition or
agreement contained in this Note or the other Loan Documents and any such
failure shall have continued for a period of fifteen (15) Business Days after
written notice of such failure; or
(d) Any obligation of Borrower (other than its obligations
under this Note) for the payment of borrowed money (excluding trade accounts
payable) in an amount greater than $200,000 is not paid when due or within any
applicable grace period, or such obligation becomes or is declared to be due and
payable before the expressed maturity of the obligation, or there shall have
occurred an event which, with the giving of notice or lapse of time, or both,
would cause any such obligation to become, or allow any such obligation to be
declared to be, due and payable; or
(e) Borrower shall (i) apply for, or consent in writing to,
the appointment of a receiver, trustee or liquidator; or (ii) file a voluntary
petition seeking relief under the Bankruptcy Code, or be unable, or admit in
writing Borrower's inability, to pay their debts as they become due; or (iii)
make a general assignment for the benefit of creditors; or (iv) file a petition
or an answer seeking reorganization or an arrangement or a readjustment of debt
with creditors, apply for, take advantage, permit or suffer to exist the
commencement of any insolvency, bankruptcy, suspension of payments,
reorganization, debt arrangement, liquidation, dissolution or similar event,
under the law of the United States or of any state in which Borrower is a
resident; or (v) file an answer admitting the material allegations of a petition
filed against Borrower in any such bankruptcy, reorganization or insolvency case
or proceeding or (vi) take any action authorizing, or in furtherance of, any of
the foregoing; or
17
(f) Either (i) an involuntary case is commenced against
Xxxxxxxx and the petition is not contested within ten (10) calendar days or is
not dismissed within sixty (60) calendar days after the commencement of the case
or (ii) an order, judgment or decree shall be entered by any court of competent
jurisdiction on the application of a creditor adjudicating Borrower bankrupt or
insolvent, or appointing a receiver, trustee or liquidator of Borrower or of all
or substantially all of the assets of Borrower and the order, judgment or decree
shall continue unstayed and in effect for a period of sixty (60) calendar days
or shall not be discharged within ten (10) calendar days after the expiration of
any stay of such order, judgment, or decree; or
(g) One or more final judgments in excess of $250,000 against
Borrower or attachments against its property not fully and unconditionally
covered by insurance shall be rendered by a court of record and shall remain
unpaid, unstayed on appeal, undischarged, unbonded and undismissed for a period
of twenty (20) calendar days; or
(h) There shall occur any uninsured damage to or loss, theft
or destruction of any portion of the Collateral that exceeds $500,000 in the
aggregate; or
(i) Borrower ceases any material portion of its business
operations as presently conducted; or
(j) Subject to applicable cure periods, Borrower breaches or
violates the terms of, or a default or an event which, whether with notice or
the passage of time, or both, is reasonably likely to constitute a default,
occurs under any other existing or future agreement (related or unrelated)
between Borrower and Lender; or
(k) Any indication or evidence is received by Lender that
Borrower may have directly or indirectly been engaged in any type of activity
which, in Lender's discretion, may result in the forfeiture of any property of
Borrower to any governmental authority, which default shall have continued
unremedied for a period of fifteen (15) calendar days after written notice from
Lender;
(l) Borrower or any Affiliate of Borrower, shall challenge or
contest, in any action, suit or proceeding, the validity or enforceability of
this Note, or any of the other Loan Documents, the legality or the
enforceability of any of the obligations under this Note or under any of the
Loan Documents or the perfection or priority of any lien granted to Lender;
(m) Borrower shall be criminally indicted or convicted under
any law that could have a Material Adverse Effect;
(n) There shall occur an adverse change in the financial
condition or business prospects of Borrower (which change meets the standard of
Material Adverse Effect hereunder), or Lender in good faith shall deem itself
insecure as a result of acts or events bearing upon the financial condition of
Borrower or the repayment of this Note, which default shall have continued
unremedied for a period of twenty (20) calendar days after written notice from
Lender; or
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(o) An Event of Default shall have occurred under the Loan
Agreement or the Revolving Loan Documents.
13. Lender's Rights.
(a) Upon the occurrence of an Event of Default under this Note
or the other Loan Documents, Lender may, in addition to its rights and remedies
set forth in Sections 6 and 7 above, proceed, to the extent permitted by law, to
protect and enforce its rights either by suit in equity or by action at law, or
both, whether for the specific performance of any covenant, condition or
agreement contained in this Note or in aid of the exercise of any power granted
in this Note, or proceed to enforce the payment of this Note or to enforce any
other legal or equitable right of Lender. No right or remedy in this Note or the
other Loan Documents, in the Loan Agreement or the Revolving Loan Documents or
any in other agreement or instrument to the benefit of Lender is intended to be
exclusive of any other right or remedy, and each and every such right or remedy
shall be cumulative and shall be in addition to every other right and remedy
given under this Note or now or hereafter existing at law or in equity or by
statute or otherwise. Without limiting the generality of the foregoing, if the
outstanding Principal Sum, or any of the other obligations of Borrower to
Lender, including but not limited to any obligations of Borrower to Lender under
the Loan Agreement or Revolving Loan Documents, shall not be paid when due,
Lender shall not be required to resort to any particular security, right or
remedy or to proceed in any particular order of priority, and Lender shall have
the right at any time and from time to time, in any commercially reasonable
manner and in any order, to enforce its security interests with respect to the
Collateral, liens, rights and remedies, or any of them, as it deems appropriate
in the circumstances, and apply the proceeds of any Collateral to the
obligations of Borrower, in any order, under (x) this Note and the Loan
Documents or (y) the obligations of Borrower under the Loan Agreement and the
Revolving Loan Documents.
(b) If an Event of Default has occurred as provided above and
Borrower has not paid all amounts outstanding, including all principal, together
with interest accrued on such amounts, upon demand by Xxxxxx, then Borrower
shall pay to Lender interest on such outstanding amounts at a rate per annum
equal to the Default Interest Rate from the date such outstanding amounts are
due until the date this Note is paid in full. Xxxxxxxx promises to pay all costs
of collection, including reasonable attorneys' fees, if this Note is referred to
an attorney for collection after the Event of Default.
14. No Defenses. Borrower's obligations under this Note shall not be
subject to any set-off, counterclaim or defense to payment that Borrower now has
or may have in the future.
15. No Waiver; Cumulative Rights. No failure or delay on the part of
Lender in exercising any right, power or privilege under this Note or the other
Loan Documents, nor any course of dealing between Borrower and Lender, shall
operate as a waiver of the right, power or privilege, nor shall a single or
partial exercise of any right, power or privilege preclude any other or further
exercise of, or the exercise of any other, right, power or privilege. The
remedies provided for in this Note are cumulative and are not exclusive of any
remedies that may be available to any party to this Note at law, in equity or
otherwise.
19
16. Writing Required. No modification or waiver of any provisions of
this Note or any other Loan Documents, and no consent to any departure by
Xxxxxxxx, shall in any event be effective, without respect to any course of
dealing between the parties, unless the modification or waiver shall be in a
writing executed by Xxxxxx (and Borrower with respect to a modification) and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. No notice to or demand on Borrower in any case
shall thereby entitle Borrower to any other or further notice or demand in the
same, similar or other circumstances.
17. Usury Limitation. Notwithstanding anything contained to the
contrary in this Note, Xxxxxx shall never be entitled to receive, collect or
apply as interest any amount in excess of the maximum rate of interest permitted
to be charged by applicable law. If Xxxxxx receives, collects or applies as
interest any such excess, the amount that would be excessive interest shall be
applied to the reduction of the Principal Sum; and if the Principal Sum is paid
in full, any remaining excess shall be paid to Borrower. In determining whether
or not the interest paid or payable in any specific case exceeds the highest
lawful rate, Lender and Borrower shall to the maximum extent permitted under
applicable law: (i) characterize any non-principal payment as an expense, fee or
premium rather than as interest; and (ii) "spread" the total amount of interest
throughout the entire term of the obligation so that the interest rate is deemed
to have been uniform throughout the entire term.
18. Notices. Any notice or demand given under this Note shall be
given by delivering it, sending by telecopier (with a confirming copy by regular
mail), or by mailing it by certified or registered mail, postage prepaid, return
receipt requested, or sent by prepaid overnight courier service addressed to
Borrower at: The TriZetto Group, Inc., 000 Xxx Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000, Attention: Xx. Xxxxxxx Xxxxxxxxxx, CFO, Telephone:
(000) 000-0000, Telecopier: (000) 000-0000, with a copy Xxxxx X. Xxxxxxxx, Vice
President, Legal Affairs for TriZetto, Telephone: (000) 000-0000, Telecopier:
(000) 000-0000. Any notice to be given to Lender under this Note shall be given
by personally delivering it, sending by telecopier (with a confirming copy by
regular mail), or mailing it by certified or registered mail, return receipt
requested, or sent by prepaid overnight courier service, addressed to Lender at:
0 Xxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxx Xxxxx, Xxxxxxxx 00000 Attention: Xxxxxxx
Xxxxxxxxxx, Chief Counsel, Telephone: (000) 000-0000, Telecopier: (301)
664-9866, or at such other place as Lender may specify in writing to Borrower.
Each party may designate a change of address by notice to the other given in
accordance with this Section 18 at least fifteen (15) calendar days before such
change of address is to become effective. A notice given under this Note shall
be deemed received upon receipt if it is personally delivered or sent by
telecopier or overnight courier service and five (5) calendar days after it is
deposited in the U.S. mail if it is sent by regular mail.
19. Section Headings. The headings of the several paragraphs of this
Note are inserted solely for convenience of reference and are not a part of and
are not intended to govern, limit or aid in the construction of any term or
provision.
20. Severability. If any term, provision, covenant or condition of
this Note or the application of such term, provision, covenant or condition to
any party or circumstance shall be found by a court of competent jurisdiction to
be, to any extent, invalid or unenforceable, the
20
remainder of this Note and the application of such term, provision, covenant, or
condition to parties or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby, and each term,
provision, covenant or condition shall be valid and enforced to the fullest
extent permitted by law. Upon determination that any such term, provision,
covenant or condition is invalid, illegal or unenforceable, Lender may, but is
not obligated to, advance funds to Borrower under this Note until Borrower and
Lender amend this Note so as to effect the original intent of the parties as
closely as possible in a valid and enforceable manner.
21. Survival of Terms. All covenants, agreements, representations and
warranties made in this Note or in any financial statements delivered pursuant
to this Note shall survive Borrower's execution and delivery of this Note to
Lender and shall continue in full force and effect so long as this Note or any
other obligation under this Note shall be outstanding and unpaid or any other
obligation of Borrower to Lender or its affiliates under this Note shall remain
unperformed.
22. Indemnity. Borrower hereby agrees to indemnify and hold harmless
Lender, its partners, officers, agents and employees (collectively,
"Indemnitee") from and against any liability, loss, cost, expense, claim,
damage, suit, action or proceeding ever suffered or incurred by Lender
(including reasonable attorneys' fees and expenses) arising from Borrower's
failure to observe, perform or discharge any of its covenants, obligations,
agreements or duties under this Note or from the breach of any of the
representations or warranties contained in this Note. In addition, Xxxxxxxx
shall defend Indemnitee against and save it harmless from all claims of any
Person with respect to the Collateral. Notwithstanding any contrary provision in
this Note, the obligations of Borrower under this Section 22 shall survive the
payment in full of the all obligations under this Note and the termination of
this Note.
23. Joint and Several Liability. Each entity comprising Borrower
shall be jointly and severally liable for all of the obligations of Borrower
under this Note.
24. Commissions. The transaction contemplated by this Note was
brought about by Xxxxxx and Xxxxxxxx acting as principals and without any
brokers, agents, or finders being the effective procuring cause. Borrower
represents that it has not committed Lender to the payment of any brokerage fee,
commission, or charge in connection with this transaction. If any such claim is
made on Lender by any broker, finder, or agent or other person, Xxxxxxxx will
indemnify, defend, and hold Lender harmless from and against the claim and will
defend any action to recover on that claim, at Xxxxxxxx's cost and expense,
including Xxxxxx's counsel fees. Xxxxxxxx further agrees that until any such
claim or demand is adjudicated in Xxxxxx's favor, the amount demanded will be
deemed a liability of Borrower under this Note, secured by the Collateral.
25. Third Parties. No rights are intended to be created under this
Note or under any other Loan Document for the benefit of any third party donee,
creditor, or incidental beneficiary of Borrower. Nothing contained in this Note
shall be construed as a delegation to Lender of Xxxxxxxx's duty of performance,
including without limitation Borrower's duties under any account or contract in
which Xxxxxx has a security interest.
21
26. Discharge of Xxxxxxxx's Obligations. Lender, in its sole
discretion, shall have the right at any time, and from time to time, without
prior notice to Borrower if Borrower fails to do so, to: (a) obtain insurance
covering any of the Collateral as required under this Note; (b) pay for the
performance of any of Borrower's obligations under this Note; (c) discharge
taxes, liens, security interests, or other encumbrances at any time levied or
placed on any of the Collateral in violation of this Note unless Borrower is in
good faith with due diligence by appropriate proceedings contesting those items;
and (d) pay for the maintenance and preservation of any of the Collateral.
Reasonable expenses and advances hereunder shall be added to the Loan, until
reimbursed to Lender and shall be secured by the Collateral. Any such payments
and advances by Xxxxxx shall not be construed as a waiver by Xxxxxx of an Event
of Default.
27. Lender Approvals. Unless expressly provided herein to the
contrary, any approval, consent, waiver or satisfaction of Lender with respect
to any matter that is the subject of this Note, the other Loan Documents may be
granted or withheld by Xxxxxx in its sole and absolute discretion.
28. GOVERNING LAW; CONSENT TO JURISDICTION. THIS NOTE SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF MARYLAND
WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS. IF
ANY ACTION ARISING OUT OF THIS NOTE OR THE OTHER LOAN DOCUMENTS IS COMMENCED BY
LENDER IN THE STATE COURTS OF THE STATE OF MARYLAND OR IN THE U.S. DISTRICT
COURT FOR THE DISTRICT OF MARYLAND, BORROWER HEREBY CONSENTS TO THE JURISDICTION
OF ANY SUCH COURT IN ANY SUCH ACTION AND TO THE LAYING OF VENUE IN THE STATE OF
MARYLAND. ANY PROCESS IN ANY SUCH ACTION SHALL BE DULY SERVED IF MAILED BY
REGISTERED MAIL, POSTAGE PREPAID, TO BORROWER AT ITS ADRESS DESCRIBED IN SECTION
18 OR IF SERVED BY ANY OTHER MEANS PERMITTED BY APPLICABLE LAW.
29. COOPERATION IN DISCOVERY AND LITIGATION. IN ANY LITIGATION,
TRIAL, ARBITRATION OR OTHER DISPUTE RESOLUTION PROCEEDING RELATING TO THIS NOTE
OR ANY OF THE OTHER LOAN DOCUMENTS, ALL DIRECTORS, OFFICERS, EMPLOYEES AND
AGENTS OF BORROWER OR OF ITS AFFILIATES SHALL BE DEEMED TO BE EMPLOYEES OR
MANAGING AGENTS OF BORROWER FOR PURPOSES OF ALL APPLICABLE LAW OR COURT RULES
REGARDING THE PRODUCTION OF WITNESSES BY NOTICE FOR TESTIMONY (WHETHER IN A
DEPOSITION, AT TRIAL OR OTHERWISE). XXXXXXXX AGREES THAT XXXXXX'S COUNSEL IN ANY
SUCH DISPUTE RESOLUTION PROCEEDING MAY EXAMINE ANY OF THESE INDIVIDUALS AS IF
UNDER CROSS-EXAMINATION AND THAT ANY DISCOVERY DEPOSITION OF ANY OF THEM MAY BE
USED IN THAT PROCEEDING AS IF IT WERE AN EVIDENCE DEPOSITION. BORROWER IN ANY
EVENT WILL USE ALL COMMERCIALLY REASONABLE EFFORTS TO PRODUCE IN ANY SUCH
DISPUTE RESOLUTION PROCEEDING, AT THE TIME AND IN THE MANNER REQUESTED BY
XXXXXX, ALL PERSONS, DOCUMENTS (WHETHER IN TANGIBLE, ELECTRONIC OR OTHER FORM)
OR OTHER THINGS UNDER ITS CONTROL AND RELATING TO THE DISPUTE IN ANY
JURISDICTION THAT RECOGNIZES THAT (OR ANY SIMILAR) DISTINCTION.
30. WAIVER OF TRIAL BY JURY. EACH OF BORROWER AND XXXXXX XXXXXX (A)
COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUES TRIABLE OF RIGHT
BY A JURY, AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY
22
FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW HEREAFTER EXIST. THIS WAIVER
OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY, BY
EACH OF BORROWER AND LENDER, AND THIS WAIVER IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A JURY TRIAL
WOULD OTHERWISE ACCRUE. EACH PARTY IS HEREBY AUTHORIZED AND REQUESTED TO SUBMIT
THIS NOTE TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER AND THE
PARTIES TO THIS NOTE, SO AS TO SERVE AS CONCLUSIVE EVIDENCE OF THE FOREGOING
WAIVER OF THE RIGHT TO JURY TRIAL. FURTHER, EACH OF BORROWER AND XXXXXX XXXXXX
CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WILL NOT SEEK TO ENFORCE THIS
WAIVER OF RIGHT TO JURY TRIAL PROVISION.
31. CONFESSION OF JUDGMENT. BORROWER AUTHORIZES ANY ATTORNEY ADMITTED
TO PRACTICE BEFORE ANY COURT OF RECORD IN THE UNITED STATES OR THE CLERK OF SUCH
COURT TO APPEAR ON BEHALF OF BORROWER IN ANY COURT IN ONE OR MORE PROCEEDINGS,
OR BEFORE ANY CLERK THEREOF OR PROTHONOTARY OR OTHER COURT OFFICIAL, AND TO
CONFESS JUDGMENT AGAINST BORROWER IN FAVOR OF XXXXXX IN THE FULL AMOUNT DUE ON
THIS NOTE (INCLUDING PRINCIPAL, ACCRUED INTEREST AND ANY AND ALL CHARGES, FEES
AND COSTS) PLUS ATTORNEYS FEES EQUAL TO FIFTEEN PERCENT (15%) OF THE AMOUNT DUE,
PLUS COURT COSTS, ALL WITHOUT PRIOR NOTICE OR OPPORTUNITY OF BORROWER FOR PRIOR
HEARING. NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS SECTION, THE LENDER
ACKNOWLEDGES THAT ATTORNEYS' FEES ARE STATED TO BE FIFTEEN PERCENT (15%) SOLELY
FOR PURPOSES OF FIXING A SUM CERTAIN FOR WHICH JUDGEMENT CAN BE ENTERED BY
CONFESSION; AND THE LENDER AGREES THAT IN ENFORCING ANY JUDGEMENT BY CONFESSION,
XXXXXX SHALL NOT DEMAND, SOLELY WITH RESPECT TO ATTORNEYS' FEES INCURRED BY THE
LENDER IN CONNECTION WITH SUCH INDEBTEDNESS AFTER SUCH JUDGEMENT IS RENDERED,
ANY AMOUNTS IN EXCESS OF THE ACTUAL AMOUNT OF ATTORNEYS' FEES CHARGED OR BILLED
TO THE LENDER (WHICH ATTORNEYS' FEES SHALL BE CHARGED OR BILLED TO THE LENDER AT
THE STANDARD HOURLY RATES). XXXXXXXX AGREES AND CONSENTS THAT VENUE AND
JURISDICTION SHALL BE PROPER IN THE CIRCUIT COURT OF ANY COUNTY OF THE STATE OF
MARYLAND OR OF BALTIMORE COUNTY, MARYLAND, OR IN THE UNITED STATES DISTRICT
COURT FOR THE DISTRICT OF MARYLAND. BORROWER WAIVES THE BENEFIT OF ANY AND EVERY
STATUTE, ORDINANCE, OR RULE OF COURT WHICH MAY BE LAWFULLY WAIVED CONFERRING
UPON BORROWER ANY RIGHT OR PRIVILEGE OF EXEMPTION, HOMESTEAD RIGHTS, STAY OF
EXECUTION, OR SUPPLEMENTARY PROCEEDINGS, OR OTHER RELIEF FROM THE ENFORCEMENT OR
IMMEDIATE ENFORCEMENT OF A JUDGMENT OR RELATED PROCEEDINGS ON A JUDGMENT. THE
AUTHORITY AND POWER TO APPEAR FOR AND ENTER JUDGMENT AGAINST BORROWER SHALL NOT
BE
23
EXHAUSTED BY ONE OR MORE EXERCISES THEREOF, OR BY ANY IMPERFECT EXERCISE
THEREOF, AND SHALL NOT BE EXTINGUISHED BY ANY JUDGMENT ENTERED PURSUANT THERETO;
SUCH AUTHORITY AND POWER MAY BE EXERCISED ON ONE OR MORE OCCASIONS FROM TIME TO
TIME, IN THE SAME OR DIFFERENT JURISDICTIONS, AS OFTEN AS LENDER SHALL DEEM
NECESSARY, CONVENIENT AND PROPER.
32. APPOINTMENT OF AGENT UNDER THIS AGREEMENT.
(a) Each of the entities comprising Borrower (other than
TriZetto) hereby irrevocably appoints and constitutes TriZetto as its agent to
request and receive the Loan (and to otherwise act on behalf of each such entity
pursuant to this Note and the other Loan Documents) from Lender in the name or
on behalf of each such entity. Lender may disburse the Loan to the bank account
of any one or more of such entities without notice to any of the other entities
comprising Borrower or any other Person at any time obligated on or in respect
of the Obligations.
(b) Each of the entities comprising Borrower (other than
TriZetto) hereby irrevocably appoints and constitutes TriZetto as its agent to
receive statements of account and all other notices from Lender with respect to
the Obligations or otherwise under or in connection with this Agreement and the
other Loan Documents.
(c) No purported termination of the appointment of TriZetto as
agent hereunder shall be effective without the prior written consent of Xxxxxx.
[THIS SPACE INTENTIONALLY BLANK]
24
IN WITNESS WHEREOF, the undersigned have executed this Secured
Term Note as of the day and year first above written.
BORROWER:
THE TRIZETTO GROUP, INC.,
a Delaware corporation
By:
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer/Secretary
CREATIVE BUSINESS SOLUTIONS, INC.,
a Texas corporation
By:
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer/Secretary
FINSERV HEALTH CARE SYSTEMS, INC.,
a New York corporation
By:
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer/Secretary
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
25
HEALTHCARE MEDIA ENTERPRISES, INC.,
a Delaware corporation
By:
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer/Secretary
HEALTHWEB, INC., a Delaware corporation
By:
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer/Secretary
XXXXXXXX HEALTH ENTERPRISES, INC.,
a California corporation
By:
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer/Secretary
XXXXXXX CORPORATION,
a Delaware corporation
By:
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer/Secretary
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
26
TRIZETTO APPLICATION SERVICES, INC.,
a Colorado corporation
By:
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer/Secretary
DIGITAL INSURANCE SYSTEMS CORPORATION,
an Ohio corporation
By:
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer/Secretary
HEALTH NETWORKS OF AMERICA, INC.,
a Maryland corporation
By:
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer/Secretary
XXXXXXX DEVELOPMENT CORPORATION,
a Delaware corporation
By:
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer/Secretary
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
27
XXXXXXX DEVELOPMENT & LICENSING
CORPORATION, an Indiana corporation
By:
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer/Secretary
XXXXXXX SERVICES CORPORATION,
a Delaware corporation
By:
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer/Secretary
ERISCO, INC., a New York corporation
By:
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer/Secretary
RESOURCE INFORMATION
MANAGEMENT SYSTEMS, INC.,
an Illinois corporation
By:
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer/Secretary
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
28
WINTHROP FINANCIAL GROUP, INC.,
an Illinois corporation
By:
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer/Secretary
OPTION SERVICES GROUP, INC., an
Illinois corporation
By:
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer/Secretary
INFOTRUST COMPANY,
an Illinois corporation
By:
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer/Secretary
29