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Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
THE TRIZETTO GROUP, INC.,
FINSERV ACQUISITION CORP.,
FINSERV HEALTH CARE SYSTEMS, INC.
AND
SECURITYHOLDERS OF FINSERV HEALTH CARE SYSTEMS, INC.
DATED AS OF DECEMBER 22, 1999
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), is made and
entered into as of December 22, 1999, by and among The TriZetto Group, Inc., a
Delaware corporation ("TriZetto"), Finserv Acquisition Corp, a Delaware
corporation and wholly owned subsidiary of TriZetto ("Merger Sub"), Finserv
Health Care Systems, Inc., a New York corporation ("Finserv"), the holders of
the capital stock of Finserv listed on the signature pages attached hereto
(collectively, the "Finserv Shareholders" and individually, a "Finserv
Shareholder"), and Xxxxxx Xxxxxxx, as a holder of certain promissory notes made
by Finserv ("Finserv Noteholder" and together with Finserv Shareholders, the
"Finserv Securityholders"). Certain other capitalized terms used in this
Agreement are defined in Exhibit A attached hereto.
RECITALS
WHEREAS, the respective Boards of Directors of TriZetto, Merger Sub and
Finserv believe it is in the best interest of each company and their respective
shareholders to consummate the business combination transaction provided for
herein in which Merger Sub would merge with and into Finserv (the "Merger");
WHEREAS, the respective Boards of Directors of TriZetto, Merger Sub and
Finserv have approved the Merger, upon the terms and subject to the conditions
set forth in this Agreement;
WHEREAS, the Finserv Securityholders are the record and beneficial
owners of 100% of the issued and outstanding shares of Finserv's common stock,
without par value (the "Finserv Stock"), as set forth on Schedule 1 attached
hereto;
WHEREAS, the Finserv Noteholder is the holder of the promissory notes
listed on Schedule 2 attached hereto, each made by Finserv and payable to the
Finserv Noteholder (collectively, the "Finserv Notes");
WHEREAS, at the time of the Closing, the Finserv Securityholders will
be the record and beneficial owners of 100% of the issued and outstanding shares
of Finserv Stock as set forth on Schedule 1 attached hereto;
WHEREAS, each of TriZetto, Merger Sub, Finserv and the Finserv
Securityholders desire to make certain representations, warranties, covenants
and agreements in connection with the Merger and also to prescribe various
conditions to the consummation thereof; and
WHEREAS, for Federal income tax purposes, the Merger is intended to be
qualified as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code").
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:
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ARTICLE 1
THE MERGER
1.1. THE MERGER. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the Delaware General Corporation Law
(the "DGCL") and the New York General Corporation Law ("NYGCL"), Merger Sub
shall be merged with and into Finserv at the Effective Time of the Merger (as
defined in Section 1.3). Following the Merger, the separate corporate existence
of Merger Sub shall cease, and Finserv shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and assume all
the rights, properties, liabilities and obligations of Merger Sub in accordance
with the DGCL and the NYGCL.
1.2. CLOSING. The closing of the Merger (the "Closing") shall take
place at the offices of Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx at 000 Xxxxxxx Xxxxxx
Xxxxx, Xxxxx 0000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 or by facsimile, on December
22, 1999, or, if the conditions to Closing set forth in Section 9 of this
Agreement shall not have been satisfied or waived by the appropriate party by
such time of day on such date, at such time of day as the parties shall agree on
the first business day to occur following the date on which all of the
conditions to Closing set forth in Section 9 shall have been satisfied or waived
as provided therein (subject to the provisions of Section 10 hereof, such other
date and time as shall be mutually agreed upon by the parties, but in no event
later than December 31, 1999. The date on which the Closing actually occurs and
the transactions contemplated hereby become effective is hereinafter referred to
as the "Closing Date." At the time of the Closing, TriZetto, Merger Sub, Finserv
and the Finserv Securityholders shall deliver the certificates and other
documents and instruments required to be delivered hereunder.
1.3. EFFECTIVE TIME. At the Closing, a certificate of merger (the
"Certificate of Merger") shall be executed in accordance with the relevant
provisions of the DGCL and the NYGCL and the parties shall make all other
filings, recordings or publications required by the DGCL and the NYGCL in
connection with the Merger. The Merger shall become effective at such time as
the Certificate of Merger is duly filed with the Delaware Secretary of State and
the New York Secretary of State, or at such other time as may be specified in
the Certificate of Merger (the "Effective Time").
1.4. EFFECTS OF THE MERGER. Subject to the foregoing, the effects of
the Merger shall be as provided in the applicable provisions of the DGCL and the
NYGCL.
1.5. CERTIFICATE OF INCORPORATION AND BYLAWS OF THE SURVIVING
CORPORATION. The Certificate of Incorporation and Bylaws of Finserv as in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation and Bylaws of the Surviving Corporation until thereafter changed
or amended as provided therein or in accordance with applicable law.
1.6. DIRECTORS AND OFFICERS. The directors and officers of Merger Sub
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation until their successors shall have been duly elected or
appointed and qualified in accordance with applicable law or until their earlier
death, resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws.
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ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF FINSERV AND MERGER SUB
2.1. EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of TriZetto, Merger Sub, Finserv or
the Finserv Securityholders:
(a) CAPITAL STOCK OF MERGER SUB. Each issued and outstanding share
of capital stock of Merger Sub (the "Merger Sub Stock") shall by virtue of the
Merger and without any action on the part of any holder thereof, be converted
into one share of Finserv Stock.
(b) CONVERSION OF FINSERV COMMON STOCK. Subject to Sections 2.1(c)
and 2.1(d):
(i) Each issued and outstanding share of Finserv Stock will be
converted automatically into the right to receive, the number of validly issued,
fully paid and non-assessable shares of common stock, $0.001 par value, of
TriZetto (the "TriZetto Stock") which equals the Conversion Number, subject to
adjustment as set forth in Sections 2.5, 2.6 and 2.7. As used herein, the
"Conversion Number" shall equal the number obtained by dividing:
(A) the quotient obtained by dividing $1,500,000 by the
average of the closing sales prices of the TriZetto Stock for the five trading
days immediately preceding December 18, 1999, as reported on the Nasdaq National
Market System ("NMS"), by
(B) the number that is equal to the total number of shares
of Finserv Stock that are issued and outstanding immediately prior to the
Effective Time of the Merger.
(ii) At the Effective Time, all such shares of Finserv Stock
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate representing any such
shares shall cease to have any rights with respect thereto, except the right to
receive, upon the surrender of any such certificates, certificates representing
the shares of TriZetto Stock ( the "Merger Consideration") to be issued or paid
in consideration therefor upon the surrender of such certificate in accordance
with Section 2.2, without interest.
(c) DISSENTING SHARES. Notwithstanding anything in this Agreement
to the contrary, shares of Finserv Stock that are outstanding immediately prior
to the Effective Time and that are held by a holder who is entitled to and has
demanded and perfected his right of appraisal for such Finserv Stock in
accordance with Article 9 of the NYGCL (the "Dissenting Shares") shall not be
converted into the right to receive the Merger Consideration as provided in
Section 2.1(b) of this Agreement, unless and until such holder fails to perfect
or withdraws or otherwise loses his right to an appraisal of the Dissenting
Shares and payment under the NYGCL. If, after the Effective Time, any such
holder fails to perfect or withdraws or loses his right to an appraisal of the
Dissenting Shares under the NYGCL, such Dissenting Shares shall thereupon be
treated as if they had been converted as of the Effective Time into the right to
receive the Merger Consideration to which such holder is entitled, without
interest thereon. Finserv agrees to give all notices acquired under Article 9 of
the NYGCL and otherwise comply with the requirements of Article 9 of the NYGCL.
In addition, Finserv shall give TriZetto (i) prompt notice of any written
demands for appraisal of any Dissenting
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Shares, withdrawals of such demands, and any other instruments served pursuant
to the NYGCL and received by Finserv and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
NYGCL. Finserv shall not, except with the prior written consent of TriZetto,
voluntarily offer to make or make any payment with respect to any demands for
appraisal for Dissenting Shares or offer to settle any such demands.
(d) STOCK OPTIONS AND STOCK PLANS. As of the date of this Agreement
and as of the Effective Time, there will be no outstanding Finserv Derivative
Securities and no outstanding Finserv Options.
2.2. EXCHANGE OF CERTIFICATES.
(a) TRIZETTO STOCK EXCHANGE PROCEDURES. Immediately following the
Closing, upon receipt of the certificates representing all of the outstanding
shares of Finserv Stock from the Finserv Securityholders, TriZetto and Finserv
shall submit to TriZetto's registrar and transfer agent, U.S. Stock Transfer
Corporation (the "Exchange Agent"), an instruction letter including a list of
the names, addresses and social security numbers or taxpayer identification
numbers of each Finserv Securityholder who has delivered the certificate or
certificates representing all shares of Finserv Stock held by such Finserv
Securityholder to TriZetto and for which the holders thereof are not entitled to
claim dissenter's rights. As soon as reasonably practicable following the
Effective Time, TriZetto shall cause the Exchange Agent to issue in exchange
therefor (i) a certificate representing that number of whole shares of TriZetto
Stock, which such shareholder has the right to receive pursuant to the
provisions of this Article 2 (less the proportionate number of shares to placed
into Escrow as provided in Section 2.4 below) and as further described on
Exhibit B attached hereto, and (ii) the cash payment in lieu of fractional
shares, if any. Upon delivery of the above mentioned consideration, the Finserv
stock certificate so surrendered shall be canceled. Until surrendered as
contemplated by this Section 2.2, each certificate shall be deemed at any time
after the Effective Time for all corporate purposes of TriZetto to represent
ownership of the number of shares of TriZetto Stock into which the number of
shares of Finserv Stock shown thereon have been converted as contemplated by
this Article 2.
(b) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends
or other distributions with respect to TriZetto Stock with a record date after
the Effective Time shall be paid to the holder of any unsurrendered certificate
with respect to the shares of TriZetto Stock represented thereby and no cash
payment in lieu of fractional shares shall be paid pursuant to Section 2.2(d)
until the surrender of such certificate in accordance with this Article 2.
Subject to the effect of applicable laws, following surrender of any such
certificate, there shall be paid to the record holder of the certificates
representing whole shares of TriZetto Stock issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of dividends or other
distributions, if any, with a record date on or after the Effective Time which
theretofore became payable, but which were not paid by reason of the immediately
preceding sentence, with respect to such whole shares of TriZetto Stock, and
(ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date on or after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole shares of TriZetto Stock.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY STOCK. All shares of
TriZetto Stock issued upon the surrender for exchange of certificates in
accordance with the terms of this Article 2 (including any cash paid pursuant to
Section 2.2(d)) shall be deemed to have been issued
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(and paid) in full satisfaction of all rights pertaining to the shares of
Finserv Stock represented thereby. From and after the Effective Time, the stock
transfer books of Finserv shall be closed and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Finserv Stock which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, certificates are
presented to the Surviving Corporation for any reason, they shall be canceled
and exchanged as provided in this Article 2.
(d) NO FRACTIONAL SHARES. No certificates or scrip representing
fractional shares of TriZetto Stock shall be issued upon the surrender for
exchange of certificates, and such fractional share interests will not entitle
the owner thereof to vote or to any other rights of a TriZetto stockholder. Each
holder of shares of Finserv Stock converted pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of TriZetto Stock
shall receive, in lieu thereof, cash without interest in an amount equal to such
fractional share of TriZetto Stock multiplied by $30.6125.
(e) WITHHOLDING TAXES; PAYMENTS TO PUBLIC OFFICIALS. TriZetto and
Merger Sub shall be entitled to deduct and withhold from any consideration
payable or otherwise deliverable to any Finserv Securityholder pursuant to this
Agreement such amounts as TriZetto and Merger Sub may be required to deduct or
withhold therefrom under the Code or under any provision of state, local or
foreign tax law. To the extent such amounts are so deducted or withheld, such
amounts shall be treated for all purposes under this Agreement as having been
paid to the Finserv Securityholder to whom such amounts would otherwise have
been paid. Neither TriZetto nor Merger Sub shall be liable to any Finserv
Securityholder for any shares of TriZetto Stock (or dividends or distributions
with respect thereto), or for any cash amounts, delivered to any public official
pursuant to any applicable abandoned property, escheat or similar law.
2.3. NOTE CONSIDERATION.
(a) NOTE PURCHASE. On the terms and subject to the conditions of
this Agreement, in reliance upon the representations, warranties and agreements
of the parties contained herein, concurrently with the Closing, the Finserv
Noteholder shall sell, transfer and deliver to TriZetto, and TriZetto shall
purchase from the Finserv Noteholder, all of the issued and outstanding Finserv
Notes except for $25,000 which shall remain outstanding; provided however, that
TriZetto shall not be obligated to pay more than $1,224,592.21 for the Finserv
Notes, net of the debt owed by the Finserv Noteholder to TriZetto pursuant to
that certain Secured Promissory Note executed by the Finserv Noteholder on
December 16, 1999 (the "Note Consideration" and together with the Merger
Consideration and Earnout Consideration, the "Consideration").
(b) PAYMENT OF THE NOTE CONSIDERATION. TriZetto will withhold
$125,000 of the Note Consideration that would otherwise be delivered to the
Finserv Noteholder at the Closing (the "Cash Holdback") and that will be held by
TriZetto for one year to secure the adjustment to the Note Consideration which
may be made pursuant to Sections 2.5 and 2.6 below; provided, however, that the
Cash Holdback will be released sooner upon the complete resolution of the
adjustments set forth in Sections 2.5 and 2.6 below. Subject to the adjustment
set forth in Sections 2.5 and 2.6, at the Closing, TriZetto will deliver the
Note Consideration minus the Cash Holdback, by wire transfer to the Finserv
Noteholder in accordance with wire instructions provided by the Finserv
Noteholder.
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2.4. DELIVERY OF TRIZETTO STOCK TO ESCROW. Pursuant to an Escrow
Agreement to be entered into on or before the Closing in substantially the form
of Exhibit C (the "Escrow Agreement"), by and among TriZetto, the Finserv
Securityholders, Bankers Trust Company of California N.A. (the "Escrow Agent")
and the Representative, TriZetto will deposit stock certificates representing
20,000 shares of TriZetto Stock that would otherwise be delivered to the Finserv
Securityholders at the Closing (the "Escrow Shares") in Escrow together with
related stock powers which will be held in escrow for one year to secure the:
(i) accounts receivable and accounts payable covenants in Section 2.5 below;
(ii) The Flex Group Excess covenant in Section 2.6 below; (iii) claims made by
or on behalf of Xxxxxx Xxxxxx against Finserv, TriZetto or any of their
Affiliates; and (iv) indemnification obligations of Finserv and the Finserv
Securityholders with respect to claims made under Article 8 hereof and to secure
the purchase price adjustments of the Finserv Securityholders which may be made
pursuant to Sections 2.5 and 2.6 below and in accordance with the Escrow
Agreement.
2.5. ADJUSTMENT TO CONSIDERATION BASED ON ACCOUNTS RECEIVABLE AND
PAYABLE SCHEDULE.
(a) ACCOUNTS RECEIVABLE AND PAYABLE SCHEDULE.
(i) No later than 60 business days after the Closing Date,
Finserv shall deliver to TriZetto a schedule of accounts receivable and accounts
payable which shall be dated as of the Closing Date and which shall be prepared
in a manner in accordance with generally accepted accounting principles
consistently applied ("GAAP"), including normal accruals through December 31,
1999 which reflects accounts receivable earned, but which were not billed as of
the Closing Date ("Accounts Receivable and Payable Schedule"). TriZetto may,
within 90 days after the Closing Date at its sole option with notice to Xxxxxx
Xxxxxxx as the representative of the Finserv Securityholders (the
"Representative"), prepare from Finserv's books and records (in accordance GAAP
consistently applied) its own version of such Accounts Receivable and Payable
Schedule, and if the two versions vary, TriZetto's Chief Financial Officer or
his designee and the Representative shall meet to reconcile the versions and
arrive at a final Accounts Receivable and Payable Schedule. In the event the
parties cannot agree on a reconciled version, the dispute shall be determined in
accordance with Section 2.5(c) below. The Accounts Receivable and Payable
Schedule, if accepted by TriZetto, or in the alternative the reconciled Accounts
Receivable and Payable Schedule resulting from the procedure described in the
immediately preceding sentence, shall be the "Final Accounts Receivable and
Payable Schedule."
(ii) It is acknowledged that after the Closing Date all
xxxxxxxx and collections of Finserv will be the property of TriZetto as holder
of 100% of the Finserv Stock (except any payments received from U.S. Imaging,
U.S. Diagnostics, or their affiliates, relating to the Dow Corning breast
implant litigation, which shall be paid to the Finserv Securityholders on a pro
rata basis); provided, however, that the Representative and TriZetto's Chief
Financial Officer shall meet to determine (A) the amount of unbooked accounts
receivable related to New York Presbyterian which shall be deemed to have
accrued prior to the Closing Date and which shall be included as an accrual on
the Accounts Receivable and Payable Schedule; and (B) the amount of moving
expenses incurred by Finserv which shall be deducted from the account payable
section of the Accounts Receivable and Payable Schedule.
(b) EXCESS ACCOUNTS PAYABLE ADJUSTMENT.
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(i) If the Final Accounts Receivable and Payable Schedule
reflects accounts payable of Finserv in excess of the sum of Finserv's accounts
receivable, less a reserve for uncollectible accounts (the "Excess"), then the
Note Consideration shall be reduced dollar-for-dollar by the amount of the
Excess. The Excess shall be applied first against the Cash Holdback until it is
reduced to zero, then if necessary against the Escrow Shares at a valuation
determined pursuant to the Escrow Agreement, then if necessary, against the
TriZetto Stock held by the Finserv Securityholders.
(ii) Assuming no disputes exist regarding the Final Accounts
Receivable and Payable Schedule, the Excess shall be paid within 15 business
days of the determination of the Accounts Receivable and Payable Schedule in
accordance with Section 2.5(a).
(c) VALUATION DISPUTE RESOLUTION. To initiate a dispute between
TriZetto and the Finserv Securityholders with respect to the Accounts Receivable
and Payable Schedule, the Representative must notify TriZetto of such dispute
within ten business days of the delivery of TriZetto's version of the Accounts
Receivable and Payable Schedule. In the event the parties disagree as to the
reconciliation of the Accounts Receivable and Payable Schedule under Section
2.5(a), this Section 2.5(c) shall be triggered automatically and the parties
shall resolve the disagreement as set forth herein. In the case of such
challenge or disagreement, the amount or amounts of any line items in the
Accounts Receivable and Payable Schedule which are in dispute (the "Valuation")
shall be determined as follows: (a) first, TriZetto and the Representative shall
engage in good faith discussions of the Valuation, following which a definitive
Valuation may be agreed to; and (b) if a definitive Valuation is not determined
within 30 days of the date of the Representative's notice, the CPA shall
determine the calculation of the Valuation, in which case the amount so
determined shall control. The costs of the CPA shall be borne equally by
TriZetto and the Finserv Securityholders.
2.6. ADJUSTMENT TO CONSIDERATION BASED ON LIABILITIES OWED TO THE FLEX
GROUP, XXXXXX XXXXXXX OR THEIR AFFILIATES.
(a) LIABILITIES OWED. Based upon the representations and warranties
of Finserv and the Finserv Securityholders, TriZetto is informed and believes
that Finserv owes The Flex Group, Xxxxxx Xxxxxxx and their Affiliates
approximately $175,000, of which $100,000 is reflected on Finserv's books and
records (the "Flex Group Indebtedness"). Pursuant to Section 3.8 of the FinServ
Disclosure Schedule, Finserv and the Finserv Securityholders represent and
warrant that The Flex Group Indebtedness can be paid off, and a General Release
may be obtained upon Finserv's payment of $180,932.79 to The Flex Group.
(b) CONSIDERATION ADJUSTMENT. If The Flex Group, Xxxxxx Xxxxxxx and
their Affiliates require more than $180,932.79 in order to execute a General
Release of all claims (the "Flex Group Excess"), then the Merger Consideration
shall be reduced dollar-for-dollar by the amount of The Flex Group Excess. The
Flex Group Excess shall first be applied against the Cash Holdback until it is
reduced to zero, then if necessary against the Escrow Shares at a valuation
determined pursuant to the Escrow Agreement.
(c) DISPUTE RESOLUTION. In the event that TriZetto and the
Representative disagree on the amount of The Flex Group Excess, the CPA shall
determine The Flex Group Excess, in which case such amount so determined shall
control. The costs of the CPA shall be borne equally by TriZetto and the FinServ
Securityholders.
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2.7. ADJUSTMENT TO CONSIDERATION BASED ON FUTURE NET REVENUES.
(a) EARNOUT PROVISIONS. The Finserv Securityholders may receive an
additional $750,000 payable in shares of TriZetto Common Stock (the "Earnout
Consideration") if certain milestones are met in fiscal year ending December 31,
2000 and fiscal year ending December 31, 2001.
(i) FISCAL YEAR 2000. The maximum Earnout Consideration of
$375,000 for fiscal year 2000 shall be calculated as follows:
(A) If Finserv's Net Revenues and EBITDA for fiscal year
2000 are equal to or greater than $5,400,000 and $600,000, respectively, then
$250,000 payable in shares of TriZetto Stock shall be delivered to the Finserv
Securityholders on a pro rata basis on or before March 31, 2001;
(B) If Finserv's Net Revenues and EBITDA meet the
thresholds set forth in Section 2.7(a)(i)(A) above, and Net Revenues or EBITDA
for fiscal year 2000 are equal to or greater than $5,700,000 or $900,000,
respectively, then $62,500 payable in shares of TriZetto Stock, in addition to
any amounts payable pursuant to 2.7(a)(i)(A) above, shall be delivered to the
Finserv Securityholders on a pro rata basis on or before March 31, 2001;
(C) If Finserv's Net Revenues and EBITDA for fiscal year
2000 are equal to or greater than $5,700,000 and $900,000, respectively, then
$62,500 payable in shares of TriZetto Stock, in addition to any amounts payable
pursuant to Section 2.7(a)(i)(A) and Section 2.7(a)(i)(B) above, shall be
delivered to the Finserv Securityholders on a pro rata basis on or before March
31, 2001;
(ii) FISCAL YEAR 2001. The maximum Earnout Consideration of
$375,000 for fiscal year 2001 shall be calculated as follows:
(A) If Finserv's Net Revenues or EBITDA for fiscal year
2001 are equal to or greater than $6,000,000 or $900,000, respectively, then
$125,000 payable in shares of TriZetto Stock shall be delivered to the Finserv
Securityholders on a pro rata basis on or before March 31, 2002;
(B) If Finserv's Net Revenues and EBITDA for fiscal year
2001 are equal to or greater than $6,000,000 and $900,000, respectively, then
$125,000 payable in shares of TriZetto Stock, in addition to any amounts payable
pursuant to Section 2.7(a)(ii)(A) above, shall be delivered to the Finserv
Securityholders on a pro rata basis on or before March 31, 2002;
(C) If Finserv's Net Revenues and EBITDA meet the
thresholds set forth in Section 2.7(a)(ii)(B) above, and Net Revenues or EBITDA
for fiscal year 2001 are equal to or greater than $6,600,000 or $1,020,000,
respectively, then $62,500 payable in shares of TriZetto Stock, in addition to
any amounts payable pursuant to Section 2.7(a)(ii)(A) and Section 2.7(a)(ii)(B)
above, shall be delivered to the Finserv Securityholders on a pro rata basis on
or before March 31, 2002;
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(D) If Finserv's Net Revenues and EBITDA for fiscal year
2001 are equal to or greater than $6,600,000 and $1,020,000, respectively, then
$62,500 payable in shares of TriZetto Stock, in addition to any amounts payable
pursuant to Section 2.7(a)(ii)(A), Section 2.7(a)(ii)(B) and Section
2.7(a)(ii)(C) above, shall be delivered to the Finserv Securityholders on a pro
rata basis on or before March 31, 2002;
(iii) As used here, "Net Revenues" shall mean Finserv's
revenues less subsequent adjustments determined in accordance with GAAP and
consistent with the practices used in preparing the FinServ Financial Statements
certified by PricewaterhouseCoopers LLP or such other independent certified
public accountant as chosen by TriZetto.
(iv) As used here, "EBITDA" shall mean Finserv's earnings
before interest, taxes, depreciation and amortization, determined in accordance
with GAAP and consistent with the practices used in preparing the FinServ
Financial Statements certified by PricewaterhouseCoopers LLP or such other
independent certified public accountant as chosen by TriZetto. The calculation
for EBITDA shall not include the following items: (A) expenses attributable to
TriZetto or any of the TriZetto Subsidiaries (other than Finserv), except to the
extent that such expenses are directly related to Finserv or are required to be
entered into the books and records of Finserv pursuant to GAAP; and (B) any
costs relating to any claim or liability which was ultimately paid to TriZetto
pursuant to Article 8 of this Agreement. In the event that TriZetto expenses
costs relating to the implementation of Finserv's computer system, including
without limitation, system interfaces, such expenses shall be deducted from
EBITDA as if they were amortized over the longest term permitted by GAAP.
(b) REVENUE CALCULATION. As soon as reasonably practicable, but not
later than March 1, 2001 and March 1, 2002, as applicable, TriZetto shall
deliver to the Representative a calculation of Finserv's Net Revenues for (i)
the 12 months and six months ended December 31, 2000 and (ii) the 12 months and
six months ended December 31, 2001, respectively, determined in accordance with
GAAP and consistent with the practices used in preparing the Finserv Financial
Statements certified by PricewaterhouseCoopers LLP or such other independent
certified public accountant as chosen by TriZetto (the "Revenue Calculation").
The cost of such accounting firm shall be borne by TriZetto. The Representative
shall have 30 days to review and approve the Revenue Calculation. If the
Representative does not notify TriZetto in writing within such 30 day period
that it disputes any matter set forth in the Revenue Calculation, the Revenue
Calculation shall be deemed to have been accepted by the Finserv Securityholders
and shall be binding upon the Finserv Securityholders and TriZetto. If any
disputes arise regarding the Revenue Calculation which the Finserv
Securityholders and TriZetto cannot resolve between themselves within 30 days,
such questions shall be referred to the CPA, and the CPA shall be directed to
resolve such questions within 7 days thereafter, and the CPA's decision shall be
final and binding on all parties. The cost of the CPA shall be borne equally by
the Finserv Securityholders and TriZetto.
(c) DELIVERY OF SHARES. Upon any final determination of the Revenue
Calculation pursuant to Section 2.7(b), TriZetto shall promptly issue, or cause
to be issued by submitting an instruction letter to its Transfer Agent
instructing the Transfer Agent to issue an additional number of shares of
TriZetto Stock equal to the applicable amount of the Earnout Consideration, to
the Finserv Securityholders for such fiscal year, if any, as set forth in
Section 2.7(a). The shares delivered in satisfaction of the Earnout
Consideration, if any, shall be
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based upon the average closing sales price for the 5 trading days preceding
March 31, 2000 or March 31, 2001, as applicable.
(d) STRATEGIC AND OPERATIONAL DECISIONS. It is acknowledged that
after the Closing Date TriZetto shall, in its sole discretion, have complete
control over all strategic and operational decisions concerning the operation of
Finserv, notwithstanding that such decisions may or will impact the amount of
the Net Revenues. TriZetto agrees to exercise its discretion in making such
decisions in good faith and without regard to any effect such decisions may have
on the Net Revenues and the Earnout Consideration, if any, to be paid hereunder.
TriZetto shall introduce such of its customers to Finserv as it shall deem
appropriate in its reasonable business judgment in order to increase Finserv's
business. TriZetto shall provide Finserv with adequate working capital as it
shall determine in its reasonable business judgment.
(e) NET REVENUE STATEMENTS. TriZetto shall provide to the
Representative, as soon as reasonably practicable, but not later than 20 days
after the end of each month (except the month of December 2000) ending after the
Closing until November 30, 2001, a statement setting forth (i) Net Revenues for
such month and (ii) Net Revenues for the fiscal year to date. The revenue
statements shall be delivered upon receipt by TriZetto of a Confidentiality
Agreement in substantially the form of Exhibit D attached hereto
("Confidentiality Agreement") executed by the Representative.
2.8. ADJUSTMENT TO TRIZETTO STOCK. If the average closing sales price
of the TriZetto Stock as reported on the NMS (or other exchange or similar
market on which TriZetto Stock is regularly traded if not then traded on NMS)
for the 20 trading days preceding the one-year anniversary of the Closing Date
(the "Adjustment Date") is less than $30.6125, then TriZetto shall issue or
cause to be issued by submitting an instruction letter to its Transfer Agent
instructing the Transfer Agent to issue an additional number of shares of
TriZetto Stock within five business days after the Adjustment Date (the
"Adjusted Shares Closing") to the Finserv Securityholders such that the total
market value of all the shares of TriZetto Stock issued and delivered by
TriZetto, as required this Section 2.8 as well as by Section 2.1(b) is
$1,500,000, based upon the average closing sales price for the 20 trading days
preceding the Adjustment Date; provided, however, that in no event shall
TriZetto be required to issue a number of additional shares at the Adjustment
Shares Closing in excess of 12,249 shares of TriZetto Stock. The adjustment
called for by this Section 2.8 shall be made after shares of TriZetto Stock are
returned from Escrow to TriZetto or otherwise sold in satisfaction of claims
under Article 8 or for adjustments in pursuant to Sections 2.5 and 2.6, or for
any other purpose.
2.9. LOST CERTIFICATES. In the event any certificate representing any
shares of Finserv Stock shall have been lost, stolen, or destroyed, upon the
making of an affidavit of that fact by the person claiming such certificate to
be lost, stolen or destroyed and upon satisfaction of the conditions set forth
below, the holder of such lost, stolen or destroyed certificate shall be
entitled to receive, in accordance with the terms of this Agreement, the Merger
Consideration payable in respect of the Finserv Stock evidenced by such
certificate. When authorizing such payment in exchange for any lost, stolen or
destroyed certificate, the person to whom the Merger Consideration is to be paid
shall, as a condition precedent to the payment thereof, give Finserv a bond
satisfactory to TriZetto in such sum as it may direct or otherwise indemnify
Finserv and TriZetto in a manner satisfactory to TriZetto against any claim that
may be made against Finserv or TriZetto with respect to the certificate alleged
to have been lost, stolen or destroyed.
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2.10. DELIVERY OF CONSIDERATION. By executing this Agreement, each of
the Finserv Securityholders agrees to the method and timing of the delivery of
the Consideration as set forth herein and in the Flow of Funds Memorandum
attached hereto as Exhibit J.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF FINSERV AND THE
FINSERV SECURITYHOLDERS
Finserv and the Finserv Securityholders, jointly and severally,
represent and warrant to TriZetto and Merger Sub that, except as set forth in
the Finserv Disclosure Schedule:
3.1. CORPORATE EXISTENCE AND POWER. Finserv is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of New York, and has all corporate powers and authority and all governmental
licenses, authorizations, permits, consents and approvals required to carry on
its business as now conducted, except for those licenses, authorizations,
permits, consents and approvals the absence of which would not, individually or
in the aggregate, have a Material Adverse Effect on Finserv. Finserv is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where such qualification is necessary, except for those
jurisdictions where the failure to be so qualified would not, individually or in
the aggregate, have a Material Adverse Effect on Finserv. Finserv has heretofore
delivered to TriZetto true and complete copies of Finserv's Articles of
Incorporation and Bylaws as currently in effect.
3.2. CORPORATE AUTHORIZATION.
(a) The execution, delivery and performance by Finserv of this
Agreement and the consummation of the transactions contemplated hereby are
within Finserv's corporate powers and, except for the required approval of the
holders of Finserv Stock in connection with the consummation of the Merger, have
been duly authorized by all necessary corporate action. The affirmative vote of
the holders of two-thirds of the outstanding shares of Finserv Stock is the only
vote of the holders of any of Finserv's capital stock necessary in connection
with the consummation of the Merger.
(b) Finserv's Board of Directors, at a meeting duly called and
held, has unanimously (i) determined that this Agreement and the transactions
contemplated hereby (including the Merger) are fair to and in the best interests
of the Finserv Shareholders, (ii) approved and adopted this Agreement and the
transactions contemplated hereby (including the Merger), which approval
satisfies in full any applicable requirements of the NYGCL, and (iii) resolved
to recommend approval and adoption of this Agreement by the holders of Finserv
Stock.
(c) This Agreement has been duly executed and delivered by Finserv
and the Finserv Securityholders and is a legal, valid and binding obligation of
Finserv and the Finserv Securityholders, enforceable against Finserv and the
Finserv Securityholders, as applicable, in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
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3.3. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Finserv and the Finserv Securityholders of this Agreement and the
consummation by Finserv and the Finserv Securityholders of the transactions
contemplated hereby require no action by or in respect of, or filing with, any
governmental body, agency, official or authority, other than (a) the filing of
the Certificate of Merger and other documents in accordance with the DGCL and
the NYGCL, (b) compliance with the Securities Act of 1933 (the "1933 Act"), the
Securities Exchange Act of 1934 (the "1934 Act"), or foreign or state securities
or blue sky laws, and (c) any other filings, approvals or authorizations which,
if not obtained, would not, individually or in the aggregate, have a Material
Adverse Effect on Finserv or materially impair the ability of Finserv and the
Finserv Securityholders to consummate the transactions contemplated by this
Agreement.
3.4. NON-CONTRAVENTION. The execution, delivery and performance by
Finserv and the Finserv Securityholders of this Agreement and the consummation
by Finserv and the Finserv Securityholders of the transactions contemplated
hereby do not and will not (i) contravene or conflict with the Articles of
Incorporation or Bylaws of Finserv, (ii) assuming compliance with the matters
referred to in Section 3.3, contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to Finserv or the Finserv Securityholder,
(iii) require the consent or other action of any person under, constitute a
default under, or give rise to any right of termination, cancellation or
acceleration of any right or obligation of Finserv or to a loss of any benefit
to which Finserv is entitled under any provision of any agreement or other
instrument binding upon Finserv or any license, franchise, permit, certificate,
approval or other similar authorization affecting, or relating in any way to,
the assets or business of Finserv, or (iv) result in the creation or imposition
of any Lien on any asset of Finserv, except, in the case of clauses (ii) through
(iv), for such matters as would not, individually or in the aggregate, have a
Material Adverse Effect on Finserv or materially impair the ability of Finserv
to consummate the transactions contemplated by this Agreement.
3.5. COMPLIANCE WITH LAW AND OTHER INSTRUMENTS. Finserv holds all
licenses, permits and authorizations necessary for the lawful conduct of its
business as now being conducted pursuant to all applicable statutes, laws,
ordinances, rules and regulations of all governmental bodies, agencies and other
authorities having jurisdiction over it or any part of its respective
operations, and there are no violations or claimed violations by Finserv of any
such license, permit or authorization or any such statute, law, ordinance, rule
or regulation.
3.6. CAPITALIZATION.
(a) The authorized capital stock of Finserv consists of 200 shares
of Finserv Stock. As of the date hereof, there are outstanding (i) 149 shares of
Finserv Stock, (ii) no employee stock options to purchase shares of Finserv
Stock, (iii) no warrants to purchase shares of Finserv Stock, and (iv) no shares
of Finserv Stock issued or relating to restricted stock awards, or other stock
based compensation arrangements.
(b) All outstanding shares of capital stock of Finserv have been
duly authorized and validly issued and are fully paid and nonassessable. Except
as set forth in this Section 3.6, there are no outstanding (i) shares of capital
stock or other voting securities of Finserv, (ii) securities of Finserv
convertible into or exchangeable for shares of capital stock or voting
securities of Finserv, or (iii) options, restricted stock, other stock based
compensation awards or other rights to acquire from Finserv, or other obligation
of Finserv to issue, any capital stock, voting securities or securities
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convertible into or exchangeable for capital stock or voting securities of
Finserv. There are no outstanding obligations of Finserv to repurchase, redeem
or otherwise acquire any securities referred to in clauses (i), (ii) or (iii)
above.
(c) As of the date hereof, there are no outstanding bonds,
debentures, notes or other indebtedness of Finserv having the right to vote (or
convertible into or exercisable for Finserv Stock having the right to vote) on
any matters on which the Finserv Securityholders may vote.
3.7. SUBSIDIARY. Finserv has no Subsidiaries and does not own any stock
or equity interest in any other Person.
3.8. COMPANY FINANCIAL STATEMENTS. Finserv has delivered to TriZetto
(a) the audited balance sheet of Finserv as of December 31, 1997, the unaudited
balance sheet of Finserv as of December 31, 1998 and the related statements of
income and shareholders equity for the fiscal years ended December 31, 1997 and
1998, together with an unaudited balance sheet as of October 31, 1999 and the
related statement of income and shareholder's equity for the ten months then
ended (collectively the "Financial Statements"). The Finserv Financial
Statements present fairly, in conformity with GAAP applied on a consistent basis
(subject, in the case of the October 31, 1999 financial statements, to normal
year end adjustments none of which individually or in the aggregate are
material), the financial condition and results of operations of as of the dates
and for the periods indicated therein. For purposes of this Agreement, "Finserv
Balance Sheet" means the balance sheet of Finserv as of October 31, 1999.
3.9. ABSENCE OF CERTAIN CHANGES. Since the date of the Finserv Balance
Sheet, the business of Finserv has been conducted in the ordinary course
consistent with past practice and there has not been:
(a) any event, occurrence or development of a state of
circumstances or facts which would, individually or in the aggregate, have a
Material Adverse Effect on Finserv (other than adverse effects arising from the
execution and performance of this Agreement, changes in general economic
conditions or changes applicable generally to the industry);
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of Finserv, or
any repurchase, redemption or other acquisition by Finserv of any outstanding
shares of capital stock or other securities of, or other ownership interests in
the Finserv;
(c) any amendment of any term of any outstanding security of
Finserv;
(d) any incurrence, assumption or guarantee by Finserv of any
indebtedness for borrowed money other than in the ordinary course and in amounts
and on terms consistent with past practices;
(e) any creation or other incurrence by Finserv of any Lien on any
asset other than in the ordinary course consistent with past practices;
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(f) any making of any loan, advance or capital contribution to or
investment in any person other than loans, advances or capital contributions to
or investments in wholly-owned subsidiaries of Finserv made in the ordinary
course consistent with past practices;
(g) any transaction or commitment made, or any contract or
agreement entered into, by Finserv relating to its assets or business (including
the acquisition or disposition of any assets) or any relinquishment by Finserv
of any contract or other right, in either case, material to Finserv, taken as a
whole, other than transactions and commitments in the ordinary course consistent
with past practices and those contemplated by this Agreement;
(h) any change in any method of accounting, method of tax
accounting or accounting practice by Finserv, except for any such change
required by reason of a concurrent change in GAAP;
(i) any (i) grant of any severance or termination pay to any
current or former director, officer or employee of Finserv, (ii) entering into
of any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any current or former director,
officer or employee of Finserv, (iii) increase in benefits payable under any
existing severance or termination pay policies or employment agreements, (iv)
increase in compensation, bonus or other benefits payable or otherwise made
available to current or former directors, officers or employees of Finserv
(other than in the ordinary course of business salary increases for employees
other than officers and directors), (v) the declaration or payment of any
bonuses or year-end payments to any current or former directors, officers or
employees of Finserv, or (vi) establishment, adoption, or amendment (except as
required by applicable law), of any collective bargaining, bonus, profit
sharing, thrift, pension, retirement, deferred compensation, compensation, stock
option, restricted stock or other benefit plan or arrangement covering any
current or former director, officer or employee of Finserv;
(j) any material labor dispute, other than routine individual
grievances, or, to the Knowledge of Finserv or the Finserv Securityholders, any
activity or proceeding by a labor union or representative thereof to organize
any employees of Finserv, which employees were not subject to a collective
bargaining agreement on the date of the Finserv Balance Sheet, or any material
lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to such employees;
(k) any tax election or any settlement of tax liability, in either
case that is material to Finserv; or
(l) any incurrence of any indebtedness by Finserv to any Finserv
Securityholder.
3.10. LITIGATION. There is no action, suit, investigation, audit or
proceeding pending against, or to the Knowledge of Finserv or the Finserv
Securityholders threatened against or affecting, Finserv, its officers or
directors or any of its properties before any court or arbitrator or any
governmental body, agency or official. No former shareholder, employee, officer
or director of Finserv has any claim pending or to the Knowledge of Finserv or
the Finserv Securityholders threatened against Finserv, its officers or
directors or any of its properties relating to sales of Finserv Stock by Finserv
or any of Finserv's current or former stockholders. Neither Finserv nor any of
its officers and directors nor any of its properties are subject to any order,
writ, judgment, decree or injunction of any court or arbitrator or any
governmental body, agency or official. Section 3.10 of
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the Finserv Disclosure Schedule contains a complete list of all claims brought
against Finserv, or pending since January 1, 1997, together with a brief
statement of the nature and amount of the claim, the court and jurisdiction in
which the claim was brought, the resolution (if resolved), and the availability
of insurance to cover the claim. To the Knowledge of Finserv or the Finserv
Securityholders, there are no facts or circumstances that could reasonably be
expected to give rise to any actions set forth in this Section 3.10.
3.11. TAXES.
(a) TAX RETURNS. Finserv has filed all material Tax returns
required to have been filed on or before the date hereof, and all Taxes shown to
be due on such Tax returns have been timely paid. Finserv has not agreed in
writing to waive any statute of limitations in respect of Taxes of Finserv. No
issues that have been raised in writing by the relevant Taxing Authority in
connection with the examination of such Tax returns are currently pending,
except for any written notice of such issues the subject matter of which has
either been substantially resolved or would otherwise not have a Material
Adverse Effect on Finserv. The amounts provided for taxes on the Finserv
Financial Statements are sufficient for the payment of all accrued and unpaid
U.S. federal, state, provincial, or local Taxes, interest, penalties,
assessments and deficiencies for all periods prior to the dates of such balance
sheets to the extent such taxes are obligations of Finserv. Section 3.11 of the
Finserv Disclosure Schedule lists all unresolved audits, examinations, contests
and proceedings (including written notices of intent to audit or examine) with
respect to United States federal and state income Tax returns of Finserv for
periods beginning on or after January 1, 1995.
(b) TAX MATTERS. The Merger is intended to qualify as a
reorganization under Section 368(a)(1)(A) of the Code. In respect thereof, the
following representations are made: (i) the liabilities of Finserv were incurred
by Finserv in the ordinary course of business; (ii) Finserv is not under the
jurisdiction of a court in a Title 11 or similar case within the meaning of
Section 368(a)(3)(A) of the Code; (iii) Finserv continues to operate at least
one significant historic business line, or owns at least a significant portion
of its historic business assets, in each case within the meaning of Section
1.368-1(d) of the United States Treasury Regulations; and (iv) Finserv is not an
"investment company" as defined in Section 368(a)(2)(F) of the Code.
3.12. FINSERV EMPLOYEE BENEFIT PLANS.
(a) The attachment to Section 3.12 of the Finserv Disclosure
Schedule sets forth a list of all employee benefit plans, as defined in Section
3(3) of ERISA, of Finserv; and
(b) Section 3.12(b) of the Finserv Disclosure Schedule sets forth a
true and complete list of all other profit-sharing, deferred compensation,
bonus, stock option, stock purchase, stock bonus, phantom stock, vacation pay,
holiday pay, severance, dependent care assistance, excess benefit, incentive
compensation, salary continuation, medical, life or other insurance,
supplemental unemployment and other employee benefit plans, programs, agreements
or arrangements, including all unwritten employee benefit plans, programs,
agreements and arrangements, if any, maintained or contributed to by Finserv for
the benefit of its Employees (or former employees) and/or their beneficiaries.
Both of these types of plans shall be collectively referred to as "Benefit
Plans." An arrangement will not fail to be a Benefit Plan simply because it only
covers one individual, or because Finserv's obligations under the plan arise by
reason of its being a "successor employer" under applicable law.
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(c) Finserv has delivered or made available to TriZetto a true and
complete copy of each Benefit Plan and any related funding agreements (e.g.,
trust agreements or insurance contracts), including all amendments (and Section
3.12(b) of the Finserv Disclosure Schedule includes a description of any such
amendment that is not in writing);
(d) Except as set forth in Section 3.12(d) of the Finserv
Disclosure Schedule, Finserv does not maintain or contribute to, nor has
maintained or contributed to, any Benefit Plan that is subject to Section 302 of
ERISA or Section 412 of the Code.
(e) No Benefit Plan is a "multi-employer plan," as defined in
Section 3(37) of ERISA, nor is a plan described in Section 4063(a) of ERISA.
(f) All costs of administering and contributions required to be
made by Finserv to each Benefit Plan under the terms of that Benefit Plan,
ERISA, the Code or any other applicable law have been timely made, and are fully
deductible. All amounts properly accrued to date as liabilities of Finserv under
or with respect to each Benefit Plan (including administrative expenses and
incurred but not reported claims) for the current plan year of the Benefit Plan
have been recorded on the appropriate books, to the extent required by law or
GAAP.
(g) Except as set forth in Section 3.12(g)(i) of the Finserv
Disclosure Schedule, each Benefit Plan has been maintained and operated in
accordance with, and complies currently with, in all material respects, all
applicable laws, including but not limited to ERISA and the Code. Each Benefit
Plan has been operated in all material respects in accordance with its terms.
Furthermore, the Internal Revenue Service has issued a favorable determination
letter with respect to each Benefit Plan that is intended to qualify under
Section 401(a) of the Code, which letter, except as set forth in Section
3.12(g)(ii) of the Finserv Disclosure Schedule, takes into account any amendment
to each such Benefit Plan, and, no event had occurred (either before or after
the date of the letter) that would disqualify the plan.
(h) No Benefit Plan is intended to provide benefits which might
require compliance with Sections 419 or 419A of the Code.
(i) No prohibited transaction has occurred with respect to any of
the Benefit Plans which is not exempt under Section 4975 of the Code and Section
406 of ERISA, and Finserv has not engaged in any transaction with respect to any
Benefit Plan which could subject it to either a material civil penalty assessed
pursuant to Section 409, 502(i) or 502(l) of ERISA, or a material tax imposed
pursuant to Section 4975 or 4976 of the Code.
(j) Except as set forth in Section 3.12(j) of the Finserv
Disclosure Schedule, Finserv does not maintain any plan that provides (or will
provide) medical or death benefits to one or more, current or future former
employees (including retirees) beyond their retirement or other termination of
service, other than benefits that are required to be provided pursuant to
Section 4980B of the Code or state law continuation coverage or conversion
rights.
(k) Except as set forth in Section 3.12(k) of the Finserv
Disclosure Schedule, there are no proceedings or lawsuits, pending or, to the
Knowledge of Finserv or the Finserv Securityholders, threatened, and, to the
Knowledge of Finserv or the Finserv Securityholders, are no investigations,
either currently in progress or expected to be instituted in the future,
relating to any
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Benefit Plan, by any administrative agency, whether local, state or federal or
by any fiduciary, participant or beneficiary of such plan.
(l) Except as set forth in Section 3.12(l) of the Finserv
Disclosure Schedule, none of the Benefit Plans or any other employment agreement
or arrangement entered into by Finserv will entitle any current or former
employee to any benefits or other compensation that become payable solely as a
result of the consummation of this transaction.
(m) None of the Benefit Plans are subject to the tax on unrelated
business taxable income or unrelated debt-financed income under Section 511 of
the Code.
(n) Except as set forth in Section 3.12(n) of the Finserv
Disclosure Schedule, no Benefit Plan has any interest in any annuity contract or
other investment or insurance contract issued by an insurance company that is
the subject of bankruptcy, conservatorship, rehabilitation or similar
proceeding.
(o) Section 3.12(o) of the Finserv Disclosure Schedule lists each
individual who (i) has elected to continue participating in a group health plan
of Finserv pursuant to an election under COBRA, or (ii) has not made an election
under COBRA but who is still eligible to make such election.
3.13. BANKING AND FINDERS' FEES. There is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf of Finserv who might be entitled to any fee or commission in
connection with the transactions contemplated by this Agreement.
3.14. ENVIRONMENTAL COMPLIANCE
(a) Finserv is in compliance with Environmental Laws and all
Environmental Permits.
(b) Since January 1, 1996, Finserv has not received any written
notice regarding any violation of any Environmental Laws, or any Finserv
Environmental Liabilities, including any investigatory, remedial or corrective
obligations, relating to Finserv or its facilities arising under Environmental
Laws, except for any such written notice the subject matter of which has either
been substantially resolved or would otherwise not reasonably be expected to
have a Material Adverse Effect on Finserv.
(c) Except as set forth in Section 3.14 of the Finserv Disclosure
Schedule:
(i) Finserv has not caused, and is not causing or threatening
to cause, any disposals or releases of any Hazardous Material on or under any
properties which it (A) leases, occupies or operates or (B) previously owned,
leased, occupied or operated and, to the Knowledge of Finserv or the Finserv
Securityholders, no such disposals or releases occurred prior to Finserv having
taken title to, or possession or operation of, any of such properties; and to
the Knowledge of Finserv or the Finserv Securityholders no such disposals or
releases are migrating or have migrated off of such properties in subsurface
soils, groundwater or surface waters after Finserv has taken title to, or
possession or operation of any such properties and, to the Knowledge of Finserv
or the Finserv
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Securityholders, no such disposals or releases are migrating or have migrated
off of such properties in subsurface soils, groundwater or surface water prior
to such time;
(ii) Finserv has neither (A) arranged for the disposal or
treatment of Hazardous Material at any facility owned or operated by another
person, or (B) accepted any Hazardous Material for transport to disposal or
treatment facilities or other sites selected by Finserv from which facilities or
sites there has been a release or there is a release or threatened release of a
Hazardous Material; any facility identified in Section 3.14(c)(ii)(A) was duly
licensed in accordance with law and has not been listed in connection with the
Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)
by the United States Environmental Protection Agency's Comprehensive
Environmental Response, Compensation, and Liability Information System (CERCLIS)
or National Priorities List (NPL) or any equivalent or like listing of sites
under state or local law (whether for potential releases of substances listed in
CERCLA or other substances);
(iii) Neither Finserv nor the Finserv Securityholders have
actual Knowledge of, or any reason to believe or suspect that, any release or
threatened release of any Hazardous Material originating from a property other
than those leased or operated by Finserv has come to be (or may come to be)
located on or under properties leased, occupied or operated by Finserv;
(iv) Finserv has never installed, used, buried or removed any
surface impoundment or underground tank or vessel on properties owned, leased,
occupied or operated by Finserv;
(v) Finserv is and has been in compliance in all material
respects for the last three years with all federal, state, local or foreign
laws, ordinances, regulations, permits, approvals and authorizations relating to
air, water, industrial hygiene and worker health and safety, anti-pollution,
hazardous or toxic wastes, materials or substances, pollutants or contaminants,
and to the Knowledge of Finserv or the Finserv Securityholders no condition
exists on any of the real property owned by or used in the business of Finserv
that would constitute a material violation of any such law or that constitutes
or threatens to constitute a public or private nuisance; and
(vi) There has been no litigation, administrative proceedings
or investigations or any other actions, claims, demands notices of potential
responsibility or requests for information brought or, to the Knowledge of
Finserv, threatened against Finserv or any settlement reached by it with any
person or persons alleging the presence, disposal, release or threatened release
of any Hazardous Material on, from or under any of such properties or as
otherwise relating to potential environmental liabilities.
(d) This Section 3.14 contains the sole and exclusive
representations and warranties of Finserv and the Finserv Securityholders with
respect to any Environmental, Health and Safety Matters, including, without
limitation, any arising under any Environmental Laws.
3.15. COLLECTIVE BARGAINING ARRANGEMENTS. Finserv is not a party to or
bound by any employee collective bargaining agreement, nor is Finserv a party to
or affected by or, to the Knowledge of Finserv or the Finserv Securityholders,
threatened with, any dispute or controversy
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with a union or with respect to unionization or collective bargaining involving
the employees of Finserv.
3.16. ACCOUNTS RECEIVABLE. The accounts receivable reflected on the
Finserv Balance Sheet are owned free and clear by Finserv and are based on
Finserv's reasonable judgment and its normal credit review procedures, business
practices and GAAP, collectible in accordance with their terms in an amount not
less than their aggregate book value. "Aggregate book value", for this purpose,
shall mean the recorded amounts of such accounts receivable, less any recorded
allowance for doubtful accounts, trade allowances and return allowances, all as
established in accordance with GAAP consistently applied. Except as set forth in
Section 3.16 of the Finserv Disclosure Schedule, all accounts receivable for
customer collections and xxxxxxxx prior to the Closing Date have been properly
recorded on the Finserv's books and records on a timely basis and in the month
in which Finserv's efforts and activities generating such income were expended.
3.17. INVENTORIES. The consolidated inventories reflected on the
Finserv Balance Sheet have been valued in accordance with GAAP consistently
applied at the lower of cost or market value and consists solely of merchandise
usable or salable in the ordinary course of business at not less than the value
thereof reflected on the Finserv Balance Sheet. The inventory conforms to
customary trade standards for such inventory, and proper recognition has been
given in the Finserv Balance Sheet to damaged, obsolete, slow-moving, irregular
or defective inventory. Since the Finserv Balance Sheet, there have been no
changes to the inventory reflected therein, except in the ordinary course of
business.
3.18. INTERESTS IN REAL PROPERTY. Section 3.18 of the Finserv
Disclosure Schedule is the complete and correct list and brief description of
all real property leased by Finserv on the Closing Date. Finserv does not own
any real property. All real property leases to which Finserv is a party are
valid and in full force and effect and are valid and binding on the parties
thereto, assuming enforceability as to the parties other than Finserv and
Finserv is not in default of any material provision thereof. All improvements
and fixtures made by or at the direction of Finserv on real properties leased by
Finserv conform in all material respects to all applicable health, fire, safety,
environmental, zoning and building laws and ordinances; and all materials,
buildings, structures (or the space used by Finserv in such buildings or
structures) and fixtures used by Finserv in the conduct of its business are in
good operating condition and repair, ordinary wear and tear excepted, and are
sufficient for the type and magnitude of their respective operations.
3.19. PERSONAL PROPERTY. Finserv has good and marketable title, free
and clear of all title defects, security interests, pledges, options, claims,
liens, encumbrances and restrictions of any nature whatsoever to all inventory
and receivables and to any item of machinery, equipment, or tangible personal
property reflected on the Finserv Balance Sheet or used in the business by
Finserv (regardless of whether reflected on the Finserv Balance Sheet). All the
machinery, equipment and other tangible personal property used in the business
by Finserv is in good operating condition and repair, normal wear and tear
excepted. At the Closing Date, Finserv will possess all of the personal property
wherever located used to conduct its business as conducted prior to the Closing.
3.20. EMPLOYEES, DIRECTORS AND OFFICERS. Section 3.20 of the Finserv
Disclosure Schedule comprises a complete and correct list of all of Finserv's
present employees, officers and directors ("Employees"), which includes the job
position and compensation payable to each of the Employees.
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3.21. PATENTS, INTELLECTUAL PROPERTY; SOFTWARE; AND YEAR 2000
COMPLIANCE.
(a) INTELLECTUAL PROPERTY, SOFTWARE AND PRODUCTS.
(i) Section 3.21(a)(i) of the Finserv Disclosure Schedule
contains (a) a complete and correct list of all Intellectual Property, Software
and Products relating to or used in the business or operations of the business
of Finserv, and (b) a complete and correct list of all persons who have
contributed to the creation or development of the Intellectual Property,
Software and Products. No Finserv Securityholder, employee or contractor, nor
any of their respective Affiliates, has any right, title or interest in or to
any Intellectual Property, Software or Products.
(ii) Finserv owns all right, title and interest in and to all
Intellectual Property and Software used in or necessary for the conduct of
Finserv's business as presently conducted, including, without limitation, all
Intellectual Property and Software developed or discovered in connection with or
contained in or related to Finserv's Products, free and clear of all liens,
mortgages, charges, pledges, claims and encumbrances (including without
limitation any distribution rights and royalty rights). All persons who have
contributed to the creation or development of the Intellectual Property,
Software and Products, including, without limitation, all employee, independent
contractors and consultants, have executed an Assignment of Rights Agreement
transferring any and all ownership rights to Finserv. None of the Products
contain any codes or modules which have been created or developed by third
parties. Such Intellectual Property and Software constitutes all Intellectual
Property and Software necessary for the conduct of its business in the manner
conducted immediately prior to the Closing. To the Knowledge of Finserv or the
Finserv Securityholders, Finserv has not infringed, nor is infringing, upon any
Intellectual Property or Software rights of others. Finserv has the exclusive
right to use, sell, license and dispose of, and has the right to bring actions
for infringement of, all Intellectual Property, Software and Products. To the
Knowledge of Finserv or the Finserv Securityholders, the Products do not include
any Intellectual Property or Software that is in the public domain.
(iii) No claims have been asserted against Finserv by any
person challenging Finserv's use or distribution (including manufacture,
marketing license, or sale) of any Product or products utilized by Finserv
(including, without limitation, Third Party Technology), or challenging or
questioning the validity or effectiveness of any license or agreement relating
thereto (including, without limitation, the Third Party Licenses). To the
Knowledge of Finserv or the Finserv Securityholders, there is no valid basis for
any claim of the type specified in this Section 3.21.
(iv) Finserv has valid copyrights in all material
copyrightable material whether or not registered with the U.S. copyright office,
including all copyrights in the Products containing material copyrightable
material. Consummation of the transactions contemplated hereby will not alter or
impair the validity of any copyrights or copyright registrations.
(v) (A) No third party (including any OEM or site license
customer) has any right to manufacture, reproduce, distribute, sell, sublicense,
market or exploit any of the Products or any adaptations, translations, or
derivative works based on the Products, or any portion thereof; (B) Finserv has
not granted to any third party any exclusive rights of any kind with respect to
any of the Products, including territorial exclusivity or exclusivity with
respect to particular versions, implementations or translations of any of the
Products; and (C) Finserv has not granted any third
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party any right to market any product utilizing any Product under any "private
label" arrangements pursuant to which Finserv is not identified as the source of
such goods. Each document or instrument identified pursuant to this Section is
listed in Section 3.21 of the Finserv Disclosure Schedule and true and correct
copies of such documents or instruments have been furnished to TriZetto. No
third party has any right to manufacture, reproduce, distribute, sublicense,
market or exploit any works or materials of which any of the Products are a
derivative work.
(vi) Each of the Products: (A) substantially complies with all
specifications set forth therefor in any contract, agreement, advertisement or
other promotional material for such products and with all other warranty
requirements, other than bugs or fixes required or expected in the ordinary
course of business and not otherwise material to Finserv's business; and (B) can
be recreated from its associated source code and related documentation by
reasonably experienced technical personnel without undue burden.
(vii) Finserv has furnished TriZetto with all end user
documentation relating to the use, maintenance or operation of each of the
Products, all of which is true and accurate in all material respects.
(viii) To the Knowledge of Finserv or the Finserv
Securityholders, no employee of Finserv is in violation of any term of any
employment contract, patent disclosure agreement or any other contract or
agreement relating to the relationship of any such employee with Finserv or any
other party because of the nature of the business conducted by Finserv or
proposed to be conducted by Finserv.
(ix) No Third Party Technology is included in the Products.
(b) YEAR 2000 COMPLIANCE.
(i) PRODUCTS AND SERVICES.
(A) To the Knowledge of Finserv or the Finserv
Securityholders, all of Finserv's products and services are Year 2000 Compliant
in all material respects.
(B) If Finserv is obligated to repair or replace products
or services previously provided by Finserv that are not Year 2000 Compliant in
order to meet Finserv's contractual obligations, to avoid personal injury or
other liability, to avoid misrepresentation claims, or to satisfy any other
obligations or requirements, to the Knowledge of Finserv or the Finserv
Securityholders, Finserv has repaired or replaced those products and services to
make them Year 2000 Compliant in all material respects.
(C) Finserv has furnished TriZetto with true, correct and
complete copies of any customer agreements and other materials and
correspondence in which Finserv has furnished (or could be deemed to have
furnished) assurances as to the performance and/or functionality of Finserv's
products or services on or after January 1, 2000.
(ii) COMPUTER SOFTWARE AND SYSTEMS. To the Knowledge Finserv
or the Finserv Securityholders, all of Finserv's computer software and systems
are Year 2000 Compliant in all material respects.
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(iii) SUPPLIERS. To the Knowledge of Finserv or the Finserv
Securityholders, all vendors of products or services to Finserv, and its
respective products, services and operations, are Year 2000 Complaint in all
material respects. To the Knowledge of Finserv or the Finserv Securityholders
after a reasonably diligent investigation, each such vendor will continue to
furnish its products or services to Finserv, without interruption or material
delay, on and after January 1, 2000.
3.22. CONTRACTS. Section 3.22 of the Finserv Disclosure Schedule
describes, and Finserv has caused to be delivered to TriZetto complete and
correct copies of, all currently effective contracts to which Finserv is a party
or by which Finserv or any of its respective properties or assets are bound
which (i) involve the payment or receipt by Finserv of more than $75,000 over
the remaining term of the contract; (ii) are financing documents, loan
agreements or promissory notes; (iii) are otherwise material to the business of
Finserv and are not for the purchase or sale of goods or services in the
ordinary course of business; (iv) have a remaining term of more than one year
from the date of this Agreement; or (v) are distributorship or other agreements
relating to the marketing of products. To the Knowledge of Finserv or the
Finserv Securityholders, all of the other parties to such agreements are in
compliance with all material provisions of all such agreements and no fact
exists which is, or with the passage of time could become, a default under any
of the aforementioned contracts.
3.23. INSURANCE AND BANKING FACILITIES. Section 3.23 of the Finserv
Disclosure Schedule comprises a complete and correct list of (i) all contracts
of insurance and indemnity of or relating to Finserv (except insurance related
to employee benefits) in force at the date of this Agreement (including name of
insurer or indemnitor, agent, annual charge, coverage and expiration date); (ii)
the names and locations of all banks in which Finserv has accounts; and (iii)
the names of all persons authorized to draw on such accounts. All premiums and
other payments due with respect to all contracts of insurance or indemnity in
force at the date hereof have been or will be paid, and Finserv knows of no
circumstance (including without limitation the consummation of the transactions
contemplated by this Agreement) which has caused, or might cause, any such
contract to be canceled or terminated.
3.24. PERSONNEL. Section 3.24 of the Finserv Disclosure Schedule
comprises a complete and correct list of, and Finserv has caused TriZetto to be
furnished with complete and correct copies of (or, if not in writing, a
description of the terms of), (i) all employment contracts, collective
bargaining agreements, and all compensation plans, agreements, programs,
practices, commitments or other arrangements of any type, including stock,
bonus, profit sharing, incentive compensation, pension and retirement agreements
respecting or affecting any employees of Finserv; and (ii) all insurance,
health, medical, hospitalization, dependent care, severance, fringe or other
employee benefit plans, agreements, programs, practices, commitments or other
arrangements of any type in effect for employees of Finserv. Section 3.24 of the
Finserv Disclosure Schedule includes a list of all employees of Finserv. Finserv
has been and are in compliance in all material respects with the terms of, and
any laws or regulations applicable to, all such plans, agreements, practices,
commitments or programs.
3.25. POWERS OF ATTORNEY AND SURETYSHIPS. Finserv does not have any
powers of attorney outstanding (other than a power of attorney issued in the
ordinary course of business with respect to tax matters or to customs agents and
customs brokers), and, except for obligations as an endorser of negotiable
instruments incurred in the ordinary course of business, Finserv does not have
any
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obligations or liabilities (absolute or contingent) as guarantor, surety,
co-signer, endorser, co-maker, indemnitor or otherwise respecting the obligation
of any other person.
3.26. MINUTES AND STOCK RECORDS. Finserv has caused TriZetto to be
given access to complete and correct copies of the minute books and stock
records of Finserv. Such items contain a complete and correct record in all
material respects of all proceedings and actions taken at all meetings of, and
all actions taken by written consent by, the holders of capital stock of Finserv
and its Board of Directors, and all original issuances and subsequent transfers
and repurchases of its capital stock.
3.27. INVESTMENT REPRESENTATIONS. Each Finserv Securityholder
represents and warrants, severally, but not jointly, that:
(a) He is acquiring the TriZetto Stock for his own account, not as
nominee or agent, for investment and not with a view to, or for resale in
connection with, any distribution or public offering thereof within the meaning
of the 1933 Act.
(b) He understands that (i) the TriZetto Stock has not been
registered under the 1933 Act by reason of a specific exemption therefrom, that
they must be held by him indefinitely, and that he must, therefore, bear the
economic risk of such investment indefinitely, unless a subsequent disposition
thereof is registered under the 1933 Act or is exempt from such registration;
(ii) each certificate representing the TriZetto Stock will be endorsed with the
following legend:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR HYPOTHECATED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933
ACT COVERING SUCH SECURITIES OR IF TRIZETTO
RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF
THESE SECURITIES REASONABLY SATISFACTORY TO
TRIZETTO, STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS
OF THE 1933 ACT."
and (iii) TriZetto will instruct any transfer agent not to register the transfer
of any of the TriZetto Stock unless the conditions specified in the foregoing
legend are satisfied; provided, however, that no such opinion of counsel shall
be necessary if the sale, transfer or assignment is made pursuant to SEC Rule
144 or Rule 144A and the Finserv Securityholder provides TriZetto with evidence
reasonably satisfactory to TriZetto and its counsel that the proposed
transaction satisfies the requirements of Rule 144 or Rule 144A.
(c) He acknowledges that he is able to fend for himself, can bear
the economic risk of his investment and has such knowledge and experience in
financial or business matters that he is capable of evaluating the merits and
risks of the investment in the TriZetto Stock.
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(d) He understands that the share of TriZetto Stock he is acquiring
are "restricted securities" under the federal securities laws inasmuch as they
are being acquired from TriZetto in a transaction not involving a public
offering and that under such laws and applicable regulations such securities may
be resold without registration under the 1933 Act, only in certain limited
circumstances, and he represents that he is familiar with SEC Rule 144 and Rule
144A, as presently in effect, and understands the resale limitations imposed
thereby and by the 1933 Act.
(e) He is an "accredited investor" within the meaning of SEC Rule
501 of Regulation D as presently in effect.
3.28. FULL DISCLOSURE. All of the representations and warranties made
by Finserv and the Finserv Securityholders in this Agreement, and all statements
set forth in the certificates delivered by Finserv and the Finserv
Securityholders at the Closing pursuant to this Agreement, are true, correct and
complete in all material respects and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make such
representations, warranties or statements, in light of the circumstances under
which they were made, misleading. The copies of all documents furnished by
Finserv and the Finserv Securityholders pursuant to the terms of this Agreement
are complete and accurate copies of the original documents.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF TRIZETTO AND MERGER SUB
TriZetto and Merger Sub, jointly and severally, represent and warrant
to Finserv and the Finserv Securityholders that, except as set forth in TriZetto
Disclosure Schedule or in TriZetto's SEC Filings which have been provided to
Finserv and the Finserv Securityholders prior to the date hereof:
4.1. CORPORATE EXISTENCE AND POWER. Each of TriZetto and Merger Sub is
a corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation. Each of TriZetto and Merger Sub has all
requisite corporate powers and authority and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not, individually or in the
aggregate, have a Material Adverse Effect on TriZetto. TriZetto is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where such qualification is necessary, except for those
jurisdictions where the failure to be so qualified would not, individually or in
the aggregate, have a Material Adverse Effect on TriZetto. TriZetto has
heretofore delivered to Finserv true and complete copies of TriZetto's
Certificate of Incorporation and Bylaws as currently in effect.
4.2. CORPORATE AUTHORIZATION.
(a) The execution, delivery and performance by TriZetto of this
Agreement and the Transaction Documents and the consummation of the transactions
contemplated hereby and thereby are within TriZetto's corporate powers and have
been duly authorized by all necessary corporate action.
(b) TriZetto's board of directors, at a meeting duly called and
held, has (i) determined that this Agreement and the Transaction Documents and
the transactions contemplated
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hereby and thereby (including the Merger) are in the best interests of
TriZetto's stockholders, and (ii) approved and adopted this Agreement and the
Transaction Documents and the transactions contemplated hereby and thereby
(including the Merger), which approval satisfies in full any applicable
requirements of Subchapter 9 of the DGCL.
(c) This Agreement has been duly executed and delivered by TriZetto
and Merger Sub and is a legal, valid and binding obligation of TriZetto and
Merger Sub, enforceable against TriZetto and Merger Sub, as applicable, in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
(d) At the Closing Date and at the time of issuance, the TriZetto
Stock issued pursuant to this Agreement will be duly authorized, validly issued,
fully paid and nonassessable and will not be subject to preemptive rights.
4.3. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by TriZetto and Merger Sub of this Agreement and the Transaction
Documents and the consummation by TriZetto and Merger Sub of the transactions
contemplated hereby and thereby require no action by or in respect of, or filing
with, any governmental body, agency, official or authority, other than (a) the
filing of the Certificate of Merger and other documents in accordance with the
DGCL and the NYGCL, (b) compliance with the 1933 Act, the 1934 Act, or foreign
or state securities or blue sky laws; and (c) any other filings, approvals or
authorizations which, if not obtained, would not, individually or in the
aggregate, have a Material Adverse Effect on TriZetto or Merger Sub or
materially impair the ability of TriZetto or Merger Sub to consummate the
transactions contemplated by this Agreement.
4.4. NON-CONTRAVENTION. The execution, delivery and performance by
TriZetto and Merger Sub of this Agreement and the Transaction Documents and the
consummation by TriZetto and Merger Sub of the transactions contemplated hereby
and thereby do not and will not (i) contravene or conflict with the Certificate
of Incorporation or Bylaws of TriZetto and Merger Sub or the charter documents
of the TriZetto Subsidiaries, (ii) assuming compliance with the matters referred
to in Section 4.3, contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to TriZetto and Merger Sub or the TriZetto Subsidiaries,
(iii) require the consent or other action of any person under, constitute a
default under, or give rise to any right of termination, cancellation or
acceleration of any right or obligation of TriZetto and Merger Sub or the
TriZetto Subsidiaries or to a loss of any benefit to which TriZetto and Merger
Sub or the TriZetto Subsidiaries is entitled under any provision of any
agreement or other instrument binding upon TriZetto and Merger Sub or the
TriZetto Subsidiaries or any license, franchise, permit, certificate, approval
or other similar authorization affecting, or relating in any way to, the assets
or business of TriZetto, or (iv) result in the creation or imposition of any
Lien on any asset of TriZetto or the TriZetto Subsidiaries, except, in the case
of clauses (ii) through (iv), for such matters as would not, individually or in
the aggregate, have a Material Adverse Effect on TriZetto or materially impair
the ability of TriZetto and Merger Sub to consummate the transactions
contemplated by this Agreement.
4.5. COMPLIANCE WITH LAW AND OTHER INSTRUMENTS. TriZetto and the
TriZetto Subsidiaries hold all material licenses, permits and authorizations
necessary for the lawful conduct of its business as now being conducted pursuant
to all applicable statutes, laws, ordinances, rules and
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regulations of all governmental bodies, agencies and other authorities having
jurisdiction over it or any part of its respective operations, and there are no
violations or claimed violations by TriZetto of any such license, permit or
authorization or any such statute, law, ordinance, rule or regulation.
4.6. CAPITALIZATION.
(a) The authorized capital stock of TriZetto consists of 40,000,000
shares of TriZetto Stock and 5,000,000 shares of TriZetto Preferred Stock. As of
November 30, 1999, there were outstanding (i) 20,309,014 shares of TriZetto
Stock, (ii) zero shares of preferred stock of TriZetto, (iii) employee stock
options to purchase an aggregate of 3,382,168 shares of TriZetto Stock, (iv)
warrants to purchase an aggregate of zero shares of TriZetto Stock, and (v) an
aggregate of zero shares of TriZetto Stock issued or relating to restricted
stock awards, or other stock based compensation arrangements. 4,600,000 shares
of TriZetto Stock have been reserved for issuance pursuant to TriZetto's
employee stock purchase plan and TriZetto's stock option plan.
(b) All outstanding shares of capital stock of TriZetto have been
duly authorized and validly issued and are fully paid and nonassessable. Except
as set forth in this Section 4.6, and except for changes since November 30,
1999, resulting from the exercise of stock options outstanding on such date,
there are no outstanding (i) shares of capital stock or other voting securities
of TriZetto, (ii) securities of TriZetto convertible into or exchangeable for
shares of capital stock or voting securities of TriZetto, or (iii) options,
restricted stock, other stock-based compensation awards or other rights to
acquire from TriZetto, or other obligation of TriZetto to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of TriZetto. There are no outstanding
obligations of TriZetto or the TriZetto Subsidiaries to repurchase, redeem or
otherwise acquire any securities referred to in clauses (i), (ii) or (iii)
above.
(c) As of the date hereof, there are no outstanding bonds,
debentures, notes or other indebtedness of TriZetto having the right to vote (or
convertible into or exercisable for TriZetto Stock having the right to vote) on
any matters on which TriZetto stockholders may vote.
4.7. SEC FILINGS OF TRIZETTO. TriZetto has furnished Finserv and the
Finserv Securityholders copies of the reports of TriZetto filed with the
Securities and Exchange Commission (the "SEC") after October 7, 1999 ("SEC
Filings"). TriZetto has timely filed with the SEC all reports required to be
filed by it since its initial public offering in October 1999. The SEC Filings
(a) complied in all material respects with the requirements of the 1933 Act and
the 1934 Act as the case may be at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) and (b) did not as of the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. TriZetto has timely filed all required forms, reports and
documents required to be filed with the SEC and the NASD.
4.8. TRIZETTO FINANCIAL STATEMENTS. The unaudited consolidated
financial statements for its third quarter ended September 30, 1999 are complete
and correct in all material respects in accordance with the books and records of
TriZetto, and present fairly the financial position of TriZetto, at the dates
indicated and the results of its operations and the changes in stockholders
equity for the period then ended, in accordance with GAAP, consistently applied.
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4.9. ABSENCE OF CERTAIN CHANGES. Since September 30, 1999, there has
been no change in the business or financial condition of TriZetto, except as set
forth in the SEC Filings and changes in the ordinary course of business that in
the aggregate have not been materially adverse to TriZetto. To the knowledge of
TriZetto, except as set forth in the SEC Filings, there are no new developments
in any business conducted by TriZetto, nor any new or improved technologies,
products, processes or services useful in connection with the business of
TriZetto or its customers, which can reasonably be expected to have a Material
Adverse Affect on TriZetto.
4.10. LITIGATION. There is no action, suit, investigation, audit or
proceeding pending against, threatened against or affecting, TriZetto, its
officers or directors, the TriZetto Subsidiaries or any of their respective
properties before any court or arbitrator or any governmental body, agency or
official which, would, individually or in the aggregate, have a Material Adverse
Effect on TriZetto. Neither TriZetto, its officers or directors, the TriZetto
Subsidiaries nor any of their respective properties, nor to the knowledge of
TriZetto any of its officers or directors, is subject to any order, writ,
judgment, decree or injunction of any court or arbitrator or any governmental
body, agency or official.
4.11. BANKING AND FINDERS' FEES. There is and will be no investment
banker, broker, finder or other intermediary retained by or authorized to act on
behalf of TriZetto or any of the TriZetto Subsidiaries who might be entitled to
any fee or commission from Finserv or any of the TriZetto Subsidiaries upon
consummation of the transactions contemplated by this Agreement.
4.12. TAX MATTERS. The Merger is intended to qualify as a
reorganization under Section 368(a)(1)(A) of the Code. In respect thereof, the
following representations are made: (i) TriZetto has no plan or intention to
reacquire, directly or indirectly, any of its stock issued in the Merger; (ii)
TriZetto has no plan or intention to sell or otherwise dispose of or to cause
Finserv to sell or otherwise dispose of any of the assets of Finserv acquired in
the Merger, except for dispositions made in the ordinary course of business or
transfers described in Section 368(a)(2)(C) of the Code; (iii) following the
Merger, TriZetto will continue the historic business of Finserv or use a
significant portion of Finserv's historic business assets in a business; (iv)
the payment of cash in lieu of fractional shares of TriZetto stock is solely for
the purpose of avoiding the expense and inconvenience to TriZetto of issuing
fractional shares and does not represent separately bargained for consideration;
(v) the total cash consideration to be paid in the Merger to the Finserv
Shareholders instead of issuing fractional shares of TriZetto Stock will not
exceed one percent of the total consideration that will be issued in the Merger
to the Finserv Shareholders in exchange for their shares of Finserv Stock; (vi)
TriZetto will pay the expenses incurred in connection with the Merger which is
allocated to it pursuant to Section 10.4, if any; (vii) TriZetto is not an
"investment company" as defined in Section 368(a)(2)(F) of the Code; (viii)
TriZetto has no plan or intention to take any action that would result in
TriZetto losing control of Finserv within the meaning of Section 368(c) of the
Code; (ix) immediately prior to and at the Effective Time, TriZetto will be in
control of Merger Sub within the meaning of Section 368(c) of the Code; and (x)
neither TriZetto nor Merger Sub is under the jurisdiction of a court in a Title
11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.
4.13. MERGER SUB. Merger Sub is and will be at all times prior to the
Effective Time a wholly-owned subsidiary of TriZetto newly formed for the sole
purpose of effecting the Merger. Merger Sub will engage in no other material
activities or operations not related to such purpose.
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4.14. FULL DISCLOSURE. All of the representations and warranties made
by TriZetto and Merger Sub in this Agreement, and all statements set forth in
the certificates delivered by TriZetto and Merger Sub at the Closing pursuant to
this Agreement, are true, correct and complete in all material respects and do
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make such representations, warranties or
statements, in light of the circumstances under which they were made,
misleading. The copies of all documents furnished by TriZetto pursuant to the
terms of this Agreement are complete and accurate copies of the original
documents.
ARTICLE 5
COVENANTS OF FINSERV AND THE FINSERV SECURITYHOLDERS
5.1. CONDUCT OF BUSINESS. Finserv agrees that from the date hereof
until the Effective Time, except with the prior written consent of TriZetto, as
set forth in the Finserv Disclosure Schedule or as contemplated by this
Agreement, (a) Finserv shall conduct its business in the ordinary course
consistent with past practice and shall use their reasonable best efforts to
preserve intact their business organizations and keep available the services of
their current officers and employees and preserve their relationships with third
parties and (b) without limiting the generality of the foregoing, and subject to
the exceptions set forth in the preceding clause, Finserv will not:
(a) (i) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property) in respect of, any of
its capital stock, (ii) adjust, split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock or (iii) purchase,
redeem or otherwise acquire any shares of capital stock of Finserv or any other
securities thereof or any rights, warrants or options to acquire any such shares
or other securities;
(b) issue, deliver, sell, pledge or otherwise encumber any shares
of its capital stock, any other voting securities or any securities convertible
into, or any rights, warrants or options, to acquire, any such shares, voting
securities or convertible;
(c) amend its Articles of Incorporation, Bylaws or other comparable
charter or organizational documents;
(d) sell, lease, license, transfer or otherwise dispose of, any
material properties or assets except (i) pursuant to existing contracts or
commitments or (ii) in the ordinary course consistent with past practices;
(e) amend, modify or waive any material term of any outstanding
security of Finserv;
(f) incur, assume, guarantee or become obligated with respect to
any indebtedness other than drawings on existing revolving credit facilities
listed in the Finserv Disclosure Schedule, or otherwise in the ordinary course
of business, consistent with past practice, or incur, assume, guarantee or
become obligated with respect to any other material obligations other than in
the ordinary course of business and consistent with past practice;
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(g) make or agree to make any new capital expenditures or
acquisitions of assets or property or other acquisitions or commitments in
excess of $25,000 individually or $25,000 in the aggregate or otherwise acquire
or agree to acquire any material assets or property;
(h) (i) grant to any current or former director, officer or
employee of Finserv any material increase in compensation or benefits, except
for cost of living raises in the ordinary course of business, and except for
employees who are not officers or directors in the ordinary course of business
consistent with past practice, (ii) grant to any such director, officer, or
employee any increase in severance or termination pay including the vesting of
shares of Finserv Stock (or other property) or (iii) enter into any employment,
deferred compensation, severance or termination agreement or arrangement with or
for the benefit of any such current or former director, officer or employee;
(i) will not take any actions that would make any representation
and warranty of Finserv hereunder inaccurate in any material respect at the
Effective Time; or
(j) authorize any of, or commit or agree to take any of, the
foregoing actions.
5.2. NO SOLICITATION. Finserv shall not, directly or indirectly,
through any officer, director, employee, representative or agent of Finserv, (i)
solicit, initiate or encourage the initiation of any inquiries or proposals
regarding any merger, sale of substantial assets, sale of shares of capital
stock (including without limitation by way of a tender offer) or similar
transactions involving Finserv other than the transactions contemplated herein
(any of the foregoing inquiries or proposals being referred to herein as an
"Acquisition Proposal"), (ii) engage in negotiations or discussions concerning,
or provide any nonpublic information to any person relating to, any Acquisition
Proposal or (iii) agree to approve or recommend any Acquisition Proposal.
5.3. CONSENTS AND FILINGS. Upon the terms and subject to the conditions
hereof, Finserv and the Representative agree to shall use all reasonable efforts
to (a) obtain the consents required under Finserv's two real property leases;
(b) take all actions to file UCC-3 Termination Statements, or other required
documents, in order to obtain release of liens held by its creditors; and (c)
take all other actions necessary to effect the transactions contemplated hereby.
ARTICLE 6
COVENANTS OF TRIZETTO
6.1. OBLIGATIONS OF MERGER SUB. TriZetto shall take all action to
incorporate Merger Sub and cause it to perform its obligations under this
Agreement and to consummate the Merger on the terms and conditions set forth in
this Agreement.
6.2. SEC FILINGS. TriZetto shall, prior to the Closing, provide Finserv
and each Finserv Securityholder with its Prospectus dated October 7, 1999 and
all Form 10-Q's and Form 8-K's and all other items filed by TriZetto under
Sections 13(a), 14(a) and (c) and 15(d) of the 1934 Act since the date of such
Prospectus.
6.3. EMPLOYEE BENEFIT PLANS. As soon as practicable after the Closing,
TriZetto shall cause Finserv to terminate all of its Benefit Plans in accordance
with their terms but without any
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liability to Finserv or TriZetto except as required in accordance with
applicable law. Concurrently therewith, TriZetto shall provide, to each person
employed after the Closing by TriZetto or Finserv, employee benefit plans under
which such persons shall receive benefits comparable to those offered to
TriZetto employees.
6.4. REGISTRATION STATEMENT. TriZetto shall use its commercially
reasonable best efforts to qualify for registration on Form S-3, subject to the
availability of audited financial statements of Finserv, if required. Without
any request necessary from the Finserv Securityholders, TriZetto shall file a
registration statement covering the shares of TriZetto Stock issued pursuant to
Sections 2.1 hereunder on or before October 8, 2000. TriZetto shall use its
commercially reasonable best efforts to have such registration statement
declared effective prior to the one year anniversary of the date hereof.
6.5. NASDAQ ADDITIONAL LISTING APPLICATION. TriZetto shall file an
Additional Listing Application covering the shares of TriZetto Stock issuable to
the Finserv Securityholders pursuant to this Agreement within one business day
after the Effective Time. TriZetto shall use its commercially reasonable best
efforts to have such shares approved for listing on the Nasdaq National Market.
6.6. STOCK OPTIONS. TriZetto shall execute and deliver option
agreements within 30 days of the Effective Time representing options to purchase
(a) 50,000 shares to each of Xxxxxx Xxxxxxx and Franc Xxxxxxxxxx and (b) 10,000
shares to each of Xxxx Xxxxx and Xxxxxxx Nice, at an exercise price equal to the
fair market value of the TriZetto Stock on December 20, 1999, the date of the
grant, and pursuant to the standard terms and provisions of the option
agreements.
6.7. PAYOFF OF BANK OBLIGATIONS. Concurrently with the Closing,
TriZetto shall payoff the bank obligations set forth in Section 6.7 of the
Finserv Disclosure Schedule (the "Bank Debt"), the sum of which shall not exceed
$250,000, and to have the Finserv Securityholders released from any personal
guaranties related to the Bank Debt.
ARTICLE 7
COVENANTS OF TRIZETTO AND FINSERV
7.1. ACCESS TO INFORMATION; CONFIDENTIALITY. Upon reasonable notice and
subject to restrictions contained in confidentiality agreements to which such
party is subject, Finserv and TriZetto shall each (and shall cause each of their
Subsidiaries to) afford to the officers, employees, accountants, counsel and
other representatives of the other, reasonable access, during the period prior
to the Effective Time to all its properties, books, contracts, commitments and
records and, during such period, Finserv and TriZetto each shall (and shall
cause each of their Subsidiaries to) furnish promptly to the other all
information concerning its business, properties and personnel as such other
party may reasonably request, and each shall make available to the other the
appropriate individuals (including attorneys, accountants and other
professionals) for discussions of the other's business, properties and personnel
as either TriZetto or Finserv may reasonably request. TriZetto will treat and
hold all such information confidential and will not use such information except
in connection with this Agreement; and if this Agreement is terminated for any
reason whatsoever, TriZetto will return to Finserv all tangible embodiments if
such information is in its possession. This covenant shall survive termination
of this Agreement.
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7.2. CONSENTS; APPROVALS. Prior to Closing, each of Finserv and
TriZetto shall use its reasonable best efforts to obtain all consents, waivers,
approvals, authorizations or orders necessary (including, without limitation,
all governmental and regulatory rulings and approvals) such that the
transactions contemplated herein will not constitute a default (or an event
which with notice or lapse of time or both would become a default) under any
material contract, agreement, lease, license, permit, franchise, or other
instrument or obligation to which it or any of its Subsidiaries is a party.
Finserv and TriZetto shall make all filings (including, without limitation, all
filings with the governmental or regulatory agencies) required in connection
with the authorization, execution and delivery of this Agreement by Finserv and
TriZetto and the consummation by them of the transactions contemplated hereby.
7.3. NOTICES OF CERTAIN EVENTS. Finserv and TriZetto shall promptly
notify the other party of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency in connection with the transactions contemplated by this
Agreement; and
(c) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge, threatened against, relating to or involving or
otherwise affecting such party that, if pending on the date of this Agreement,
would have been required to be disclosed pursuant to Articles 2, 3 or 4 or that
relate to the consummation of the transactions contemplated by this Agreement or
any other development causing a breach of any representation or warranty made by
a party hereunder.
7.4. FURTHER ACTION. Upon the terms and subject to the conditions
hereof, each of the parties hereto shall use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all other things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, to obtain in a
timely manner all necessary waivers, consents and approvals and to effect all
necessary registrations and filings, and otherwise to satisfy or cause to be
satisfied all conditions precedent to its obligations under this Agreement.
7.5. PUBLIC ANNOUNCEMENTS. TriZetto and Finserv shall consult with each
other before issuing any press release with respect to this Agreement or the
transactions contemplated herein, and except as may be required by applicable
law, will not issue any such press release or make any such public statement
without the prior written consent of the other party.
7.6. TRANSFER TAXES. TriZetto and Finserv shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees, and any similar taxes which become payable in
connection with the transactions contemplated hereby that are required or
permitted to be filed on or before the Effective Time. TriZetto, Merger Sub,
Finserv and the Finserv Securityholders agree that each of the Finserv
Securityholders on a pro rata basis according to their ownership of Finserv
Stock (prior to
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the Merger) and the Surviving Corporation (following the Merger) will pay any
real property, transfer or gains tax, stamp tax, stock transfer tax, or other
similar tax imposed on the Merger or the surrender of the Finserv Stock pursuant
to the Merger (collectively, "Transfer Taxes"), excluding any Transfer Taxes as
may result from the transfer of beneficial interests in the Finserv Stock other
than as a result of the Merger, and any penalties or interest with respect to
the Transfer Taxes. The Finserv Securityholders agree to cooperate with TriZetto
in the filing of any returns with respect to the Transfer Taxes.
7.7. FURTHER ACTION. Upon the terms and subject to the conditions
hereof, each of the parties hereto shall use reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all other things
necessary, proper or advisable to consummate and make effective as promptly as
practicable, and to the extent practicable, on or before December 31, 1999, the
transactions contemplated by this Agreement, to obtain in a timely manner all
necessary waivers, consents and approvals and to effect all necessary
registrations and filings, and to otherwise satisfy or cause to be satisfied all
conditions precedent to its obligations under this Agreement. The forgoing
covenant shall not include any obligation by TriZetto to agree to divest,
abandon, license or take similar action with respect to any assets (tangible or
intangible) of TriZetto or Finserv.
ARTICLE 8
INDEMNIFICATION
8.1. INDEMNIFICATION OF TRIZETTO AND MERGER SUB.
(a) Subject to the limitations contained in this Article 8, the
Finserv Securityholders shall severally defend, indemnify and hold harmless
TriZetto and Merger Sub and their respective officers, directors, stockholders,
employees and agents from and against any and all losses, claims, judgments,
liabilities, demands, charges, suits, penalties, costs or expenses, including
court costs and attorneys' fees ("Claims and Liabilities") with respect to or
arising from (i) the breach of any warranty or any inaccuracy of any
representation made by Finserv or such Finserv Securityholder in this Agreement
(as each such representation or warranty would read if all qualifications as to
knowledge or materiality, including without limitation the definition of
Material Adverse Effect were deleted therefrom), or (ii) the breach of any
covenant or agreement made by Finserv or such Finserv Securityholder in this
Agreement.
(b) With respect to Subsection 8.1(a), the Finserv Securityholders
shall be liable to TriZetto for any Claims and Liabilities only if the aggregate
amount of all Claims and Liabilities exceeds $50,000 (the "Basket Amount"), in
which case the Finserv Securityholders shall be obligated to indemnify TriZetto
for all such Claims and Liabilities without regard to the Basket Amount;
provided, however, that the Basket Amount shall not apply to the indemnification
obligations for breach of any representations and warranties set forth in
Section 3.6 and 3.11 hereof. Further, the Finserv Securityholders' aggregate
liability under Subsection 8.1(a) (other than with respect to any intentional or
willful breach or failure to perform) shall in no event exceed the aggregate
Consideration.
8.2. LIMITATIONS. Anything to the contrary notwithstanding, TriZetto
shall not be indemnified and held harmless in respect of any Claims and
Liabilities which are covered by insurance owned by Finserv to the extent that
any net loss is reduced by such insurance. To the
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extent quantifiable, the parties shall make appropriate adjustments to take into
account the tax benefits in determining the amount of indemnification to be
provided hereunder.
8.3. INDEMNIFICATION OF FINSERV. TriZetto shall defend, indemnify and
hold harmless Finserv, and its officers, directors, shareholders, employees and
agents against and in respect to all Claims and Liabilities with respect to or
arising from (i) breach of any warranty or any inaccuracy of any representation
made by TriZetto or Merger Sub, or (ii) breach of any covenant or agreement made
by TriZetto or Merger Sub in this Agreement; provided, however, notwithstanding
anything to the contrary TriZetto's liability hereunder shall be limited to
$250,000; provided, however, that this dollar limit shall not apply to any
Finserv Securityholders' claims for failure of TriZetto to perform or comply
with its obligations pursuant to Article 2, its covenants in Article 6 or the
breach of its representations and warranties in Section 4.12 of this Agreement.
8.4. CLAIMS PROCEDURE. Promptly after the receipt by any indemnified
party (the "Indemnitee") of notice of the commencement of any action or
proceeding against such Indemnitee, such Indemnitee shall, if a claim with
respect thereto is or may be made against any indemnifying party (the
"Indemnifying Party") pursuant to this Article 8, give such Indemnifying Party
written notice of the commencement of such action or proceeding and give such
Indemnifying Party a copy of such claim and/or process and all legal pleadings
in connection therewith. The failure to give such notice shall not relieve any
Indemnifying Party of any of his or its indemnification obligations contained in
this Article 8, except where, and solely to the extent that, such failure
actually and materially prejudices the rights of such Indemnifying Party. Such
Indemnifying Party shall have, upon request within thirty (30) days after
receipt of such notice, but not in any event after the settlement or compromise
of such claim, the right to defend, at his or its own expense and by his or its
own counsel reasonably acceptable to the Indemnitee, any such matter involving
the asserted liability of the Indemnitee; provided, however, that if the
Indemnitee determines that, as a result of an existing or prospective business
relationship between TriZetto or any of the TriZetto Subsidiaries on the one
hand and any other party or parties to such claim on the other hand, or as a
result of other reasonable circumstances, there is a reasonable probability that
a claim may materially and adversely affect him or it, other than solely as a
result of money payments required to be reimbursed in full by such Indemnifying
Party under this Article 8, the Indemnitee shall have the right to defend,
compromise or settle such claim or suit; and, provided, further, that such
settlement or compromise shall not, unless consented to in writing by such
Indemnifying Party, which should not be unreasonably withheld, be conclusive as
to the liability of such Indemnifying Party to the Indemnitee. In any event, the
Indemnitee, such Indemnifying Party and his or its counsel shall cooperate in
the defense against, or compromise of, any such asserted liability, and in cases
where the Indemnifying Party shall have assumed the defense, the Indemnitee
shall have the right to participate in the defense of such asserted liability at
the Indemnitee's own expense. In the event that such Indemnifying Party shall
decline to participate in or assume the defense of such action, prior to paying
or settling any claim against which such Indemnifying Party is, or may be,
obligated under this Article 8 to indemnify an Indemnitee, the Indemnitee shall
first supply such Indemnifying Party with a copy of a final court judgment or
decree holding the Indemnitee liable on such claim or, failing such judgment or
decree, the terms and conditions of the settlement or compromise of such claim.
An Indemnitee's failure to supply such final court judgment or decree or the
terms and conditions of a settlement or compromise to such Indemnifying Party
shall not relieve such Indemnifying Party of any of his or its indemnification
obligations contained in this Article 8, except where, and solely to the extent
that, such failure actually and materially prejudices the rights of such
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Indemnifying Party. If the Indemnifying Party is defending the claim as set
forth above, the Indemnifying Party shall have the right to settle the claim
only with the consent of the Indemnitee; provided, however, that if the
Indemnitee shall fail to consent to the settlement of such a claim by the
Indemnifying Party, which settlement (i) the claimant has indicated it will
accept, and (ii) includes an unconditional release of the Indemnitee and its
Affiliates by the claimant and imposes no material restrictions on the future
activities of the Indemnitee and its affiliates, the Indemnifying Party shall
have no liability with respect to any payment required to be made to such
claimant in respect of such claim in excess of the proposed amount of
settlement. If the Indemnitee is defending the claim as set forth above, the
Indemnitee shall have the right to settle or compromise any claim against it
after consultation with, but without the prior approval of, any Indemnifying
Party, provided, however, that such settlement or compromise shall not, unless
consented to in writing by such Indemnifying Party, which shall not be
unreasonably withheld, be conclusive as to the liability of such Indemnifying
Party to the Indemnitee.
8.5. TREATMENT OF INDEMNITY PAYMENTS. Any payment made to an
Indemnified Person pursuant to this Article 8 or the Escrow Agreement shall
first be paid out of the Escrow Shares, then if necessary, out of the TriZetto
Stock held by the Finserv Securityholders, then out of any other Consideration
paid hereunder; any payment shall be treated as a reduction in the Consideration
paid by TriZetto in connection with the transactions contemplated herein.
8.6. AGREEMENT OF FINSERV SECURITYHOLDERS. By virtue of the acceptance
by Finserv Securityholders of the consideration payable by TriZetto to the
Finserv Securityholders upon the Closing and consummation of the transactions
contemplated herein, the Finserv Securityholders will, without the need for any
further action on their part, have agreed and consented to (i) their
indemnification and other obligations under this Article 8; (ii) all of the
terms and conditions of the Escrow Agreement and the establishment of the Escrow
pursuant to the terms and conditions of this Agreement and the Escrow Agreement
to secure their indemnification obligations under this Article 8; and (iii) the
appointment of the Representative as the Finserv Securityholders' representative
for purposes of this Article 8 and the Escrow Agreement and as attorney-in-fact
and agent for and on behalf of each Finserv Securityholder, and the taking by
the Representative of any and all actions and making of any decisions required
or permitted to be taken or made by the Representative on their behalf under
this Article 8 or the Escrow Agreement. Each Finserv Securityholder agrees that
the provisions of this Article 8 and the Escrow Agreement will be personally
binding on such Finserv Securityholder.
8.7. EXCLUSIVE REMEDY. Each of the parties hereto acknowledges and
agrees that, from and after the Closing Date, its sole and exclusive monetary
remedy with respect to any and all claims relating to the subject matter of this
Agreement shall be pursuant to the indemnification provisions set forth in this
Article 8, except that nothing in this Agreement shall be deemed to constitute a
waiver of any injunctive or other equitable remedies or any tort claims of, or
causes of action arising from, intentionally fraudulent misrepresentation or
deceit.
ARTICLE 9
CONDITIONS TO MERGER
9.1. CONDITION TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of TriZetto, Merger Sub, Finserv and Finserv
Securityholders to consummate the
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transactions contemplated herein are subject to the satisfaction at or prior to
the Effective Time of the following conditions:
(a) SHAREHOLDER APPROVAL. This Agreement and the Merger shall have
been approved and adopted by the requisite vote of the Finserv Shareholders in
accordance with Finserv's Articles of Incorporation and the NYGCL; and
(b) NO INJUNCTIONS. No temporary restraining order, preliminary or
permanent injunction issued by any court of competent jurisdiction preventing
the consummation of the transactions contemplated herein shall be in effect.
9.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF TRIZETTO AND MERGER SUB.
The obligations of TriZetto and the Merger Sub to consummate the transactions
contemplated herein are also subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Finserv and the Finserv Securityholders contained in this
Agreement and in any certificate or other writing delivered to TriZetto pursuant
hereto shall be true and correct on and as of the Effective Time with the same
force and effect as if made on and as of the Effective Time, and TriZetto and
Merger Sub shall have received a certificate to such effect signed by the
President and the Chief Executive Officer of Finserv;
(b) AGREEMENTS AND COVENANTS. Finserv and each of the Finserv
Securityholders shall have performed or complied with all agreements and
covenants required by this Agreement to be performed or complied with by them on
or prior to the Effective Time, and TriZetto shall have received a certificate
to such effect signed by the President and Chief Executive Officer of Finserv;
(c) CONSENTS OBTAINED. All consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made, by Finserv for the authorization, execution and delivery of this Agreement
and the consummation by it of the transactions contemplated hereby shall have
been obtained and made by Finserv;
(d) FINSERV SHAREHOLDERS. At or prior to the Closing, the Finserv
Shareholders shall hold 100% of the issued and outstanding shares of the Finserv
Stock;
(e) FINSERV STOCK OPTIONS AND FINSERV DERIVATIVE SECURITIES. As of
the Closing, there shall be no outstanding Finserv Derivative Securities and no
outstanding Finserv Options;
(f) ESCROW AGREEMENT. The Escrow Agreement in the form of Exhibit C
shall have been entered into by TriZetto and each of the Finserv
Securityholders;
(g) NON-COMPETITION AGREEMENT. The Non-Competition Agreement in the
form of Exhibit E shall have been entered into by TriZetto and each of Xxxxxx
Xxxxxxx and Franc Xxxxxxxxxx;
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(h) OUTSTANDING FINSERV INDEBTEDNESS. The Finserv Notes and all
other outstanding notes payable including the notes issued to The Flex Group,
Xxxxxx X. Xxxxxx and their Affiliates, shall be marked cancelled and delivered
to TriZetto at Closing;
(i) NOTE CONTRIBUTION AGREEMENT. The Note Contribution Agreement in
the form of Exhibit F shall have been entered into by Finserv and the Finserv
Noteholder;
(j) RESIGNATIONS. At the Closing, Finserv shall cause to be
delivered to TriZetto duly signed resignations, effective immediately after the
Closing, of all directors and officers of Finserv (other than those directors
and officers designated in writing by TriZetto to Finserv at least one day
before the Closing Date), or shall take such other action as is necessary to
assure that such persons are not directors or officers of Finserv after the
Closing;
(k) OPINION OF COUNSEL. TriZetto shall have received the opinion of
Lasser Xxxxxxx, L.L.C, counsel to Finserv, dated as of the Closing Date, in the
form attached hereto as Exhibit G;
(l) REGISTRATION RIGHTS AGREEMENT. The Registration Rights
Agreement in the form attached hereto as Exhibit I shall have been entered into
by TriZetto and each of the Finserv Securityholders; and
(m) INTELLECTUAL PROPERTY AND TECHNICAL INFORMATION AGREEMENT. The
Intellectual Property and Technical Information Agreement in the form attached
hereto as Exhibit K shall have been entered into by TriZetto and each of the
Finserv Securityholders.
9.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF FINSERV. The obligations
of Finserv to consummate the transactions contemplated herein are also subject
to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of TriZetto and Merger Sub contained in this Agreement and in any
certificate or other writing delivered to TriZetto pursuant hereto shall be true
and correct in all respects on and as of the Effective Time, with the same force
and effect as if made on and as of the Effective Time and Finserv shall have
received a certificate to such effect signed by the President and the Chief
Executive Officer of TriZetto;
(b) AGREEMENTS AND COVENANTS. TriZetto and Merger Sub shall have
performed or complied with all agreements and covenants required by this
Agreement to be performed or complied with by them on or prior to the Closing
and Finserv shall have received a certificate to such effect signed by the
President and the Chief Executive Officer of TriZetto;
(c) CONSENTS OBTAINED. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made, by TriZetto and Merger Sub for the authorization, execution and delivery
of this Agreement and the consummation by them of the transactions contemplated
hereby shall have been obtained and made by TriZetto and Merger Sub, except
where the failure to receive such consents, etc. would not reasonably be
expected to have a Material Adverse Effect on TriZetto; and
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(d) OPINION OF COUNSEL. Finserv shall have received the opinion of
Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx, counsel to TriZetto, dated as of the Closing
Date, in the form attached hereto as Exhibit H.
ARTICLE 10
TERMINATION
10.1. TERMINATION. Notwithstanding anything contained in this Agreement to
the contrary, this Agreement may be terminated at any time prior to the
Effective Time (notwithstanding any approval of this Agreement by the board of
directors of TriZetto or Finserv or Finserv's Shareholders):
(a) by mutual written agreement duly authorized by the board of
directors of TriZetto and Finserv;
(b) by the board of directors of TriZetto if any condition to the
obligation of TriZetto or Merger Sub under this Agreement to be complied with or
performed by Finserv at or before the Closing shall not have been complied with
or performed at the time required for such compliance or performance and such
noncompliance or nonperformance shall not have been waived by TriZetto;
(c) by the board of directors of Finserv if any condition to the
obligation of Finserv under this Agreement to be complied with or performed by
TriZetto at or before the Closing shall not have been complied with or performed
at the time required for such compliance or performance and such noncompliance
or nonperformance shall not have been waived by Finserv; or
(d) by either TriZetto or Finserv if the Merger shall not have been
consummated by December 31, 1999; provided, however, that the right to terminate
this Agreement under this Section 10.1(d) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the cause
of or resulted in the failure of the Closing to occur on or before such date).
10.2. EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to Article 10, this Agreement shall forthwith become void and
there shall be no liability on the part of any party hereto or any of its
directors, officers, shareholders or Affiliates except (i) as set forth in
Article 7 hereof, and (ii) that, except as otherwise provided in Article 8,
nothing herein shall relieve any party from liability for any breach by such
party.
10.3. OPTION AGREEMENT. Notwithstanding anything to the contrary herein,
if Xxxxxx Xxxxxx ("Xxxxxx") refuses to abide by the terms and provisions of that
certain Option Agreement between him and Xxxxxx Xxxxxxx, dated November 12,
1999, and as a result Xxxxxx remains a stockholder of Finserv, TriZetto's sole
remedy under this Agreement in said event shall be to terminate this Agreement
and there shall be no liability on the part of Finserv or the Finserv
Securityholders.
10.4. FEES AND EXPENSES. Except as set forth in this Article 10, all fees
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid
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by the party incurring such expenses, whether or not the Merger is consummated.
Without limiting the generality of the foregoing, the Finserv Securityholders
will pay, on a pro rata basis according to their ownership of Finserv Stock, all
of the fees and expenses incurred in connection with the transactions
contemplated by this Agreement for Finserv's and the Finserv Securityholders'
legal, financial and accounting, and other advisors, including, without
limitation, Lasser Xxxxxxx, L.L.C. and Xxxx Xxxxxxx and his Affiliates. TriZetto
will pay all the fees and expenses incurred in connection with the transaction
contemplated by the Agreement for TriZetto's legal, financial and accounting
advisors, including without limitation Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx and
PricewaterhouseCoopers LLP.
ARTICLE 11
GENERAL PROVISIONS
11.1. EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS;
KNOWLEDGE, ETC. The representations, warranties and agreements in this Agreement
or in any instrument delivered pursuant to this Agreement shall survive the
Effective Time and shall continue in full force and effect for a period of one
year following the Effective Time. The covenants and agreements of the parties
contained in this Agreement shall survive the Effective Time unless and until
they are otherwise terminated pursuant to their terms as a matter of applicable
laws.
11.2. 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
days after having been sent by registered or certified mail, return receipt
requested, postage prepaid; or (d) two days after deposit with a nationally
recognized overnight courier, specifying two day delivery, with written
verification of receipt. All communications shall 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 days
advance written notice to the other parties hereto):
(a) If to TriZetto or Merger Sub:
The TriZetto Group, Inc.
000 Xxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx
Ph: (000) 000-0000
Fax: (000) 000-0000
E-mail: 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
Attn: X.X. Xxxxxx, Esq.
Ph: (000) 000-0000
38
40
Fax: (000) 000-0000
(b) If to Finserv:
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
Ph: (000) 000-0000
Fax: (000) 000-0000
(c) If to the Finserv Securityholders:
To the address set forth on Schedule 1 attached hereto.
11.3. AMENDMENT. This Agreement may not be amended except by an instrument
in writing signed by the parties hereto.
11.4. WAIVER. At any time prior to the Closing, 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.
11.5. 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 rights. Except as otherwise provided hereunder, all
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
11.6. 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.
11.7. 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
39
41
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.
11.8. ENTIRE AGREEMENT. This Agreement (including the Finserv Disclosure
Schedule and the TriZetto Disclosure Schedule together with the Transaction
Documents and the exhibits and schedules attached hereto and thereto and the
certificates referenced herein) constitutes the entire agreement and supersedes
all prior agreements and undertakings 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.
11.9. ASSIGNMENT. 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.
11.10. PARTIES IN INTEREST. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, including, without limitation, by way of subrogation, other than
Section 8.4 (which is intended to be for the benefit of the Indemnified Parties
and the others specifically referenced therein as beneficiaries of the
agreements contained in Section 8.4, and may be enforced by such Indemnified
Parties and other persons).
11.11. GOVERNING LAW. This Agreement will be governed by, and construed
and enforced in accordance with the laws of the State of Delaware as applied to
contracts that are executed and performed in Delaware, without regard to the
principles of conflicts of law thereof. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in Orange
County, California, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law.
11.12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed 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 the other party.
11.13. ATTORNEYS FEES. If any action or proceeding relating to this
Agreement or the Escrow Agreement, or the enforcement of any provision of this
Agreement or the Escrow Agreement is brought by a party hereto against any party
hereto, the prevailing party shall be entitled to recover
40
42
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
11.14. GENDER. For purposes of this Agreement, references to the masculine
gender shall include feminine and neuter genders and entities.
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43
IN WITNESS WHEREOF, the parties have caused this Agreement and Plan of
Merger to be executed as of the date first written above by their respective
officers thereunto duly authorized.
THE TRIZETTO GROUP, INC., a Delaware
corporation
By:____________________________________
Name:__________________________________
Title:_________________________________
FINSERV ACQUISITION CORP., a Delaware
corporation
By:____________________________________
Name:__________________________________
Title:_________________________________
FINSERV HEALTH CARE SYSTEMS, INC., a New
York corporation
By:____________________________________
Name:__________________________________
Title:_________________________________
"FINSERV STOCKHOLDERS":
_______________________________________
Xxxxxx Xxxxxxx
_______________________________________
Franc Xxxxxxxxxx
S-1
44
_______________________________________
Xxxx Xxxxx
_______________________________________
Xxxxxxx Nice
FINSERV NOTEHOLDER:
_______________________________________
Xxxxxx Xxxxxxx
S-2
45
SCHEDULE 1
FINSERV SHAREHOLDERS
[Omitted pursuant to Item 601 of Regulation S-K - Information is not material to
an investment decision]
46
SCHEDULE 2
FINSERV NOTES
[Omitted pursuant to Item 601 of Regulation S-K - Information is not material
to an investment decision]
47
EXHIBIT A
CERTAIN DEFINITIONS
The following terms, as used in the Purchase Agreement, have the following
meanings:
"1933 ACT" shall have the meaning as set forth in Section 3.3 of the
Agreement.
"1934 ACT" shall have the meaning as set forth in Section 3.3 of the
Agreement.
"ACCOUNTS RECEIVABLE AND PAYABLE SCHEDULE" shall have the meaning as set
forth in Section 2.5(a)(i) of the Agreement.
"ACQUISITION PROPOSAL" shall have the meaning as set forth in Section 5.2
of the Agreement.
"ADJUSTED SHARES CLOSING" shall have the meaning as set forth in Section
2.8 of the Agreement.
"ADJUSTMENT DATE" shall have the meaning as set forth in Section 2.8 of
the Agreement.
"AFFILIATE" shall mean any individual, corporation, partnership, firm,
joint venture, limited liability company, association, joint-stock company,
trust, unincorporated organization or Governmental Entity, or person directly or
indirectly controlling, controlled by or under common control with Finserv,
including all officers and directors of Finserv.
"AGREEMENT" shall have the meaning as set forth in the Preamble.
"BANK DEBT" shall have the meaning as set forth in Section 6.7 of the
Agreement.
"BASKET AMOUNT" shall have the meaning as set forth in Section 8.1(b) of
the Agreement.
"BENEFIT PLANS" shall have the meaning as set forth in Section 3.12(b) of
the Agreement.
"CASH HOLDBACK" shall have the meaning as set forth in Section 2.3(b)(i)
of the Agreement.
"CERTIFICATE OF MERGER" shall have the meaning as set forth in Section 1.3
of the Agreement.
"CLOSING" shall have the meaning as set forth in Section 1.2 of the
Agreement.
"CLOSING DATE" shall have the meaning as set forth in Section 1.2 of the
Agreement.
"CLAIMS AND LIABILITIES" shall have the meaning as set forth in Section
8.1 of the Agreement.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended.
"CODE" shall have the meaning as set forth in the Recitals.
48
"CONFIDENTIALITY AGREEMENT" shall have the meaning as set forth in Section
2.7(d) of the Agreement.
"CONSIDERATION" shall have the meaning as set forth in Section 2.3(a) of
the Agreement.
"CPA" means KPMG LLP.
"DGCL" shall have the meaning as set forth in Section 1.1 of the
Agreement.
"DISSENTING SHARES" shall have the meaning as set forth in Section 2.1(c)
of the Agreement.
"EARNOUT CONSIDERATION" shall have the meaning set forth in Section 2.7(a)
of the Agreement.
"EFFECTIVE TIME" shall have the meaning as set forth in Section 1.3 of the
Agreement.
"EMPLOYEES" shall have the meaning as set forth in Section 3.20 of the
Agreement.
"ENVIRONMENTAL LAWS" mean any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, codes, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and governmental restrictions, relating to
human health, the environment or to emissions, discharges or releases of
pollutants, contaminants or other Hazardous Substances or wastes into the
environment, including without limitation ambient air, surface water, ground
water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants or other Hazardous Substances or wastes or the clean-up
or other remediation thereof.
"ENVIRONMENTAL PERMITS" means, with respect to any person, all permits,
licenses, franchises, certificates, approvals and other similar authorizations
of governmental authorities relating to or required by Environmental Laws and
affecting, or relating in any way to, the business of such person as currently
conducted.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ESCROW" shall have the meaning as set forth in Section 2.4 of the
Agreement.
"ESCROW AGENT" shall have the meaning as set forth in Section 2.4 of the
Agreement.
"ESCROW AGREEMENT" shall have the meaning as set forth in Section 2.4 of
the Agreement.
"ESCROW SHARES" shall have the meaning as set forth in Section 2.4 of the
Agreement.
"EXCESS" shall have the meaning as set forth in Section 2.5(b)(i) of the
Agreement.
"EXCHANGE AGENT" shall have the meaning as set forth in Section 2.2(a) of
the Agreement.
"FINAL ACCOUNTS RECEIVABLE AND PAYABLE SCHEDULE" shall have the meaning as
set forth in Section 2.5(a)(i) of the Agreement.
49
"FINANCIAL STATEMENTS" shall have the meaning as set forth in Section 3.8
of the Agreement.
"FINSERV" shall have the meaning as set forth in the Preamble.
"FINSERV BALANCE SHEET" shall have the meaning as set forth in Section 3.8
of the Agreement.
"FINSERV CONVERTIBLE SECURITY" means any note, evidence of indebtedness,
stock or other security that is convertible into or exchangeable for any shares
of the capital stock of Finserv.
"FINSERV DERIVATIVE SECURITY" shall mean (a) any Finserv Warrant, (b) any
Finserv Convertible Security, (c) any warrant, option, right or other security
that entitles the holder thereof to purchase or otherwise acquire any Finserv
Convertible Security; and (d) any note, evidence of indebtedness, stock or other
security that is convertible into or exchangeable for any Finserv Warrant.
"FINSERV DISCLOSURE SCHEDULE" shall mean the written disclosure schedule
delivered on or prior to the date hereof by Finserv to TriZetto that is arranged
in paragraphs corresponding to the numbered and lettered paragraphs
corresponding to the numbered and lettered paragraphs contained in the
Agreement.
"FINSERV ENVIRONMENTAL LIABILITIES" mean any and all liabilities of or
relating to Finserv, whether contingent or fixed, actual or potential, known or
unknown, which (i) arise under or relate to matters covered by Environmental
Laws and (ii) relate to actions occurring or conditions existing on or prior to
the Closing Date.
"FINSERV NOTES" shall have the meaning as set forth in the Recitals.
"FINSERV OPTION" means any option granted, whether exercisable or not
exercisable and not exercised or expired, to a current or former employee,
director, consultant, advisor or independent contractor of Finserv or any
predecessor thereof to purchase Finserv Stock.
"FINSERV SECURITYHOLDER" shall have the meaning as set forth in the
Preamble.
"FINSERV SHAREHOLDERS" shall have the meaning as set forth in the
Preamble.
"FINSERV STOCK" shall have the meaning as set forth in Section 2.1(b)(i)
of the Agreement.
"FINSERV WARRANT" means any warrant, option, right or other security that
entitles the holder thereof to purchase or otherwise acquire any shares of the
capital stock of Finserv.
"GAAP" shall have the meaning as set forth in Section 2.5(a) of the
Agreement.
"HAZARDOUS MATERIAL" means any toxic, radioactive, corrosive or otherwise
hazardous substance, including petroleum, its derivatives, by-products and other
hydrocarbons, or any substance having any constituent elements displaying any of
the foregoing characteristics, which in any event is regulated under any
Environmental Law.
"INDEMNIFYING PARTY" shall have the meaning as set forth in Section 8.4 of
the Agreement.
50
"INDEMNITEE" shall have the meaning asset forth in Section 8.4 of the
Agreement.
"INTELLECTUAL PROPERTY" means patents, patent applications, patent
licenses, copyrights, copyright licenses, trademarks, trademark applications and
trademark licenses, trade names, service marks, service names, licenses, trade
secrets and any other know-how or intellectual property rights, and rights in
any thereof (insofar as it is practical to list or describe such rights).
"KNOWLEDGE OF FINSERV" means the actual knowledge of the officers of
Finserv, and knowledge that a reasonable person in such capacity should have
after due inquiry.
"KNOWLEDGE OF THE FINSERV SECURITYHOLDER" means the actual knowledge of
such person and knowledge that a reasonable person should have after due
inquiry.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect to such asset.
"MATERIAL ADVERSE EFFECT" means, with respect to any Person, a material
adverse effect on the condition (financial or otherwise), business, assets or
liabilities of such Person and its Subsidiaries taken as a whole.
"MERGER" shall have the meaning as set forth in the Recitals.
"MERGER CONSIDERATION" shall have the meaning as set forth in Section
2.1(b)(ii) of the Agreement.
"MERGER SUB" shall have the meaning as set forth in the Preamble.
"NASD" means National Association of Securities Dealers, Inc.
"NET REVENUE" shall have the meaning as set forth in Section 2.7(a)(iii)
of the Agreement.
"NOTE CONSIDERATION" shall have the meaning as set forth in Section
2.3(a).
"NYGCL" shall have the meaning as set forth in Section 1.1 of the
Agreement.
"NMS" shall have the same meaning as set forth in Section 2.1(b)(i)(A) of
the Agreement.
"PERSON" means an individual, a corporation, a partnership, an
association, a trust, a limited liability company or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
"PRODUCTS" means the proprietary software applications developed or owned
by Finserv and all related products, including any Intellectual Property related
thereto.
"REPRESENTATIVE" shall have the meaning as set forth in Section 2.5(a) of
the Agreement.
"REVENUE CALCULATION" shall have the meaning as set forth in Section
2.7(b) of the Agreement.
"SEC" shall have the meaning as set forth in Section 4.7 of the Agreement.
51
"SEC FILINGS" shall have the meaning as set forth in Section 4.7 of the
Agreement.
"SELLING SHAREHOLDER" shall have the meaning as set forth in Section
6.__(b) of the Agreement.
"SOFTWARE" means software programs and rights in any thereof (insofar as
it is practical to list or describe such rights).
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of capital stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"SURVIVING CORPORATION" shall have the meaning as set forth in Section 1.1
of the Agreement.
"TAXES" shall mean all income, gross receipts, sales, transfer, use,
employment, franchise, profits, property and other taxes, fees, stamp taxes and
duties, assessments, and charges of any kind whatsoever (whether payable
directly or by withholding), together with any interest thereof and any
penalties, additions to tax or additional amounts imposed by any Taxing
Authority.
"TAXING AUTHORITY" shall mean any governmental authority responsible for
the imposition of Taxes.
"THIRD PARTY LICENSES" means all licenses and other agreements with third
parties relating to any Intellectual Property or products that Finserv is
licensed or otherwise authorized by such third parties to use, market,
distribute or incorporate into products marketed and distributed by Finserv.
"THIRD PARTY TECHNOLOGY" means all Intellectual Property and products
owned by third parties and licensed pursuant to Third Party Licenses.
"TRANSFER TAXES" shall have the meaning as set forth in Section 7.6 of
this Agreement.
"TRANSACTION DOCUMENTS" means the Agreement, the Escrow Agreement, the
Non-Competition Agreement, the Note Contribution Agreement, the Registration
Rights Agreement, the Confidentiality Agreement, the Intellectual Property and
Technical Information Agreement, and any other document executed and delivered
pursuant hereto together with any exhibits or schedules to such documents.
"TRIZETTO" shall have the meaning as set forth in the Preamble.
"TRIZETTO DISCLOSURE SCHEDULE" shall mean the written disclosure schedule
delivered on or prior to the date hereof by TriZetto to Company that is arranged
in paragraphs corresponding to the numbered and lettered paragraphs
corresponding to the numbered and lettered paragraphs contained in the
Agreement.
52
"TRIZETTO STOCK" shall have the meaning as set forth in Section 1.1(a) of
the Agreement.
"VALUATION" shall have the meaning as set forth in Section 2.5(c) of the
Agreement.
"YEAR 2000 COMPLIANT" means that (1) the products, services, or other
item(s) at issue accurately process, provide and/or receive all date/time data
(including calculating, comparing, sequencing, processing and outputting)
within, from, into, and between centuries (including the twentieth and
twenty-first centuries and the years 1999 and 2000), including leap year
calculations, and (2) neither the performance nor the functionality of Finserv's
provision of the products, services, and other item(s) at issue will be affected
by any dates/times prior to, on, after, or spanning January 1, 2000. The design
of the products, services, and other item(s) at issue to ensure compliance with
the foregoing warranties and representations includes proper date/time data
century recognition and recognition of 1999 and 2000, calculations that
accommodate single century and multi-century formulae and date/time values
before, on, after, and spanning January 1, 2000, and date/time data interface
values that reflect the century, 1999, and 2000. In particular, but without
limitation, (i) no value for current date/time will cause any error,
interruption, or decreased performance in or for such product(s), service(s),
and other item(s), (ii) all manipulations of date and time related data
(including calculating, comparing, sequencing, processing, and outputting) will
produce correct results for all valid dates and times when used independently or
in combination with other products, services, and/or items, (iii) date/time
elements in interfaces and data storage will specify the century to eliminate
date ambiguity without human intervention, including leap year calculations,
(iv) where any date/time element is represented without a century, the correct
century will be unambiguous for all manipulations involving that element, (v)
authorization codes, passwords, and zaps (purge functions) will function
normally and in the same manner during, prior to, on and after January 1, 2000,
including the manner in which they function with respect to expiration dates and
CPU serial numbers, and (vi) Finserv's supply of the product(s), service(s), and
other item(s) will not be interrupted, delayed, decreased, or otherwise affected
by the advent of the year 2000.
53
EXHIBIT B
ALLOCATION OF STOCK PORTION OF MERGER CONSIDERATION
[Omitted pursuant to Item 601 of Regulation S-K - Information is not material to
an investment decision]
54
EXHIBIT C
FORM OF ESCROW AGREEMENT
See Exhibit 2.2 filed with the Company's Form 8-K
55
EXHIBIT D
FORM OF CONFIDENTIALITY AGREEMENT
[Omitted pursuant to Item 601 of Regulation S-K - Information is not material to
an investment decision]
56
EXHIBIT E
FORM OF NON-COMPETITION AGREEMENT
See Exhibit 2.3 filed with the Company's Form 8-K
57
EXHIBIT F
FORM OF NOTE CONTRIBUTION AGREEMENT
[Omitted pursuant to Item 601 of Regulation S-K - Information is not material to
an investment decision]
58
EXHIBIT G
FORM OF OPINION OF SELLERS' COUNSEL
[Omitted pursuant to Item 601 of Regulation S-K - Information is not material to
an investment decision]
59
EXHIBIT H
FORM OF SYCR OPINION
[Omitted pursuant to Item 601 of Regulation S-K - Information is not material to
an investment decision]
60
EXHIBIT I
FORM OF REGISTRATION RIGHTS AGREEMENT
See Exhibit 2.4 filed with the Company's Form 8-K
61
EXHIBIT J
FLOW OF FUNDS MEMORANDUM
[Omitted pursuant to Item 601 of Regulation S-K - Information is not material to
an investment decision]
62
EXHIBIT K
INTELLECTUAL PROPERTY AND TECHNICAL INFORMATION AGREEMENT
[Omitted pursuant to Item 601 of Regulation S-K - Information is not material to
an investment decision]
