1
EXHIBIT 2.7
ESCROW AGREEMENT
This Escrow Agreement (this "Agreement") is made and entered into as of
February 5, 1999 (the "Effective Date") by and among The TriZetto Group, Inc., a
Delaware corporation ("TriZetto"), the parties listed on Exhibit A attached
hereto (collectively, the "Partners," and each individually, a "Partner"),
Xxxxxx Xxxxxxxx as the representative of the Partners (the "Representative"),
and Bankers Trust Company of California, N.A. as escrow agent (the "Escrow
Agent").
RECITALS
WHEREAS, HealthWeb General Partner, Inc., a Texas corporation ("HWGP"),
owns a one percent (1%) general partnership interest in HealthWeb Systems, Ltd.,
a Texas limited partnership ("HealthWeb") and Xxxxxxx Xxxxx ("Xxxxx") and Xxxxx
Xxxxx ("Xxxxx") own a thirteen and one-half percent (13.5%) and three percent
(3%) limited partnership interest in HealthWeb, respectively;
WHEREAS, TriZetto, TriZetto Acquisition Group, LLC, a Delaware limited
liability company, and the Partners have entered into a Partnership Interest
Purchase Agreement dated as of February 5, 1999 (the "Purchase Agreement"),
pursuant to which TriZetto will purchase the partnership interests in HealthWeb
from the Partners (the "HealthWeb Interests");
WHEREAS, the Purchase Agreement provides that a portion of the
consideration will be withheld from the Purchase Price (as defined in the
Purchase Agreement) and will be placed in an escrow established in accordance
with this Agreement to secure the indemnification obligations under Article V of
the Purchase Agreement; and
WHEREAS, the parties desire to enter into this Agreement to establish
the terms and conditions under which the escrow will be established and
maintained.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements herein
contained, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. CERTAIN DEFINED TERMS.
1.1 TERMS DEFINED IN PURCHASE AGREEMENT. Capitalized terms used
in this Agreement and not otherwise defined herein shall have the same meanings
given to such terms in the Purchase Agreement.
1.2 ESCROW. As used herein, the "Escrow" means the escrow and
the Escrow Account (as defined in Section 3.1 below) established pursuant to
this Agreement in which the Escrowed Property (as defined in Section 1.3 below)
will be held to secure the indemnification obligations of the Partners in
accordance with Article V of the Purchase Agreement.
1.3 ESCROWED PROPERTY. As used herein, the "Escrowed Property"
means, collectively: (a) twenty percent (20%) of the total number of shares of
TriZetto Common Stock issued on the Closing Date in connection with the purchase
of the HealthWeb Interests (the "Escrow Shares") and the Stock Powers (as
defined in Section 3.1 below) executed and delivered by the
2
Partners; (b) all interest or other amounts paid with respect to such Escrow
Shares; and (c) all other property (not including cash dividends but including
Distributions and Secondary Distributions (as defined in Section 3.2 below))
other than cash dividends issued or paid with respect to any Escrow Shares that
are deposited in the Escrow Account pursuant to this Agreement, all of which
shall be deemed to be "Escrowed Property" upon deposit in the Escrow Account.
The number of Escrow Shares of each Partner that will be placed in the Escrow
Account is equal to such Partner's Pro Rata Share (as defined in Section 2.1 and
as listed on Exhibit A hereto) of the Escrowed Property.
1.4 TERMINATION DATE. "Termination Date" means the second
anniversary of the Closing Date, unless TriZetto and the Partners provide
written notice to the Escrow Agent of earlier termination.
2. AGREEMENT.
2.1 INDEMNIFICATION BY PARTNERS. By virtue of the
Partners' execution and delivery of the Purchase Agreement, the Partners have
agreed, and by executing this Agreement each Partner hereby confirms that such
Partner agrees, subject to the terms and conditions of this Agreement and
Article V of the Purchase Agreement:
(a) to indemnify and hold harmless TriZetto, its
officers, directors, stockholders, employees and agents from and against any and
all Claims and Liabilities to the extent provided in Article V of the Purchase
Agreement;
(b) to establish the Escrow pursuant to this
Agreement to secure the indemnification obligations of the Partners under
Article V of the Purchase Agreement;
(c) without limiting such Partner's obligations under
paragraph (a) above, that in the event TriZetto, its officers, directors,
stockholders, employees and agents (hereinafter, collectively, "TriZetto")
incurs any Claims and Liabilities provided in Article V of the Purchase
Agreement, the Escrowed Property shall, subject to the provisions of the
Purchase Agreement requiring an offset to the Promissory Notes (prior to making
a claim against the Escrowed Property) and this Agreement, be transferred to
TriZetto to compensate TriZetto for such Claims and Liabilities, with the
portion of the Escrowed Property to be so transferred to be pro rata as to each
Claim and Liability among the Partners according to each Partner's proportionate
share of the Escrowed Property set forth on Exhibit A hereto (the "Pro Rata
Share");
(d) to appoint the Representative as the Partners'
representative, attorney-in-fact and agent for purposes of this Agreement to act
for and on behalf of each Partner as provided herein, and to the taking by the
Representative of any and all actions and the making of any decisions required
or permitted to be taken or made by the Representative on the Partners' behalf
under this Agreement; and
(e) to all of the other terms and conditions of this
Agreement.
2
3
3. FORMATION OF ESCROW ACCOUNT.
3.1 DELIVERY AND DEPOSIT OF ESCROWED PROPERTY. Upon the
execution of this Agreement by all parties hereto, TriZetto will promptly
deliver to the Escrow Agent the Escrow Shares in the form of duly authorized and
executed stock certificates issued in the respective names of the Partners,
representing each Partner's Pro Rata Share of the Escrow Shares; and (b) each
Partner will promptly deliver to the Escrow Agent duly executed Stock Powers and
Assignments Separate From Certificate for such Partner's Escrow Shares in the
form of Exhibit B ("Stock Powers"), signed in blank by such Partner. The Escrow
Agent agrees to accept delivery of the above-mentioned Escrowed Property, which
shall be clearly designated by TriZetto as "Escrowed Property", and to hold the
same in escrow in an escrow account (the "Escrow Account"), subject to the terms
and conditions of this Agreement. The Escrow Agent shall deliver a Receipt and
Acknowledgement to the Representative upon receipt of the Escrowed Property.
3.2 DISTRIBUTIONS, CONVERSIONS, VOTING AND RIGHTS OF
OWNERSHIP. So long as the Escrow is in effect, dividends payable in stock or
securities of TriZetto or of any other person, firm or entity or any other
property, other than cash dividends which shall be distributed to Partners, or
other distributions of any kind (including without limitation shares of TriZetto
Common Stock issued in connection with a subdivision or split of TriZetto's
Common Stock) that are paid, issued or made by TriZetto in respect of the Escrow
Shares that are issuable by TriZetto or a third party upon the conversion or
other exchange of Escrow Shares in a merger, consolidation or other transaction
affecting the Escrow Shares (the "Distributions"), or in respect of any such
Distributions ("Secondary Distributions"), will be immediately delivered to the
Escrow Agent and will be held in the Escrow on the same terms and conditions as
those applied hereunder to the Escrow Shares and the Partners will promptly sign
and deliver to the Escrow Agent new Stock Powers or other applicable instruments
of transfer for such Distributions and/or Secondary Distributions (duly executed
in blank by the Partners) to be held in the Escrow as Escrowed Property pursuant
to this Agreement. As used herein, the terms "Escrowed Property" includes all
Distributions and Secondary Distributions on Escrowed Property and the term
"Escrow Shares" includes all Distributions and Secondary Distributions on
Escrowed Property consisting of stock or other securities. The Partners will
have the right to exercise any and all rights to vote (including, if necessary,
directing the Escrow Agent to vote) the Escrow Shares deposited in the Escrow
Account for their account so long as such Escrow Shares are held in the Escrow
and have not been released to TriZetto as provided herein and TriZetto will take
all steps necessary to allow the exercise of such rights. While the stock
certificates representing, and Stock Powers for, Escrow Shares remain in the
Escrow Agent's possession pursuant to this Agreement, the Partners, will
(subject to the provisions of Sections 3.3 and 3.4 below) retain and be able to
exercise all other incidents of ownership of the Escrow Shares that are not
inconsistent with the terms and conditions of this Agreement. If reasonably
requested to do so by TriZetto or the Escrow Agent, each Partner shall promptly
execute and deliver to the Escrow Agent (or to TriZetto, as to Escrow Shares
that are released to TriZetto as provided herein) replacement Stock Powers for
any Escrow Shares or other shares of stock or securities that are or become
Escrowed Property. If requested by TriZetto, due to the failure of any Partner
to promptly execute and deliver replacement Stock Powers as herein provided, the
Representative, acting as attorney-in-fact for each Partner, shall promptly
execute on behalf of such Partner, and deliver to the Escrow Agent, replacement
Stock Powers for any Escrow Shares or other shares of stock or securities that
are or become Escrowed Property.
3
4
3.3 NO TRANSFER OR ENCUMBRANCE. Except to the extent expressly
permitted by the provisions of this Section 3.3, no Escrowed Property or any
beneficial interest therein may be sold, assigned, pledged, encumbered or
otherwise transferred (including without limitation by operation of law, other
than a conversion of shares in a merger or consolidation) by any Partner or be
taken or reached by any legal or equitable process in satisfaction of any debt
or other liability of a Partner (other than such Partner's obligations under
this Agreement) prior to the delivery and release to the Partners of the
Escrowed Property by the Escrow Agent in accordance with the provisions of
Section 5 hereof; provided, however, that any Partner may transfer its share of
the Escrowed Property hereunder so long as such transfer is by gift or upon
death or permanent incapacity to his or her guardian, conservator, executor,
administrator, trustees or beneficiaries under his or her will, spouse,
children, stepchildren, grandchildren, parents, siblings or legal dependents, to
a trust of which the beneficiary or beneficiaries of the corpus and the income
shall be such a person and all such persons agree to be bound by the terms
hereof or to partners of a Partner that is a partnership, provided that all of
such partners agree to be bound by the terms hereof.
3.4 TREATMENT OF ESCROWED PROPERTY. The Escrowed Property
shall be held by the Escrow Agent as a trust fund and shall not be subject to
any lien, attachment, trustee process or any other judicial process of any
creditor of any party hereto.
4. ADMINISTRATION OF ESCROW ACCOUNT. The Escrow Agent shall administer
the Escrow Account as follows:
4.1 CLAIM NOTICE. If TriZetto asserts a claim for
indemnification under Article V of the Purchase Agreement on or prior to the
Termination Date, then TriZetto shall promptly give written notice of such claim
(a "Claim Notice"), including a copy of such claim and/or process and all legal
pleadings in connection therewith, to the Representative in accordance with
Article V of the Purchase Agreement and the Escrow Agent in accordance with
Article VI hereof. Each Claim Notice shall state the amount of claimed Claims
and Liabilities (the "Claimed Amount") and the basis for such claim.
4.2 RESPONSE NOTICE. Within thirty (30) days after delivery of
a Claim Notice to the Representative, the Representative shall give to TriZetto,
with a copy to the Escrow Agent, a written response (the "Response Notice") in
which the Representative shall either:
(a) agree that such portions of the Escrowed Property
having a value (computed in accordance with Section 4.4 below) equal to the full
Claimed Amount may be released from the Escrow Account and delivered to
TriZetto; or
(b) agree that a portion of the Escrowed Property
having a value (computed in accordance with Section 4.4 below) equal to a
specified part, but not all, of the Claimed Amount (the "Agreed Amount") may be
released from the Escrow Account to TriZetto and contest the remaining portion
of the Escrowed Property; or
(c) contest that any of the Escrowed Property may be
released from the Escrow Account to TriZetto.
4
5
The Representative may contest the release of Escrowed Property only
based upon a good faith belief that all or such portion of the Claimed Amount
does not constitute Claims and Liabilities, or does not constitute the actual
amount of Claims and Liabilities incurred for which TriZetto is entitled to
indemnification under Article V of the Purchase Agreement. If no Response Notice
is delivered by the Representative within such thirty (30) day period, then the
Representative shall be deemed to have agreed that the full Claimed Amount may
be released and delivered from the Escrow Account to TriZetto.
4.3 RELEASE WITHOUT CONTEST.
(a) If in his Response Notice the Representative
agrees (or if the Representative fails to deliver a Response Notice within the
required time period and as such is deemed to have agreed) that the Escrowed
Property having a value (computed in accordance with Section 4.4 below) equal to
the full Claimed Amount may be released from the Escrow Account to TriZetto,
then the Escrow Agent shall promptly thereafter deliver to TriZetto from the
Escrow Account Escrowed Property having a value (computed in accordance with
Section 4.4 below) equal to the Claimed Amount (or such lesser amount as is then
held in the Escrow Account).
(b) If the Representative in the Response Notice
agrees that Escrowed Property having a value (computed in accordance with
Section 4.4 below) equal to the Agreed Amount may be released from the Escrow
Account to TriZetto in the respective amounts set forth in the Response Notice,
then the Escrow Agent shall promptly thereafter deliver to TriZetto such Agreed
Amount or such lesser amount as is then held in the Escrow Account, and the
provisions of Section 5 shall apply to the contested portion of the Claimed
Amount. The amounts of Escrowed Property equal to the Agreed Amount that are to
be released by the Escrow Agent to TriZetto from the Escrow Account under this
Section shall be in such proportions of Escrow Shares and other Escrowed
Property as may be requested by the Representative (subject to the availability
of such type(s) of Escrowed Property at such time).
4.4 VALUE OF ESCROWED PROPERTY. For purposes of determining
the amount of Escrowed Property to be delivered out of the Escrow to TriZetto as
all or part of any Claimed Amount hereunder and determining the value of any
Escrowed Property for any other purpose hereunder Escrowed Property that is cash
will be deemed to have a value equal to the amount of such cash in U.S. Dollars.
The Shares of TriZetto Common Stock will be deemed to have a fair market value
determined as follows: (i) the average closing price of TriZetto Common Stock
for the five (5) trading days immediately preceding the anticipated date of
transfer of such shares, if TriZetto Common Stock is registered under the
Securities Exchange Act of 1934 and trades on the New York or American Stock
Exchanges or on the Nasdaq Stock Market, or (ii) as determined by the Board of
Directors of TriZetto in good faith. If the Representative disagrees with the
fair market value as determined by the Board of Directors, then the
Representative may submit the dispute to Arbitration pursuant to Section 5
below.
5. ARBITRATION OF CONTESTED RELEASES.
5.1 ARBITRATION OF DISPUTES OVER ESCROW RELEASE. If the
Representative gives a Response Notice contesting the release of Escrowed
Property equal to all or any part of the Claimed Amount set forth in the
applicable Claim Notice, as provided in Section 4.2 above (the
5
6
"Contested Amount"), then such dispute shall be settled by mandatory binding
arbitration in Orange County, California in accordance with the provisions of
this Section 5 and the Commercial Arbitration Rules of the American Arbitration
Association then in effect (the "AAA Rules"), unless TriZetto and the
Representative settle such dispute in a written settlement agreement executed by
TriZetto and the Representative on behalf of and binding on each of the Partners
and TriZetto. The provisions of this Section 5 shall prevail and govern in the
event of any conflict between such provisions and the AAA Rules.
5.2 ARBITRATOR. Unless otherwise mutually agreed by TriZetto
and the Representative, the arbitration will be heard and decided by a single
arbitrator who shall be selected as provided in Section 5.3.
5.3 SELECTION OF ARBITRATOR. TriZetto and the Representative
will mutually agree on an arbitrator selected from a list of arbitrators who are
attorneys-at-law who practice business law and have significant experience with
respect to the representation of companies which develop computer services and
technology; provided that the arbitrator cannot have represented either TriZetto
or any of the Partners in any previous matter. If TriZetto and the
Representative cannot agree on the selection of the arbitrator from the above
list of arbitrators, then the arbitrator shall be chosen by the American
Arbitration Association.
5.4 TIME FOR ARBITRATION DECISION; EFFECT. The arbitrator
shall decide each dispute to be arbitrated pursuant hereto within ninety (90)
days after the selection of the arbitrator. The arbitrator's decision shall
relate solely to whether TriZetto is entitled to receive the Contested Amount
(or a portion thereof) pursuant to the applicable terms of the Purchase
Agreement and this Agreement. The final decision of the arbitrator shall provide
directions to the Escrow Agent as provided in Section 5.5 and shall be furnished
to TriZetto, the Representative, and the Escrow Agent in writing and shall
constitute a conclusive determination of all issues in question, binding upon
TriZetto, the Representative, the Partners, and the Escrow Agent and shall not
be contested by any of them. Upon the conclusion of any arbitration proceedings
hereunder, the arbitrator will render findings of fact and conclusions of law
and a written opinion setting forth the basis and reasons for any decision
reached and instructions (if applicable) to the Escrow Agent as to the release
of Escrowed Property and will deliver such documents to TriZetto, the
Representative and the Escrow Agent, along with a signed copy of the award and
the instructions (if any) to the Escrow Agent. The arbitrator chosen in
accordance with these provisions will not have the power to alter, amend or
otherwise affect the terms of this Section 5 or the provisions of this Agreement
or the Purchase Agreement. Judgment upon the award rendered by the arbitrator
may be entered in any court having competent jurisdiction over the subject
matter thereof.
5.5 ACTIONS OF ESCROW AGENT PENDING ARBITRATION. After
delivery of a Response Notice in which any or all of the Claimed Amount is
contested by the Representative, the Escrow Agent shall continue to hold in the
Escrow Account Escrowed Property having a value (computed in accordance with
Section 4.4 of this Agreement) sufficient to cover the Contested Amount (but
only to the extent that there is Escrowed Property remaining in the Escrow after
payment to TriZetto of all uncontested Claimed Amounts), notwithstanding the
occurrence of the Termination Date, until: (a) delivery of a copy of a
settlement agreement executed by TriZetto and the Representative setting forth
instructions to the Escrow Agent as to the release of such Escrowed Property
that shall be made with respect to the Contested Amount; (b) delivery of a copy
of the final
6
7
decision of the arbitrator setting forth instructions to the Escrow Agent as to
the release of Escrowed Property that shall be made with respect to the
Contested Amount; or (c) receipt of a court order or judgment directing Escrow
Agent to act with respect to the distribution of any Escrowed Property. The
Escrow Agent shall thereupon release Escrowed Property from the Escrow Account
(to the extent Escrowed Property is then held in the Escrow Account) in
accordance with such settlement agreement, arbitrator's instructions, court
order or judgment, as applicable. The Escrowed Property released by the Escrow
Agent to TriZetto from the Escrow Account shall be in such proportions of Escrow
Shares and/or other Escrowed Property, as may be requested by the Representative
(subject to the availability of such type(s) of Escrowed Property at such time).
5.6 NO RESPONSIBILITY OF ESCROW AGENT TO RESOLVE DISPUTE. If
any controversy arises involving any party to this Agreement (other than the
Escrow Agent) concerning the subject matter of this Agreement, including a
Contested Amount, the Escrow Agent will not be required to determine the
controversy or to take any action until such dispute has been resolved.
5.7 RIGHT TO COUNSEL. TriZetto (on behalf of itself and any
Indemnified Person(s)) and the Representative shall each have the right to
employ its or his own legal counsel at its own expense to represent such person
in any disputes arising under this Agreement.
5.8 COMPENSATION OF ARBITRATOR; ATTORNEYS' FEES. The
arbitrator will be compensated for his or her services at a rate to be
determined by the parties or by the American Arbitration Association, but based
upon reasonable hourly or daily consulting rates for the arbitrator in the event
the parties are not able to agree upon his or her rate of compensation.
TriZetto, on the one hand, and the Partners, on the other hand, will each pay
50% of the compensation to be paid to the arbitrator in any such arbitration and
50% of the costs of transcripts and other normal and regular expenses of the
arbitration proceedings (collectively, the "Arbitration Expenses"), with the
portion of such Arbitration Expenses required to be borne by the Partners to be
shared by the Partners based on the Partner's respective Pro Rata Shares. Unless
the Arbitrator provides to the contrary in the decision, each side shall pay its
own attorneys fees.
5.9 BURDEN OF PROOF. For any claim submitted to an arbitration
hereunder, the burden of proof will be as it would be if the claim were
litigated in a judicial proceeding.
5.10 EXCLUSIVE REMEDY. Except to the extent provided in
Article V of the Purchase Agreement, and except as specifically otherwise
provided in this Agreement, arbitration in accordance with this Section 5 will
be the sole and exclusive remedy of the parties for any dispute arising over the
release of Escrowed Property from the Escrow hereunder.
6. PAYMENT OF REMAINING ESCROWED PROPERTY TO PARTNERS.
6.1 ON TERMINATION DATE. On the Termination Date, the Escrow
Agent shall deliver to TriZetto and the Representative a statement of the value
(computed in accordance with Section 4.4 hereof) of the remaining balance of the
Escrowed Property then remaining in the Escrow Account, and the total amount of
all claims made pursuant to Sections 4 or 5 hereof in connection with the Escrow
Account and not therefore resolved and paid (the excess, if any, of such
remaining balance in such Escrow Account over the total amount of such claims
against such Escrow Account shall be referred to as the "Final Escrow Balance").
TriZetto and the Representative each shall
7
8
review the accuracy of the Final Escrow Balance and notify the Escrow Agent and
each other of any asserted discrepancy within ten (10) business days of receipt
of the foregoing statement. If the Escrow Agent has not been notified of any
discrepancy by TriZetto or the Representative within the ten (10) business day
period specified in the preceding sentence, then within twenty (20) business
days after receipt by TriZetto and the Representative of such statement, the
Escrow Agent shall deliver to each of the Partners an amount of the Escrowed
Property representing such Partner's Pro Rata Share of the Final Escrow Balance
constituting Escrowed Property, free and clear of the Escrow created by this
Agreement. After the last claim shall have been resolved pursuant to Sections 4
and 5 hereof and all Escrowed Property deliverable to TriZetto upon the
resolution of all such claims has been delivered to TriZetto, the remaining
balance, if any, of the Escrowed Property shall promptly be delivered by the
Escrow Agent to each Partner pro rata, based on each Partner's Pro Rata Share,
free and clear of the Escrow created by this Agreement.
6.2 DISTRIBUTION OF THE ESCROWED PROPERTY. All distributions
of Escrowed Property to the Partners to be made by the Escrow Agent under this
Section shall be made so that each Partner receives his or her Pro Rata Share of
the total amount of each type of property (principally TriZetto Common Stock)
constituting the Escrowed Property held in the Escrow Account immediately before
such distribution.
6.3 DELIVERY METHODS. Delivery of Escrowed Property by the
Escrow Agent shall be by registered mail or by nationally recognized overnight
courier. The Escrow Agent shall not be responsible for obtaining insurance in
connection with such delivery.
6.4 POWER TO TRANSFER ESCROW AMOUNTS. The Escrow Agent is
hereby granted the power to effect any transfer of Escrowed Property permitted
or required by this Agreement in accordance with its terms.
7. FEES AND EXPENSES OF ESCROW AGENT AND REPRESENTATIVE.
7.1 ESCROW AGENT. TriZetto shall pay the fees of the Escrow
Agent for the services to be rendered by the Escrow Agent hereunder; provided,
however, that any extraordinary fees and expenses referred to in Section 7.3
below, including, without limitation, any fees or expenses incurred by the
Escrow Agent in connection with a dispute over the distribution of Escrowed
Property will be paid 50% by TriZetto and 50% by the Partners.
7.2 REPRESENTATIVE. The Representative will not be entitled to
receive any compensation from TriZetto or the Partners in connection with this
Agreement; however, the Partners shall indemnify and promptly reimburse the
Representative for all reasonable expenses actually incurred by the
Representative in connection with the performance of his duties hereunder
(including, but not limited to, all losses, costs and expenses which the
Representative may incur as a result of involvement in any legal proceedings
arising from the performance of his duties hereunder) pro rata according to the
Partners' respective Pro Rata Shares. TriZetto shall not have any obligation to
reimburse the Representative for any expenses whatsoever.
7.3 ESCROW AGENT'S EXTRAORDINARY FEES. TriZetto and the
Representative hereby acknowledge that all fees and usual charges for services
of the Escrow Agent hereunder shall be considered compensation for ordinary
services as contemplated by this Agreement. In the event
8
9
that the Escrow Agent renders any service not provided for in this Agreement, or
if the parties hereto request a substantial modification of the terms of this
Agreement, or if any controversy arises and the Escrow Agent is made a party to
any litigation pertaining to this Agreement or its subject matter, then the
Escrow Agent shall be reasonably compensated for such extraordinary services and
reimbursed for all reasonable costs, attorney's fees and expenses incurred by
the Escrow Agent in rendering such extraordinary services, which costs, fees and
expenses shall be borne by TriZetto and the Partners as provided in Section 7.1
above.
8. LIABILITY AND AUTHORITY OF REPRESENTATIVE; SUCCESSORS AND ASSIGNEES.
8.1 LIMITS ON LIABILITY. The Representative shall incur no
liability with respect to any action taken or suffered by him in his capacity as
Representative in reliance upon any note, direction, instruction, consent,
statement or other documents believed by him in good faith to be genuinely and
duly authorized, nor for other action or inaction except his own willful
misconduct or gross negligence. The Representative may, in all questions arising
under this Escrow Agreement, rely on the advice of counsel, and for anything
done, omitted or suffered in good faith by the Representative based on such
advice, the Representative shall not be liable to anyone.
8.2 SUCCESSOR REPRESENTATIVES. In the event of the death or
permanent disability of the Representative, or the resignation of Representative
as the representative of the Partners hereunder, a successor Representative
shall be elected by a majority vote of the Partners, with each such Partner (or
his or her successors or assigns) to be given a weighted vote based on such
Partner's Pro Rata Share. Each successor Representative shall have all of the
power, authority, rights and privileges conferred by this Agreement upon the
original Representative, and the term "Representative" as used herein shall be
deemed to include each successor Representative.
8.3 AUTHORITY OF REPRESENTATIVE. The Representative shall have
full power and authority to represent the Partners and their successors with
respect to all matters arising under this Agreement or related to the subject
matter hereof and all actions taken by the Representative hereunder shall be
binding upon each and all of the Partners and their successors, as if expressly
confirmed and ratified in writing by each of them. Without limiting the
generality of the foregoing, the Representative shall have full power and
authority to interpret all of the terms and provisions of this Agreement, to
compromise and settle any claims asserted hereunder and to authorize payments to
be made with respect thereto, on behalf of the Partners and their successors.
The Partners have consented to the appointment of the Representative as
representative of the Partners and as the attorney-in-fact and agent for and on
behalf of each Partner for the purposes of taking actions and executing
agreements and documents on behalf of any of the Partners as provided in this
Agreement, and, subject to the express limitations set forth below, the taking
by the Representative of any and all actions and the making of any decisions
required or permitted to be taken by him under this Agreement, including, but
not limited to, the exercise of the power to authorize delivery to TriZetto of
Escrowed Property and to take all actions necessary in the judgment of the
Representative for the accomplishment of the foregoing and all of the other
terms, conditions and limitations of this Agreement. The Representative will
have unlimited authority and power to act on behalf of each Partner with respect
to this Agreement and the disposition, settlement or other handling of all
claims, rights or obligations arising under this Agreement with respect to
Escrowed Property so long as all Partners are treated in the same manner (unless
the Partners otherwise consent). The Partners will be
9
10
bound by all actions taken by the Representative in connection with this
Agreement, and TriZetto will be entitled to rely on any action or decision of
the Representative.
9. LIMITATION OF ESCROW AGENT'S RESPONSIBILITY AND LIABILITY.
9.1 LIMITATION OF RESPONSIBILITY. The Escrow Agent's duties
are limited to those set forth in this Agreement, and the Escrow Agent, acting
as such under this Agreement, is not charged with knowledge of or any duties or
responsibilities under any other document or agreement, including, without
limitation, the Purchase Agreement. The Escrow Agent may execute any of its
powers or responsibilities hereunder and exercise any rights hereunder either
directly or by or through its agents or attorneys. Nothing in this Escrow
Agreement will be deemed to impose upon the Escrow Agent any duty to qualify to
do business or to act as a fiduciary or otherwise in any jurisdiction. The
Escrow Agent will not be responsible for, and will not be under a duty to
examine into or pass upon, the validity, binding effect, execution or
sufficiency of this Escrow Agreement or of any agreement mandatory or
supplemental hereto.
9.2 LIMITATION OF LIABILITY. The Escrow Agent will incur no
liability with respect to any action taken, not taken or suffered by it in
reliance upon any notice, direction, instruction, consent, statement or other
document believed by it to be genuine and duly authorized, nor for any other
action or inaction, except its own gross negligence or willful misconduct . In
all questions arising under this Agreement, the Escrow Agent may rely on the
advice of counsel, and for anything done, omitted or suffered in good faith by
the Escrow Agent based on such advice, the Escrow Agent will not be liable to
anyone, provided that the Escrow Agent shall have used reasonable care in the
selection of such counsel. The Escrow Agent will not be required to take any
action hereunder involving any expense unless the payment of such expense is
made or provided for in a manner satisfactory to it. The Escrow Agent will not
be liable for any action taken or omitted to be taken by it in good faith unless
a court of competent jurisdiction determines that the Escrow Agent's gross
negligence or willful misconduct was the cause of any loss to TriZetto, the
Representative, or any Partner. The Escrow Agent makes no representation or
warranty with respect to, and is not responsible for, the Escrowed Amount, other
than any losses resulting from its gross negligence or willful misconduct. The
Escrow Agent will have no duty to solicit the delivery from TriZetto of any
Escrowed Property. The Escrow Agent will have no obligation with respect to the
Escrowed Property other than to (i) keep safely all property held in escrow,
(ii) withhold the release of Escrowed Property to the Partners, or (iii) release
the Escrowed Property to TriZetto, as the case may be, to the extent expressly
provided in this Agreement.
9.3 INDEMNITY. TriZetto and each of the Partners (each an
"Indemnifying Party" and together the "Indemnifying Parties"), each hereby
jointly and severally covenants and agrees to reimburse, indemnify and hold
harmless the Escrow Agent and its employees and agents from and against any
loss, damage or liability suffered, incurred by or asserted against the Escrow
Agent (including amounts paid in settlement of any action, suit, proceeding, or
claim brought or threatened to be brought and including reasonable expenses of
legal counsel) arising out of, in connection with or based upon any act or
omission by the Escrow Agent relating in any way to this Agreement or the Escrow
Agent's services hereunder; provided, however, that the liability of any Partner
shall be limited to such Partner's pro rata share of the liability of all of the
Partners hereunder, based on the number of shares of HealthWeb Interests held by
such Partner. This indemnity will not apply to any such loss, damage or
liability arising from the gross negligence or willful misconduct on the Escrow
10
11
Agent's part. Anything in this Agreement to the contrary notwithstanding, in no
event will the Escrow Agent be liable for special, indirect or consequential
damage or loss of any kind whatsoever (including but not limited to lost
profits), even if the Escrow Agent has been advised of the likelihood of such
loss or damage and regardless of the form of action.
9.4 PARTICIPATION IN DEFENSE OF THE ESCROW AGENT. Each
Indemnifying Party may participate at its own expense in the defense of any
claim or action that may be asserted against the Escrow Agent, and if the
Indemnifying Parties so elect, the Indemnifying Parties may assume the defense
of such claim or action; provided, however, that if there exists a conflict of
interest that would make it inappropriate for the same counsel to represent both
the Escrow Agent and the Indemnifying Parties, the Escrow Agent's retention of
separate counsel will be reimbursable as provided in Section 9.3. The Escrow
Agent's right to indemnification hereunder will survive the Escrow Agent's
resignation or removal as escrow agent hereunder and will survive the
termination of this Agreement by lapse of time or otherwise.
9.5 NOTICE OF CLAIMS AGAINST ESCROW AGENT. The Escrow Agent
will notify each Indemnifying Party by letter, or by telephone or telecopy
confirmed by letter sent U.S. first class mail, registered or certified, of any
receipt by the Escrow Agent of a written assertion of a claim against the Escrow
Agent related to this Agreement, or any action commenced against the Escrow
Agent, within ten (10) business days after the Escrow Agent's receipt of written
notice of such claim. However, the Escrow Agent's failure to so notify each
Indemnifying Party will not operate in any manner whatsoever to relieve an
Indemnifying Party from any liability that it may have otherwise than on account
of this Section 9. In the event the Escrow Agent fails to so notify each
Indemnifying Party and an Indemnifying Party is prejudiced thereby, then such
Indemnifying Party will not have liability to Escrow Agent under this Section 9.
10. SUCCESSOR ESCROW AGENT. In the event the Escrow Agent becomes
unavailable or unwilling to continue in its capacity herewith, the Escrow Agent
may resign at any time and be discharged from its duties or obligations
hereunder by giving a written resignation to the parties to this Escrow
Agreement, specifying not less than thirty (30) days prior written notice of the
date when such resignation shall take effect; provided, however, that no such
resignation shall become effective until the appointment of a successor Escrow
Agent and acceptance of such appointment by such successor Escrow Agent.
TriZetto may appoint a successor Escrow Agent without the consent of the
Representative so long as such successor is a bank with assets of at least Five
Hundred Million Dollars ($500,000,000) which has no direct depository or lending
relationship with TriZetto and which is qualified to do business in the State of
California, and may appoint any other successor Escrow Agent with the consent of
the Representative, which shall not be unreasonably withheld. If, within such
notice period, TriZetto provides to the Escrow Agent written instructions with
respect to the appointment of a successor Escrow Agent in accordance with this
Section 10 and directions for the transfer of any Escrowed Property then held by
the Escrow Agent to such successor, the Escrow Agent shall act in accordance
with such instructions and promptly transfer such Escrowed Property to such
designated successor. If no successor Escrow Agent is appointed within sixty
(60) days of the date specified for the Escrow Agent's resignation to take
effect, the Escrow Agent shall have the right to apply to a court of competent
jurisdiction for such appointment at the expense of TriZetto. Each successor
Escrow Agent shall execute and deliver an instrument accepting such appointment
and shall, without further acts, be vested in all the estates, properties,
rights, powers and duties of the Escrow Agent or any other predecessor Escrow
Agent as if originally named as Escrow Agent hereunder.
11
12
11. TERMINATION. This Agreement shall terminate upon the earlier of (a)
the Termination Date, assuming there are no contests regarding the Escrowed
Property, or (b) the release by the Escrow Agent of all of the Escrowed Property
in accordance with this Agreement. In the event that a contests exists on the
Termination Date, the Escrow shall continue in place until the dispute is
resolved pursuant to Section 5.
12. NOTICES. All notices, requests, consents, and other communications
hereunder shall be in writing and shall be deemed to have been properly given or
made on the date personally delivered or on the date mailed, by first class
registered or certified mail with postage prepaid, by private nationally
recognized courier service or by facsimile and confirmed, if delivered, mailed,
courier or facsimile to the respective parties hereto at the following
addresses:
IF THE ESCROW AGENT:
Bankers Trust Company of California, N.A.
0 Xxxx Xxxxx, Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
IF TO TRIZETTO TO:
The TriZetto Group, Inc.
000 Xxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xx. Xxxxx Xxxx
WITH A COPY TO:
Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: X.X. Xxxxxx, Esq.
IF TO HEALTHWEB OR HWGP, TO:
HealthWeb Systems, Ltd.
0000 Xxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx
WITH A COPY TO:
McGuire, Woods, Battle & Xxxxxx LLP
NationsBank Corporate Center Suite 2900
100 No. Xxxxx Street
Charlotte, North Carolina 28202-4011
Attn: Xxxxxxx X. Xxxxxxx, Esq.
IF TO THE PARTNERS:
The address set forth on Exhibit A attached hereto.
Any party hereto may designate a different address by providing written
notice of such new address to the other parties hereto.
12
13
13. MISCELLANEOUS.
13.1 GOVERNING LAW; ASSIGNS. This Agreement will be governed
by and construed in accordance with the internal laws of the State of California
without regard to conflict-of-law principles and will be binding upon, and inure
to the benefit of, the parties hereto and their respective successors and
permitted assigns.
13.2 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
13.3 ENTIRE AGREEMENT; SEVERABILITY. Except as otherwise set
forth in the Purchase Agreement, this Agreement constitutes the entire
understanding and agreement of the parties with respect to the subject matter of
this Agreement and supersedes all prior agreements or understandings, written or
oral, between the parties with respect to the subject matter hereof. If any
provision of this Agreement is held to be illegal or unenforceable by a tribunal
of competent jurisdiction, then such provision shall not be voided, but shall be
deemed modified to the extent necessary to make such provision lawful and
enforceable, and the other provisions of this Agreement shall remain in full
force and effect.
13.4 WAIVERS. No waiver by any party hereto of any condition
or of any breach of any provision of this Agreement will be effective unless in
writing. No waiver by any party of any such condition or breach, in any one
instance, will be deemed to be a further or continuing waiver of any such
condition or breach or a waiver of any other condition or breach of any other
provision contained herein.
13.5 AMENDMENT. This Agreement may be amended by the written
agreement of TriZetto, the Escrow Agent and the Representative, provided that,
if the Escrow Agent does not agree to an amendment agreed upon by TriZetto and
the Representative, the Escrow Agent will resign (which resignation shall be
effective immediately and, in any event, prior to the effective date of the
amendment) and TriZetto will appoint a successor Escrow Agent in accordance with
Section 10 hereof. No such amendment may treat any one Partner differently from
the other Partners unless consented to in writing by Partners having beneficial
ownership in a majority of the outstanding Escrowed Property, including the
consent of any Partner who is to be treated differently.
13
14
IN WITNESS WHEREOF, the parties have duly executed this Escrow
Agreement as of the day and year first above written.
THE TRIZETTO GROUP, INC., THE "COMPANY"
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Its: President and CEO
---------------------------------
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
"ESCROW AGENT"
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------------
Its: Assistant Secretary
---------------------------------
XXXXXX XXXXXXXX, "REPRESENTATIVE"
/s/ Xxxxxx Xxxxxxxx
------------------------------------------
Xxxxxx Xxxxxxxx
"PARTNERS"
/s/ Xxxxxxx Xxxxx
------------------------------------------
Xxxxxxx Xxxxx
/s/ Xxxxx Xxxxx
------------------------------------------
Xxxxx Xxxxx
14
