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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 16, 2000
IMS HEALTH INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 001-14049 06-1506026
- ------------- ------------------------ -------------------
(State of (Commission File Number) (IRS Employer
incorporation) Identification No.)
200 Nyala Farms
Westport, CT 06880
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(Address of principal executive offices) (Zip Code)
(203) 222-4200
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(Registrant's telephone number,
including area code)
_____________________________N/A____________________________
(Former name or former address, if changed since last report)
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Items 1-4. Not Applicable.
Item 5. OTHER EVENTS.
IMS Health Incorporated, a Delaware corporation ("IMS"), announced on
May 16, 2000 that it had entered into an Agreement and Plan of Reorganization,
dated as of May 16, 2000 (the "Merger Agreement"), among The TriZetto Group,
Inc., a Delaware corporation ("TriZetto"), Elbejay Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of TriZetto ("Merger Sub"), IMS, and
ERISCO Managed Care Technologies, Inc., a New York corporation and a wholly
owned subsidiary of IMS ("Erisco"), pursuant to which Merger Sub will merge with
and into Erisco (the "Merger"). Erisco will become a wholly owned subsidiary of
TriZetto. As more specifically set forth in the Merger Agreement, IMS will
receive shares of common stock of TriZetto, par value $.001 per share (the
"TriZetto Common Stock"), having a value of $255 million. The final exchange
ratio will be determined based upon the average daily price of TriZetto Common
Stock for the 15 trading days ending on the third day prior to the Closing Date,
except that IMS will receive not less than 8.8 million shares nor more than 12.1
million shares of TriZetto Common Stock.
In addition, by execution of the Merger Agreement, IMS and TriZetto
agreed to terminate the Agreement and Plan of Reorganization, dated as of March
28, 2000, between IMS and TriZetto, that provided for the merger of IMS with and
into TriZetto.
The Merger is subject to certain regulatory approvals as well as to
approval of the issuance of TriZetto Common Stock to IMS pursuant to the Merger
Agreement by the stockholders of TriZetto. IMS has entered into voting
agreements with certain holders of TriZetto Common Stock representing more than
50% of the outstanding shares of TriZetto Common Stock to vote in favor of the
issuance of TriZetto Common Stock to IMS.
The Merger is also conditioned upon IMS and TriZetto entering into a
Stockholder Agreement and Registration Rights Agreement, forms of which are
attached as exhibits to the Merger Agreement, and a Transitional Services
Agreement, Data Rights Agreement, and HealthWeb License Agreement, the principal
terms of which are more specifically set forth in the Merger Agreement.
The preceding is qualified in its entirety by reference to the Merger
Agreement, which is attached hereto as an Exhibit and which is incorporated
herein by reference.
Item 6. Not Applicable.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
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2.1 Agreement and Plan of Reorganization, dated as of May 16, 2000, among
The TriZetto Group, Inc., Elbejay Acquisition Corp., IMS Health
Incorporated, and ERISCO Managed Care Technologies, Inc.
99.1 Press release, dated May 16, 2000, issued by IMS Health Incorporated
and The TriZetto Group, Inc.
Item 8-9. Not Applicable.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IMS HEALTH INCORPORATED
By /s/ Craig R. Kussman
---------------------
Name: Craig R. Kussman
Title: Senior Vice President,
Corporate Development
Date: May 17, 2000
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Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "AGREEMENT") is entered
into as of this 16th day of May 2000, by and among The TriZetto Group, Inc., a
Delaware corporation ("TRIZETTO"), Elbejay Acquisition Corp., a Delaware
corporation and wholly-owned subsidiary of TriZetto ("MERGER SUB"), IMS Health
Incorporated, a Delaware corporation ("IMS"), and ERISCO Managed Care
Technologies, Inc., a New York corporation and wholly-owned subsidiary of IMS
("ERISCO").
RECITALS
WHEREAS, IMS and TriZetto entered into an Agreement and Plan of
Reorganization, dated as of March 28, 2000 (the "MERGER AGREEMENT"), pursuant to
which, among other things, IMS would merge with and into TriZetto with TriZetto
as the surviving corporation in the merger;
WHEREAS, pursuant to Section 9.1(a) of the Merger Agreement, IMS and
TriZetto desire to terminate the Merger Agreement without liability to either
party;
WHEREAS, the Boards of Directors of TriZetto, Merger Sub, IMS and Erisco
deem it advisable and in the best interests of each corporation and its
respective stockholders that Erisco and Merger Sub engage in a business
combination in order to advance the long-term strategic business interests of
TriZetto and IMS;
WHEREAS, upon the terms and subject to the conditions of this Agreement,
Merger Sub will merge with and into Erisco (the "MERGER"), with Erisco as the
surviving corporation in the Merger, all pursuant to the terms and conditions of
this Agreement and the applicable provisions of the New York Business
Corporation Law, as amended (the "NYBCL"), and the Delaware General Corporation
Law (the "DGCL");
WHEREAS, in furtherance thereof, the Board of Directors of each of
TriZetto, Merger Sub, IMS and Erisco have approved the Merger, upon the terms
and subject to the conditions set forth in this Agreement, pursuant to which
each share of common stock of Erisco issued and outstanding immediately prior to
the Effective Time (as defined in Section 2.2) will be converted into the right
to receive shares of common stock of TriZetto as set forth herein;
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, and as a condition and inducement to IMS's willingness to enter into
this Agreement, IMS and certain stockholders of TriZetto (the "DESIGNATED
STOCKHOLDERS") are entering into agreements dated as of the date hereof in the
form of EXHIBITS A, B and C hereto (the "VOTING AGREEMENTS") pursuant to which
the Designated Stockholders have agreed, among other things, to vote their
shares of TriZetto Common Stock in favor of the transactions contemplated by
this Agreement;
WHEREAS, for United States federal income tax purposes, it is intended
that the Merger shall qualify as a "tax-free" reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "CODE"),
and the regulations promulgated thereunder; and
WHEREAS, IMS, Erisco, TriZetto and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
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NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, and intending to be legally bound hereby and thereby, the parties
hereto agree as follows:
1. TERMINATION OF MERGER AGREEMENT. By their execution and delivery of
this Agreement, IMS and TriZetto hereby mutually agree to terminate the Merger
Agreement pursuant to Section 9.1(a) thereof without liability to either party.
Except as expressly set forth in the Merger Agreement, the Merger Agreement
shall have no further force and effect. For the avoidance of doubt, neither IMS
nor TriZetto shall have any obligations with respect to the payment of a
Termination Fee (as defined in the Merger Agreement) or the reimbursement of any
Expenses (as defined in the Merger Agreement) pursuant to Section 9.4 of the
Merger Agreement, and each of IMS and TriZetto hereby waive all rights of such
party pursuant to such Section. IMS and TriZetto further agree that the letter
agreements listed on Schedule 1 hereto shall be hereby terminated.
2. PLAN OF REORGANIZATION.
2.1 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, at the Effective Time, Merger Sub shall be merged with
and into Erisco and the corporate existence of Merger Sub shall thereupon cease.
Erisco shall be the surviving corporation in the Merger (sometimes hereinafter
referred to as the "SURVIVING CORPORATION"), and the separate corporate
existence of Erisco with all its rights, privileges, immunities, powers and
franchises shall continue unaffected by the Merger. The Merger shall have the
effects specified in the NYBCL and the DGCL.
2.2 THE CLOSING. Subject to the termination of this Agreement as
provided in Section 12 below, the closing of the transactions contemplated by
this Agreement (the "CLOSING") shall take place at the offices of Stradling
Yocca Carlson & Rauth, 660 Newport Center Drive, Suite 1600, Newport Beach,
California 92660 on a date (the "CLOSING DATE") and at a time to be mutually
agreed upon by IMS and TriZetto, which date shall be no later than the third
business day after all conditions to Closing set forth herein (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the fulfillment or waiver of those conditions) shall have been satisfied or
waived in accordance with this Agreement, unless another place, time and date is
mutually agreed upon in writing by IMS and TriZetto. As soon as practicable
following the Closing, TriZetto and IMS will cause a Certificate of Merger (the
"NY CERTIFICATE OF MERGER") to be executed, acknowledged and filed in the office
of the Secretary of State of the State of New York as provided in Section 904-A
of the NYBCL and a Certificate of Merger (the "DE CERTIFICATE OF MERGER") to be
executed, acknowledged and filed in the office of the Secretary of State of the
State of Delaware as provided in Section 252 of the DGCL. The Merger shall
become effective at the time when the last of the following actions shall have
been consummated: (i) the NY Certificate of Merger has been duly filed by the
office of the New York Department of State and (ii) the DE Certificate of Merger
has been duly filed with the Secretary of State of the State of Delaware (the
"EFFECTIVE TIME").
2.3 EFFECT ON CAPITAL STOCK. At the Effective Time, as a result of
the Merger and without any action on the part of any holder of any capital stock
of Erisco:
(a) CONVERSION OF SHARES. The shares of Common Stock, par
value $.01 per share, of Erisco ("ERISCO COMMON STOCK"), that are issued and
outstanding immediately prior to the Effective Time (other than shares of Erisco
Common Stock held by Erisco in its treasury (the
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"EXCLUDED SHARES")) shall be converted, in the aggregate, into the right to
receive that number of shares (the "MERGER CONSIDERATION") of validly issued,
fully paid and nonassessable Common Stock, par value $0.001 per share (the
"TRIZETTO COMMON STOCK"), rounded to the nearest whole share, equal to the
amount derived by dividing $255,000,000 by the Average Closing Price (as defined
herein); provided, that:
(i) if the Average Closing Price is less than $21.00,
the Merger Consideration shall be 12,142,857 shares of TriZetto Common Stock; or
(ii) if the Average Closing Price is greater than
$29.00, the Merger Consideration shall be 8,793,103 shares of TriZetto Common
Stock.
As used herein, the "AVERAGE CLOSING PRICE" shall mean the average of the per
share closing prices of TriZetto Common Stock as reported on the NASDAQ National
Market System (the "NASDAQ") (as reported in the New York City edition of THE
WALL STREET JOURNAL or, if not reported thereby or if manifestly erroneous,
another authoritative source) for 15 trading days ending on the third trading
day prior to the Closing Date.
At the Effective Time, all shares of Erisco Common Stock shall no
longer be outstanding and shall be cancelled and retired and shall cease to
exist, and all certificates formerly representing any such shares of Erisco
Common Stock (other than Excluded Shares) shall thereafter represent only the
right to receive the Merger Consideration. All Excluded Shares shall, by virtue
of the Merger and without any action on the part of the holder thereof, cease to
be outstanding, shall be cancelled and retired without payment of any
consideration therefor and shall cease to exist.
(b) MERGER SUB COMMON STOCK. At the Effective Time, each share
of Common Stock, par value $0.001 per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into one
share of common stock of the Surviving Corporation.
(c) ADJUSTMENTS FOR CAPITAL CHANGES. If, prior to the
Effective Time, TriZetto recapitalizes through a subdivision of its outstanding
shares into a greater number of shares, or by a combination of its outstanding
shares into a lesser number of shares, or reorganizes, reclassifies or otherwise
changes its outstanding shares into the same or a different number of shares of
other classes, or declares a dividend on its outstanding shares payable in
shares of its capital stock or securities convertible into shares of its capital
stock, then the Merger Consideration will be adjusted equitably so as to
maintain the proportionate interest in the issued and outstanding TriZetto
Common Stock represented by the Merger Consideration.
(d) DISSENTING SHARES. In accordance with Section 910 of the
NYBCL, no appraisal rights shall be available to holders of Erisco Common Stock
in connection with the Merger.
2.4 FRACTIONAL SHARES. No fractional shares of TriZetto Common Stock
will be issued in the Merger.
2.5 EXCHANGE OF CERTIFICATES. At the Closing (i) IMS shall deliver
to TriZetto certificates representing all shares of Erisco Common Stock then
issued and outstanding and
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(ii) TriZetto shall deliver or cause to be delivered to IMS duly executed
certificates representing the Merger Consideration.
2.6 CERTIFICATE OF INCORPORATION AND BY-LAWS.
(a) The Certificate of Incorporation of Erisco, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law.
(b) The By-laws of Merger Sub, as in effect immediately prior
to the Effective Time, shall be the by-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
3. REPRESENTATIONS AND WARRANTIES OF IMS AND ERISCO.
Except as set forth in the letter to be delivered by IMS and Erisco to
TriZetto concurrently herewith (the "IMS DISCLOSURE LETTER), IMS and Erisco,
jointly and severally, represent and warrant to TriZetto as set forth below. In
this Agreement, the term "MATERIAL ADVERSE EFFECT" used in connection with a
party or any of such party's subsidiaries means any event, change or effect that
is materially adverse to the financial condition, properties, assets,
liabilities, businesses or results of operations of such party and its
subsidiaries, taken as a whole, or to the ability of such party to consummate
the Merger and the other transactions contemplated hereby, other than, in each
case, events, changes or effects that result from general economic conditions or
conditions generally affecting the industry in which such party conducts
operations.
3.1 ORGANIZATION; GOOD STANDING; QUALIFICATION AND POWER. Erisco is
a corporation duly organized, validly existing and in good standing under the
laws of the State of New York, has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted, and is duly qualified and in good standing to do business in
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary, other than in such
jurisdictions where the failure to so qualify is not reasonably likely to have a
Material Adverse Effect on Erisco. IMS has made available to TriZetto or its
counsel complete and correct copies of the Certificate of Incorporation and
bylaws of Erisco.
3.2 CAPITAL STRUCTURE.
(a) STOCK AND OPTIONS. The authorized capital stock of Erisco
consists of 200 shares of Common Stock, no par value. At the close of business
on the date of this Agreement, 10 shares of Erisco Common Stock were issued and
outstanding, all of which were held by IMS. All outstanding shares of Erisco
Common Stock are validly issued, fully paid and nonassessable and not subject to
preemptive rights and are owned by IMS free and clear of any liens, security
interests, pledges, agreements, claims, charges or encumbrances. IMS has made
available to TriZetto true and correct copies of its 1998 Employees' Stock
Incentive Plan, 1998 Replacement Plan for Certain Employees Holding Cognizant
Corporation Equity-Based Awards, 1998 Employees Stock Purchase Plan (the
"ESPP"), and 1998 Replacement Plan for Certain Individuals Holding Cognizant
Corporation Stock Options (collectively, the "IMS PLANS") and a correct and
complete list of the following information with respect to options to purchase
shares of IMS Common Stock issued to Erisco employees or consultants (the "IMS
OPTIONS") outstanding as of May 16, 2000: (i) the
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aggregate number of shares of IMS Common Stock subject to IMS Options under each
IMS Plan other than the ESPP; (ii) the exercise price of the IMS Options
outstanding under each such IMS Plan; (iii) the vesting schedule under each such
IMS Plan; and (iv) with respect to Erisco employees that have entered into
change of control agreements with IMS, the name of such employee, the number of
shares of IMS Common Stock subject to IMS Options held by such employee, the
particular IMS Plan(s) pursuant to which such IMS Options were granted and the
vesting schedule of the IMS Options held by such employee.
(b) NO OTHER COMMITMENTS. There are no options, warrants,
calls, rights, commitments, conversion rights or agreements of any character to
which IMS or Erisco is party or by which IMS or Erisco is bound obligating
Erisco to issue, deliver or sell, or cause to be issued, delivered or sold, any
shares of capital stock of Erisco or securities convertible into or exchangeable
for shares of capital stock of Erisco, or obligating Erisco to grant, extend or
enter into any such option, warrant, call, right, commitment, conversion right
or agreement.
(c) SUBSIDIARIES. Except for IMS Health Purchasing, Inc., a
Delaware corporation and wholly-owned subsidiary of Erisco ("IHPI"), Erisco does
not own, control or hold with the power to vote, directly or indirectly, of
record, beneficially or otherwise, any share capital, capital stock or any
equity or ownership interest in any company, corporation, partnership,
association, joint venture, business, trust or other entity. IHPI has not
conducted any business or engaged in any activity that has resulted in any
liability to Erisco, and does not own any assets relating to businesses
conducted by Erisco.
3.3 AUTHORITY.
(a) CORPORATE ACTION BY IMS. IMS has all requisite corporate
power and authority to enter into this Agreement, the Voting Agreements, the
Registration Rights Agreement (as defined in Section 7.3), the Stockholder
Agreement (as defined in Section 7.4), the Transitional Services Agreements (as
defined in Section 7.5), the Data Rights Agreement (as defined in Section 7.6)
and the License Agreement (as defined in Section 7.7) (collectively, the "BASIC
DOCUMENTS"), to perform its obligations under the Basic Documents and to
consummate the transactions contemplated by the Basic Documents. The execution
and delivery of the Basic Documents by IMS and the consummation by IMS of the
transactions contemplated thereby have been duly authorized by all necessary
corporate action on the part of IMS. Each of the Basic Documents has been, or
will when executed be, duly executed and delivered by IMS and is, or when
executed will be, the valid and binding obligation of IMS, enforceable in
accordance with its terms, except that such enforceability may be subject to (i)
bankruptcy, insolvency, reorganization or other similar laws affecting or
relating to enforcement of creditors' rights generally and (ii) general
equitable principles (the "BANKRUPTCY AND EQUITY EXCEPTION").
(b) CORPORATE ACTION BY ERISCO. Erisco has all requisite
corporate power and authority to enter into this Agreement and the Transitional
Services Agreements, to perform its obligations hereunder and thereunder and to
consummate the Merger and the other transactions contemplated by this Agreement
and the Transitional Services Agreements. The execution and delivery of this
Agreement and the Transitional Services Agreements by Erisco and the
consummation by Erisco of the Merger and the other transactions contemplated
hereby and by the Transitional Services Agreements have been duly authorized by
all necessary corporate action on the part of Erisco. This Agreement has been
duly executed and delivered by Erisco and is the valid and
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binding obligation of Erisco, enforceable in accordance with its terms, except
that such enforceability may be subject to the Bankruptcy and Equity Exception.
(c) NO CONFLICT. Neither the execution, delivery and
performance of the Basic Documents nor the consummation of the transactions
contemplated thereby nor compliance with the provisions hereof or thereof will
conflict with, or result in any violations of, or cause a breach or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, amendment, cancellation or acceleration of any obligation
contained in, or the loss of any material benefit under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
material properties or assets of Erisco under, any term, condition or provision
of (A) the certificate of incorporation or bylaws of Erisco or (B) any loan or
credit agreement, note, bond, mortgage, indenture, lease, license, agreement,
contract, arrangement or other obligation ("CONTRACT"), permit, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Erisco or its
properties or assets, other than any such conflicts, violations, defaults,
losses, liens, security interests, charges, or encumbrances which, individually
or in the aggregate, is not reasonably likely to have a Material Adverse Effect
on Erisco.
(d) GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (each a "GOVERNMENTAL ENTITY"), is required
to be obtained by IMS or Erisco in connection with the execution and delivery of
the Basic Documents or the consummation of the transactions contemplated
thereby, except for: (i) the filing with the Securities and Exchange Commission
(the "SEC") of such reports and information under the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), and the rules and regulations promulgated
by the SEC thereunder as may be required in connection with this Agreement or
the Voting Agreements and the transactions contemplated hereby or thereby; (ii)
the filing of the NY Certificate of Merger with the Secretary of State of the
State of New York, the DE Certificate of Merger with the Secretary of State of
the State of Delaware, and appropriate documents with the relevant authorities
of other states in which Erisco is qualified to do business; (iii) such filings,
authorizations, orders and approvals as may be required under foreign securities
laws, state securities laws and the rules of the New York Stock Exchange, Inc.
(the "NYSE"); (iv) such filings and notifications as may be necessary under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (the "HSR Act")
and applicable foreign antitrust laws and (v) where the failure to obtain or
make such consents, approvals, orders or authorizations, registrations,
declarations or filings would not prevent or delay the consummation of the
Merger or otherwise prevent IMS or Erisco from performing their respective
obligations under this Agreement or the Voting Agreements and is not reasonably
likely to have a Material Adverse Effect on Erisco.
3.4 SEC DOCUMENTS. IMS has made available to TriZetto or its counsel
correct and complete copies of each report, schedule, registration statement and
definitive proxy statement filed by IMS or any of its subsidiaries with the SEC
on or after December 31, 1998 (the "IMS SEC DOCUMENTS"), which are all the
documents (other than preliminary material) that IMS was required to file with
the SEC on or after such date. As of their respective dates or, in the case of
registration statements, their effective dates (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing),
none of the IMS SEC Documents (including all exhibits and schedules thereto and
documents incorporated by reference therein) contained any untrue statement of a
material fact with respect to Erisco or omitted to state a material fact with
respect to Erisco 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.
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3.5 INFORMATION SUPPLIED. None of the information supplied or to be
supplied by IMS for inclusion or incorporation by reference in the Proxy
Statement will, at the date the Proxy Statement is mailed to the stockholders of
TriZetto and at the time of the TriZetto Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they are made, not misleading. The material to be
supplied by IMS in respect of the Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder.
3.6 COMPLIANCE WITH APPLICABLE LAWS. The businesses of Erisco have
not been and are not being conducted in violation of any federal, state, local
or foreign law, ordinance, regulation, rule or order of any Governmental Entity
where such violation is reasonably likely to have a Material Adverse Effect on
Erisco. Neither IMS nor Erisco has been notified by any Governmental Entity that
any investigation or review with respect to Erisco is pending or threatened, nor
has any Governmental Entity notified IMS or Erisco of its intention to conduct
the same. Erisco has all material permits, licenses and franchises from
Governmental Entities required to conduct its businesses as now being conducted,
except for those whose absence is not reasonably likely to have a Material
Adverse Effect on Erisco.
3.7 LITIGATION. There is no suit, action, arbitration, demand, claim
or proceeding ("CLAIM") pending or, to the knowledge of IMS or Erisco,
threatened against Erisco, nor is there any judgment, decree, injunction, rule
or order of any Governmental Entity or arbitrator outstanding against Erisco
that, individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on Erisco. Section 3.7 of the IMS Disclosure Letter sets forth a
complete list of all material Claims made against Erisco or IMS, to the extent
primarily related to Erisco's business, since January 1, 1998.
3.8 ERISA AND OTHER COMPLIANCE.
(a) IMS has made available to TriZetto a list of (i) each
"employee benefit plan," as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and (ii) any other plan,
arrangement or agreement involving compensation or benefits, including any
employment agreements, plans or arrangements providing for insurance coverage
(including self-insured arrangements), retirement benefits, deferred
compensation, profit-sharing, incentive compensation, stock options, stock
purchases, phantom stock, stock appreciation, other stock-based awards, or
post-retirement insurance, covering employees of Erisco and maintained or
contributed to or entered into as of the date of this Agreement, or that has
within the last six (6) years been maintained or contributed to or entered into
by IMS or any of its subsidiaries or any IMS ERISA Affiliate (as defined below)
under which IMS or any of its subsidiaries or any IMS ERISA Affiliate has any
present or future obligation or liability with respect to any current or former
employee, consultant, leased employee or director of IMS or any of its
subsidiaries or any IMS ERISA Affiliate (collectively, the "IMS EMPLOYEE
PLANS"). For purposes of this Agreement, "IMS ERISA AFFILIATE" shall mean any
entity which is a member of (A) a "controlled group of corporations," as defined
in Section 414(b) of the Code, (B) a group of entities under "common control,"
as defined in Section 414(c) of the Code, or (C) an "affiliated service group,"
as defined in Section 414(m) of the Code, or treasury regulations promulgated
under Section 414(o) of the Code, any of which includes IMS or any of its
subsidiaries. IMS has also made available to TriZetto copies of all IMS Employee
Plans, and as applicable, all amendments thereto and written interpretations
thereof, trust agreements, insurance contracts, current summary plan
descriptions and summaries of
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material modification, the three (3) most recent annual reports (Form 5500,
including, if applicable, Schedule B thereto), the most recent determination
letter from the Internal Revenue Service, actuarial reports for the last three
(3) years, all agreements with fiduciaries and service providers and all
substantive correspondence with the Internal Revenue Service, the Department of
Labor, the Pension Benefit Guaranty Corporation or any other governmental
agency. All contributions due from IMS or any of its subsidiaries through the
date hereof with respect to any of the IMS Employee Plans have been made as may
have been required by ERISA and the Code or have been accrued in accordance with
generally accepted accounting practices on IMS's or any such subsidiary's
financial statements as of the date hereof. Each IMS Employee Plan has been
maintained and operated in compliance with its terms and with the requirements
prescribed by any and all applicable statutes, orders, rules and regulations,
including, without limitation, ERISA and the Code, except for such noncompliance
as would not have a Material Adverse Effect on Erisco. Erisco does not currently
maintain, nor has it ever maintained, any "employee benefit plan", as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
(b) Section 3.8(b) of the IMS Disclosure Letter lists each
Erisco employee who (i) has elected to continue participating in a group health
plan of IMS pursuant to an election under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA") or (ii) has not made an
election under COBRA but who is still eligible to make such election.
(c) Section 3.8(c) of the IMS Disclosure Letter lists each
Erisco employee who is receiving (i) long-term disability benefits or (ii)
short-term disability benefits pursuant to an employee benefit plan maintained
by IMS.
(d) No work stoppage or labor strike against Erisco is
pending, threatened or reasonably anticipated with respect to the Erisco
employees. Neither IMS nor Erisco knows of any activities or proceedings of any
labor union to organize any such Erisco employees. There are no actions, suits,
claims, labor disputes or grievances pending, or, to the knowledge of IMS or
Erisco, threatened or reasonably anticipated relating to any labor, safety or
discrimination matters involving any Erisco employee, including, without
limitation, charges of unfair labor practices or discrimination complaints,
which, if adversely determined, would, individually or in the aggregate, result
in any liability to Erisco having a Material Adverse Effect on Erisco. Neither
IMS nor Erisco is presently, nor has it been, a party to, or bound by, any
collective bargaining or union contract with respect to Erisco employees and no
collective bargaining agreement is being negotiated by IMS or Erisco with
respect to such employees.
(e) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby (either alone or in
conjunction with any other event) will (i) result in any payment constituting an
"excess parachute payment" (within the meaning of Section 280G of the Code),
(ii) result in forgiveness of indebtedness of any director, officer or Erisco
employee under any IMS Employee Plan or otherwise, (iv) increase any benefits
otherwise payable to any Erisco employee under any IMS Employee Plan, or (v)
result in any acceleration of the time of payment or vesting of any benefits to
any Erisco employee under any IMS Employee Plan or otherwise.
(f) IMS and each of its Significant Subsidiaries (as defined
in Regulation S-X under the Exchange Act): (i) are in compliance in all material
respects with all applicable laws, agreements and contracts relating to
employment, employment practices, wages, hours and terms and conditions of
employment, including, but not
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limited to, employee compensation matters, but not including ERISA; (ii) have
withheld and reported in all material respects all amounts required by law or by
agreement to be withheld and reported with respect to wages, salaries and other
payments to IMS and Erisco employees; (iii) is not liable in any material
respect for any arrears of wages or any taxes or any penalty for failure to
comply with any of the foregoing; and (iv) is not liable for any material
payment to any trust or other fund or to any governmental or administrative
authority, with respect to unemployment compensation benefits, social security
or other benefits or obligations for IMS employees (other than payments to IMS
Employee Plans and routine payments to be made in the normal course of business
and consistent with past practice). There are no pending, threatened or
reasonably anticipated material claims or actions against IMS or any of its
subsidiaries under any worker's compensation policy or any uninsured long-term
disability policy. To the knowledge of IMS or Erisco, no employee of Erisco has
violated in any material respect any employment contract, nondisclosure
agreement or noncompetition agreement by which such employee is bound due to
such employee being employed by IMS or any of its subsidiaries and disclosing to
IMS or using trade secrets or proprietary information of any other Person.
3.9 ABSENCE OF UNDISCLOSED LIABILITIES. At March 31, 2000 (the
"ERISCO BALANCE SHEET DATE"), Erisco did not have any liabilities or obligations
of any nature (matured or unmatured, fixed or contingent) which were not
provided for or disclosed in notes to the balance sheet included in the Interim
Financial Statements (as defined in Section 3.22), other than liabilities or
obligations which, individually or in the aggregate, are not reasonably likely
to have a Material Adverse Effect on Erisco.
3.10 ABSENCE OF CERTAIN CHANGES OR EVENTS. As of the date hereof,
except as contemplated by this Agreement, since the Erisco Balance Sheet Date
there has not occurred:
(a) any change in the financial condition, properties,
businesses or results of operations of Erisco that is reasonably likely to have
a Material Adverse Effect on Erisco;
(b) any amendments or changes in the Certificate of
Incorporation or Bylaws of Erisco;
(c) any damage, destruction or loss to physical property,
whether covered by insurance or not, that is reasonably likely to constitute a
Material Adverse Effect on Erisco;
(d) any redemption, repurchase or other acquisition of shares
of Erisco Common Stock by Erisco or any other Person;
(e) any material increase in or modification of the
compensation or benefits payable or to become payable by Erisco to any of its
directors or employees, except in the ordinary course of business consistent
with past practice;
(f) any material increase in or modification of any bonus,
pension, or employee benefit plan (including, but not limited to, the granting
of stock options, restricted stock awards or stock appreciation rights) made to,
for or with any of the Erisco employees, other than in the ordinary course of
business consistent with past practice;
(g) any acquisition or sale of a material amount of property
or assets of Erisco, other than in the ordinary course of business consistent
with past practice;
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(h) any alteration in any term of any outstanding security of
Erisco;
(i) any (A) incurrence, assumption or guarantee by Erisco of
any debt for borrowed money other than inter-company borrowings, (B) issuance or
sale of any securities convertible into or exchangeable for debt securities of
Erisco or (C) issuance or sale of options or other rights to acquire from
Erisco, directly or indirectly, debt securities of Erisco or any securities
convertible into or exchangeable for any such debt securities;
(j) any creation or assumption by Erisco of any mortgage,
pledge, security interest or lien or other encumbrance on any asset;
(k) any making of any loan, advance or capital contribution to
or investment in any Person other than (i) travel loans or advances made in the
ordinary course of business of Erisco, (ii) other loans and advances in an
aggregate amount which does not exceed $500,000 outstanding at any time, (iii)
purchases on the open market of liquid, publicly traded securities and (iv)
intercompany loans, advances, capital contributions or investments;
(l) any entering into, amendment of, relinquishment,
termination or non-renewal by Erisco of any contract, lease transaction,
commitment or other right or obligation other than in the ordinary course of
business;
(m) any material transfer or grant of a right under the Erisco
IP Rights (as defined in Section 3.14 below), other than those transferred or
granted in the ordinary course of business consistent with past practices;
(n) any material labor dispute or charge of unfair labor
practice (other than routine individual grievances), any material activity or
proceeding by a labor union or representative thereof to organize any Erisco
employees or any material campaign being conducted to solicit authorization from
employees to be represented by such labor union or any material lockouts,
strikes, slow downs, work stoppages or threats thereof by or with such
employees;
(o) any event, occurrence or development which is reasonably
likely to have a Material Adverse Effect on Erisco;
(p) any material change in the accounting practices of Erisco,
except for any such change required by reason of a concurrent change in
generally accepted accounting principles ("GAAP");
(q) any failure to make any material contribution due under
any IMS or Erisco employee benefit plan in which a contribution could be
required to be made by Erisco; or
(r) any agreement or arrangement made by Erisco or IMS to take
any action which, if taken prior to the date hereof, would have made any
representation or warranty set forth in this Agreement untrue or incorrect as of
the date when made unless otherwise disclosed.
3.11 NO DEFAULTS. To the knowledge of IMS or Erisco, neither Erisco
nor any other party thereto is in breach or default under, and there exists no
event, condition or occurrence which, after notice or lapse of time, or both,
would constitute such a breach or default by Erisco or any other party under,
any Contract to which Erisco is a party and which would, if terminated or
modified,
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have, insofar as can reasonably be foreseen, a Material Adverse Effect on
Erisco. Each of such Contracts is in full force and effect and is a legal, valid
and binding agreement, enforceable in accordance with its terms, of each party
thereto, subject to the Bankruptcy and Equity Exception.
3.12 CERTAIN AGREEMENTS. Neither the execution and delivery of the
Basic Documents nor the consummation of the transactions contemplated thereby
(either alone or in conjunction with other transactions currently contemplated)
will result in any payment (including, without limitation, severance,
unemployment compensation, golden parachute, bonus or otherwise) becoming due to
any director or Erisco employee, under any IMS employee benefit plan or
otherwise.
3.13 TAXES.
(a) Except as set forth in (or resulting from matters set
forth in) the IMS Disclosure Letter or as is not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on Erisco:
(i) Erisco and the IMS Group (as defined herein) have
prepared in good faith and duly and timely filed (taking into account any
extension of time within which to file) with the appropriate governmental
agencies all franchise, income and all other material Tax (as defined below)
returns and reports required to be filed on or before the Effective Time
(collectively, "RETURNS") and all such filed Returns are complete and accurate
in all material respects;
(ii) Erisco and the IMS Group have timely paid all Taxes
that are shown as due on such filed Returns or that Erisco or any member of the
IMS Group is obligated to withhold from amounts owing to any employee, creditor
or third party, except with respect to matters contested in good faith;
(iii) as of the date hereof, there are not pending or,
to the actual knowledge of the executive officers of Erisco or any member of the
IMS Group, threatened in writing, any audits, examinations, investigations or
other proceedings in respect of Taxes or Tax matters in respect of Erisco;
(iv) Erisco is not liable for the Taxes of any Person
(as defined below) (other than Persons who at the Effective Time are members of
the affiliated group of corporations of which IMS is the common parent) pursuant
to Section 1502 of the Code, by agreement or otherwise; and
(v) Erisco has no liability with respect to material
income, franchise or similar Taxes in excess of the amounts accrued in respect
thereof that are reflected in the financial statements included in the IMS SEC
Documents, other than any liability for unpaid Taxes that may have properly
accrued since the Erisco Balance Sheet Date in connection with the operation of
the business of Erisco or any of the members of the IMS Group in the ordinary
course.
(b) No payments to be made to any Erisco employee will as a
result of consummation of the Merger be subject to the deduction limitations
under Section 280G of the Code.
(c) "IMS GROUP" shall mean any affiliated group (as defined in
Section 1504(a) of the Code without regard to the limitations contained in
Section 1504(b) of the
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Code) that includes IMS or any predecessor of or successor to IMS (or another
such predecessor or successor).
(d) "TAX" or "TAXES" shall mean all United States federal,
state, provincial, local or foreign taxes and any other applicable duties,
levies, fees, charges and assessments that are in the nature of a tax, including
income, gross receipts, property, sales, use, license, excise, franchise, ad
valorem, value-added, transfer, severance, stamp, occupation, premium, windfall
profits, environmental (including taxes under Section 59A of the Code), customs,
capital stock, real property, personal property, alternative or add-on minimum,
estimated, social security payments, and health taxes and any deductibles
relating to wages, salaries and benefits and payments to subcontractors,
together with all interest, penalties and additions imposed with respect to such
amounts.
(e) "PERSON" shall mean any individual, corporation (including
not-for-profit), general or limited partnership, limited liability company,
joint venture, estate, trust, association, organization, Governmental Entity (as
defined herein) or other entity of any kind or nature.
3.14 INTELLECTUAL PROPERTY.
(a) Erisco owns or has the right to use all material
Intellectual Property Rights (as defined below) necessary or required for the
operation of the business of Erisco as currently conducted (collectively,
"ERISCO IP RIGHTS"), and has the right to sublicense the Erisco IP Rights that
are licensed for the purpose of sublicensing or redistribution without material
liability to, or any requirement of consent from, any other Person or party. The
Erisco IP Rights constitute all Intellectual Property Rights necessary for the
conduct of Erisco's business in the manner conducted immediately prior to the
Closing. All Erisco IP Rights are either owned by Erisco free and clear of all
liens and encumbrances or are used pursuant to a license agreement; each such
license agreement is valid and enforceable and in full force and effect; Erisco
is not in material default thereunder; and to the knowledge of IMS or Erisco, no
corresponding licensor is in material default thereunder. None of the Erisco IP
Rights infringes or otherwise conflicts with any Intellectual Property Rights or
other right of any Person; there is no pending or, to the knowledge of IMS or
Erisco, threatened (in writing) litigation, adversarial proceeding,
administrative action or other challenge or claim relating to any Erisco IP
Rights; there is no outstanding order relating to any Erisco IP Rights; to the
knowledge of IMS or Erisco, there is currently no infringement by any Person of
any Erisco IP Rights; and the Erisco IP Rights owned, used or possessed by
Erisco are sufficient and adequate to conduct the business of Erisco to the full
extent as such business is currently conducted. Section 3.14(a) of the IMS
Disclosure Letter sets forth a complete and accurate list of all licenses to
third parties with respect to the Erisco IP Rights that permit such third
parties to provide outsourcing or application services or otherwise remotely
host Software (as defined below) owned or licensed by Erisco.
(b) IMS and/or Erisco have taken reasonable steps to protect,
maintain and safeguard the Erisco IP Rights, including any Erisco IP Rights for
which improper or unauthorized disclosure would impair its value or validity
materially, and has executed and required appropriate nondisclosure agreements
and made appropriate filings and registrations in connection with the foregoing.
(c) A true and complete list of all material Software owned by
Erisco has heretofore been made available to TriZetto. All of the Software owned
by Erisco is Year 2000
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Compliant (as defined below). A true and complete list of all material third
party Software used by Erisco has heretofore been made available to TriZetto. To
the knowledge of IMS or Erisco, all material third party Software currently used
by Erisco is Year 2000 Compliant. "Software" means and includes all computer
programs, whether in source code, object code or other form (including without
limitation any embedded in or otherwise constituting part of a computer hardware
device), algorithms, edit controls, methodologies, applications, flow charts and
any and all systems documentation (including, but not limited to, data entry and
data processing procedures, report generation and quality control procedures),
logic and designs for all programs, and file layouts and written narratives of
all procedures used in the coding or maintenance of the foregoing.
(d) A true and complete list of all material Databases (as
defined below) owned by Erisco has heretofore been made available to TriZetto.
All of the Databases owned by Erisco are Year 2000 Compliant. A true and
complete list of all material third party Databases used by Erisco has
heretofore been made available to TriZetto. To the knowledge of IMS or Erisco,
all material third party Databases currently used by Erisco are Year 2000
Compliant. "Databases" means and includes all compilations of data and all
related documentation and written narratives of all procedures used in
connection with the collection, processing and distribution of data contained
therein, together with information that describes the attributes of certain data
and such data's relationship to other data, including, without limitation, (A)
whether the data must be numerical, alphabetic, or alphanumeric, (B) range or
type limitations of the data, (C) one-to-one, one-to-many, or many-to-many
relationships with other data, (D) file layouts, and (E) data formats.
(e) No material confidential or trade secret information of
Erisco has been provided to any Person except subject to written confidentiality
agreements, except for any such disclosure which has not resulted and is not
reasonably likely to result in a Material Adverse Effect on Erisco.
(f) Erisco has valid copyrights in all material copyrightable
material whether or not registered with the U.S. copyright office, including all
copyrights in the Erisco Products (as defined herein) containing material
copyrightable material. Consummation of the transactions contemplated hereby
will not alter or impair the validity of any such copyrights or copyright
registrations.
(g) (A) No third party (including any original equipment
manufacturer or site license customer) has any right to manufacture, reproduce,
distribute, sell, sublicense, market or exploit any of the products or services
offered by Erisco (the "ERISCO PRODUCTS") or any adaptations, translations, or
derivative works based on the Erisco Products, or any portion thereof; (B)
neither IMS nor Erisco has granted to any third party any exclusive rights of
any kind with respect to any of the Erisco Products, including territorial
exclusivity or exclusivity with respect to particular versions, implementations
or translations of any of the Erisco Products; and (C) neither IMS nor Erisco
has granted any third party any right to market any product utilizing any Erisco
Product under any "private label" arrangements pursuant to which Erisco is not
identified as the source of such goods. Each document or instrument identified
pursuant to this Section is listed in Section 3.14 of the IMS Disclosure Letter
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 IMS
Products are a derivative work.
(h) Except as is not reasonably likely to have a Material
Adverse Effect on Erisco, each of the Erisco Products: (A) substantially
complies with all specifications set forth in any
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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 Erisco's business; and (B) can be recreated from its associated
source code and related documentation by reasonably experienced technical
personnel without undue burden.
(i) To the knowledge of IMS or Erisco, no Erisco employee 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 Erisco or any other party because of the nature of the business
conducted by Erisco or proposed to be conducted by Erisco.
(j) If Erisco is obligated to repair or replace products or
services previously provided by Erisco that are not Year 2000 Compliant in order
to meet Erisco'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 IMS or Erisco, Erisco has
repaired or replaced those products and services to make them Year 2000
Compliant in all material respects.
(k) All of the Software owned or used by Erisco complies in
all material respects with the currently known and relevant provisions of the
Health Insurance Portability and Accountability Act of 1996, as amended.
(l) "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 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)
supply of the product(s), service(s), and other item(s) will not be interrupted,
delayed, decreased, or otherwise affected by the year 2000.
(m) As used herein, the term "INTELLECTUAL PROPERTY RIGHTS"
shall mean all worldwide industrial and intellectual property rights, including,
without limitation, patents, patent applications, patent rights, trademarks,
trademark applications, trade names, service marks, service mark applications,
copyright, copyright applications, franchises, licenses, inventories, know-how,
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trade secrets, customer lists, proprietary processes and formulae, all source
and object code, algorithms, architecture, structure, display screens, layouts,
inventions, development tools, Software, Databases and all documentation and
media constituting, describing or relating to the above, including, without
limitation, manuals, memoranda and records.
3.15 FEES AND EXPENSES. Neither IMS nor Erisco has paid or become
obligated to pay any fee or commission to any broker, finder or intermediary in
connection with the transactions contemplated by this Agreement.
3.16 ENVIRONMENTAL MATTERS.
(a) Erisco, including all of its businesses and operations,
is, and has been, operated in compliance with all laws, statutes, rules,
regulations and other restrictions or requirements of any domestic or foreign
governmental authority concerning or relating to industrial hygiene or
protection of human health or the environment or to emissions, discharges or
releases of pollutants, contaminants or other Hazardous Substances (as
defined below) 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
(collectively, "ENVIRONMENTAL LAWS"), except where the failure to so comply
has not had, and is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Erisco. "HAZARDOUS SUBSTANCES" shall
mean any substance regulated under any Environmental Laws including, without
limitation, any substance which is: (A) petroleum, asbestos or
asbestos-containing material, or polychlorinated biphenls; (B) defined,
designated or listed as a "Hazardous Substance" pursuant to Sections 307 and
311 of the Clean Water Act, 33 U.S.C. Sections 1317, 1321, Section 101(14) of
CERCLA, 42 U.S.C. Section 9601; (C) listed in the United States Department of
Transportation Hazardous Material Tables, 49 C.F.R. Section 172.101; or (D)
defined, designated or listed as a "Hazardous Waste" under Section 1004(5) of
the Resource and Conservation and Recovery Act, 42 U.S.C. 6903(5).
(b) Except as is not reasonably likely to have a Material
Adverse Effect on Erisco, neither IMS nor Erisco has received notice or has
knowledge of:
(i) any claim, demand, investigation, enforcement
action, response, removal, remedial action, statutory lien or other governmental
or regulatory action instituted or threatened against Erisco or any real
property which is now owned, used or leased to or by Erisco (the "ERISCO CURRENT
REAL PROPERTY") or any real property which was, but is no longer, owned, used or
leased to or by Erisco ("ERISCO FORMER REAL PROPERTY") pursuant to any
Environmental Law;
(ii) any claim, demand notice, suit or action, made or
threatened by any Person against Erisco, the Erisco Current Real Property or the
Erisco Former Real Property relating to (A) any form of damage, loss or injury
resulting from or claimed to result from, any Hazardous Substance on, about,
beneath or arising from the Erisco Current Real Property or Erisco Former Real
Property or (B) any alleged material violation of any Environmental Law by
Erisco; or
(iii) any communication to or from any governmental
authority alleging violations, liability or contamination arising out of or in
connection with Hazardous Substances on, about, beneath, arising from or
generated at the Erisco Current Real Property or
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Erisco Former Real Property, including without limitation, any notice of
violation, citation, complaint, order, directive, request for information or
response thereto, notice letter, demand letter or compliance schedule.
3.17 INTERESTED PARTY TRANSACTIONS. No officer or director of Erisco
or any "affiliate" or "associate" (as those terms are defined in Rule 405
promulgated under the Securities Act of 1933, as amended (the "SECURITIES Act"))
of any such person has had, either directly or indirectly, a material interest
in: (i) any Person which purchases from or sells, licenses or furnishes to
Erisco any material amount of goods, property, technology or intellectual or
other property rights or services; or (ii) any material contract or agreement to
which Erisco is a party or by which it may be bound or affected.
3.18 BOARD APPROVAL. The Board of Directors of Erisco has, as of the
date hereof, unanimously (i) approved this Agreement and the Merger, (ii)
determined that the Merger is in the best interests of its stockholders and
(iii) submitted this Agreement to IMS, as its sole stockholder, for adoption and
approval. The Board of Directors of IMS has, as of the date hereof, unanimously
approved this Agreement and the transactions contemplated hereby.
3.19 VOTE REQUIRED. The approval of IMS is the only vote or approval
of the holders of any class or series of capital stock of IMS or Erisco
necessary to approve this Agreement and the Merger. IMS, as the sole stockholder
of Erisco, has approved this Agreement and the Merger.
3.20 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no material
agreement, judgment, injunction, order or decree binding upon Erisco that has or
could reasonably be expected to have the effect of prohibiting or materially
impairing the conduct of its business as currently conducted or any acquisition
of property by Erisco.
3.21 TAKEOVER STATUTES. No "fair price," "moratorium," "control
share acquisition" or other similar anti-takeover statute or regulation
(including Section 912 of the NYBCL and Section 203 of the DGCL) (each a
"TAKEOVER STATUTE") or any anti-takeover provision in Erisco's certificate of
incorporation or by-laws is applicable to Erisco, the Erisco Common Stock, the
Merger or the other transactions contemplated by this Agreement.
3.22 ERISCO FINANCIAL STATEMENTS. Set forth in Section 3.22 of the
IMS Disclosure Letter are an unaudited balance sheet, unaudited income statement
and unaudited statement of cash flows of Erisco at and for the three fiscal
years ended December 31, 1999 (including any notes and schedules thereto, the
"FINANCIAL STATEMENTS") and an internally generated income statement and balance
sheet at and for the three month period ended March 31, 2000 (including any
notes and schedules thereto, the "INTERIM FINANCIAL STATEMENTS"). The internal
books and records of Erisco from which the Financial Statements and the Erisco
Balance Sheet were prepared do not contain any information which is false or
misleading in any respect that resulted in a material impact on the Financial
Statements. The Financial Statements (i) were prepared in accordance with GAAP,
applied on a consistent basis throughout the periods presented; and (ii) present
fairly, in all material respects, the financial position and results of
operations of Erisco at the dates and for the periods reflected therein. The
Interim Financial Statements (i) were prepared on a basis consistent with those
of the Financial Statements; and (ii) present fairly, in all material respects,
the financial position and results of operations of Erisco at the dates and for
the periods reflected therein.
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3.23 DEFERRED REVENUE. The deferred revenue reflected on the Erisco
Balance Sheet is based on Erisco's reasonable judgment and business practices,
as established in accordance with GAAP consistently applied. All unearned
revenue relating to contracts executed prior to the Closing Date have been
properly recorded on Erisco's books and records on a timely basis and in the
month in which Erisco received the cash payment or billed the customer.
3.24 ACCOUNTS RECEIVABLE; WARRANTIES. The accounts receivable
reflected on the balance sheet included in the Interim Financial Statements are
owned free and clear by Erisco and are based on Erisco's reasonable judgment and
its normal credit review procedures, business practices and GAAP. Section 3.24
of the IMS Disclosure Letter (i) sets forth Erisco's warranty expense since
January 1, 1998, and (ii) describes Erisco's product return policy and the forms
of warranties given or made by Erisco with respect to products sold by Erisco
since January 1, 1998. To the knowledge of IMS or Erisco, there is no fact or
event which has occurred since January 1, 1998 which has formed or could
reasonably be expected to form the basis of any material claim against Erisco,
whether or not covered by insurance, for breach of any express or implied
product warranty, other than warranty claims asserted by customers in the
ordinary course of business and consistent with Erisco's past experience.
3.25 INTERESTS IN REAL PROPERTY. Section 3.25 of the IMS Disclosure
Letter is a complete and correct list and brief description of all real property
currently leased by Erisco. Erisco does not own any real property. All real
property leases to which Erisco is a party are in full force and effect and are
valid and binding on the parties thereto, assuming enforceability as to the
parties other than Erisco and subject to the Bankruptcy and Equity Exception,
and Erisco is not in material default of the provisions thereof. To the
knowledge of IMS or Erisco, all improvements and fixtures made by or at the
direction of Erisco on real properties leased by Erisco 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 Erisco in such buildings or structures) and fixtures used by
Erisco 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.
3.26 PERSONAL PROPERTY. Erisco has good and marketable title, free
and clear of all material title defects, security interests, pledges, options,
claims, liens and encumbrances, to all inventory and receivables and to any
material item of machinery, equipment, or tangible personal property reflected
on the Erisco Balance Sheet or used in the business by Erisco (regardless of
whether reflected on the Erisco Balance Sheet). All the material machinery,
equipment and other tangible personal property used in the business by Erisco is
in good operating condition and repair, normal wear and tear excepted. At the
Closing Date, Erisco will possess all of the material personal property wherever
located used to conduct its business as conducted prior to the Closing.
3.27 CONTRACTS. Erisco is not a party to any:
(a) employment, change in control or severance contract;
(b) contract relating to the borrowing of money in excess of
$100,000 by Erisco, or the guaranty of any obligation for the borrowing of money
by Erisco;
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(c) contract that involves the payment or receipt by Erisco of
more than $200,000 over the remaining term of the contract;
(d) contract that requires the consent of, or terminates or
becomes terminable by, any person other than Erisco as a result of the
transactions contemplated by this Agreement;
(e) contracts that are otherwise material to the business of
Erisco and are not for the purchase or sale of goods or services in the ordinary
course of business;
(f) contracts that have a remaining term of more than one year
from the date of this Agreement.
3.28 INSURANCE AND BANKING FACILITIES. Section 3.28 of the Erisco
Disclosure Letter comprises a complete and correct list of: (i) all contracts of
insurance and indemnity of or relating to Erisco (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 or depository organizations in which Erisco
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 neither IMS nor Erisco knows of any circumstance, which has caused, or might
cause, any such contract to be canceled or terminated. There is no currently
pending material claim by Erisco under any insurance policies of IMS or Erisco
as to which coverage has been questioned, denied or disputed by the underwriters
of such policies.
3.29 POWER OF ATTORNEY AND SURETYSHIPS. Erisco has no powers of
attorney outstanding (other than a power of attorney issued in the ordinary
course of business with respect to tax matters), and, except for obligations as
an endorser of negotiable instruments incurred in the ordinary course of
business, Erisco has no obligations or liabilities (absolute or contingent) as
guarantor, surety, co-signer, endorser, co-maker, indemnitor or otherwise
respecting the obligation of any other person.
3.30 CUSTOMERS; PAYORS. Section 3.30 of the IMS Disclosure Letter
lists (i) Erisco's top 10 customers by billings and (ii) Erisco's top 10 payors
(collectively, the "CUSTOMERS"), by the revenues received by Erisco from each
such Customer during fiscal 1999 and the percentage of Erisco's revenues during
fiscal 1999 for which each such Customer is responsible. To the knowledge of IMS
or Erisco, there are no oral or written notices or other indications from any of
the Customers stating that such Customer intends to terminate its business
relationship with Erisco or materially reduce the volume of business it does
with Erisco.
4. REPRESENTATIONS AND WARRANTIES OF TRIZETTO.
Except as set forth in a letter dated the date of this Agreement and
delivered by TriZetto to IMS concurrently herewith (the "TRIZETTO DISCLOSURE
LETTER"), TriZetto hereby represents and warrants to IMS that:
4.1 ORGANIZATION; GOOD STANDING; QUALIFICATION AND POWER. TriZetto
and each of its subsidiaries, including Merger Sub (the "TRIZETTO SUBSIDIARIES")
is a corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation, has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as
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now being conducted, and is duly qualified and in good standing to do business
in each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary, other than in such
jurisdictions where the failure to qualify is not reasonably likely to have a
Material Adverse Effect on TriZetto. The TriZetto Disclosure Letter sets forth a
correct and complete list of the TriZetto Subsidiaries. TriZetto has made
available to IMS or its counsel complete and correct copies of the certificates
or articles of incorporation and bylaws of TriZetto and each of the TriZetto
Subsidiaries, in each case as amended to the date of this Agreement.
4.2 CAPITAL STRUCTURE.
(a) STOCK AND OPTIONS. The authorized capital stock of
TriZetto consists of 40,000,000 shares of TriZetto Common Stock and 5,000,000
shares of Preferred Stock, $0.001 par value (the "TRIZETTO PREFERRED STOCK"). At
the close of business on May 12, 2000, 21,309,330 shares of TriZetto Common
Stock were issued and outstanding, no shares of TriZetto Common Stock were held
by TriZetto in its treasury and 3,332,943 shares of TriZetto Common Stock were
reserved for issuance upon the exercise of outstanding options to acquire shares
of TriZetto's capital stock (the "TRIZETTO OPTIONS"). No shares of TriZetto
Preferred Stock are issued or outstanding. All outstanding shares of TriZetto
Common Stock are validly issued, fully paid and nonassessable and not subject to
preemptive rights. All outstanding shares of the capital stock of each of the
TriZetto Subsidiaries are validly issued, fully paid and nonassessable and are
owned by TriZetto or one of the TriZetto Subsidiaries free and clear of any
liens, security interests, pledges, agreements, claims, charges or encumbrances.
TriZetto has made available to IMS a correct and complete copy of its 1998 Stock
Option Plan (the "TRIZETTO PLAN") and a correct and complete list of each
TriZetto Option outstanding as of the date hereof, including the name of the
holder of such TriZetto Option, the TriZetto option plan pursuant to which such
TriZetto Option was issued, the security and number of shares covered by such
TriZetto Option, the per share exercise price of such TriZetto Option and the
vesting schedule applicable to such TriZetto Option. The shares of TriZetto
Common Stock issuable pursuant to the terms of this Agreement will be duly
authorized, validly issued, fully paid and nonassessable and free and clear of
any lien, pledge, security interest, claim or other encumbrance, except for
restrictions on transfer pursuant to the Stockholder Agreement (as defined in
Section 7.4) or under federal or state securities laws.
(b) NO OTHER COMMITMENTS. Except for the TriZetto Options
disclosed pursuant to Section 4.2(a) above, there are no options, warrants,
calls, rights, commitments, conversion rights or agreements of any character to
which TriZetto or any of the TriZetto Subsidiaries is a party or by which
TriZetto or any of the TriZetto Subsidiaries is bound obligating TriZetto or any
of the TriZetto Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, any shares of capital stock of TriZetto or any of the
TriZetto Subsidiaries or securities convertible into or exchangeable for shares
of capital stock of TriZetto or any of the TriZetto Subsidiaries, or obligating
TriZetto or any of the TriZetto subsidiaries to grant, extend or enter into any
such option, warrant, call, right, commitment, conversion right or agreement.
4.3 AUTHORITY.
(a) CORPORATE ACTION. Each of TriZetto and Merger Sub has all
requisite corporate power and authority to enter into each of the Basic
Documents to which it is a party and, subject to approval of the TriZetto
Proposal (as defined in Section 6.4) by the stockholders of TriZetto, to perform
its obligations thereunder and to consummate the Merger and the other
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transactions contemplated by the Basic Documents. The execution and delivery of
each of the Basic Documents to which it is a party by TriZetto and Merger Sub
and, subject to approval by the stockholders of TriZetto of the TriZetto
Proposal, the consummation by TriZetto and Merger Sub of the Merger and the
other transactions contemplated by the Basic Documents have been duly authorized
by all necessary corporate action on the part of TriZetto and Merger Sub. Each
of the Basic Documents to which it is a party has been, or will when executed
be, duly executed and delivered by each of TriZetto and Merger Sub and is, or
when executed will be, the valid and binding obligation of each of TriZetto and
Merger Sub, enforceable in accordance with its terms, except that such
enforceability may be subject to the Bankruptcy and Equity Exception.
(b) NO CONFLICT. Neither the execution, delivery and
performance of the Basic Documents nor the consummation of the transactions
contemplated thereby nor compliance with the provisions hereof will: (i)
conflict with, or result in any violations of, or cause a breach or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, amendment, cancellation or acceleration of any obligation
contained in, or the loss of any material benefit under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
material properties or assets of TriZetto or any of the TriZetto Subsidiaries
under, any term, condition or provision of (A) the certificate or articles of
incorporation or bylaws of TriZetto or any of the TriZetto Subsidiaries or
(B) any Contract, permit, judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to TriZetto or any of the TriZetto Subsidiaries or
their respective properties or assets, other than any such conflicts,
violations, defaults, losses, liens, security interests, charges or encumbrances
which, individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect on TriZetto; or (ii) require the affirmative vote of the
holders of greater than a majority of the issued and outstanding shares of
TriZetto Common Stock.
(c) GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained by TriZetto or any of the TriZetto
Subsidiaries in connection with the execution and delivery of the Basic
Documents or the consummation of the transactions contemplated hereby, except
for: (i) the filing with the SEC of the Proxy Statement and such other reports
and information under the Exchange Act and the rules and regulations promulgated
by the SEC thereunder as may be required in connection with this Agreement and
the transactions contemplated hereby; (ii) the filing of the NY Certificate of
Merger with the Secretary of State of the State of New York, the DE Certificate
of Merger with the Secretary of State of the State of Delaware, and appropriate
documents with the relevant authorities of other states in which TriZetto is
qualified to do business; (iii) such filings, authorizations, orders and
approvals as may be required under foreign securities laws, state securities
laws and the rules of the Nasdaq; (iv) such filings and notifications as may be
necessary under the HSR Act and applicable foreign antitrust laws; and (v) where
the failure to obtain or make such consents, approvals, orders or
authorizations, registrations, declarations or filings would not prevent or
delay the consummation of the Merger or otherwise prevent TriZetto or Merger Sub
from performing its obligations under this Agreement and is not reasonably
likely to have a Material Adverse Effect on TriZetto.
4.4 SEC DOCUMENTS.
(a) SEC REPORTS. TriZetto has made available to IMS or its
counsel correct and complete copies of each report, schedule, registration
statement and definitive proxy statement filed by TriZetto with the SEC on or
after October 7, 1999 (the "TRIZETTO SEC DOCUMENTS"), which are all the
documents (other than preliminary material) that TriZetto was required to file
with the
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SEC on or after such date. As of their respective dates or, in the case of
registration statements, their effective dates (or if amended or superseded a
filing prior to the date of this Agreement, then on the date of such filing),
none of the TriZetto SEC Documents (including all exhibits and schedules thereto
and documents incorporated by reference therein) contained any untrue statement
of a material fact or omitted 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, and the TriZetto SEC
Documents complied when filed in all material respects with the then applicable
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations promulgated by the SEC thereunder. TriZetto has filed
all documents and agreements which were required to be filed as exhibits to the
TriZetto SEC Documents.
(b) FINANCIAL STATEMENTS. The financial statements of TriZetto
included in the TriZetto SEC Documents complied as to form in all material
respects with the then applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved (except as may have been indicated in the
notes thereto or, in the case of the unaudited statements, as permitted by Form
10-Q promulgated by the SEC) and fairly present (subject, in the case of the
unaudited statements, to normal, year-end audit adjustments) the consolidated
financial position of TriZetto and its consolidated TriZetto Subsidiaries as at
the respective dates thereof and the consolidated results of their operations
and cash flows for the respective periods then ended.
4.5 INFORMATION SUPPLIED. None of the information supplied or to be
supplied by TriZetto for inclusion or incorporation by reference in the Proxy
Statement will, at the date the Proxy Statement is mailed to the stockholders of
TriZetto and at the time of the TriZetto Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations promulgated by the SEC thereunder.
4.6 COMPLIANCE WITH APPLICABLE LAWS. Except as disclosed in the
TriZetto SEC Documents filed prior to the date of this Agreement, the businesses
of TriZetto and the TriZetto Subsidiaries have not been, and are not being,
conducted in violation of any federal, state, local or foreign law, ordinance,
regulation, rule or order of any Governmental Entity where such violation is
reasonably likely to have a Material Adverse Effect on TriZetto. Except as
disclosed in the TriZetto SEC Documents filed prior to the date of this
Agreement, TriZetto has not been notified by any Governmental Entity that any
investigation or review with respect to TriZetto or any of the TriZetto
Subsidiaries is pending or threatened, nor has any Governmental Entity notified
TriZetto of its intention to conduct the same. TriZetto and the TriZetto
Subsidiaries have all material permits, licenses and franchises from
Governmental Entities required to conduct their businesses as now being
conducted, except for those whose absence is not reasonably likely to have a
Material Adverse Effect on TriZetto.
4.7 LITIGATION. Except as disclosed in the TriZetto SEC Documents
filed prior to the date of this Agreement, there is no suit, action,
arbitration, demand, claim or proceeding pending or, to the best knowledge of
TriZetto, threatened against TriZetto or any of the TriZetto Subsidiaries; nor
is there any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against TriZetto or any of the TriZetto
Subsidiaries that, individually or in the aggregate,
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is reasonably likely to have a Material Adverse Effect on TriZetto. TriZetto has
made available to IMS or its counsel correct and complete copies of all
correspondence prepared by its counsel for TriZetto's auditors in connection
with the last two (2) completed audits of TriZetto's financial statements and
any such correspondence since the date of the last such audit.
4.8 ERISA AND OTHER COMPLIANCE.
(a) TriZetto has made available to IMS a list of (i) each
"employee benefit plan," as defined in Section 3(3) of ERISA, and (ii) any other
plan, arrangement or agreement involving direct or indirect compensation or
benefits, including any employment agreements, plans or arrangements providing
for insurance coverage (including self-insured arrangements), retirement
benefits, deferred compensation, profit-sharing, incentive compensation, stock
options, stock purchases, phantom stock, stock appreciation, other stock-based
awards, or post-retirement insurance, maintained or contributed to or entered
into as of the date of this Agreement, or that has within the last six (6) years
been maintained or contributed to or entered into by TriZetto or any of the
TriZetto Subsidiaries or any TriZetto ERISA Affiliate (as defined below) under
which TriZetto or any of the TriZetto Subsidiaries or any TriZetto ERISA
Affiliate has any present or future obligation or liability with respect to any
current or former employee, consultant, leased employee or director of TriZetto
or any of the TriZetto Subsidiaries or any TriZetto ERISA Affiliate
(collectively, the "TRIZETTO EMPLOYEE PLANS"). For purposes of this Agreement,
"TRIZETTO ERISA AFFILIATE" shall mean any entity which is a member of (A) a
"controlled group of corporations," as defined in Section 414(b) of the Code,
(B) a group of entities under "common control," as defined in Section 414(c) of
the Code, or (C) an "affiliated service group," as defined in Section 414(m) of
the Code, or treasury regulations promulgated under Section 414(o) of the Code,
any of which includes TriZetto or any of the TriZetto Subsidiaries. TriZetto has
also made available to IMS copies of all TriZetto Employee Plans, and as
applicable, all amendments thereto and written interpretations thereof, trust
agreements, insurance contracts, current summary plan descriptions and any
summaries of material modification, the three (3) most recent annual reports
(Form 5500, including, if applicable, Schedule B thereto), the most recent
determination letter from the Internal Revenue Service, actuarial reports for
the last three (3) years, all agreements with fiduciaries and service providers
and all substantive correspondence with the Internal Revenue Service, the
Department of Labor, the Pension Benefit Guaranty Corporation or any other
governmental agency. All contributions due from TriZetto or any of the TriZetto
Subsidiaries through the date hereof with respect to any of the TriZetto
Employee Plans have been made as may have been required by ERISA and the Code or
have been accrued in accordance with generally accepted accounting practices on
TriZetto's or any such TriZetto Subsidiary's financial statements as of the date
hereof. Each TriZetto Employee Plan has been maintained and operated in
compliance with its terms and with the requirements prescribed by any and all
applicable statutes, orders, rules and regulations, including, without
limitation, ERISA and the Code, except for such noncompliance as would not have
a Material Adverse Effect on TriZetto.
(b) No TriZetto Employee Plan is subject to Title IV of ERISA.
No TriZetto Employee Plan is a "multiemployer plan," as defined in Section 3(37)
of ERISA. No "prohibited transaction," as defined in Section 406 of ERISA or
Section 4975 of the Code, has occurred with respect to any TriZetto Employee
Plan which is covered by Title I of ERISA which, assuming the taxable period of
such transaction expired as of the date hereof, could subject TriZetto or any
TriZetto Subsidiary to a tax or penalty that would have a Material Adverse
Effect on TriZetto. To the knowledge of TriZetto, there are no pending,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the TriZetto Employee Plans which could result in a
liability that would have a Material Adverse Effect on TriZetto. No TriZetto
Employee
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Plan, either individually or collectively, provides for any payment by TriZetto
or any TriZetto Subsidiary that would not be deductible under Code Sections
162(a)(1), 162(m) or 404.
(c) Any TriZetto Employee Plan which is intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service, and TriZetto is not
aware of any circumstances likely to result in revocation of any such favorable
determination letter.
(d) No TriZetto Employee Plan provides benefits, including,
without limitation, death or medical benefits (whether or not insured), with
respect to current or former employees of TriZetto or any TriZetto Subsidiary
beyond their retirement or other termination of service, other than (i) coverage
mandated by applicable law, (ii) death benefits or retirement benefits under a
TriZetto Employee Plan that is an "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA, (iii) deferred compensation benefits under a
plan, which are accrued as liabilities on the books of TriZetto or any TriZetto
Subsidiary, or (iv) benefits the full cost of which is borne by the current or
former employee (or his beneficiary). All such TriZetto Employee Plans may be
amended or terminated at any time without causing TriZetto or any TriZetto
Subsidiary to incur liability having a Material Adverse Effect on TriZetto.
(e) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby (either alone or in
conjunction with any other event) will (i) restrict or prohibit TriZetto or any
TriZetto Subsidiary from amending any TriZetto Employee Plan, (ii) result in any
payment constituting an "excess parachute payment" (within the meaning of
Section 280G of the Code), (iii) result in forgiveness of indebtedness to any
director, officer or employee of TriZetto or any TriZetto Subsidiary under any
TriZetto Employee Plan or otherwise, (iv) increase any benefits otherwise
payable under any TriZetto Employee Plan or (v) result in any acceleration of
the time of payment or vesting of any benefits under any TriZetto Employee Plan
or otherwise.
(f) TriZetto and each TriZetto Subsidiary is: (i) in
compliance in all material respects with all applicable laws, agreements and
contracts relating to employment, employment practices, wages, hours and terms
and conditions of employment, including, but not limited to, employee
compensation matters, but not including ERISA; (ii) has withheld and reported in
all material respects all amounts required by law or by agreement to be withheld
and reported with respect to wages, salaries and other payments to TriZetto
employees; (iii) is not liable in any material respect for any arrears of wages
or any taxes or any penalty for failure to comply with any of the foregoing; and
(iv) is not liable for any material payment to any trust or other fund or to any
governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
TriZetto employees (other than payments to TriZetto Employee Plans and routine
payments to be made in the normal course of business and consistent with past
practice). There are no pending, threatened or reasonably anticipated material
claims or actions against TriZetto or any TriZetto Subsidiary under any worker's
compensation policy or any uninsured long-term disability policy. To TriZetto's
knowledge, no employee of TriZetto has violated in any material respect any
employment contract, nondisclosure agreement or noncompetition agreement by
which such employee is bound due to such employee being employed by TriZetto or
any TriZetto Subsidiary and disclosing to TriZetto or using trade secrets or
proprietary information of any other Person.
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(g) No work stoppage or labor strike against TriZetto or any
TriZetto Subsidiary is pending, threatened or reasonably anticipated with
respect to TriZetto employees. TriZetto does not know of any activities or
proceedings of any labor union to organize any such TriZetto employees. There
are no actions, suits, claims, labor disputes or grievances pending, or, to the
knowledge of TriZetto, threatened or reasonably anticipated relating to any
labor, safety or discrimination matters involving any TriZetto employee,
including, without limitation, charges of unfair labor practices or
discrimination complaints, which, if adversely determined, would, individually
or in the aggregate, result in any liability to TriZetto or any TriZetto
Subsidiary having a Material Adverse Effect on TriZetto. Neither TriZetto nor
any TriZetto Subsidiary is presently, nor has it been, a party to, or bound by,
any collective bargaining or union contract with respect to TriZetto employees
and no collective bargaining agreement is being negotiated by TriZetto or any
TriZetto Subsidiary with respect to such employees.
4.9 ABSENCE OF UNDISCLOSED LIABILITIES. At March 31, 2000 (the
"TRIZETTO BALANCE SHEET DATE"), neither TriZetto nor any of the TriZetto
Subsidiaries had any liabilities or obligations of any nature (matured or
unmatured, fixed or contingent) which were not provided for or disclosed in
notes to the consolidated balance sheet of TriZetto at the TriZetto Balance
Sheet Date, a copy of which has been delivered to IMS (the "TRIZETTO BALANCE
SHEET"), other than liabilities or obligations which, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect on
TriZetto.
4.10 ABSENCE OF CERTAIN CHANGES OR EVENTS. As of the date hereof,
except as disclosed in the TriZetto SEC Documents filed prior to the date of
this Agreement or as contemplated by this Agreement, since the TriZetto Balance
Sheet Date there has not occurred:
(a) any change in the financial condition, properties,
businesses or results of operations of TriZetto and the TriZetto Subsidiaries
taken as a whole that is reasonably likely to constitute a Material Adverse
Effect on TriZetto;
(b) any amendments or changes in the Certificate of
Incorporation or Bylaws of TriZetto;
(c) any damage destruction or loss to physical property,
whether covered by insurance or not, that is reasonably likely to constitute a
Material Adverse Effect on TriZetto;
(d) any redemption, repurchase or other acquisition of shares
of TriZetto Common Stock by TriZetto (other than pursuant to arrangements with
terminated employees or consultants), or any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to TriZetto Common Stock;
(e) any material increase in or modification of the
compensation or benefits payable or to become payable by TriZetto to any of its
directors or employees, except in the ordinary course of business consistent
with past practice;
(f) any material increase in or modification of any bonus,
pension, insurance or TriZetto Employee Plan or TriZetto Benefit Arrangement
(including, but not limited to, the granting of stock options, restricted stock
awards or stock appreciation rights) made to, for or with any of its employees,
other than in the ordinary course of business consistent with past practice;
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(g) any acquisition or sale of a material amount of property
or assets of TriZetto, other than in the ordinary course of business consistent
with past practice and those contemplated by this Agreement;
(h) any alteration in any term of any outstanding security of
TriZetto;
(i) any (A) incurrence, assumption or guarantee by TriZetto of
any debt for borrowed money; (B) issuance or sale of any securities convertible
into or exchangeable for debt securities of TriZetto; or (C) issuance or sale of
options or other rights to acquire from TriZetto, directly or indirectly, debt
securities of TriZetto or any securities convertible into or exchangeable for
any such debt securities;
(j) any creation or assumption by TriZetto of any mortgage,
pledge, security interest or lien or other encumbrance on any asset;
(k) any making of any loan, advance or capital contribution to
or investment in any Person other than (i) travel loans or advances made in the
ordinary course of business of TriZetto, (ii) other loans and advances in an
aggregate amount which does not exceed $500,000 outstanding at any time and
(iii) purchases on the open market of liquid, publicly traded securities;
(l) any entering into, amendment of, relinquishment,
termination or non-renewal by TriZetto of any contract, lease transaction,
commitment or other right or obligation other than in the ordinary course of
business;
(m) any material transfer or grant of a right under the
TriZetto IP Rights (as defined in Section 4.14 below), other than those
transferred or granted in the ordinary course of business consistent with past
practices;
(n) any material labor dispute or charge of unfair labor
practice (other than routine individual grievances), any material activity or
proceeding by a labor union or representative thereof to organize any employees
of TriZetto, any material campaign being conducted to solicit authorization from
employees to be represented by such labor union or any material lockouts,
strikes, slow downs, work stoppages or threats thereof by or with such
employees;
(o) any failure to make any material contribution due under
any of the TriZetto Employee Plans;
(p) any event, occurrence or development which is reasonably
likely to have a Material Adverse Effect on TriZetto;
(q) any material change in the accounting practices of
TriZetto, except for any such change required by reason of a concurrent change
in GAAP; or
(r) any agreement or arrangement made by TriZetto to take any
action which, if taken prior to the date hereof, would have made any
representation or warranty set forth in this Agreement untrue or incorrect as of
the date when made unless otherwise disclosed.
4.11 NO DEFAULTS. Except as disclosed in the TriZetto SEC Documents
filed prior to the date of this Agreement, to TriZetto's knowledge, neither it
nor any of the TriZetto Subsidiaries nor any other party thereto is in breach or
default under, and there exists no event, condition or
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occurrence which, after notice or lapse of time, or both, would constitute such
a breach or default by TriZetto, any of the TriZetto Subsidiaries or any other
party under, any Contract to which TriZetto or any of the TriZetto Subsidiaries
is a party and which would, if terminated or modified, have, insofar as can
reasonably be foreseen, a Material Adverse Effect on TriZetto. Each of such
Contracts is in full force and effect and is a legal, valid and binding
agreement, enforceable in accordance with its terms, of each party thereto,
subject to the Bankruptcy and Equity Exception.
4.12 CERTAIN AGREEMENTS. Neither the execution and delivery of the
Basic Documents nor the consummation of the transactions contemplated thereby
(either alone or in conjunction with other transactions currently contemplated)
will (i) result in any payment (including, without limitation, severance,
unemployment compensation, golden parachute, bonus or otherwise) becoming due to
any director or employee of TriZetto or any of the TriZetto Subsidiaries from
TriZetto or any of the TriZetto Subsidiaries, under any TriZetto Employee Plan
or otherwise, (ii) materially increase any benefits otherwise payable under any
TriZetto Employee Plan or (iii) result in the acceleration of the time of
payment or vesting of any such benefits.
4.13 TAXES.
(a) Except as set forth in (or resulting from matters set
forth in) the TriZetto SEC Documents or as is not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on TriZetto:
(i) TriZetto and each of the TriZetto Subsidiaries have
prepared in good faith and duly and timely filed (taking into account any
extension of time within which to file) with the appropriate governmental
agencies all Returns and all such filed Returns are complete and accurate in all
material respects;
(ii) TriZetto and each of the TriZetto Subsidiaries have
timely paid all Taxes that are shown as due on such filed Returns or that
TriZetto or any of the TriZetto Subsidiaries is obligated to withhold from
amounts owing to any employee, creditor or third party, except with respect to
matters contested in good faith;
(iii) as of the date hereof, there are not pending or,
to the actual knowledge of the executive officers of TriZetto or any of the
TriZetto Subsidiaries, threatened in writing, any audits, examinations,
investigations or other proceedings in respect of Taxes or Tax matters;
(iv) neither TriZetto nor any of the TriZetto
Subsidiaries is or may be liable for the Taxes of any Person (other than Persons
who at the Effective Time are members of the affiliated group of corporations of
which TriZetto is the common parent) pursuant to Section 1502 of the Code, by
agreement or otherwise; and
(v) neither TriZetto nor any of the TriZetto
Subsidiaries has any liability with respect to material income, franchise or
similar Taxes in excess of the amounts accrued in respect thereof that are
reflected in the financial statements included in the TriZetto SEC Documents
other than any liability for unpaid Taxes that may have properly accrued since
the TriZetto Balance Sheet Date in connection with the operation of the business
of TriZetto or any of the TriZetto Subsidiaries in the ordinary course.
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(b) No payments to be made to any of the officers and
employees of TriZetto or any of the TriZetto Subsidiaries will as a result of
consummation of the Merger be subject to the deduction limitations under Section
280G of the Code.
4.14 INTELLECTUAL PROPERTY.
(a) TriZetto and the TriZetto Subsidiaries own or have the
right to use all material Intellectual Property Rights necessary or required for
the operation of the business of TriZetto as currently conducted or to products
or services currently under development by TriZetto and the TriZetto
Subsidiaries (collectively, "TRIZETTO IP RIGHTS"), and have the right to use,
license, sublicense or assign the same without material liability to, or any
requirement of consent from, any other Person or party. The TriZetto IP Rights
constitute all Intellectual Property Rights necessary for the conduct of their
businesses in the manner conducted immediately prior to the Closing. All
TriZetto IP Rights are either owned by TriZetto and the TriZetto Subsidiaries
free and clear of all liens and encumbrances or are used pursuant to a license
agreement; each such license agreement is valid and enforceable and in full
force and effect; neither TriZetto nor any TriZetto Subsidiary is in material
default thereunder; and to the knowledge of TriZetto, no corresponding licensor
is in material default thereunder. None of the TriZetto IP Rights infringes or
otherwise conflicts with any Intellectual Property Rights or other right of any
Person; there is no pending or, to the knowledge of TriZetto, threatened (in
writing) litigation, adversarial proceeding, administrative action or other
challenge or claim relating to any TriZetto IP Rights; there is no outstanding
order relating to any TriZetto IP Rights; to the knowledge of TriZetto, there is
currently no infringement by any Person of any TriZetto IP Rights; and the
TriZetto IP Rights owned, used or possessed by TriZetto and the TriZetto
Subsidiaries are sufficient and adequate to conduct the business of TriZetto and
the TriZetto Subsidiaries to the full extent as such business is currently
conducted.
(b) TriZetto and the TriZetto Subsidiaries have taken
reasonable steps to protect, maintain and safeguard their respective TriZetto IP
Rights, including any TriZetto IP Rights for which improper or unauthorized
disclosure would impair its value or validity materially, and has executed and
required appropriate nondisclosure agreements and made appropriate filings and
registrations in connection with the foregoing.
(c) A true and complete list of all material Software owned by
TriZetto and the TriZetto Subsidiaries has heretofore been made available to
IMS. All of the Software owned by TriZetto and the TriZetto Subsidiaries is Year
2000 Compliant. A true and complete list of all material third party Software
used by TriZetto and the TriZetto Subsidiaries has heretofore been made
available to IMS. To the knowledge of TriZetto, all material third party
Software currently used by TriZetto and the TriZetto Subsidiaries is Year 2000
Compliant.
(d) A true and complete list of all material Databases owned
by TriZetto and the TriZetto Subsidiaries has heretofore been made available to
IMS. All of the Databases owned by TriZetto and the TriZetto Subsidiaries are
Year 2000 Compliant. A true and complete list of all material third party
Databases used by TriZetto and the TriZetto Subsidiaries has heretofore been
made available to IMS. To the knowledge of TriZetto, all material third party
Databases currently used by TriZetto and the TriZetto Subsidiaries are Year 2000
Compliant.
(e) No material confidential or trade secret information of
TriZetto or any TriZetto Subsidiary has been provided to any Person except
subject to written confidentiality
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agreements, except for any such disclosure which has not resulted and is not
reasonably likely to result in a Material Adverse Effect on TriZetto.
(f) TriZetto and the TriZetto Subsidiaries have valid
copyrights in all material copyrightable material whether or not registered with
the U.S. copyright office, including all copyrights in the TriZetto Products (as
defined herein) containing material copyrightable material. Consummation of the
transactions contemplated hereby will not alter or impair the validity of any
such copyrights or copyright registrations.
(g) (A) No third party (including any original equipment
manufacturer or site license customer) has any right to manufacture, reproduce,
distribute, sell, sublicense, market or exploit any of the products or services
offered by TriZetto (the "TRIZETTO PRODUCTS") or any adaptations, translations,
or derivative works based on the TriZetto Products, or any portion thereof; (B)
neither TriZetto nor any TriZetto Subsidiary has granted to any third party any
exclusive rights of any kind with respect to any of the TriZetto Products,
including territorial exclusivity or exclusivity with respect to particular
versions, implementations or translations of any of the TriZetto Products; and
(C) neither TriZetto nor any TriZetto Subsidiary has granted any third party any
right to market any product utilizing any TriZetto Product under any "private
label" arrangements pursuant to which TriZetto or any TriZetto Subsidiary is not
identified as the source of such goods. Each document or instrument identified
pursuant to this Section is listed in Section 4.14 of the TriZetto Disclosure
Letter and true and correct copies of such documents or instruments have been
furnished to IMS. No third party has any right to manufacture, reproduce,
distribute, sublicense, market or exploit any works or materials of which any of
the TriZetto Products are a derivative work.
(h) Except as is not reasonably likely to have a Material
Adverse Effect on TriZetto, each of the TriZetto 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 TriZetto's business;
and (B) can be recreated from its associated source code and related
documentation by reasonably experienced technical personnel without undue
burden.
(i) To the knowledge of TriZetto, no employee of TriZetto or
any TriZetto Subsidiary 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 TriZetto or any other party because of
the nature of the business conducted by TriZetto or proposed to be conducted by
TriZetto.
(j) If TriZetto or any TriZetto Subsidiary is obligated to
repair or replace products or services previously provided by TriZetto or any
TriZetto Subsidiary that are not Year 2000 Compliant in order to meet TriZetto's
or any TriZetto Subsidiary'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 TriZetto, TriZetto and the
TriZetto Subsidiaries have repaired or replaced those products and services to
make them Year 2000 Compliant in all material respects.
(k) All of the Software owned or used by TriZetto complies in
all material respects with the currently known and relevant provisions of the
Health Insurance Portability and Accountability Act of 1996, as amended.
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4.15 FEES AND EXPENSES. Neither TriZetto nor any of the TriZetto
Subsidiaries has paid or become obligated to pay any fee or commission to any
broker, finder or intermediary in connection with the transactions contemplated
by this Agreement.
4.16 ENVIRONMENTAL MATTERS.
(a) TriZetto and each TriZetto Subsidiary, including all of
their businesses and operations, are, and have been, operated in compliance with
all Environmental Laws, except where the failure to so comply has not had, and
is not reasonably likely to have, a Material Adverse Effect on TriZetto.
(b) To the knowledge of TriZetto, there are no conditions on,
about, beneath or arising from any real property which is now owned, used or
leased to or by TriZetto or any TriZetto Subsidiary ("TRIZETTO CURRENT REAL
PROPERTY") which might, under any Environmental Law, (i) give rise to any
material cost, obligation, liability or the imposition of a statutory lien, or
(ii) which would or may require any response, removal or remedial action or any
other action, including without limitation reporting, investigation, monitoring,
cleanup or contribution or which would require a material expenditure or
commitment by TriZetto or any TriZetto Subsidiary.
(c) To the knowledge of TriZetto, there were no conditions on,
about, beneath or arising from any real property which was, but is no longer,
owned, used or leased to or by TriZetto or any TriZetto Subsidiary ("TRIZETTO
FORMER REAL PROPERTY"), during the period of such ownership, use or lease, which
might, under any Environmental Law, (i) give rise to any material cost,
obligation, liability or the imposition of a statutory lien, or (ii) which would
or may require any response, removal or remedial action or any other action,
including without limitation reporting, investigation, monitoring, cleanup or
contribution or which would require a material expenditure or commitment by
TriZetto or any TriZetto Subsidiary.
(d) Neither TriZetto nor any TriZetto Subsidiary has received
any notification of a release or threat of a release of a Hazardous Substance
with respect to any TriZetto Current Real Property or TriZetto Former Real
Property.
(e) No Hazardous Substances have been used, handled,
generated, processed, treated, stored, transported to or from, released,
discharged or disposed of by TriZetto, any TriZetto Subsidiary or, to TriZetto's
knowledge, any third party on, about or beneath any TriZetto Current Real
Property in a manner which could reasonably be expected to result in any
material liability under any Environmental Law.
(f) During TriZetto's or any TriZetto Subsidiary's ownership,
use or lease of the TriZetto Former Real Property, no Hazardous Substances were
used, handled, generated, processed, treated, stored, transported to or from,
released, discharged or disposed of by TriZetto, any TriZetto Subsidiary or, to
TriZetto's knowledge, any third party on, about or beneath the TriZetto Former
Real Property in a manner which could reasonably be expected to result in any
material liability under any Environmental Law.
(g) To the knowledge of TriZetto, there are no above or
underground storage tanks, asbestos containing materials, or transformers
containing or contaminated with PCB's on, about or beneath the TriZetto Current
Real Property. During TriZetto's or any TriZetto Subsidiary's ownership, use or
lease of the TriZetto Former Real Property, there were no above or underground
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storage tanks, asbestos containing materials, or transformers containing or
contaminated with PCB's on, about or beneath the TriZetto Former Real Property.
(h) Except as is not reasonably likely to have a Material
Adverse Effect on TriZetto, neither TriZetto nor any TriZetto Subsidiary has
received notice or has knowledge of:
(i) any claim, demand, investigation, enforcement
action, response, removal, remedial action, statutory lien or other governmental
or regulatory action instituted or threatened against TriZetto or any TriZetto
Subsidiary or the TriZetto Current Real Property or TriZetto Former Real
Property pursuant to any Environmental Law;
(ii) any claim, demand notice, suit or action, made or
threatened by any Person against TriZetto, any TriZetto Subsidiary, the TriZetto
Current Real Property or the TriZetto Former Real Property relating to (A) any
form of damage, loss or injury resulting from or claimed to result from, any
Hazardous Substance on, about, beneath or arising from the TriZetto Current Real
Property or TriZetto Former Real Property or (B) any alleged violation of any
Environmental Law by TriZetto or any TriZetto Subsidiary; or
(iii) any communication to or from any governmental
authority arising out of or in connection with Hazardous Substances on, about,
beneath, arising from or generated at the TriZetto Current Real Property or
TriZetto Former Real Property, including without limitation, any notice of
violation, citation, complaint, order, directive, request for information or
response thereto, notice letter, demand letter or compliance schedule.
(i) No wastes generated by TriZetto or any TriZetto Subsidiary
have ever been directly or indirectly sent, transferred, transported to,
treated, stored or disposed of at any site listed or formally proposed for
listing on the National Priority List promulgated pursuant to CERCLA or to any
site listed on any state list of sites requiring or recommended for
investigation or clean-up. None of the TriZetto Current Real Property or
TriZetto Former Real Property is listed on the National Priorities List or any
state list of sites requiring or recommended for investigation or clean up.
(j) all environmental reports, studies, assessments, sampling
data, permits, filings, regulatory correspondence, claims and other
environmental information relating to TriZetto or any TriZetto Subsidiary or any
of their current or former properties or operations have been provided to IMS.
4.17 INTERESTED PARTY TRANSACTIONS. Except as disclosed in the
TriZetto SEC Documents filed prior to the date of this Agreement, no officer or
director of TriZetto or any "affiliate" or "associate" (as those terms are
defined in Rule 405 promulgated under the Securities Act) of any such person has
had, either directly or indirectly, a material interest in: (i) any Person which
purchases from or sells, licenses or furnishes to TriZetto or any of the
TriZetto Subsidiaries any material amount of goods, property, technology or
intellectual or other property rights or services; or (ii) any material contract
or agreement to which TriZetto or any of the TriZetto Subsidiaries is a party or
by which it may be bound or affected.
4.18 BOARD APPROVAL. The Board of Directors of Merger Sub has, as of
the date hereof, unanimously (i) approved this Agreement and the Merger, (ii)
determined that the Merger is in the best interests of its stockholders and
(iii) submitted this Agreement to TriZetto, as its sole
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stockholder, for adoption and approval. The Board of Directors of TriZetto has,
as of the date hereof, unanimously (i) approved this Agreement and the
transactions contemplated hereby, including the issuance of TriZetto Common
Stock to IMS in connection with the Merger, (ii) determined that this Agreement
and the transactions contemplated hereby are in the best interests of the
stockholders of TriZetto and (iii) approved a recommendation that the
stockholders of TriZetto approve the issuance of TriZetto Common Stock to IMS in
connection with the Merger as contemplated hereby.
4.19 VOTE REQUIRED. The affirmative vote of a majority of the shares
of TriZetto Common Stock present in person or represented by proxy at the
TriZetto Stockholders Meeting is the only vote of the holders of any class or
series of TriZetto capital stock necessary to approve this Agreement and the
transactions contemplated hereby, including the issuance of TriZetto Common
Stock to IMS in connection with the Merger as contemplated hereby. The shares of
TriZetto Common Stock that the Designated Stockholders have agreed to vote in
favor of the transactions contemplated hereby pursuant to the Voting Agreements
represents more than 50% of the issued and outstanding TriZetto Common Stock as
of the date hereof. The approval of TriZetto is the only vote or approval of the
holders of any class or series of capital stock of Merger Sub necessary to
approve this Agreement and the Merger. TriZetto, as the sole stockholder of
Merger Sub, has approved this Agreement and the Merger.
4.20 OPINION OF FINANCIAL ADVISOR. TriZetto's Board of Directors
has received an opinion, dated the date of this Agreement, from UBS Warburg
LLC to the effect that, as of such date, the Merger Consideration is fair to
TriZetto from a financial point of view.
4.21 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no material
agreement, judgment, injunction, order or decree binding upon TriZetto or any of
the TriZetto Subsidiaries that has or could reasonably be expected to have the
effect of prohibiting or materially impairing the conduct of business by
TriZetto or any of Subsidiaries as currently conducted or any acquisition of
property by TriZetto or any of Subsidiaries.
4.22 TAKEOVER STATUTES. No Takeover Statute or any anti-takeover
provision in the certificate of incorporation or bylaws of TriZetto or Merger
Sub is applicable to TriZetto, the TriZetto Common Stock, the Merger or the
other transactions contemplated by this Agreement or the Voting Agreements.
4.23 MERGER SUB. The authorized capital stock of Merger Sub consists
of 1,000 shares of Common Stock, par value $0.001 per share, all of which have
been duly authorized and are validly issued and outstanding, fully paid and
nonassessable. All of the issued and outstanding capital stock of Merger Sub is,
and at the Effective Time will be, owned by TriZetto, and there are (i) no other
authorized, issued or outstanding shares of capital stock or other equity
securities of Merger Sub, (ii) no securities of Merger Sub convertible into or
exchangeable or exercisable for shares of capital stock or other equity
securities of Merger Sub and (iii) no options or other rights to acquire from
Merger Sub, and no obligations of Merger Sub to issue, any capital stock or
other equity securities or securities convertible into or exchangeable or
exercisable for capital stock or other equity securities of Merger Sub. Merger
Sub has not conducted any business prior to the date hereof and has no, and
prior to the Effective Time will have no, assets, liabilities or obligations of
any nature other than those incident to its formation and pursuant to this
Agreement and the Merger and the other transactions contemplated by this
Agreement.
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5. IMS COVENANTS.
5.1 ADVICE OF CHANGES. During the period from the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement in accordance with its terms, IMS will promptly advise TriZetto in
writing (A) of any event occurring subsequent to the date of this Agreement that
would render any representation or warranty of IMS or Erisco contained in this
Agreement, if made on or as of the date of such event or the Closing Date,
untrue or inaccurate in any material respect, (B) of any Material Adverse Effect
on Erisco and (C) of any breach by IMS or Erisco of any covenant or agreement
contained in this Agreement.
5.2 MAINTENANCE OF BUSINESS. During the period from the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement in accordance with its terms, Erisco shall, and IMS will use its
reasonable best efforts to cause Erisco to, carry on and to preserve its
business and its relationships with customers, suppliers, employees and others
in substantially the same manner as it has prior to the date hereof. If IMS or
Erisco becomes aware of any material deterioration in Erisco's relationship with
any material customer, material supplier or key employee, it will promptly bring
such information to the attention of TriZetto in writing and, if requested by
TriZetto, will exert its reasonable best efforts to restore the relationship.
5.3 CONDUCT OF BUSINESS. During the period from the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement in accordance with its terms, Erisco shall, and IMS will cause Erisco
to, continue to conduct its business and maintain its business relationships in
the ordinary and usual course and to not, without the prior written consent of
TriZetto, unless expressly contemplated by this Agreement:
(a) borrow any money except for amounts that are not in the
aggregate material to the financial condition of Erisco and except for
intercompany borrowings;
(b) enter into any material transaction not in the ordinary
course of its business consistent with past practice;
(c) materially encumber or permit to be materially encumbered
any of its assets except in the ordinary course of its business;
(d) make a material disposition of assets except in the
ordinary course of business consistent with past practice;
(e) enter into any material lease or contract for the purchase
or sale or license of any property, real or personal, except in the ordinary
course of business consistent with past practice;
(f) fail to maintain its equipment and other assets in good
working condition and repair according in all material respects to the standards
it has maintained to the date of this Agreement, subject only to ordinary wear
and tear;
(g) pay (or make any oral or written commitments or
representations to pay) any bonus, increased salary or special remuneration to
any officer, employee or consultant (except for normal salary increases
consistent with past practices not to exceed ten percent (10%) per year pursuant
to existing arrangements previously disclosed to TriZetto) or enter into or vary
the terms of
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any employment, consulting or severance agreement with any such person, pay any
severance or termination pay (other than payments made in accordance with plans
or agreements existing on the date hereof), grant any stock option (except for
normal grants to newly hired or current employees consistent with past
practices) or issue any restricted stock, or enter into or modify any agreement
or plan or increase benefits to Erisco employees under any of IMS's employee
benefit plans, other than such incentive awards, bonus payments and retention
programs as may be reasonably necessary in order for Erisco to conduct its
business and administer corporate affairs in the ordinary course consistent with
past practice;
(h) make any material change in accounting practices, except
for any such change required by reason of a concurrent change in GAAP;
(i) issue, pledge or sell, dispose of or encumber any shares
of its capital stock of any class, or any other of its securities, or issue or
create any warrants, obligations, subscriptions, options, convertible securities
or other commitments to issue shares of capital stock;
(j) merge, consolidate or reorganize with, or acquire any
entity in one or more transactions (other than such transaction that would not
be material and that would not impair or affect the timing of the Merger);
(k) amend its Certificate of Incorporation or Bylaws;
(l) license any Erisco IP Rights except in the ordinary course
of business consistent with past practice;
(m) knowingly take any actions that would make any
representation or warranty of Erisco or IMS hereunder inaccurate in any material
respect; or
(n) agree to do, or enter into negotiations with respect to,
any of the things described in the preceding clauses in this Section 5.3.
5.4 PROXY STATEMENT. IMS and Erisco will promptly provide all
information relating to its business or operations and the business or
operations of Erisco necessary for inclusion in the Proxy Statement to satisfy
all requirements of applicable state and federal securities laws. IMS and Erisco
shall be solely responsible for any statement, information or omission in the
Proxy Statement relating to it or its affiliates based upon written information
furnished by it. IMS will not provide or publish to its stockholders any
material concerning it or its affiliates that violates the Exchange Act with
respect to the transactions contemplated hereby.
5.5 REGULATORY APPROVALS. IMS and Erisco will promptly execute and
file, or join in the execution and filing, of any application or other document
that may be necessary in order to obtain the authorization, approval or consent
of any governmental body, federal, state, local or foreign, which may be
reasonably required, or which TriZetto may reasonably request, in connection
with the consummation of the transactions contemplated by this Agreement.
Without limiting the generality of the foregoing, as promptly as practicable
after the execution of this Agreement, IMS shall file with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the Department of Justice
(the "DOJ"), a pre-merger notification report under the HSR Act. Subject to the
proviso contained in Section 5.6, IMS will use its reasonable best efforts to
promptly obtain all such authorizations, approvals and consents.
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5.6 NECESSARY CONSENTS. During the term of this Agreement, each of
IMS and Erisco will use its reasonable best efforts to obtain such written
consents and take such other actions as may be necessary or appropriate in
addition to those set forth in Section 5.5 to allow the consummation of the
transactions contemplated hereby; PROVIDED, HOWEVER, that nothing in this
Section 5.6 shall require, or be construed to require, IMS or Erisco to proffer
to, or agree to, sell or hold separate and agree to sell, before or after the
Effective Time, any assets, businesses, or interest in any assets or businesses
of IMS or Erisco or any of its affiliates (or to consent to any sale, or
agreement to sell, by TriZetto of any of its assets or businesses) or to agree
to any material changes or restriction in the operations of any such assets or
businesses.
5.7 ACCESS TO INFORMATION. IMS and Erisco will allow TriZetto and
its agents reasonable access to the files, books, records and offices of Erisco,
including, without limitation, any and all information relating to Erisco's
taxes, commitments, contracts, leases, licenses and real, personal and
intangible property and financial condition. IMS will cause its accountants to
cooperate with TriZetto and its agents in making available to TriZetto all
financial information with respect to Erisco reasonably requested, including,
without limitation, the right to examine all working papers pertaining to all
tax returns of Erisco and financial statements of Erisco prepared or audited by
such accountants. All such information shall be governed by the terms of the
confidentiality agreement between IMS and TriZetto (the "CONFIDENTIALITY
AGREEMENT").
5.8 SATISFACTION OF CONDITIONS PRECEDENT. During the term of this
Agreement, each of Erisco and IMS will use its reasonable best efforts to
satisfy or cause to be satisfied all the conditions precedent that are set forth
in Section 11, and will use its reasonable best efforts to cause the Merger and
the other transactions contemplated by this Agreement to be consummated.
5.9 AUDITED FINANCIAL STATEMENTS. Within 30 days following the date
of this Agreement, Erisco shall, and IMS shall cause Erisco to, deliver to
TriZetto audited financial statements for the three year period ended December
31, 1999, which audited financial statements shall be prepared in conformity
with Regulation S-X of the Exchange Act.
5.10 NO SOLICITATION.
(a) From and after the date of this Agreement until the
Effective Time or termination of this Agreement pursuant to Section 12, IMS and
Erisco will not, nor will they authorize or permit any affiliate or
representative retained by them to, directly or indirectly, (i) solicit,
initiate, encourage or induce the making, submission or announcement of any
Acquisition Proposal; (ii) participate in any discussions or negotiations
regarding, or furnish to any person any non-public information with respect to,
or take any other action to facilitate any inquiries or the making of any
proposal that constitutes or may reasonably be expected to lead to, any
Acquisition Proposal; (iii) engage in discussions with any person with respect
to any Acquisition Proposal, except as to the existence of this Section 5.10;
(iv) approve, endorse or recommend any Acquisition Proposal; or (v) enter into
any letter of intent or similar document or any contract contemplating or
otherwise relating to any Acquisition Transaction. IMS and Erisco will
immediately cease any and all existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any Acquisition Proposal.
Without limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding two sentences by any officer, director
or employee of IMS, Erisco or any of their subsidiaries or any investment
banker, attorney or other advisor or representative of IMS or Erisco or any of
their subsidiaries shall be deemed to be a breach of this Section 5.10 by IMS
and Erisco.
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"ACQUISITION PROPOSAL" shall mean any proposal (other than an offer
or proposal by TriZetto) relating to any Acquisition Transaction. "ACQUISITION
TRANSACTION" shall mean any transaction or series of related transactions
involving: (A) any merger, consolidation, business combination or similar
transaction with or into, or stock sale or similar transaction by, Erisco; (B)
any sale, lease (other than in the ordinary course of business), acquisition or
disposition of more than 5% of the assets of Erisco; or (C) any liquidation or
dissolution of Erisco.
In addition to the obligations of IMS and Erisco set forth in
Section 5.10(a) hereof, IMS and Erisco shall immediately advise TriZetto orally
and in writing of any request for non-public information or any inquiry with
respect to Erisco which either of them reasonably believes may pertain to an
Acquisition Proposal or to any Acquisition Transaction, the material terms and
conditions of such request, Acquisition Proposal or inquiry, and the identity of
the Person or group making any such request, Acquisition Proposal or inquiry.
IMS and Erisco will keep TriZetto immediately informed of the status and details
(including material amendments or proposed material amendments) of any such
request, Acquisition Proposal or inquiry.
5.11 IHPI. Prior to the Effective Time, IMS will cause Erisco to
distribute all of the shares of IHPI to IMS. Such distribution will not have a
Material Adverse Effect on Erisco.
6. TRIZETTO COVENANTS.
6.1 ADVICE OF CHANGES. During the period from the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement in accordance with its terms, TriZetto will promptly advise IMS in
writing (a) of any event occurring subsequent to the date of this Agreement that
would render any representation or warranty of TriZetto contained in this
Agreement, if made on or as of the date of such event or the Closing Date,
untrue or inaccurate in any material respect, (b) of any Material Adverse Effect
on TriZetto and (c) of any breach by TriZetto of any covenant or agreement
contained in this Agreement.
6.2 MAINTENANCE OF BUSINESS. During the period from the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement in accordance with its terms, TriZetto will use its reasonable best
efforts to carry on and to preserve its business and its relationships with
customers, suppliers, employees and others in substantially the same manner as
it has prior to the date hereof. If TriZetto becomes aware of any material
deterioration in the relationship with any material customer, material supplier
or key employee, it will promptly bring such information to the attention of IMS
in writing and, if requested by IMS, will exert its reasonable best efforts to
restore the relationship.
6.3 CONDUCT OF BUSINESS. During the period from the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement in accordance with its terms, TriZetto will continue to conduct its
business and maintain its business relationships in the ordinary and usual
course and, except as set forth on Schedule 6.3(a) hereto, will not, without the
prior written consent of IMS, unless expressly contemplated by this Agreement,
enter into, consummate, agree to or approve any Highly Material Transaction. As
used herein, "HIGHLY MATERIAL TRANSACTION" shall mean (i) a sale or other
disposition of 25% or more of the assets of TriZetto in a transaction or series
of related transactions, (ii) a merger, consolidation or similar transaction in
which TriZetto is not the surviving corporation, (iii) an issuance by TriZetto,
or an acquisition by a third party or group, of equity interests in TriZetto
that have the power to cast at least 25% of the votes entitled to be cast in
elections of directors (or similar officials) of TriZetto in a transaction or
series of related transactions,
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other than in connection with a public offering of securities for purposes of
raising capital, or (iv) a strategic alliance, joint venture or other material
transaction with any of the entities set forth on Schedule 6.3(b) or any of
their respective successors or Affiliates (as defined under Rule 12b-2 under the
Exchange Act).
6.4 STOCKHOLDER MEETING. TriZetto will convene a meeting (the
"TRIZETTO STOCKHOLDERS MEETING") of holders of TriZetto Common Stock (the
"TRIZETTO STOCKHOLDERS") to be held within forty-five (45) days after the Proxy
Statement is mailed to the TriZetto Stockholders to submit the issuance of
TriZetto Common Stock to IMS in connection with the Merger (the "TRIZETTO
PROPOSAL") for the consideration and approval of the TriZetto Stockholders. Such
approval shall be recommended by TriZetto's Board of Directors unless in the
good faith judgment of TriZetto's Board of Directors, after consultation with
outside counsel, taking such action would be inconsistent with its fiduciary
obligations under applicable law. Such meeting will be convened, held and
conducted, and any proxies will be solicited, in compliance with applicable
securities laws. TriZetto agrees that its obligations to convene, hold and
conduct the TriZetto Stockholders Meeting shall not be affected by the
withdrawal or modification by the TriZetto's Board of Directors, in accordance
with this Section 6.4, of its recommendation to the TriZetto Stockholders that
such Stockholders approve the TriZetto Proposal.
6.5 PROXY STATEMENT. TriZetto will mail to its stockholders in a
timely manner, for the purpose of considering and voting upon the TriZetto
Proposal at the TriZetto Stockholders Meeting, the Proxy Statement. TriZetto
will promptly provide all information relating to its business or operations
necessary for inclusion in the Proxy Statement to satisfy all requirements of
applicable state and federal securities laws. TriZetto shall be solely
responsible for any statement, information or omission in the Proxy Statement
relating to it or its affiliates based upon written information furnished by it.
TriZetto will not provide or publish to its stockholders any material concerning
it or its affiliates that violates the Exchange Act with respect to the
transactions contemplated hereby.
6.6 REGULATORY APPROVALS. TriZetto will promptly execute and file,
or join in the execution and filing, of any application or other document that
may be necessary in order to obtain the authorization, approval or consent of
any governmental body, federal, state, local or foreign which may be reasonably
required, or which IMS may reasonably request, in connection with the
consummation of the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, as promptly as practicable after the
execution of this Agreement, TriZetto shall file with the FTC and the DOJ a
pre-merger notification report under the HSR Act. TriZetto will use its
reasonable best efforts to promptly obtain all such authorizations, approvals
and consents. In addition, TriZetto will proffer its willingness to abandon or
restructure transactions other than the Merger entered into or announced by
TriZetto or any of the TriZetto Subsidiaries on or after the date hereof, to
sell or otherwise dispose of or hold separate and agree to sell or otherwise
dispose of, or to change or restrict the operations of, such assets, categories
of assets or businesses of TriZetto or the TriZetto Subsidiaries (and to enter
into agreements with the relevant Governmental Entity giving effect thereto), no
later than 90 days from the date hereof, if (i) such action should be reasonably
necessary or advisable to avoid the commencement of a proceeding to delay,
restrain, enjoin or otherwise prohibit consummation of the Merger by any
Governmental Entity and (ii) the necessity or advisability of taking such action
to avoid the commencement of a proceeding to delay, restrain, enjoin or
otherwise prohibit consummation of the Merger by any Governmental Entity arose
as a result of transactions entered into or announced by TriZetto or any
TriZetto Subsidiary on or after the date hereof; PROVIDED, that the foregoing
shall not require TriZetto to (i) sell, dispose of or hold separate, or agree to
sell, dispose of or hold separate, any assets, categories of assets or
businesses
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other than those acquired or to be acquired pursuant to transactions entered
into or announced on or after the date hereof or (ii) abandon or restructure any
transaction other than those entered into or announced on or after the date
hereof.
6.7 NECESSARY CONSENTS. During the term of this Agreement, TriZetto
will use its reasonable best efforts to obtain such written consents and take
such other actions as may be necessary or appropriate in addition to those set
forth in Section 6.6 to allow the consummation of the transactions contemplated
hereby.
6.8 ACCESS TO INFORMATION. TriZetto will allow IMS and its agents
reasonable access to the files, books, records and offices of TriZetto and each
TriZetto Subsidiary, including, without limitation, any and all information
relating to TriZetto's taxes, commitments, contracts, leases, licenses and real,
personal and intangible property and financial condition. TriZetto will cause
its accountants to cooperate with IMS and its agents in making available to IMS
all financial information reasonably requested, including, without limitation,
the right to examine all working papers pertaining to all tax returns and
financial statements prepared or audited by such accountants. All such
information shall be governed by the terms of the Confidentiality Agreement.
6.9 SATISFACTION OF CONDITIONS PRECEDENT. During the term of this
Agreement, TriZetto will use its reasonable best efforts to satisfy or to cause
to be satisfied all the conditions precedent that are set forth in Section 10,
and TriZetto will use its reasonable best efforts to cause the Merger and the
other transactions contemplated by this Agreement to be consummated.
6.10 LISTING. TriZetto will use its best efforts to cause the shares
of TriZetto Common Stock to be issued to IMS pursuant to the Merger to be
approved for quotation on the Nasdaq, subject to official notice of issuance,
prior to the Closing Date.
6.11 APPOINTMENT OF DIRECTOR. The Board of Directors of TriZetto
shall take any and all such actions as may be necessary to cause the Chief
Executive Officer of IMS (or such other individual as may be designated by IMS
and reasonably acceptable to TriZetto) to be appointed to the Board of Directors
of TriZetto as of the Effective Time as a Class II director.
6.12 TRIZETTO OPTIONS. Prior to the TriZetto Stockholders Meeting,
the Board of Directors of TriZetto (or the committee thereof appointed to
administer the TriZetto Plan) shall take all such actions (if any) as are
necessary in order to ensure that the vesting of all TriZetto Options will not
accelerate as a result of the Merger or the related transactions contemplated
hereby.
6.13 EMPLOYEES AND EMPLOYEE BENEFITS.
(a) TriZetto shall be responsible for (i) payment of long and
short-term disability claims that arise from disabilities of Erisco employees
that occur on or after the Effective Time, and (ii) providing COBRA coverage for
Erisco employees who elect such coverage after the Effective Time (including
Erisco employees who were eligible for COBRA coverage prior to the Effective
Time but who elect such coverage after the Effective Time). For purposes of this
paragraph, a claim shall be deemed to have been incurred when the medical or
other service giving rise to the claim is performed, except that disability
claims shall be deemed to have been incurred on the date the Employee becomes
disabled.
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Attached hereto as Schedule 6.13(b) is a list of employee benefit plans
currently available to TriZetto and Erisco employees. TriZetto and Erisco shall
use their respective reasonable best efforts to achieve the resolutions set
forth on Schedule 6.13(b). Each of the parties acknowledges that Schedule
6.13(b) is subject to continued review and may be amended from time to time
after the date hereof, PROVIDED that no amendment may be made without the prior
written consent of TriZetto and Erisco, which consent may not be unreasonably
withheld. Irrespective of the extent to which the stated resolutions on Schedule
6.13(b) are achieved, TriZetto will use its reasonable best efforts to ensure
that benefits received by Erisco employees under TriZetto's employee benefit
plans are not, in the aggregate and taking into account any of the resolutions
on Schedule 6.13(b) which are achieved, materially less than what an Erisco
employee would have received under the employee benefit plans in which such
employee was entitled to participate prior to the Closing Date. For purposes of
this Section 6.13(b), benefits will be considered materially less if the value
of the benefits are decreased by an amount greater than 2% of the average base
annual salary of Erisco employees as of the date hereof. Except as expressly set
forth in Section 7.9, TriZetto shall bear, and shall indemnify and hold IMS
harmless from, all costs and expenses incurred in connection with providing
benefits to Erisco's employees from and after the Closing, whether such benefits
are provided in accordance with Schedule 6.13(b) or otherwise. The parties will
use their best efforts to complete the resolutions by January 1, 2001. Effective
January 1, 2001, TriZetto shall make a one-time salary adjustment to those
employees who have been adversely affected in excess of the amounts set forth
above. Thereafter, the Erisco employees will participate in TriZetto's employee
benefit plans in accordance with employees in similar positions.
6.14 RIGHTS AGREEMENT. Prior to the Closing, TriZetto shall adopt a
Stockholder Protection Rights Agreement (the "TRIZETTO RIGHTS AGREEMENT"), in a
form reasonably acceptable to IMS, which shall, among other things, provide for
a 15% "flip-in" triggering level; a "flip-over" trigger; an exchange option and
an exception to the definition of "Acquiring Person" to exclude therefrom IMS,
its affiliates and any transferees of the TriZetto Common Stock issued to IMS in
connection with the Merger (other than those entities set forth on Schedule 6.14
hereto and their respective successors and Affiliates) (collectively, the
"GRANDFATHERED ENTITIES"). In addition, from and after the date hereof, TriZetto
shall not (i) amend or supplement the TriZetto Rights Agreement in any manner
which would adversely affect the rights of the Grandfathered Entities thereunder
or (ii) adopt or implement any other stockholder protection rights agreement or
any similar plan or arrangement unless such agreement, plan or arrangement is in
no way less favorable to the Grandfathered Entities than the TriZetto Rights
Agreement.
7. ADDITIONAL AGREEMENTS.
7.1 PROXY STATEMENT. As promptly as practicable after the date of
this Agreement, TriZetto shall prepare and file with the SEC a proxy statement
with respect to the submission to the TriZetto Stockholders of the issuance of
TriZetto Common Stock to IMS in connection with the Merger and any related
matters (the "PROXY STATEMENT") and any other documents required by the Exchange
Act in connection with the Merger. TriZetto shall use its reasonable best
efforts to respond promptly to any comments of the SEC and to cause the Proxy
Statement to be mailed to the TriZetto Stockholders at the earliest practicable
time. Each party shall promptly furnish to the other party all information
concerning such party and, in the case of TriZetto, its stockholders as may be
reasonably required in connection with any action contemplated by this Section
7.1. The Proxy Statement shall comply in all material respects with all
applicable requirements of law. TriZetto will notify IMS promptly of the receipt
of any comments from the SEC or its staff and of any request by the SEC or its
staff for amendments or supplements to the Proxy Statement or for additional
information and will
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supply the other with copies of all correspondence with the SEC or its staff
with respect to the Proxy Statement. Whenever any event occurs which should be
set forth in an amendment or supplement to the Proxy Statement, TriZetto or IMS,
as the case may be, shall promptly inform the other of such occurrence and
cooperate in filing with the SEC or its staff, and/or mailing to stockholders of
TriZetto, such amendment or supplement.
7.2 TAKEOVER STATUTE. If any Takeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
Agreement or the Voting Agreements, TriZetto and its Board of Directors shall
grant such approvals and take such actions as are necessary so that such
transactions may be consummated as promptly as practicable on the terms
contemplated by this Agreement or by the Voting Agreements, as the case may be,
or by the Merger and otherwise act to eliminate or minimize the effects of such
statute or regulation on such transactions.
7.3 REGISTRATION RIGHTS AGREEMENT. Prior to or concurrently with the
Closing, IMS and TriZetto shall enter into a registration rights agreement in
the form of EXHIBIT D hereto (the "REGISTRATION RIGHTS AGREEMENT").
7.4 STOCKHOLDER AGREEMENT. Prior to or concurrently with the
Closing, IMS and TriZetto shall enter into a stockholder agreement in the form
of EXHIBIT E hereto (the "STOCKHOLDER AGREEMENT").
7.5 TRANSITIONAL SERVICES AGREEMENTS. Prior to or concurrently with
the Closing, IMS, Erisco and TriZetto shall enter into one or more agreements
(the "TRANSITIONAL SERVICES AGREEMENTS"), in form and substance reasonably
satisfactory to TriZetto and IMS, pursuant to which IMS will continue to provide
certain services (e.g. payroll processing) to Erisco for a transitional period
of time after the Effective Time at a price based on the fair market value of
such services.
7.6 DATA RIGHTS AGREEMENT. Prior to or concurrently with the
Closing, IMS and TriZetto shall enter into a data rights agreement (the "DATA
RIGHTS AGREEMENT") pursuant to which TriZetto will grant IMS (i) an exclusive
(other than for TriZetto's internal use or, with respect to data which TriZetto
does not own, at the specific request of the owner of such data), worldwide,
royalty-free (other than reimbursement of reasonable costs of data transmission
and payment of a mutually agreed upon profit margin), perpetual license to all
data rights currently held or acquired in the future by TriZetto and its
subsidiaries that arise from or relate to the Erisco business, and (ii) a
worldwide license to all other data rights currently held or acquired in the
future by TriZetto and its subsidiaries, on terms and conditions (including
reimbursement of reasonable costs of data transmission and payment of a mutually
agreed upon profit margin) as shall be reasonably agreed upon by the parties,
which terms and conditions shall be at least as favorable to IMS in every
material respect as other data rights or similar agreements entered into between
TriZetto and third parties. IMS acknowledges that TriZetto and Erisco currently
hold no rights to commercialize data, and that the granting of any license to
IMS shall be subject to any required consents from TriZetto's and Erisco's
customers.
7.7 HEALTHWEB LICENSE AGREEMENT. Prior to or concurrently with the
Closing, IMS and TriZetto shall enter into a license agreement (the "HEALTHWEB
LICENSE AGREEMENT") on the terms and conditions set forth on Schedule 7.7
hereto.
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7.8 WORKING CAPITAL.
(a) IMS covenants and agrees that, immediately prior to
Closing, it will (i) repay, in cash by wire transfer of immediately available
funds, the amount then owed by IMS to Erisco in full and (ii) if that amount
falls short of $32,000,000 (the approximate amount owed by IMS to Erisco as of
March 31, 2000), contribute to Erisco, in cash by wire transfer of immediately
available funds, an amount equal to the shortfall.
(b) Within 45 days following the Closing, IMS shall, at its
expense, prepare, or cause to be prepared, and deliver to TriZetto an unaudited
balance sheet (the "CLOSING WORKING CAPITAL AMOUNT STATEMENT") which shall set
forth the Closing Working Capital Amount and which shall be prepared in a manner
consistent with the balance sheet included in the Interim Financial Statements.
For purposes of this Section 7.8, "CLOSING WORKING CAPITAL AMOUNT" means the
accounts receivable of Erisco as of the Closing Date plus the prepaid expenses
of Erisco as of the Closing Date, minus the sum of (i) the accounts payable of
Erisco as of the Closing Date and (ii) the accrued liabilities (excluding any
Taxes for which IMS is liable pursuant to Section 8 of this Agreement) of Erisco
as of the Closing Date.
(c) TriZetto and TriZetto's accountants shall complete their
review of the Closing Working Capital Amount Statement within 10 days after the
delivery by IMS thereof. In the event that TriZetto determines that the Closing
Working Capital Amount has not been calculated in accordance with the definition
thereof set forth in Section 7.8(b), TriZetto shall inform IMS in writing of
such determination (the "TRIZETTO OBJECTION"), setting forth a specific
description of the basis of the TriZetto Objection and the adjustments which
TriZetto believes should be made, on or before the last day of such 10 day
period. IMS shall then have 10 days to review and respond to the TriZetto
Objection. If IMS and TriZetto are unable to resolve all of their disagreements
with respect to the determination of the foregoing items within 30 days
following IMS's response to the TriZetto Objection, they shall refer their
remaining differences to PricewaterhouseCoopers LLC or another internationally
recognized firm of independent public accountants as to which IMS and TriZetto
mutually agree (the "INDEPENDENT PUBLIC ACCOUNTANTS"), who shall, acting as
experts and not as arbitrators, determine on the basis of the definition of
Closing Working Capital Amount, and only with respect to the remaining
differences so submitted, whether and to what extent, if any, the Closing
Working Capital Amount, as derived from the Closing Working Capital Amount
Statement, requires adjustments. The Independent Public Accountants'
determination shall be conclusive and binding upon TriZetto and IMS. The fees
and disbursements of the Independent Public Accountants shall be shared equally
by TriZetto and IMS. TriZetto and IMS shall make readily available to the
Independent Public Accountants all relevant books and records and any work
papers (including those of the parties' respective accountants) relating to the
Closing Working Capital Amount Statement and all other items reasonably
requested by the Independent Public Accountants. The "ADJUSTED CLOSING WORKING
CAPITAL AMOUNT STATEMENT" shall be (i) the Closing Working Capital Amount
Statement in the event that (x) no TriZetto Objection is delivered to IMS during
the 10-day period specified above, or (y) IMS and TriZetto so agree, (ii) the
Closing Working Capital Amount Statement, adjusted in accordance with the
TriZetto Objection in the event that (x) IMS does not respond to the TriZetto
Objection within the 10-day period following receipt by IMS of the TriZetto
Objection, or (y) IMS and TriZetto so agree, or (iii) the Closing Working
Capital Amount Statement, as adjusted by either (x) the agreement of IMS and
TriZetto or (y) the Independent Public Accountants.
(d) TriZetto shall provide IMS and its accountants full access
to its books and records, any other information, including work papers of its
accountants, and to any of its employees
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to the extent reasonably necessary for IMS to prepare the Closing Working
Capital Amount Statement.
(e) Within 10 days following issuance of the Adjusted Closing
Working Capital Amount Statement, the adjustment payments payable pursuant to
this Section 7.8(e) shall be paid by wire transfer of immediately available
funds to the bank account designated by TriZetto or IMS, as the case may be. If
but only if the Closing Working Capital Amount derived from the Adjusted Closing
Working Capital Amount Statement falls short of zero by more than $2,000,000,
IMS shall pay TriZetto an amount equal to the absolute value of such Closing
Working Capital Amount minus $2,000,000. Similarly, if but only if the Closing
Working Capital Amount derived from the Adjusted Closing Working Capital Amount
Statement is more than $2,000,000, TriZetto shall pay IMS an amount equal to
such Closing Working Capital Amount minus $2,000,000. Any such payment by IMS or
TriZetto shall be accompanied by interest thereon from the Closing Date through
the date of payment at the rate of interest publicly announced by Citibank, N.A.
or any successor thereto in New York, New York from time to time as its "base
rate" plus two (2) per cent.
7.9 EMPLOYEES AND EMPLOYEE BENEFITS.
(a) As of the Effective Time, the Erisco employees shall cease
to be covered by IMS's employee welfare benefit plans, including plans,
programs, policies and arrangements which provide medical and dental coverage,
life and accident insurance, disability coverage, and vacation and severance pay
(collectively, "WELFARE PLANS"), and shall cease to participate in all "employee
pension benefit plans" (within the meaning of Section 3(2) of ERISA) and all
other employee benefit plans maintained by IMS. Except as otherwise provided
herein, IMS shall (i) retain responsibility for all Welfare Plan claims incurred
by Erisco employees prior to the Effective Time, (ii) retain any obligation for
payment of short-term and long-term disability claims arising from disabilities
of Erisco employees that occurred prior to the Effective Time, and (iii) provide
COBRA coverage for Erisco employees who elected such coverage prior to the
Effective Time. For purposes of this paragraph, a claim shall be deemed to have
been incurred when the medical or other service giving rise to the claim is
performed, except that disability claims shall be deemed to have been incurred
on the date the Erisco employee becomes disabled.
(b) As of the Effective Time, Erisco shall cease to be a
participating employer in all IMS employee benefit plans.
7.10 JOINTLY DEVELOPED PRODUCTS. From and after the Effective Time,
IMS and TriZetto shall discuss the appropriate treatment of jointly developed
products and any data rights arising therefrom; PROVIDED, that the foregoing
shall not (i) impose on either IMS or TriZetto any obligation to enter into any
agreement with respect to any such jointly developed products or (ii) in any way
reduce or limit the rights granted to IMS pursuant to the Data Rights Agreement.
7.11 USE OF NAME AND LOGO. It is expressly agreed that neither
TriZetto nor Merger Sub is purchasing or acquiring or after the Closing shall
have any right, title or interest in the names of IMS or its affiliates (other
than Erisco) or any trade names, trademarks, identifying logos or service marks
employing the words "IMS" or any part or variation thereof. As promptly as
practicable, but in no event alter than 90 days following the Closing Date,
TriZetto shall cause the Surviving Corporation to remove, strike over or
otherwise obliterate all of IMS's trademarks and logos from all materials
constituting their properties and assets, including, without limitation, any
business cards, schedules, stationery, displays, signs, promotional materials,
manuals, forms and
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other materials, if such materials are distributed or made available or proposed
to be distributed or made available to third parties; PROVIDED that (i) the
Surviving Corporation shall cease using invoices, stationery and business cards
containing IMS's trademarks and logos no later than 30 days after the Closing
and (ii) nothing herein contained shall require or be construed to require
TriZetto or Merger Sub to cause customers of the Surviving Corporation to take
any action with respect to property of the Surviving Corporation created prior
to the Closing Date and in the possession of any such customers or property of
customers created prior to the Closing Date in the possession of the Surviving
Corporation. TriZetto agrees that neither TriZetto, the Surviving Corporation,
nor any of their affiliates shall make any use of IMS's trademarks and logos
from and after the expiration of 60 days.
7.12 INTERCOMPANY SERVICES. At the Closing, all data processing,
internal accounting, insurance, personnel, legal, telephone and other services
provided to Erisco by IMS or its affiliates (other than Erisco) shall terminate
without any liability or obligation, other than the specific arrangements set
forth in the Transitional Services Agreements.
7.13 PREFERRED VENDOR STATUS. TriZetto shall be the preferred
application services provider and transformation services provider to IMS from
the date hereof and for a period of five (5) years following the Closing Date.
As the preferred provider, to the extent that TriZetto offers application
services and transformation services, including consulting and implementation
services, that IMS seeks to obtain from a third party, at levels of price,
quality and service that are competitive with the levels obtainable by IMS in an
arm's length transaction with a third party, TriZetto will be given the first
opportunity to submit bids to provide such services. After the date hereof, each
of the parties agrees to cooperate in good faith and use their respective
reasonable best efforts to formalize the terms of such preferred vendor status
in an agreement mutually acceptable to both parties.
7.14 ASP AGREEMENT. Erisco and TriZetto will cooperate in good faith
and use their respective reasonable best efforts to enter into an agreement
whereby TriZetto would become an application services provider for Erisco within
ten (10) days following the date of this Agreement. The terms and conditions of
such agreement will be at least as favorable to IMS in every material respect as
similar agreements entered into between TriZetto and third parties.
7.15 ERISCO EMPLOYEE OPTIONS.
(a) TRIZETTO OPTIONS. Subject to necessary board and
stockholder approval, as soon as practicable after the Closing, TriZetto will
issue options (the "ERISCO EMPLOYEE OPTIONS") to purchase an aggregate of
1,200,000 shares of TriZetto Common Stock to Erisco employees.
(b) IMS OPTIONS. IMS will cause the options to purchase
capital stock of IMS held by Erisco employees immediately prior to the Closing
to be treated as follows: (i) all unvested options held by the Erisco employees
pursuant to the IMS Health Incorporated Employees' Stock Incentive Plan (the
"ESIP") will be fully vested at or before the Closing, with other terms
applicable to ESIP options governed by the provisions of the ESIP and the
applicable option agreement; (ii) all unvested options held by Erisco employees
pursuant to the 1998 IMS Health Incorporated Replacement Plan for Certain
Employees Holding Cognizant Corporation Equity-Based Awards (the "COGNIZANT
PLAN") will be accorded "retirement" status under the Cognizant Plan, with the
term of such options to expire upon the second anniversary of the Closing and
with other terms applicable to such options governed by the provisions of the
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Cognizant Plan and the applicable option agreement; (iii) all "Year 2000"
options pursuant to the Cognizant Plan (such options relating to 107,293 shares)
will be fully vested and exercisable at or before the Closing, with the term of
such options to expire upon the second anniversary of the Closing and with other
terms applicable to such options governed by the provisions of the Cognizant
Plan and the applicable option agreement; (iv) all options, other than the
options covered by clauses (iii) and (iv), held by Erisco employees pursuant to
the Cognizant Plan shall be governed by the terms of the Cognizant Plan and the
applicable option agreement, except to the extent that specified Erisco
employees may be accorded more favorable terms as set forth in a separate letter
dated as of the date hereof from IMS to TriZetto (the "OPTIONS LETTER"); and
(v), the terms set forth in the foregoing clauses notwithstanding, each Erisco
employee who meets the non-discretionary definition of "retirement" under the
ESIP or Cognizant Plan at the Closing will be deemed "retired" with respect to
all options then held by to such employee pursuant to such Plans.
8. TAX MATTERS.
8.1 LIABILITY FOR TAXES AND RELATED MATTERS.
(a) IMS'S INDEMNIFICATION OF TRIZETTO. IMS shall be liable for
and indemnify TriZetto for all Taxes (including, without limitation, any
obligation to contribute to the payment of a tax determined on a consolidated,
combined or unitary basis with respect to a group of corporations that includes
or included Erisco and Taxes resulting from Erisco ceasing to be a member of
IMS's group) (i) imposed on IMS's group (other than Erisco) for any taxable year
and (ii) imposed on Erisco or for which Erisco may otherwise be liable for any
taxable year or period that ends on or before the Closing Date and, with respect
to any taxable year or period beginning before and ending after the Closing
Date, the portion of such taxable year ending on and including the Closing Date.
IMS shall also indemnify, defend and hold harmless TriZetto from all costs and
expenses incurred by TriZetto (including reasonable attorneys' fees and
expenses) in connection with any liability to, or claim by, any taxing
authority, for Taxes for which IMS is required to indemnify TriZetto under this
Section 8. Except as set forth in Section 8.1(e), IMS shall be entitled to any
refund of Taxes of Erisco received for such periods.
(b) TRIZETTO'S INDEMNIFICATION OF IMS. TriZetto shall be
liable for and indemnify IMS for the Taxes of Erisco for any taxable year or
period that begins after the Closing Date and, with respect to any taxable year
or period beginning before and ending after the Closing Date, the portion of
such taxable year beginning after the Closing Date. TriZetto shall also
indemnify, defend and hold harmless IMS from all costs and expenses incurred by
IMS (including reasonable attorneys' fees and expenses) in connection with any
liability to, or claim by, any taxing authority, for Taxes for which TriZetto is
required to indemnify IMS under this Section 8. TriZetto shall be entitled to
any refund of Taxes of Erisco received for such periods.
(c) TAXES FOR SHORT TAXABLE YEAR. For purposes of paragraphs
(a) and (b) of this Section 8.1, whenever it is necessary to determine the
liability for Taxes of Erisco for a portion of a taxable year or period that
begins before and ends after the Closing Date, the determination of the Taxes of
Erisco for the portion of the year or period ending on, and the portion of the
year or period beginning after, the Closing Date shall be determined by assuming
that Erisco had a taxable year or period which ended at the close of the Closing
Date, except that exemptions,
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allowances or deductions that are calculated on an annual basis, such as the
deduction for depreciation, shall be apportioned on a time basis.
(d) TREATMENT OF INDEMNITY PAYMENTS. Any payments pursuant to
this Section 8 shall be made by wire transfer of immediately available funds.
(e) REFUNDS FROM CARRYBACKS. If IMS becomes entitled to a
refund or credit of Taxes for any period for which it is liable under Section
8.1(a) to indemnify TriZetto and such refund or credit is attributable solely to
the carryback of losses, credits or similar items attributable to Erisco and
from a taxable year or period that begins after the Closing Date, IMS shall
promptly pay to TriZetto the amount of such refund or credit together with any
interest thereon. In the event that any refund or credit of Taxes for which a
payment has been made is subsequently reduced or disallowed, TriZetto shall
indemnify and hold harmless IMS for any tax liability, including interest and
penalties, assessed against IMS by reason of the reduction or disallowance.
(f) RETENTION OF CARRYOVERS. IMS will not elect to retain any
net operating loss carryovers or capital loss carryovers of Erisco under
Treasury Regulation Section 1.1502-20(g).
(g) TAX RETURNS. IMS shall file or cause to be filed when due
all Returns that are required to be filed by or with respect to Erisco for
taxable years or periods ending on or before the Closing Date and shall pay any
Taxes due in respect of such Returns, and TriZetto shall file or cause to be
filed when due all Returns that are required to be filed by or with respect to
Erisco for taxable years or periods ending after the Closing Date and shall
remit any Taxes due in respect of such Returns. IMS shall pay TriZetto the Taxes
for which IMS is liable pursuant to Section 8.1(a) but which are payable with
Returns to be filed by TriZetto pursuant to the previous sentence within 10 days
prior to the due date for the filing of such Returns. IMS shall have the right
to review and comment on any Returns required to be filed by TriZetto pursuant
to this Section 8.1(g) with respect to taxable years or periods for which IMS is
liable in whole or in part pursuant to Section 8.1(a).
(h) CONTEST PROVISIONS. TriZetto shall promptly notify IMS in
writing upon receipt by TriZetto, any of its affiliates or Erisco of notice of
any pending or threatened federal, state, local or foreign income or franchise
tax audits or assessments which may materially affect the tax liabilities of
Erisco for which IMS would be required to indemnify TriZetto pursuant to Section
8.1(a), PROVIDED that failure to comply with this provision shall not affect
TriZetto's right to indemnification hereunder, except to the extent that IMS is
prejudiced by such failure. IMS shall have the sole right to represent Erisco's
interests in any tax audit or administrative or court proceeding relating to
taxable periods ending on or before the Closing Date, and to employ counsel of
its choice at its expense. Notwithstanding the foregoing, IMS shall not be
entitled to settle, either administratively or after the commencement of
litigation, any claim for Taxes which would adversely affect the liability for
Taxes of TriZetto or Erisco for any period after the Closing Date to any extent
(including, but not limited to, the imposition of income tax deficiencies, the
reduction of asset basis or cost adjustments, the lengthening of any
amortization or depreciation periods, the denial of amortization or depreciation
deductions, or the reduction of loss or credit carryforwards) without the prior
written consent of TriZetto. Such consent shall not be unreasonably withheld,
and shall not be necessary to the extent that IMS has indemnified TriZetto
against the effects of any such settlement. IMS shall be entitled to participate
at its expense in the defense of any claim for Taxes for a year or period ending
after the Closing Date which may be the subject of indemnification by IMS
pursuant to Section 8.1(a) and, with the written consent of TriZetto, and at its
sole expense, may assume the entire defense of such tax claim. Neither TriZetto
nor Erisco may agree to settle any tax claim for
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the portion of the year or period ending on the Closing Date which may be the
subject of indemnification by IMS under Section 8.1(a) without the prior written
consent of IMS, which consent shall not be unreasonably withheld.
8.2 ASSISTANCE AND COOPERATION. After the Closing Date, each of IMS
and TriZetto shall:
(a) assist (and cause their respective affiliates to assist)
the other party in preparing any Returns or reports which such other party is
responsible for preparing and filing in accordance with this Section 8;
(b) cooperate fully in preparing for any audits of, or
disputes with taxing authorities regarding, any Returns of Erisco;
(c) make available to the other and to any taxing authority as
reasonably requested all information, records, and documents relating to Taxes
of Erisco;
(d) provide timely notice to the other in writing of any
pending or threatened tax audits or assessments of Erisco for taxable periods
for which the other may have a liability under this Section 8, PROVIDED, that
failure to comply with this provision shall not affect the other party's rights
to indemnification hereunder to the extent that the indemnifying party is not
prejudiced by such failure; and
(e) furnish the other with copies of all correspondence
received from any taxing authority in connection with any tax audit or
information request with respect to any such taxable period.
8.3 TAX SHARING AGREEMENTS. Any and all tax sharing, tax indemnity,
or tax allocation agreements with respect to which Erisco was a party at any
time prior to the Closing shall terminate upon the Closing. No further amounts
shall be payable by or to Erisco under such agreements following the Closing.
8.4 SURVIVAL OF OBLIGATIONS. The obligations of the parties set
forth in this Section 8 shall be unconditional and absolute and shall terminate
upon the expiration of the statute of limitations applicable to the Taxes at
issue.
9. INDEMNIFICATION.
9.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations, warranties and covenants of the parties contained in this
Agreement will survive the Closing until June 30, 2001, whereupon such
representations, warranties and covenants will expire (except for covenants that
by their terms survive for a longer period).
9.2 INDEMNIFICATION OF TRIZETTO AND MERGER SUB. Subject to the
limitations contained in this Section 9, IMS shall 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 IMS or Erisco in this Agreement, or (ii) the breach
of any covenant or agreement made by IMS or Erisco in this
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Agreement (other than with respect to the matters referred to in Section 8, as
to which the indemnification provisions set forth in Section 8 shall govern).
9.3 INDEMNIFICATION OF IMS. Subject to the limitations contained in
this Section 9, TriZetto and Merger Sub shall, jointly and severally, defend,
indemnify and hold harmless IMS and its subsidiaries' and their respective
officers, directors, stockholders, employees and agents from and against any and
all Claims and Liabilities with respect to or arising from (i) the breach of any
warranty or any inaccuracy of any representation made by TriZetto or Merger Sub
in this Agreement, or (ii) the breach of any covenant or agreement made by
TriZetto or Merger Sub in this Agreement (other than with respect to the matters
referred to in Section 8, as to which the indemnification provisions set forth
in Section 8 shall govern).
9.4 LIMITATIONS ON INDEMNIFICATION.
(a) Notwithstanding anything to the contrary contained herein,
neither IMS, on the one hand, nor TriZetto and Merger Sub, on the other hand,
shall be liable to TriZetto and Merger Sub or IMS, or any of their respective
subsidiaries or any directors, officers, employees or agents of any of the
foregoing, as applicable, for any Claims and Liabilities which such party(ies)
would otherwise be entitled to indemnification pursuant to Section 9.2 or 9.3 in
respect of, unless the aggregate amount of all such Claims and Liabilities
incurred by such party(ies) exceeds $4,000,000 (the "DEDUCTIBLE AMOUNT"), in
which event such party(ies) shall be liable only for the amount of such Claims
and Liabilities which exceeds the Deductible Amount; provided, that the
aggregate liability of IMS, on the one hand, and TriZetto and Merger Sub, on the
other hand, under this Section 9 (other than with respect to any intentional or
willful breach or failure to perform) shall in no event exceed $100,000,000.
(b) Anything to the contrary notwithstanding, neither IMS, on
the one hand, nor TriZetto and Merger Sub, on the other hand, shall be liable to
TriZetto and Merger Sub or IMS, or any of their respective subsidiaries or any
directors, officers, employees or agents of any of the foregoing, as applicable,
in respect of any Claims and Liabilities which are covered by insurance owned by
such party(ies) to the extent that any net loss is reduced by such insurance. To
the extent quantifiable, the parties shall make appropriate adjustments to take
into account the tax benefits or costs in determining the amount of
indemnification to be provided hereunder.
9.5 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 Section 9, 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 its indemnification obligations contained in this
Section 9, 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. In any event, the Indemnitee, such
Indemnifying Party and 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
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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
Section 9 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 Indemnity'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 its indemnification obligations
contained in this Section 9, except where, and solely to the extent that, such
failure actually and materially prejudices the rights of such 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.
9.6 TREATMENT OF INDEMNITY PAYMENTS. Any payments pursuant to this
Section 9 shall be made by wire transfer of immediately available funds.
9.7 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
Section 9, except that nothing in this Agreement shall be deemed, to constitute
a waiver of (A) any injunctive or other equitable remedies or (B) any tort
claims of, or causes of action arising from, intentionally fraudulent
misrepresentation or deceit.
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF IMS AND ERISCO.
The obligations of IMS and Erisco hereunder are subject to the
satisfaction or waiver, on or before the Closing, of each of the following
conditions:
10.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of TriZetto set forth in Section 4 (as qualified by the TriZetto
Disclosure Letter) shall be true and accurate in every material respect on and
as of the date of this Agreement and on and as of the Closing Date with the same
force and effect as if they had been made at the Closing except to the extent
(i) any such representation or warranty expressly speaks as of an earlier date
or (ii) the failure of such representations and warranties to be true and
accurate in such respects has not had and is not reasonably likely to have a
Material Adverse Effect on TriZetto, and IMS shall have received a certificate
to such effect executed by TriZetto's Chief Executive Officer and Chief
Financial Officer.
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10.2 COVENANTS. TriZetto and Merger Sub shall have performed and
complied in all material respects with all of the covenants required to be
performed by it under this Agreement on or before the Closing, except where any
nonperformance or noncompliance would not have a Material Adverse Effect on
TriZetto, and IMS shall have received a certificate to such effect signed by
TriZetto's Chief Executive Officer and Chief Financial Officer.
10.3 ABSENCE OF MATERIAL ADVERSE CHANGE. There shall not have been
any material adverse change in the financial condition, properties, assets,
liabilities, businesses or results of operations of TriZetto and the TriZetto
Subsidiaries, taken as a whole, or in the ability of TriZetto and Merger Sub to
consummate the Merger, other than any change that shall result from general
economic conditions or conditions generally affecting the industry in which
TriZetto conducts operations (a "TRIZETTO MATERIAL ADVERSE CHANGE").
10.4 COMPLIANCE WITH LAW. There shall be no order, decree or ruling
by any governmental agency or written threat thereof, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
Merger, which would prohibit or render illegal the transactions contemplated by
this Agreement.
10.5 GOVERNMENT CONSENTS. There shall have been obtained on or
before the Closing such material permits or authorizations, and there shall have
been taken such other action, as may be required to consummate the Merger by any
regulatory authority having jurisdiction over the parties and the actions herein
proposed to be taken, including but not limited to requirements under applicable
federal and state securities laws and the compliance with, and expiration of any
applicable waiting period under, the HSR Act.
10.6 PROXY STATEMENT. The Proxy Statement shall not be subject to
any proceedings commenced or threatened by the SEC.
10.7 DOCUMENTS. IMS shall have received all written consents,
assignments, waivers, authorizations or other certificates reasonably deemed
necessary by IMS's legal counsel to provide for the continuation in full force
and effect of any and all material Contracts of TriZetto and the TriZetto
subsidiaries and for TriZetto and Merger Sub to consummate the transactions
contemplated hereby except when the failure to receive such consents,
assignments, waivers, authorizations or other certificates is not reasonably
likely to have a Material Adverse Effect on TriZetto.
10.8 TRIZETTO APPROVALS. The TriZetto Proposal shall have been duly
approved by the TriZetto Stockholders in accordance with the rules of the
Nasdaq, applicable law and TriZetto's Certificate of Incorporation and Bylaws.
10.9 NO LEGAL ACTION. No temporary restraining order, preliminary
injunction or permanent injunction or other order preventing the consummation of
the Merger shall have been issued by any Federal or state court and remain in
effect, nor shall any proceeding initiated by the United States Federal
government seeking any of the foregoing be pending.
10.10 ELECTION OF IMS DESIGNEES TO BOARD OF DIRECTORS OF TRIZETTO.
The Board of Directors of TriZetto shall have taken appropriate action to cause
one individual designated by IMS be appointed to the Board of Directors of
TriZetto as a Class II director effective upon the Effective Time in accordance
with Section 6.10.
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10.11 TAX OPINION. IMS shall have received the opinion of Sullivan &
Cromwell, counsel to IMS, dated the Closing Date, to the effect that the Merger
will be treated for United States federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, and that each
of Erisco, Merger Sub and TriZetto will be a party to that reorganization within
the meaning of Section 368(b) of the Code, provided, that if Sullivan & Cromwell
does not render such opinion, this condition shall nonetheless be deemed
satisfied if Stradling Yocca Carlson & Rauth renders such opinion to IMS; it
being understood that in rendering such opinion, such counsel shall be entitled
to rely on, and IMS and TriZetto agree to provide reasonable cooperation to
provide, certain customary representations and assumptions
10.12 NASDAQ LISTING. The shares of TriZetto Common Stock issuable
to IMS pursuant to this Agreement shall have been approved for quotation on the
Nasdaq, upon official notice of issuance.
10.13 REGISTRATION RIGHTS AGREEMENT. IMS, Erisco and TriZetto shall
have entered into the Registration Rights Agreement.
10.14 STOCKHOLDER AGREEMENT. IMS, Erisco and TriZetto shall have
entered into the Stockholder Agreement.
10.15 TRANSITIONAL SERVICES AGREEMENTS. IMS and TriZetto shall have
entered into the Transitional Services Agreements.
10.16 DATA RIGHTS AGREEMENT. IMS and TriZetto shall have entered
into the Data Rights Agreement.
10.17 HEALTHWEB LICENSE AGREEMENT. IMS and TriZetto shall have
entered into the HealthWeb License Agreement.
10.18 LEGAL OPINION. IMS shall have received one or more opinions of
counsel to TriZetto and Merger Sub, in a customary form for transactions of the
type contemplated by this Agreement, that collectively will cover the due
incorporation and good standing of TriZetto and Merger Sub and the due
authorization, execution, delivery, validity and enforceability of the Basic
Documents with respect to TriZetto and Merger Sub.
11. CONDITIONS PRECEDENT TO OBLIGATIONS OF TRIZETTO AND MERGER SUB.
The obligations of TriZetto and Merger Sub hereunder are subject to the
satisfaction or waiver, on or before the Closing, of each of the following
conditions:
11.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of IMS and Erisco set forth in Section 3 (as qualified by the IMS
Disclosure Letter) shall be true and accurate in every material respect on and
as of the date of this Agreement and on and as of the Closing Date with the same
force and effect as if they had been made at the Closing except to the extent
(i) any such representation or warranty expressly speaks as of an earlier date
or (ii) the failure of such representations and warranties to be true and
accurate in such respects is not reasonably likely to have a Material Adverse
Effect on Erisco, and TriZetto shall have received a certificate to such effect
executed by IMS's and Erisco's Chief Executive Officer and Chief Financial
Officer.
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11.2 COVENANTS. Each of Erisco and IMS shall have performed and
complied in all material respects with all of the covenants required to be
performed by it under this Agreement on or before the Closing, except where any
nonperformance or noncompliance would not have a Material Adverse Effect on
Erisco, and TriZetto shall receive a certificate to such effect signed by
Erisco's and IMS's Chief Executive Officer and Chief Financial Officer.
11.3 ABSENCE OF MATERIAL ADVERSE CHANGE. There shall not have been
any material adverse change in the financial condition, properties, assets,
liabilities, businesses or results of operations of Erisco or in the ability of
IMS and Erisco to consummate the Merger and the other transactions contemplated
hereby, other than any change that shall result from general economic conditions
or conditions generally affecting the industry in which Erisco conducts
operations (an "ERISCO MATERIAL ADVERSE CHANGE").
11.4 COMPLIANCE WITH LAW. There shall be no order, decree or ruling
by any governmental agency or written threat thereof, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
Merger, which would prohibit or render illegal the transactions contemplated by
this Agreement.
11.5 GOVERNMENT CONSENTS. There shall have been obtained on or
before the Closing such material permits or authorizations, and there shall have
been taken such other action, as may be required to consummate the Merger by any
regulatory authority having jurisdiction over the parties and the actions herein
proposed to be taken, including but not limited to requirements under applicable
federal and state securities laws and the compliance with, and expiration of any
applicable waiting period under, the HSR Act.
11.6 PROXY STATEMENT. The Proxy Statement shall not be subject to
any proceedings commenced or threatened by the SEC.
11.7 DOCUMENTS. TriZetto shall have received all written consents,
assignments, waivers, authorizations or other certificates reasonably deemed
necessary by TriZetto's legal counsel to provide for the continuation in full
force and effect of any and all material Contracts of Erisco and for IMS and
Erisco to consummate the transactions contemplated hereby except when the
failure to receive such consents, assignments, waivers, authorizations or other
certificates is not reasonably likely to have a Material Adverse Effect on
Erisco.
11.8 STOCKHOLDER APPROVAL. The TriZetto Proposal shall have been
duly approved by the TriZetto Stockholders in accordance with the rules of the
Nasdaq, applicable law and TriZetto's Certificate of Incorporation and Bylaws.
11.9 NO LEGAL ACTION. No temporary restraining order, preliminary
injunction or permanent injunction or other order preventing the consummation of
the Merger shall have been issued by any Federal or state court and remain in
effect, nor shall any proceeding initiated by the United States Federal
government seeking any of the foregoing be pending.
11.10 TAX OPINION. TriZetto shall have received the opinion of
Stradling Yocca Carlson & Rauth, counsel to TriZetto and Merger Sub, dated the
Closing Date, to the effect that the Merger will be treated for United States
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Code, and that each Erisco, Merger Sub and TriZetto will be a
party to that reorganization within the meaning of Section 368(b) of the Code,
provided, that if Stradling
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Yocca Carlson & Rauth does not render such opinion, this condition shall
nonetheless be deemed satisfied if Sullivan & Cromwell renders such opinion to
TriZetto; it being understood that in rendering such opinion, such counsel shall
be entitled to rely on, and IMS and TriZetto agree to provide reasonable
cooperation in providing, certain customary representations and assumptions.
11.11 NASDAQ LISTING. The shares of TriZetto Common Stock issuable
to IMS pursuant to this Agreement shall have been approved for quotation on the
Nasdaq, upon official notice of issuance.
11.12 REGISTRATION RIGHTS AGREEMENT. IMS and TriZetto shall have
entered into the Registration Rights Agreement.
11.13 STOCKHOLDER AGREEMENT. IMS and TriZetto shall have entered
into the Stockholder Agreement.
11.14 TRANSITIONAL SERVICES AGREEMENTS. IMS, Erisco and TriZetto
shall have entered into the Transitional Services Agreements.
11.15 HEALTHWEB LICENSE AGREEMENT. IMS and TriZetto shall have
entered into the HealthWeb License Agreement.
11.16 LEGAL OPINION. TriZetto shall have received one or more
opinions of counsel to IMS and Erisco, in a customary form for transactions of
the type contemplated by this Agreement, that collectively will cover the due
incorporation and good standing of Erisco and the due authorization, execution,
delivery, validity and enforceability of the Basic Documents with respect to IMS
and Erisco.
12. TERMINATION OF AGREEMENT.
12.1 TERMINATION. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval of the Merger by the
stockholders of TriZetto:
(a) by mutual agreement of IMS and TriZetto;
(b) by IMS, if there has been a breach by TriZetto of any
representation, warranty, covenant or agreement set forth in this Agreement on
the part of TriZetto, or if any representation of TriZetto shall have become
untrue, such that Section 10.1 or 10.2 would not be satisfied and which TriZetto
fails to cure prior to the Closing (except that no cure period shall be provided
for a breach by TriZetto which by its nature cannot be cured);
(c) by TriZetto, if there has been a breach by IMS of any
representation. warranty, covenant or agreement set forth in this Agreement on
the part of IMS, or if any representation of IMS shall have become untrue, such
that Section 11.1 or 11.2 would not be satisfied and which IMS fails to cure
prior to the Closing (except that no cure period shall be provided for a breach
by IMS which by its nature cannot be cured);
(d) by either IMS or TriZetto, if the TriZetto Meeting shall
have been held and the required approval of the stockholders of TriZetto shall
not have been obtained by reason of the failure to obtain the required vote;
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(e) by either IMS or TriZetto, if all the conditions for
Closing the Merger set forth in Sections 10 and 11 hereof shall not have been
satisfied or waived on or before the Final Date (as defined below) other than as
a result of a breach of this Agreement by the terminating party, or, in the case
of TriZetto, a breach by any of the Designated Stockholders of the Voting
Agreements in the event TriZetto does not obtain stockholder approval of the
TriZetto Proposal; or
(f) by either IMS or TriZetto, if a permanent injunction or
other order by any Federal or state court which would make illegal or otherwise
restrain or prohibit the consummation of the Merger shall have been issued and
shall have become final and nonappealable.
As used herein, the "FINAL DATE" shall be December 31, 2000.
12.2 NOTICE OF TERMINATION. Any termination of this Agreement under
Section 12.1 above will be effective by the delivery of written notice of IMS or
TriZetto, as the case may be, to TriZetto or IMS, as applicable.
12.3 EFFECT OF TERMINATION. In the case of any termination of this
Agreement as provided in this Section 12, this Agreement shall be of no further
force and effect (except as expressly provided herein); provided, that except as
otherwise provided herein, no such termination shall relieve any party from
liability for any breach of this Agreement prior to such termination. No
termination of this Agreement shall affect the obligations contained in the
Confidentiality Agreement, all of which will survive termination of this
Agreement in accordance with their terms.
13. MISCELLANEOUS.
13.1 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. The laws of the
State of Delaware (irrespective of its choice of law principles) will govern the
validity of this Agreement, the construction of its terms and the interpretation
and enforcement of the rights and duties of the parties hereto. The parties
hereby irrevocably submit to the jurisdiction of the courts of the State of
Delaware and the Federal courts of the United States of America located in the
State of Delaware solely in respect of the interpretation and enforcement of the
provisions of this Agreement and of the documents referred to in this Agreement,
and in respect of the transactions contemplated hereby and thereby, and hereby
waive, and agree not to assert, as a defense in any action, suit or proceeding
for the interpretation or enforcement hereof or of any such document, that it is
not subject thereto or that such action, suit or proceeding may not be brought
or is not maintainable in said courts or that the venue thereof may not be
appropriate or that this Agreement or any such document may not be enforced in
or by such courts, and the parties hereto irrevocably agree that all claims with
respect to such action or proceeding shall be heard and determined in such a
Delaware State or Federal court. The parties hereby consent to and grant any
such court jurisdiction over the person of such parties and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
13.9 or in such other manner as may be permitted by law shall be valid and
sufficient service thereof. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
52
<PAGE>
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED
THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY,
AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 13.1.
13.2 ASSIGNMENT; BINDING UPON SUCCESSORS AND ASSIGNS. No party
hereto may assign any of its rights or obligations hereunder without the prior
written consent of the other parties hereto. This Agreement will be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
13.3 SEVERABILITY. If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other Persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. The parties further agree to replace such void
or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the greatest extent possible, the economic,
business and other purposes of the void or unenforceable provision.
13.4 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and the
same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, will bear the signatures of
all the parties reflected hereon as signatories.
13.5 OTHER REMEDIES. Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby or by law on such
party, and the exercise of any one remedy will not preclude the exercise of any
other. TriZetto, in addition to being entitled to exercise all rights provided
herein and granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. IMS and Erisco agree
that monetary damages would not be adequate compensation for any loss incurred
by reason of breach by IMS or Erisco of the provisions of this Agreement and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.
13.6 AMENDMENT AND WAIVERS. Any term or provision of this Agreement
may be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by duly authorized officers of the party
or parties to be bound thereby. The waiver by a party of any breach hereof or
default in the performance hereof will not be deemed to constitute a waiver of
any other default or any succeeding breach or default. This Agreement may be
amended by the parties hereto at any time before or after approval of the
TriZetto Stockholders, but, after such approval, no amendment will be made which
by applicable law requires the further approval of the TriZetto Stockholders
without obtaining such further approval.
13.7 EXPENSES. IMS will bear the legal, accounting, financial
advisor and other fees and expenses incurred with respect to this Agreement and
the transactions contemplated
53
<PAGE>
hereby by IMS and Erisco, including costs incurred to audit the financial
statements of Erisco. TriZetto will bear its legal, accounting, financial
advisor and other fees and expenses incurred with respect to this Agreement and
the transactions contemplated hereby.
13.8 ATTORNEYS' FEES. Should suit be brought to enforce or interpret
any part of this Agreement, the prevailing party will be entitled to recover, as
an element of the costs of suit and not as damages, reasonable attorneys' fees
to be fixed by the court (including, without limitation, costs, expenses and
fees on any appeal).
13.9 NOTICES. All notices and other communications pursuant to this
Agreement shall be in writing and deemed to be sufficient if contained in a
written instrument and shall be deemed given if delivered personally, via
facsimile, sent by nationally-recognized overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following address (or at such other address for a party as shall
be specified by like notice):
If to IMS or Erisco: IMS Health Incorporated
200 Nyala Farms
Westport, Connecticut 06880
Attention: Chief Executive Officer
Telecopy: (203) 222-4247
With a copy to: IMS Health Incorporated
200 Nyala Farms
Westport, Connecticut 06880
Attention: David Stevens
Jared Finkelstein
Telecopy: (203) 222-4268
And to: Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Alan J. Sinsheimer
Keith A. Pagnani
Telecopy: (212) 558-3588
And if to TriZetto or Merger The TriZetto Group, Inc.
Sub: 567 San Nicolas Drive, Suite 367
Newport Beach, California 92660
Attention: Christine A. Miller
Telecopy: (949) 219-2197
With a copy to: Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92660-6422
Attention: K.C. Schaaf
Michael E. Flynn
Telecopy: (949) 725-4100
54
<PAGE>
All such notices and other communications shall be deemed to have been
received (a) in the case of personal delivery, on the date of such delivery, (b)
in the case of a facsimile, when the party receiving such copy shall have
confirmed receipt of the communication, (c) in the case of delivery by
nationally-recognized overnight courier, on the business day following dispatch,
and (d) in the case of mailing, on the third business day following such
mailing.
13.10 CONSTRUCTION OF AGREEMENT. This Agreement has been negotiated
by the respective parties hereto and their attorneys and the language hereof
will not be construed for or against either party. A reference to a Section,
Schedule or an Exhibit will mean a Section in, or Schedule or Exhibit to, this
Agreement unless otherwise explicitly set forth. The titles and headings herein
are for reference purposes only and will not in any manner limit the
construction of this Agreement which will be considered as a whole. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
13.11 NO JOINT VENTURE. Nothing contained in this Agreement will be
deemed or construed as creating a joint venture or partnership between any of
the parties hereto. No party is by virtue of this Agreement authorized as an
agent, employee or legal representative of any other party. No party will have
the power to control the activities and operations of any other. The status of
the parties hereto is, and at all times, will continue to be, that of
independent contractors with respect to each other. No party will have any power
or authority to bind or commit any other. No party will hold itself out as
having any authority or relationship in contravention of this Section.
13.12 FURTHER ASSURANCES. Each party agrees to cooperate fully with
the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to evidence and reflect the transactions described
herein and contemplated hereby and to carry into effect the intents and purposes
of this Agreement.
13.13 ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No provisions of
this Agreement are intended, nor will be interpreted, to provide or create any
third party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, stockholder, partner or employee or any other Person, and
all provisions hereof will be personal solely between the parties to this
Agreement.
13.14 PUBLIC ANNOUNCEMENT. Upon execution of this Agreement,
TriZetto and IMS promptly will issue a joint press release approved by both
parties announcing the Merger. Thereafter, TriZetto or IMS may issue such press
releases, and make such other disclosure regarding the Merger, as it determines
(after consultation with legal counsel) are required under applicable securities
laws or Nasdaq or NYSE rules.
13.15 ENTIRE AGREEMENT. This Agreement, the Voting Agreements, the
Stockholder Agreement, the Registration Rights Agreement, the Data Rights
Agreement, the Transitional Services Agreements, the HealthWeb License
Agreement, the IMS Disclosure Letter, the TriZetto Disclosure Letter and the
Exhibits and Schedules hereto constitute the entire understanding and agreement
of the parties hereto with respect to the subject matter hereof and supersede
all prior and contemporaneous agreements or understandings, inducements or
conditions, express or implied, written or oral, between the parties with
respect hereto other than the Confidentiality Agreement,
55
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which shall remain in full force and effect. The express terms hereof control
and supersede any course of performance or usage of trade inconsistent with any
of the terms hereof.
56
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
Plan of Reorganization as of the date first above written.
THE TRIZETTO GROUP, INC.
By: /s/ Jeffrey H. Margolis
------------------------------
Name: Jeffrey H. Margolis
Title: President, Chief Executive
Officer and Chairman
ELBEJAY ACQUISITION CORP.
By: /s/ Jeffrey H. Margolis
------------------------------
Name: Jeffrey H. Margolis
Title: President, Chief Executive
Officer and Chairman
IMS HEALTH INCORPORATED
By: /s/ Robert E. Weissman
------------------------------
Name: Robert E. Weissman
Title: Chairman of the
Board of Directors
ERISCO MANAGED CARE
TECHNOLOGIES, INC.
By: /s/ Anthony Bellomo
------------------------------
Name: Anthony Bellomo
Title: President
<PAGE>
Exhibit A to
Agreement and Plan of Reorganization
VOTING AGREEMENT
VOTING AGREEMENT (the "AGREEMENT"), dated as of May ___, 2000, among
the undersigned stockholders (the "STOCKHOLDERS") of The TriZetto Group, Inc., a
Delaware corporation ("TRIZETTO"), and IMS Health Incorporated, a Delaware
corporation ("IMS"). Except as otherwise provided herein, capitalized terms that
are used but not otherwise defined herein shall have the respective meanings
assigned to such terms in the Merger Agreement (as defined below).
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, TriZetto, Elbejay Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of TriZetto ("MERGER SUB"), IMS and ERISCO Managed Care
Technologies, Inc., a New York corporation and a wholly owned subsidiary of IMS
("ERISCO"), have entered into an Agreement and Plan of Reorganization (the
"MERGER AGREEMENT"), providing for, among other things, the merger of Merger Sub
with and into Erisco, with Erisco as the surviving corporation (the "MERGER"),
and the issuance of shares of TriZetto Common Stock to IMS in connection with
the Merger (the "ISSUANCE"), upon the terms and subject to the conditions set
forth in the Merger Agreement, and setting forth certain representations,
warranties, covenants and agreements of the parties thereto in connection with
the Merger and the Issuance;
WHEREAS, the Merger Agreement contemplates the execution and
delivery of this Agreement;
WHEREAS, in order to induce IMS to enter into the Merger Agreement,
the Stockholders wish to agree (i) to deliver to IMS an irrevocable proxy to
Vote (as defined in Section 2 hereof) the Shares (as defined in Section 1
hereof) and any other shares of capital stock of TriZetto acquired hereafter and
prior to the termination of this Agreement so as to approve the Issuance and any
related matters, and (ii) not to transfer or otherwise dispose of any of the
Shares or any other shares of capital stock of TriZetto acquired hereafter and
prior to the termination of this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. REPRESENTATIONS OF STOCKHOLDERS. Each of the Stockholders
represents and warrants to IMS that (a) such Stockholder lawfully owns
beneficially (as such term is defined in Rule 13d-3 of the Exchange Act) and of
record each of the shares of Common Stock, par value $0.001 per share, of
TriZetto (the "TRIZETTO COMMON STOCK"), set forth opposite such Stockholder's
name on EXHIBIT A hereto (such Stockholder's "SHARES") free and clear of all
liens, claims, charges, security interests or other encumbrances and, except for
this Agreement and the Merger Agreement, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character to which such
Stockholder is a party relating to the pledge, disposition or Voting of any
shares of capital stock of TriZetto and there are no Voting trusts or Voting
agreements with respect to
<PAGE>
such Shares, (b) such Stockholder does not beneficially own (as such
term is used in Rule 13d-3 of the Exchange Act) any shares of TriZetto Common
Stock other than such Shares and does not have any options, warrants or other
rights to acquire any additional shares of capital stock of TriZetto or any
security exercisable for or convertible into shares of capital stock of TriZetto
other than those options, warrants or other rights set forth opposite such
Stockholder's name on EXHIBIT B hereto (such Stockholder's "OPTIONS") and each
Stockholder represents and warrants that such Stockholder shall not exercise any
such Options prior to the termination of this Agreement except in accordance
with Section 6 of this Agreement, (c) such Stockholder has full power and
authority and has taken all actions necessary to enter into, execute and deliver
this Agreement and to perform fully such Stockholder's obligations hereunder and
this Agreement has been duly executed and delivered and constitutes the legal,
valid and binding obligation of such Stockholder enforceable against such
Stockholder in accordance with its terms, subject to the Bankruptcy and Equity
Exception, (d) other than filings under the Exchange Act, no notices, reports or
other filings are required to be made by such Stockholder with, nor are any
consents, registrations, approvals, permits or authorizations required to be
obtained by such Stockholder from, any Governmental Entity, in connection with
the execution and delivery of this Agreement by such Stockholder, and (e) the
execution, delivery and performance of this Agreement by such Stockholder does
not, and the consummation by such Stockholder of the transactions contemplated
hereby will not, violate, conflict with or constitute a breach of, or a default
under, the certificate of incorporation or by-laws of such Stockholder or any or
their comparable governing instruments (if such Stockholder is not a natural
person) or result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation, modification or acceleration) (whether after the
giving of or the passage of time of both) under any contract to which such
Stockholder is a party or which is binding on it or its assets and will not
result in the creation of any lien on, or security interest in, any of the
assets or properties of such Stockholder.
2. AGREEMENT TO DELIVER PROXY. Each of the Stockholders agrees to
deliver to IMS on the date hereof an irrevocable proxy substantially in the form
attached hereto as EXHIBIT C to Vote such Stockholder's Shares (a) in favor of
approval of the Issuance and any related matters at any meeting of the
stockholders of TriZetto at which such matters are considered and at every
adjournment or postponement thereof, (b) against any action or agreement that
would compete with, impede, interfere with or tend to discourage the Merger or
the Issuance or inhibit the timely consummation of the Merger and the Issuance,
and (c) against any action or agreement that would result in a breach in any
material respect of any covenant, representation or warranty or any other
obligation of TriZetto or Merger Sub under the Merger Agreement. The proxy
delivered by each of the Stockholders pursuant to this Section 2 shall be
irrevocable during the term of this Agreement to the extent permitted under
Delaware law. For purposes of this Agreement, "VOTE" shall include voting in
person or by proxy in favor of or against any action, otherwise consenting or
withholding consent in respect of any action (including, but not limited to,
consenting in accordance with Section 228 of the Delaware General
2
<PAGE>
Corporation Law) or taking other action in favor of or against any action.
"VOTING" shall have a correlative meaning.
3. NO VOTING TRUSTS. Each of the Stockholders agrees that they will
not, nor will they permit any entity or person under their control to, deposit
any of its Shares or New Shares (as defined in Section 6 hereof) in a Voting
trust or subject any of their Shares or New Shares to any arrangement with
respect to the Voting of such Shares or New Shares other than agreements entered
into with IMS.
4. NO PROXY SOLICITATIONS. Each of the Stockholders agrees that such
Stockholder will not, nor will such Stockholder permit any entity or person
under such Stockholder's control, (a) to solicit proxies or become a
"participant" in a "solicitation" (as such terms are defined in Regulation 14A
under the Exchange Act) in opposition to or in competition with the consummation
of the Merger or the Issuance or otherwise encourage or assist any party in
taking or planning any action which would compete with, impede, interfere with
or tend to discourage the Merger or the Issuance or inhibit the timely
consummation of the Merger and the Issuance, (b) to directly or indirectly
encourage, initiate or cooperate in a stockholders' Vote or action by consent of
TriZetto's stockholders in opposition to or in competition with the consummation
of the Merger and the Issuance or (c) to become a member of a "group" (as such
term is used in Section 13(d) of the Exchange Act) with respect to any voting
securities of TriZetto for the purpose of opposing or competing with the
consummation of the Merger and the Issuance.
5. TRANSFER AND ENCUMBRANCE. On or after the date hereof and during
the term of this Agreement, each of the Stockholders agrees not to transfer,
sell, offer, exchange, pledge or otherwise dispose of or encumber any of such
Stockholder's Shares, Options or New Shares.
6. ADDITIONAL PURCHASES. Each of the Stockholders agrees that such
Stockholder will not purchase or otherwise acquire beneficial ownership (as such
term is used in Rule 13d-3 of the Exchange Act) of any shares of TriZetto Common
Stock after the execution of this Agreement, including, but not limited to,
acquisition by virtue of exercising any Option ("NEW SHARES"), nor will any
Stockholder voluntarily acquire the right to Vote or share in the Voting of any
shares of TriZetto Common Stock other than the Shares, unless such Stockholder
agrees to deliver to IMS immediately after such purchase or acquisition an
irrevocable proxy substantially in the form attached hereto as EXHIBIT D with
respect to such New Shares. Each of the Stockholders also severally agrees that
any New Shares acquired or purchased by him or her shall be subject to the terms
of this Agreement to the same extent as if they constituted Shares.
7. SPECIFIC PERFORMANCE AND OPTION TO PURCHASE. Each party hereto
acknowledges that it will be impossible to measure in money the damage to the
other party if a party hereto fails to comply with any of the obligations
imposed by this Agreement, that every such obligation is material and that, in
the event of any such failure, the other party will not have an adequate remedy
at law or damages.
3
<PAGE>
Accordingly, each party hereto agrees that injunctive relief or other equitable
remedy, in addition to remedies at law or damages, is the appropriate remedy for
any such failure and will not oppose the granting of such relief on the basis
that the other party has an adequate remedy at law. Each party hereto agrees
that it will not seek, and agrees to waive any requirement for, the securing or
posting of a bond in connection with any other party's seeking or obtaining such
equitable relief.
8. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement (including
the exhibits hereto) supersedes all prior agreements, written or oral, among the
parties hereto with respect to the subject matter hereof and contains the entire
agreement among the parties with respect to the subject matter hereof. This
Agreement may not be amended, supplemented or modified, and no provisions hereof
may be modified or waived, except by an instrument in writing signed by all the
parties hereto. No waiver of any provisions hereof by any party shall be deemed
a waiver of any other provisions hereof by any such party, nor shall any such
waiver be deemed a continuing waiver of any provision hereof by such party.
9. NOTICES. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission and on the next business day when sent by Federal
Express, Express Mail or other reputable overnight courier service to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
If to IMS:
IMS Health Incorporated
200 Nyala Farms
Westport, Connecticut 06880
Attention: Chief Executive Officer
Telecopy: (203) 222-4247
With copies, which shall not constitute notice, to:
IMS Health Incorporated
200 Nyala Farms
Westport, Connecticut 06880
Attention: David Stevens
Jared Finkelstein
Telecopy: (203) 222-4268
and
4
<PAGE>
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Alan J. Sinsheimer
Keith A. Pagnani
Telecopy: (212) 558-3588
If to a Stockholder, to the address or telecopy number set forth for
such Stockholder on the signature page hereof:
With a copy to:
The TriZetto Group, Inc.
567 San Nicolas Drive
Newport Beach, California 92660
Attention: General Counsel
Telecopy: (949) 219-2197
or to such other Persons on addresses as may be designated in writing by the
party to receive such notice as provided above.
10. MISCELLANEOUS.
(a) GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH AND
SUBJECT TO THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO CONFLICTS OF
LAWS PRINCIPLES.
(b) VENUE; WAIVER OF JURY TRIAL. The parties hereby irrevocably
submit to the jurisdiction of the courts of the State of Delaware and the
Federal courts of the United States of America located in the State of Delaware
solely in respect of the interpretation and enforcement of the provisions of
this Agreement and of the documents governed by Delaware law referred to in this
Agreement, and in respect of the transactions contemplated hereby, and hereby
waive, and agree not to assert, as a defense in any action, suit or proceeding
for the interpretation or enforcement hereof or of any such document, that it is
not subject thereto or that such action, suit or proceeding may not be brought
or is not maintainable in said courts or that the venue thereof may not be
appropriate or that this Agreement or any such document may not be enforced in
or by such courts, and the parties hereto irrevocably agree that all claims with
respect to such action or proceeding shall be heard and determined in such a
Delaware State or Federal court. The parties hereby consent to and grant any
such court jurisdiction over the person of such parties and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
9 of this Agreement or in such other manner as may be permitted by law shall be
valid and sufficient service thereof.
5
<PAGE>
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT,
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 10 (b).
(c) SEVERABILITY. In the event that any provision of the Agreement
is held to be illegal, invalid or unenforceable in a final, unappealable order
or judgment (each such provision, an "INVALID PROVISION"), then such provision
shall be severed from this Agreement and shall be inoperative and the parties
promptly shall negotiate in good faith a lawful, valid and enforceable provision
that is as similar to the invalid provision as may be possible and that
preserves the original intentions and economic positions of the parties as set
forth herein to the maximum extent feasible, while the remaining provisions of
this Agreement shall remain binding on the parties hereto. Without limiting the
generality of the foregoing sentence, in the event a change in any applicable
law, rule or regulation makes it unlawful for a party to comply with any of its
obligations hereunder, the parties shall negotiate in good faith a modification
to such obligation to the extent necessary to comply with such law, rule or
regulation that is as similar in terms to the original obligation as may be
possible while preserving the original intentions and economic positions of the
parties as set forth herein to the maximum extent feasible.
(d) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
(e) TERMINATION. This Agreement shall terminate upon the earliest to
occur of (i) the Closing, (ii) the termination of the Merger Agreement and (iii)
the date specified in a written agreement duly executed and delivered by IMS and
each of the Stockholders.
(f) FURTHER ASSURANCES. Each party hereto shall execute and deliver
such additional instruments and other documents and shall take such further
actions as may be necessary or desirable to effectuate, carry out and comply
with all of the terms of this Agreement and the transactions contemplated
hereby.
6
<PAGE>
(g) HEADINGS; RECITALS. All Section headings and the recitals herein
are for convenience of reference only and are not part of this Agreement, and no
construction or reference shall be derived therefrom.
(h) THIRD PARTY BENEFICIARIES. NOTHING IN THIS AGREEMENT, EXPRESS OR
IMPLIED, IS INTENDED TO CONFER UPON ANY THIRD PARTY ANY RIGHTS OR REMEDIES OF
ANY NATURE WHATSOEVER UNDER OR BY REASON OF THIS AGREEMENT.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
IMS HEALTH INCORPORATED
By: _________________________
Name:
Title:
STOCKHOLDERS:
By: _________________________
Name:
Title:
Address:
8
<PAGE>
EXHIBIT A
STOCKHOLDERS
NAME NUMBER OF SHARES
---- ----------------
A-1
<PAGE>
EXHIBIT B
STOCKHOLDERS OPTIONS
NAME OPTIONS
---- -------
B-1
<PAGE>
EXHIBIT C
FORM OF PROXY
The undersigned, for consideration received, hereby appoints
Victoria Fash or another representative of IMS Health Incorporated, a Delaware
corporation ("IMS"), designated by her and each of them my proxies, with full
power of substitution and resubstitution, (i) to vote all shares of Common
Stock, par value $0.001 per share (the "TRIZETTO COMMON STOCK"), of The TriZetto
Group, Inc., a Delaware corporation ("TRIZETTO"), owned by the undersigned (the
"SHARES") as of the date hereof at any meetings of stockholders of TriZetto
after the date hereof and at any adjournment or postponement thereof (each, a
"TRIZETTO MEETING") FOR approval of the issuance of TriZetto Common Stock to IMS
(the "ISSUANCE") as contemplated by the Agreement and Plan of Reorganization,
dated as of May ___, 2000 (the "MERGER AGREEMENT"), by and among TriZetto,
Elbejay Acquisition Corp., a Delaware corporation and a wholly owned subsidiary
of TriZetto ("MERGER SUB"), IMS and ERISCO Managed Care Technologies, Inc., a
New York corporation and a wholly owned subsidiary of IMS ("ERISCO"), which
provides for, among other things, the merger of Merger Sub with and into Erisco
(the "MERGER"), and any related matters, and AGAINST (a) any action or agreement
that would compete with, impede, interfere with or tend to discourage the Merger
or the Issuance or inhibit the timely consummation of the Merger and the
Issuance, and (b) any action or agreement that would result in a breach in any
material respect of any covenant, representation or warranty or any other
obligation of TriZetto or Merger Sub under the Merger Agreement, and (ii) to
withhold consents with respect to such Shares for (a) any action or agreement
that would compete with, impede, interfere with or tend to discourage the Merger
or the Issuance or inhibit the timely consummation of the Merger and the
Issuance and (b) any action or agreement that would result in a breach in any
material respect of any covenant, representation or warranty or any other
obligation of TriZetto or Merger Sub under the Merger Agreement. This proxy is
coupled with an interest, revokes all prior proxies granted by the undersigned
and is irrevocable until such time as the Voting Agreement, dated as of May ___,
2000, among certain stockholders of TriZetto, including the undersigned, and
IMS, terminates in accordance with its terms, at which time this proxy shall
expire.
Dated May ___, 2000
--------------------------------
(Signature of Stockholder)
C-1
<PAGE>
EXHIBIT D
FORM OF PROXY
The undersigned, for consideration received, hereby appoints
Victoria Fash or another representative of IMS Health Incorporated, a Delaware
corporation ("IMS"), designated by her and each of them my proxies, with full
power of substitution and resubstitution, (i) to vote the _____________ shares
(the "NEW SHARES") of Common Stock, par value $0.001 per share (the "TRIZETTO
COMMON Stock"), of The TriZetto Group, Inc., a Delaware corporation
("TRIZETTO"), purchased or otherwise acquired by the undersigned, or for which
the undersigned has voluntarily acquired the right to vote or share in the
voting of such shares, since the execution of the Voting Agreement, dated as of
May ___, 2000 (the "VOTING AGREEMENT"), by and among certain stockholders of
TriZetto, including the undersigned, and IMS, at any meetings of stockholders of
TriZetto after the date hereof and at any adjournment or postponement thereof
(each, a "TRIZETTO MEETING") FOR approval of the issuance of TriZetto Common
Stock to IMS (the "ISSUANCE") as contemplated by the Agreement and Plan of
Reorganization, dated as of May ___, 2000 (the "MERGER AGREEMENT"), by and among
TriZetto, Elbejay Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of TriZetto ("MERGER SUB"), IMS and ERISCO Managed Care Technologies,
Inc., a New York corporation and a wholly owned subsidiary of IMS ("ERISCO"),
which provides for, among other things, the merger of Merger Sub with and into
Erisco (the "Merger"), and any related matters, and AGAINST (a) any action or
agreement that would compete with, impede, interfere with or tend to discourage
the Merger or the Issuance or inhibit the timely consummation of the Merger and
the Issuance and (b) any action or agreement that would result in a breach in
any material respect of any covenant, representation or warranty or any other
obligation of TriZetto or Merger Sub under the Merger Agreement, and (ii) to
withhold consents with respect to such New Shares for (a) any action or
agreement that would compete with, impede, interfere with or tend to discourage
the Merger or the Issuance or inhibit the timely consummation of the Merger and
the Issuance, and (b) any action or agreement that would result in a breach in
any material respect of any covenant, representation or warranty or any other
obligation of TriZetto or the Merger Sub under the Merger Agreement. This proxy
is coupled with an interest and is irrevocable until such time as the Voting
Agreement terminates in accordance with its terms, at which time this proxy
shall expire.
Dated ____________________, 200_
--------------------------------
(Signature of Stockholder)
D-1
<PAGE>
Exhibit B to
Agreement and Plan of Reorganization
VOTING AGREEMENT
VOTING AGREEMENT (the "AGREEMENT"), dated as of May ___, 2000, among
the undersigned stockholders (the "STOCKHOLDERS") of The TriZetto Group, Inc., a
Delaware corporation ("TRIZETTO"), and IMS Health Incorporated, a Delaware
corporation ("IMS"). Except as otherwise provided herein, capitalized terms that
are used but not otherwise defined herein shall have the respective meanings
assigned to such terms in the Merger Agreement (as defined below). In the case
of Fidelity Ventures, Limited, Fidelity Investors Limited Partnership and
Fidelity Investors II Limited Partnership (collectively, the "FIDELITY
ENTITIES"), all references to "Stockholder" shall include only the Fidelity
Entities and shall not include FMR Corp. and its other subsidiaries and
affiliates; Fidelity International Limited and its subsidiaries and affiliates;
directors and officers of FMR Corp. and Fidelity International Limited and their
respective subsidiaries and affiliates; Edward C. Johnson 3d and members of his
family and trusts for their benefit; and any accounts over which FMR Corp. or
Fidelity International Limited or their respective subsidiaries and affiliates
have investment management or advisory responsibilities, including any of the
Fidelity Investments mutual funds.
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, TriZetto, Elbejay Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of TriZetto ("MERGER SUB"), IMS and ERISCO Managed Care
Technologies, Inc., a New York corporation and a wholly owned subsidiary of IMS
("ERISCO"), have entered into an Agreement and Plan of Reorganization (the
"MERGER AGREEMENT"), providing for, among other things, the merger of Merger Sub
with and into Erisco, with Erisco as the surviving corporation (the "MERGER"),
and the issuance of shares of TriZetto Common Stock to IMS in connection with
the Merger (the "ISSUANCE"), upon the terms and subject to the conditions set
forth in the Merger Agreement, and setting forth certain representations,
warranties, covenants and agreements of the parties thereto in connection with
the Merger and the Issuance;
WHEREAS, the Merger Agreement contemplates the execution and
delivery of this Agreement;
WHEREAS, in order to induce IMS to enter into the Merger Agreement,
the Stockholders wish to agree (i) to deliver to IMS an irrevocable proxy to
Vote (as defined in Section 2 hereof) the Shares (as defined in Section 1
hereof) and any other shares of capital stock of TriZetto acquired hereafter and
prior to the termination of this Agreement so as to approve the Issuance and any
related matters, and (ii) not to transfer or otherwise dispose of any of the
Shares or any other shares of capital stock of TriZetto acquired hereafter and
prior to the termination of this Agreement except in accordance with this
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. REPRESENTATIONS OF STOCKHOLDERS. Each of the Stockholders
represents and warrants to IMS that (a) such Stockholder lawfully owns
beneficially (as such term is defined in Rule 13d-3 of the Exchange Act) and of
record each of the shares of Common Stock, par value $0.001 per share, of
TriZetto (the "TRIZETTO COMMON STOCK"), set forth opposite such
<PAGE>
Stockholder's name on EXHIBIT A hereto (such Stockholder's "SHARES") free and
clear of all liens, claims, charges, security interests or other encumbrances
and, except for this Agreement and the Merger Agreement, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character to which such Stockholder is a party relating to the pledge,
disposition or Voting of any shares of capital stock of TriZetto and there are
no Voting trusts or Voting agreements with respect to such Shares, (b) such
Stockholder does not beneficially own (as such term is used in Rule 13d-3 of the
Exchange Act) any shares of TriZetto Common Stock other than such Shares and
does not have any options, warrants or other rights to acquire any additional
shares of capital stock of TriZetto or any security exercisable for or
convertible into shares of capital stock of TriZetto other than those options,
warrants or other rights set forth opposite such Stockholder's name on EXHIBIT B
hereto (such Stockholder's "OPTIONS") and each Stockholder represents and
warrants that such Stockholder shall not exercise any such Options prior to the
termination of this Agreement except in accordance with Section 6 of this
Agreement, (c) such Stockholder has full power and authority and has taken all
actions necessary to enter into, execute and deliver this Agreement and to
perform fully such Stockholder's obligations hereunder and this Agreement has
been duly executed and delivered and constitutes the legal, valid and binding
obligation of such Stockholder enforceable against such Stockholder in
accordance with its terms, subject to the Bankruptcy and Equity Exception, (d)
other than filings under the Exchange Act, no notices, reports or other filings
are required to be made by such Stockholder with, nor are any consents,
registrations, approvals, permits or authorizations required to be obtained by
such Stockholder from, any Governmental Entity, in connection with the execution
and delivery of this Agreement by such Stockholder, and (e) the execution,
delivery and performance of this Agreement by such Stockholder does not, and the
consummation by such Stockholder of the transactions contemplated hereby will
not, violate, conflict with or constitute a breach of, or a default under, the
certificate of incorporation or by-laws of such Stockholder or any or their
comparable governing instruments (if such Stockholder is not a natural person)
or result in a violation or breach of, or constitute (with or without due notice
or lapse of time or both) a default (or give rise to any right of termination,
cancellation, modification or acceleration) (whether after the giving of or the
passage of time of both) under any contract to which such Stockholder is a party
or which is binding on it or its assets and will not result in the creation of
any lien on, or security interest in, any of the assets or properties of such
Stockholder.
2. AGREEMENT TO DELIVER PROXY. Each of the Stockholders agrees to
deliver to IMS on the date hereof an irrevocable proxy substantially in the form
attached hereto as EXHIBIT C to Vote such Stockholder's Shares (a) in favor of
approval of the Issuance and any related matters at any meeting of the
stockholders of TriZetto at which such matters are considered and at every
adjournment or postponement thereof, (b) against any action or agreement that
would compete with, impede, interfere with or tend to discourage the Merger or
the Issuance or inhibit the timely consummation of the Merger and the Issuance,
and (c) against any action or agreement that would result in a breach in any
material respect of any covenant, representation or warranty or any other
obligation of TriZetto or Merger Sub under the Merger Agreement. The proxy
delivered by each of the Stockholders pursuant to this Section 2 shall be
irrevocable during the term of this Agreement to the extent permitted under
Delaware law. For purposes of this Agreement, "VOTE" shall include voting in
person or by proxy in favor of or against any action, otherwise consenting or
withholding consent in respect of any action (including, but not
<PAGE>
limited to, consenting in accordance with Section 228 of the Delaware General
Corporation Law) or taking other action in favor of or against any action.
"VOTING" shall have a correlative meaning.
3. NO VOTING TRUSTS. Each of the Stockholders agrees that they will
not, nor will they permit any entity or person under their control to, deposit
any of its Shares or New Shares (as defined in Section 6 hereof) in a Voting
trust or subject any of their Shares or New Shares to any arrangement with
respect to the Voting of such Shares or New Shares other than agreements entered
into with IMS.
4. NO PROXY SOLICITATIONS. Each of the Stockholders agrees that such
Stockholder will not, nor will such Stockholder permit any entity or person
under such Stockholder's control, (a) to solicit proxies or become a
"participant" in a "solicitation" (as such terms are defined in Regulation 14A
under the Exchange Act) in opposition to or in competition with the consummation
of the Merger or the Issuance or otherwise encourage or assist any party in
taking or planning any action which would compete with, impede, interfere with
or tend to discourage the Merger or the Issuance or inhibit the timely
consummation of the Merger and the Issuance, (b) to directly or indirectly
encourage, initiate or cooperate in a stockholders' Vote or action by consent of
TriZetto's stockholders in opposition to or in competition with the consummation
of the Merger and the Issuance or (c) to become a member of a "group" (as such
term is used in Section 13(d) of the Exchange Act) with respect to any voting
securities of TriZetto for the purpose of opposing or competing with the
consummation of the Merger and the Issuance.
5. TRANSFER AND ENCUMBRANCE. On or after the date hereof and during
the term of this Agreement, each of the Stockholders agrees not to transfer,
sell, offer, exchange, pledge or otherwise dispose of or encumber any of such
Stockholder's Shares, Options or New Shares; PROVIDED, that a Stockholder may
transfer such Stockholder's Shares or New Shares if, prior to such transfer, the
transferee of such Shares or New Shares, as applicable, shall have executed for
the benefit of IMS, a legally binding instrument pursuant to which such
transferee agrees to assume all of such Stockholder's obligations under this
Agreement, including the delivery of an irrevocable proxy to IMS substantially
in the form attached hereto as EXHIBIT C with respect to such transferred Shares
or New Shares, as applicable.
6. ADDITIONAL PURCHASES. Each of the Stockholders agrees that such
Stockholder will not purchase or otherwise acquire beneficial ownership (as such
term is used in Rule 13d-3 of the Exchange Act) of any shares of TriZetto Common
Stock after the execution of this Agreement, including, but not limited to,
acquisition by virtue of exercising any Option ("NEW SHARES"), nor will any
Stockholder voluntarily acquire the right to Vote or share in the Voting of any
shares of TriZetto Common Stock other than the Shares, unless such Stockholder
agrees to deliver to IMS immediately after such purchase or acquisition an
irrevocable proxy substantially in the form attached hereto as EXHIBIT D with
respect to such New Shares. Each of the Stockholders also severally agrees that
any New Shares acquired or purchased by him or her shall be subject to the terms
of this Agreement to the same extent as if they constituted Shares.
7. SPECIFIC PERFORMANCE AND OPTION TO PURCHASE. Each party hereto
acknowledges that it will be impossible to measure in money the damage to the
other party if a
<PAGE>
party hereto fails to comply with any of the obligations imposed by this
Agreement, that every such obligation is material and that, in the event of any
such failure, the other party will not have an adequate remedy at law or
damages. Accordingly, each party hereto agrees that injunctive relief or other
equitable remedy, in addition to remedies at law or damages, is the appropriate
remedy for any such failure and will not oppose the granting of such relief on
the basis that the other party has an adequate remedy at law. Each party hereto
agrees that it will not seek, and agrees to waive any requirement for, the
securing or posting of a bond in connection with any other party's seeking or
obtaining such equitable relief.
8. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement (including
the exhibits hereto) supersedes all prior agreements, written or oral, among the
parties hereto with respect to the subject matter hereof and contains the entire
agreement among the parties with respect to the subject matter hereof. This
Agreement may not be amended, supplemented or modified, and no provisions hereof
may be modified or waived, except by an instrument in writing signed by all the
parties hereto. No waiver of any provisions hereof by any party shall be deemed
a waiver of any other provisions hereof by any such party, nor shall any such
waiver be deemed a continuing waiver of any provision hereof by such party.
9. NOTICES. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission and on the next business day when sent by Federal
Express, Express Mail or other reputable overnight courier service to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
<PAGE>
If to IMS:
IMS Health Incorporated
200 Nyala Farms
Westport, Connecticut 06880
Attention: Chief Executive Officer
Telecopy: (203) 222-4247
With copies, which shall not constitute notice, to:
IMS Health Incorporated
200 Nyala Farms
Westport, Connecticut 06880
Attention: David Stevens
Jared Finkelstein
Telecopy: (203) 222-4268
and
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Alan J. Sinsheimer
Keith A. Pagnani
Telecopy: (212) 558-3588
If to a Stockholder, to the address or telecopy number set forth for
such Stockholder on the signature page hereof:
With a copy to:
The TriZetto Group, Inc.
567 San Nicolas Drive
Newport Beach, California 92660
Attention: General Counsel
Telecopy: (949) 219-2197
or to such other Persons on addresses as may be designated in writing by the
party to receive such notice as provided above.
10. MISCELLANEOUS.
(a) GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH AND
SUBJECT TO THE LAWS OF THE
<PAGE>
STATE OF DELAWARE, WITHOUT REFERENCE TO CONFLICTS OF LAWS PRINCIPLES.
(b) VENUE; WAIVER OF JURY TRIAL. The parties hereby irrevocably
submit to the jurisdiction of the courts of the State of Delaware and the
Federal courts of the United States of America located in the State of Delaware
solely in respect of the interpretation and enforcement of the provisions of
this Agreement and of the documents governed by Delaware law referred to in this
Agreement, and in respect of the transactions contemplated hereby, and hereby
waive, and agree not to assert, as a defense in any action, suit or proceeding
for the interpretation or enforcement hereof or of any such document, that it is
not subject thereto or that such action, suit or proceeding may not be brought
or is not maintainable in said courts or that the venue thereof may not be
appropriate or that this Agreement or any such document may not be enforced in
or by such courts, and the parties hereto irrevocably agree that all claims with
respect to such action or proceeding shall be heard and determined in such a
Delaware State or Federal court. The parties hereby consent to and grant any
such court jurisdiction over the person of such parties and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
9 of this Agreement or in such other manner as may be permitted by law shall be
valid and sufficient service thereof.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT,
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 10 (b).
(c) SEVERABILITY. In the event that any provision of the Agreement
is held to be illegal, invalid or unenforceable in a final, unappealable order
or judgment (each such provision, an "INVALID PROVISION"), then such provision
shall be severed from this Agreement and shall be inoperative and the parties
promptly shall negotiate in good faith a lawful, valid and enforceable provision
that is as similar to the invalid provision as may be possible and that
preserves the original intentions and economic positions of the parties as set
forth herein to the maximum extent feasible, while the remaining provisions of
this Agreement shall remain binding on the parties hereto. Without limiting the
generality of the foregoing sentence, in the event a change in any applicable
law, rule or regulation makes it unlawful for a party to comply with any of its
obligations hereunder, the parties shall negotiate in good faith a modification
to such
<PAGE>
obligation to the extent necessary to comply with such law, rule or regulation
that is as similar in terms to the original obligation as may be possible while
preserving the original intentions and economic positions of the parties as set
forth herein to the maximum extent feasible.
(d) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
(e) TERMINATION. This Agreement shall terminate upon the earliest to
occur of (i) the Closing, (ii) the termination of the Merger Agreement, (iii)
the date 180 days after the date of this Agreement, and (iv) the date specified
in a written agreement duly executed and delivered by IMS and the Fidelity
Entities.
(f) FURTHER ASSURANCES. Each party hereto shall execute and deliver
such additional instruments and other documents and shall take such further
actions as may be necessary or desirable to effectuate, carry out and comply
with all of the terms of this Agreement and the transactions contemplated
hereby.
(g) HEADINGS; RECITALS. All Section headings and the recitals herein
are for convenience of reference only and are not part of this Agreement, and no
construction or reference shall be derived therefrom.
(h) THIRD PARTY BENEFICIARIES. NOTHING IN THIS AGREEMENT, EXPRESS OR
IMPLIED, IS INTENDED TO CONFER UPON ANY THIRD PARTY ANY RIGHTS OR REMEDIES OF
ANY NATURE WHATSOEVER UNDER OR BY REASON OF THIS AGREEMENT.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
IMS HEALTH INCORPORATED
By:______________________________
Name:
Title:
STOCKHOLDERS:
By:______________________________
Name:
Title:
Address:
<PAGE>
EXHIBIT A
STOCKHOLDERS
NAME NUMBER OF SHARES
---- ----------------
A-1
<PAGE>
EXHIBIT B
STOCKHOLDERS OPTIONS
NAME OPTIONS
---- -------
B-1
<PAGE>
EXHIBIT C
FORM OF PROXY
The undersigned, for consideration received, hereby appoints
Victoria Fash or another representative of IMS Health Incorporated, a Delaware
corporation ("IMS"), designated by her and each of them my proxies, with full
power of substitution and resubstitution, (i) to vote all shares of Common
Stock, par value $0.001 per share (the "TRIZETTO COMMON STOCK"), of The TriZetto
Group, Inc., a Delaware corporation ("TRIZETTO"), owned by the undersigned (the
"SHARES") as of the date hereof at any meetings of stockholders of TriZetto
after the date hereof and at any adjournment or postponement thereof (each, a
"TRIZETTO MEETING") FOR approval of the issuance of TriZetto Common Stock to IMS
(the "ISSUANCE") as contemplated by the Agreement and Plan of Reorganization,
dated as of May ___, 2000 (the "MERGER AGREEMENT"), by and among TriZetto,
Elbejay Acquisition Corp., a Delaware corporation and a wholly owned subsidiary
of TriZetto ("MERGER SUB"), IMS and ERISCO Managed Care Technologies, Inc., a
New York corporation and a wholly owned subsidiary of IMS ("ERISCO"), which
provides for, among other things, the merger of Merger Sub with and into Erisco
(the "MERGER"), and any related matters, and AGAINST (a) any action or agreement
that would compete with, impede, interfere with or tend to discourage the Merger
or the Issuance or inhibit the timely consummation of the Merger and the
Issuance, and (b) any action or agreement that would result in a breach in any
material respect of any covenant, representation or warranty or any other
obligation of TriZetto or Merger Sub under the Merger Agreement, and (ii) to
withhold consents with respect to such Shares for (a) any action or agreement
that would compete with, impede, interfere with or tend to discourage the Merger
or the Issuance or inhibit the timely consummation of the Merger and the
Issuance, and (b) any action or agreement that would result in a breach in any
material respect of any covenant, representation or warranty or any other
obligation of TriZetto or Merger Sub under the Merger Agreement. This proxy is
coupled with an interest, revokes all prior proxies granted by the undersigned
and is irrevocable until such time as the Voting Agreement, dated as of May ___,
2000, among certain stockholders of TriZetto, including the undersigned, and
IMS, terminates in accordance with its terms, at which time this proxy shall
expire.
Dated May ___, 2000
--------------------------------
(Signature of Stockholder)
B-2
<PAGE>
EXHIBIT D
FORM OF PROXY
The undersigned, for consideration received, hereby appoints
Victoria Fash or another representative of IMS Health Incorporated, a Delaware
corporation ("IMS"), designated by her and each of them my proxies, with full
power of substitution and resubstitution, (i) to vote the _____________ shares
(the "NEW SHARES") of Common Stock, par value $0.001 per share (the "TRIZETTO
COMMON STOCK"), of The TriZetto Group, Inc., a Delaware corporation
("TRIZETTO"), purchased or otherwise acquired by the undersigned, or for which
the undersigned has voluntarily acquired the right to vote or share in the
voting of such shares, since the execution of the Voting Agreement, dated as of
May ___, 2000 (the "VOTING AGREEMENT"), by and among certain stockholders of
TriZetto, including the undersigned, and IMS, at any meetings of stockholders of
TriZetto after the date hereof and at any adjournment or postponement thereof
(each, a "TRIZETTO MEETING") FOR approval of the issuance of TriZetto Common
Stock to IMS (the "ISSUANCE") as contemplated by the Agreement and Plan of
Reorganization, dated as of May ___, 2000 (the "MERGER AGREEMENT"), by and among
TriZetto, Elbejay Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of TriZetto ("MERGER SUB"), IMS and ERISCO Managed Care Technologies,
Inc., a New York corporation and a wholly owned subsidiary of IMS ("ERISCO"),
which provides for, among other things, the merger of Merger Sub with and into
Erisco (the "MERGER"), and any related matters, and AGAINST (a) any action or
agreement that would compete with, impede, interfere with or tend to discourage
the Merger or the Issuance or inhibit the timely consummation of the Merger and
the Issuance, and (b) any action or agreement that would result in a breach in
any material respect of any covenant, representation or warranty or any other
obligation of TriZetto or Merger Sub under the Merger Agreement, and (ii) to
withhold consents with respect to such New Shares for (a) any action or
agreement that would compete with, impede, interfere with or tend to discourage
the Merger or the Issuance or inhibit the timely consummation of the Merger and
the Issuance, and (b) any action or agreement that would result in a breach in
any material respect of any covenant, representation or warranty or any other
obligation of TriZetto or Merger Sub under the Merger Agreement. This proxy is
coupled with an interest and is irrevocable until such time as the Voting
Agreement terminates in accordance with its terms, at which time this proxy
shall expire.
Dated ____________________, 200_
------------------------------
(Signature of Stockholder)
D-1
<PAGE>
Exhibit C to
Agreement and Plan of Reorganization
VOTING AGREEMENT
VOTING AGREEMENT (the "AGREEMENT"), dated as of May ___, 2000, among
the undersigned stockholder (the "STOCKHOLDER") of The TriZetto Group, Inc., a
Delaware corporation ("TRIZETTO"), and IMS Health Incorporated, a Delaware
corporation ("IMS"). Except as otherwise provided herein, capitalized terms that
are used but not otherwise defined herein shall have the respective meanings
assigned to such terms in the Merger Agreement (as defined below).
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, TriZetto, Elbejay Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of TriZetto ("MERGER SUB"), IMS and ERISCO Managed Care
Technologies, Inc., a New York corporation and a wholly owned subsidiary of IMS
("ERISCO"), have entered into an Agreement and Plan of Reorganization (the
"MERGER AGREEMENT"), providing for, among other things, the merger of Merger Sub
with and into Erisco, with Erisco as the surviving corporation (the "MERGER"),
and the issuance of shares of TriZetto Common Stock to IMS in connection with
the Merger (the "ISSUANCE"), upon the terms and subject to the conditions set
forth in the Merger Agreement, and setting forth certain representations,
warranties, covenants and agreements of the parties thereto in connection with
the Merger and the Issuance;
WHEREAS, the Merger Agreement contemplates the execution and
delivery of this Agreement;
WHEREAS, in order to induce IMS to enter into the Merger Agreement,
the Stockholder wishes to agree (i) to deliver to IMS an irrevocable proxy to
Vote (as defined in Section 2 hereof) the Shares (as defined in Section 1
hereof) and any other shares of capital stock of TriZetto acquired hereafter and
prior to the termination of this Agreement so as to approve the Issuance and any
related matters, and (ii) not to transfer or otherwise dispose of any of the
Shares or any other shares of capital stock of TriZetto acquired hereafter and
prior to the termination of this Agreement except in accordance with this
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. REPRESENTATIONS OF STOCKHOLDER. The Stockholder represents and
warrants to IMS that (a) such Stockholder lawfully owns beneficially (as such
term is defined in Rule 13d-3 of the Exchange Act) and of record each of the
shares of Common Stock, par value $0.001 per share, of TriZetto (the "TRIZETTO
COMMON STOCK"), set forth opposite such Stockholder's name on EXHIBIT A hereto
(such Stockholder's "SHARES") free and clear of all liens, claims, charges,
security interests or other encumbrances and, except for this Agreement and the
Merger Agreement, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character to which such Stockholder is a
party relating to the pledge, disposition or Voting of any shares of capital
<PAGE>
stock of TriZetto and there are no Voting trusts or Voting agreements with
respect to such Shares, (b) such Stockholder does not beneficially own (as such
term is used in Rule 13d-3 of the Exchange Act) any shares of TriZetto Common
Stock other than such Shares and does not have any options, warrants or other
rights to acquire any additional shares of capital stock of TriZetto or any
security exercisable for or convertible into shares of capital stock of TriZetto
other than those options, warrants or other rights set forth opposite such
Stockholder's name on EXHIBIT B hereto (such Stockholder's "OPTIONS") and the
Stockholder represents and warrants that such Stockholder shall not exercise any
such Options prior to the termination of this Agreement except in accordance
with Section 6 of this Agreement, (c) such Stockholder has full power and
authority and has taken all actions necessary to enter into, execute and deliver
this Agreement and to perform fully such Stockholder's obligations hereunder and
this Agreement has been duly executed and delivered and constitutes the legal,
valid and binding obligation of such Stockholder enforceable against such
Stockholder in accordance with its terms, subject to the Bankruptcy and Equity
Exception, (d) other than filings under the Exchange Act, no notices, reports or
other filings are required to be made by such Stockholder with, nor are any
consents, registrations, approvals, permits or authorizations required to be
obtained by such Stockholder from, any Governmental Entity, in connection with
the execution and delivery of this Agreement by such Stockholder, and (e) the
execution, delivery and performance of this Agreement by such Stockholder does
not, and the consummation by such Stockholder of the transactions contemplated
hereby will not, violate, conflict with or constitute a breach of, or a default
under, the certificate of incorporation or by-laws of such Stockholder or any or
their comparable governing instruments (if such Stockholder is not a natural
person) or result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation, modification or acceleration) (whether after the
giving of or the passage of time of both) under any contract to which such
Stockholder is a party or which is binding on it or its assets and will not
result in the creation of any lien on, or security interest in, any of the
assets or properties of such Stockholder.
2. AGREEMENT TO DELIVER PROXY. The Stockholder agrees to deliver to
IMS on the date hereof an irrevocable proxy substantially in the form attached
hereto as EXHIBIT C to Vote such Stockholder's Shares (a) in favor of approval
of the Issuance and any related matters at any meeting of the stockholders of
TriZetto at which such matters are considered and at every adjournment or
postponement thereof, (b) against any action or agreement that would compete
with, impede, interfere with or tend to discourage the Merger or the Issuance or
inhibit the timely consummation of the Merger and the Issuance, and (c) against
any action or agreement that would result in a breach in any material respect of
any covenant, representation or warranty or any other obligation of TriZetto or
Merger Sub under the Merger Agreement. The proxy delivered by the Stockholder
pursuant to this Section 2 shall be irrevocable during the term of this
Agreement to the extent permitted under Delaware law. For purposes of this
Agreement, "VOTE" shall include voting in person or by proxy in favor of or
against any action, otherwise consenting or withholding consent in respect of
any action (including, but not limited to, consenting in accordance with Section
228 of the Delaware General
2
<PAGE>
Corporation Law) or taking other action in favor of or against any action.
"VOTING" shall have a correlative meaning.
3. NO VOTING TRUSTS. The Stockholder agrees that it will not, nor
will it permit any entity or person under its control to, deposit any of its
Shares or New Shares (as defined in Section 6 hereof) in a Voting trust or
subject any of their Shares or New Shares to any arrangement with respect to the
Voting of such Shares or New Shares other than agreements entered into with IMS.
4. NO PROXY SOLICITATIONS. The Stockholder agrees that such
Stockholder will not, nor will such Stockholder permit any entity or person
under such Stockholder's control, (a) to solicit proxies or become a
"participant" in a "solicitation" (as such terms are defined in Regulation 14A
under the Exchange Act) in opposition to or in competition with the consummation
of the Merger and the Issuance or otherwise encourage or assist any party in
taking or planning any action which would compete with, impede, interfere with
or tend to discourage the Merger or the Issuance or inhibit the timely
consummation of the Merger and the Issuance, (b) to directly or indirectly
encourage, initiate or cooperate in a stockholders' Vote or action by consent of
TriZetto's stockholders in opposition to or in competition with the consummation
of the Merger and the Issuance or (c) to become a member of a "group" (as such
term is used in Section 13(d) of the Exchange Act) with respect to any voting
securities of TriZetto for the purpose of opposing or competing with the
consummation of the Merger and the Issuance.
5. TRANSFER AND ENCUMBRANCE. On or after the date hereof and during
the term of this Agreement, the Stockholder agrees not to transfer, sell, offer,
exchange, pledge or otherwise dispose of or encumber any of such Stockholder's
Shares, Options or New Shares; PROVIDED, that the Stockholder may transfer such
Stockholder's Shares or New Shares if, prior to such transfer, the transferee of
such Shares or New Shares, as applicable, shall have executed for the benefit of
IMS, a legally binding instrument pursuant to which such transferee agrees to
assume all of such Stockholder's obligations under this Agreement, including the
delivery of an irrevocable proxy to IMS substantially in the form attached
hereto as EXHIBIT C with respect to such transferred Shares or New Shares, as
applicable.
6. ADDITIONAL PURCHASES. The Stockholder agrees that such
Stockholder will not purchase or otherwise acquire beneficial ownership (as such
term is used in Rule 13d-3 of the Exchange Act) of any shares of TriZetto Common
Stock after the execution of this Agreement, including, but not limited to,
acquisition by virtue of exercising any Option ("NEW SHARES"), nor will the
Stockholder voluntarily acquire the right to Vote or share in the Voting of any
shares of TriZetto Common Stock other than the Shares, unless such Stockholder
agrees to deliver to IMS immediately after such purchase or acquisition an
irrevocable proxy substantially in the form attached hereto as EXHIBIT D with
respect to such New Shares. The Stockholder also severally agrees that any New
Shares acquired or purchased by him or her shall be subject to the terms of this
Agreement to the same extent as if they constituted Shares.
3
<PAGE>
7. SPECIFIC PERFORMANCE AND OPTION TO PURCHASE. Each party hereto
acknowledges that it will be impossible to measure in money the damage to the
other party if a party hereto fails to comply with any of the obligations
imposed by this Agreement, that every such obligation is material and that, in
the event of any such failure, the other party will not have an adequate remedy
at law or damages. Accordingly, each party hereto agrees that injunctive relief
or other equitable remedy, in addition to remedies at law or damages, is the
appropriate remedy for any such failure and will not oppose the granting of such
relief on the basis that the other party has an adequate remedy at law. Each
party hereto agrees that it will not seek, and agrees to waive any requirement
for, the securing or posting of a bond in connection with any other party's
seeking or obtaining such equitable relief.
8. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement (including
the exhibits hereto) supersedes all prior agreements, written or oral, among the
parties hereto with respect to the subject matter hereof and contains the entire
agreement among the parties with respect to the subject matter hereof. This
Agreement may not be amended, supplemented or modified, and no provisions hereof
may be modified or waived, except by an instrument in writing signed by all the
parties hereto. No waiver of any provisions hereof by any party shall be deemed
a waiver of any other provisions hereof by any such party, nor shall any such
waiver be deemed a continuing waiver of any provision hereof by such party.
9. NOTICES. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission and on the next business day when sent by Federal
Express, Express Mail or other reputable overnight courier service to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
If to IMS:
IMS Health Incorporated
200 Nyala Farms
Westport, Connecticut 06880
Attention: Chief Executive Officer
Telecopy: (203) 222-4247
With copies, which shall not constitute notice, to:
IMS Health Incorporated
200 Nyala Farms
Westport, Connecticut 06880
Attention: David Stevens
Jared Finkelstein
Telecopy: (203) 222-4268
and
4
<PAGE>
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Alan J. Sinsheimer
Keith A. Pagnani
Telecopy: (212) 558-3588
If to a Stockholder, to the address or telecopy number set forth for
such Stockholder on the signature page hereof:
With a copy to:
The TriZetto Group, Inc.
567 San Nicolas Drive
Newport Beach, California 92660
Attention: General Counsel
Telecopy: (949) 219-2197
or to such other Persons on addresses as may be designated in writing by the
party to receive such notice as provided above.
10. MISCELLANEOUS.
(a) GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH AND
SUBJECT TO THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO CONFLICTS OF
LAWS PRINCIPLES.
(b) VENUE; WAIVER OF JURY TRIAL. The parties hereby irrevocably
submit to the jurisdiction of the courts of the State of Delaware and the
Federal courts of the United States of America located in the State of Delaware
solely in respect of the interpretation and enforcement of the provisions of
this Agreement and of the documents governed by Delaware law referred to in this
Agreement, and in respect of the transactions contemplated hereby, and hereby
waive, and agree not to assert, as a defense in any action, suit or proceeding
for the interpretation or enforcement hereof or of any such document, that it is
not subject thereto or that such action, suit or proceeding may not be brought
or is not maintainable in said courts or that the venue thereof may not be
appropriate or that this Agreement or any such document may not be enforced in
or by such courts, and the parties hereto irrevocably agree that all claims with
respect to such action or proceeding shall be heard and determined in such a
Delaware State or Federal court. The parties hereby consent to and grant any
such court jurisdiction over the person of such parties and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
9 of this Agreement or in such other manner as may be permitted by law shall be
valid and sufficient service thereof.
5
<PAGE>
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT,
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 10 (b).
(c) SEVERABILITY. In the event that any provision of the Agreement
is held to be illegal, invalid or unenforceable in a final, unappealable order
or judgment (each such provision, an "INVALID PROVISION"), then such provision
shall be severed from this Agreement and shall be inoperative and the parties
promptly shall negotiate in good faith a lawful, valid and enforceable provision
that is as similar to the invalid provision as may be possible and that
preserves the original intentions and economic positions of the parties as set
forth herein to the maximum extent feasible, while the remaining provisions of
this Agreement shall remain binding on the parties hereto. Without limiting the
generality of the foregoing sentence, in the event a change in any applicable
law, rule or regulation makes it unlawful for a party to comply with any of its
obligations hereunder, the parties shall negotiate in good faith a modification
to such obligation to the extent necessary to comply with such law, rule or
regulation that is as similar in terms to the original obligation as may be
possible while preserving the original intentions and economic positions of the
parties as set forth herein to the maximum extent feasible.
(d) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
(e) TERMINATION. This Agreement shall terminate upon the earliest to
occur of (i) the Closing, (ii) the termination of the Merger Agreement and (iii)
the date specified in a written agreement duly executed and delivered by IMS and
the Stockholder.
(f) FURTHER ASSURANCES. Each party hereto shall execute and deliver
such additional instruments and other documents and shall take such further
actions as may be necessary or desirable to effectuate, carry out and comply
with all of the terms of this Agreement and the transactions contemplated
hereby.
6
<PAGE>
(g) HEADINGS; RECITALS. All Section headings and the recitals herein
are for convenience of reference only and are not part of this Agreement, and no
construction or reference shall be derived therefrom.
(h) THIRD PARTY BENEFICIARIES. NOTHING IN THIS AGREEMENT, EXPRESS OR
IMPLIED, IS INTENDED TO CONFER UPON ANY THIRD PARTY ANY RIGHTS OR REMEDIES OF
ANY NATURE WHATSOEVER UNDER OR BY REASON OF THIS AGREEMENT.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
IMS HEALTH INCORPORATED
By:__________________________
Name:
Title:
STOCKHOLDER:
By:_________________________
Name:
Title:
Address:
8
<PAGE>
EXHIBIT A
STOCKHOLDER
NAME NUMBER OF SHARES
---- ----------------
A-1
<PAGE>
EXHIBIT B
STOCKHOLDER OPTIONS
NAME OPTIONS
---- -------
B-1
<PAGE>
EXHIBIT C
FORM OF PROXY
The undersigned, for consideration received, hereby appoints
Victoria Fash or another representative of IMS Health Incorporated, a Delaware
corporation ("IMS"), designated by her and each of them my proxies, with full
power of substitution and resubstitution, (i) to vote all shares of Common
Stock, par value $0.001 per share (the "TRIZETTO COMMON STOCK"), of The TriZetto
Group, Inc., a Delaware corporation ("TRIZETTO"), owned by the undersigned (the
"SHARES") as of the date hereof at any meetings of stockholders of TriZetto
after the date hereof and at any adjournment or postponement thereof (each, a
"TRIZETTO MEETING") FOR approval of the issuance of TriZetto Common Stock to IMS
(the "ISSUANCE") as contemplated by the Agreement and Plan of Reorganization,
dated as of May ___, 2000 (the "MERGER AGREEMENT"), by and among TriZetto,
Elbejay Acquisition Corp., a Delaware corporation and a wholly owned subsidiary
of TriZetto ("MERGER Sub"), IMS and ERISCO Managed Care Technologies, Inc., a
New York corporation and a wholly owned subsidiary of IMS ("ERISCO"), which
provides for, among other things, the merger of Merger Sub with and into Erisco
(the "MERGER"), and any related matters, and AGAINST (a) any action or agreement
that would compete with, impede, interfere with or tend to discourage the Merger
or the Issuance or inhibit the timely consummation of the Merger and the
Issuance, and (b) any action or agreement that would result in a breach in any
material respect of any covenant, representation or warranty or any other
obligation of TriZetto or Merger Sub under the Merger Agreement, and (ii) to
withhold consents with respect to such Shares for (a) any action or agreement
that would compete with, impede, interfere with or tend to discourage the Merger
or the Issuance or inhibit the timely consummation of the Merger and the
Issuance, and (b) any action or agreement that would result in a breach in any
material respect of any covenant, representation or warranty or any other
obligation of TriZetto or Merger Sub under the Merger Agreement. This proxy is
coupled with an interest, revokes all prior proxies granted by the undersigned
and is irrevocable until such time as the Voting Agreement, dated as of May ___,
2000, between the undersigned and IMS, terminates in accordance with its terms,
at which time this proxy shall expire.
Dated May ___, 2000
--------------------------------
(Signature of Stockholder)
D-2
<PAGE>
EXHIBIT D
FORM OF PROXY
The undersigned, for consideration received, hereby appoints
Victoria Fash or another representative of IMS Health Incorporated, a Delaware
corporation ("IMS"), designated by her and each of them my proxies, with full
power of substitution and resubstitution, (i) to vote the _____________ shares
(the "NEW SHARES") of Common Stock, par value $0.001 per share (the "TRIZETTO
COMMON STOCK"), of The TriZetto Group, Inc., a Delaware corporation
("TRIZETTO"), purchased or otherwise acquired by the undersigned, or for which
the undersigned has voluntarily acquired the right to vote or share in the
voting of such shares, since the execution of the Voting Agreement, dated as of
May ___, 2000 (the "VOTING AGREEMENT"), by and between the undersigned and IMS,
at any meetings of stockholders of TriZetto after the date hereof and at any
adjournment or postponement thereof (each, a "TRIZETTO MEETING") FOR approval of
the issuance of TriZetto Common Stock to IMS (the "ISSUANCE") as contemplated by
the Agreement and Plan of Reorganization, dated as of May __, 2000 (the "MERGER
AGREEMENT"), by and among TriZetto, Elbejay Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of TriZetto ("MERGER SUB"), IMS and
ERISCO Managed Care Technologies, Inc., a New York corporation and a wholly
owned subsidiary of IMS ("ERISCO"), which provides for, among other things, the
merger of Merger Sub with and into Erisco (the "MERGER"), and any related
matters, and AGAINST (a) any action or agreement that would compete with,
impede, interfere with or tend to discourage the Merger or the Issuance or
inhibit the timely consummation of the Merger and the Issuance, and (b) any
action or agreement that would result in a breach in any material respect of any
covenant, representation or warranty or any other obligation of TriZetto or
Merger Sub under the Merger Agreement, and (ii) to withhold consents with
respect to such New Shares for (a) any action or agreement that would compete
with, impede, interfere with or tend to discourage the Merger or the Issuance or
inhibit the timely consummation of the Merger and the Issuance, and (b) any
action or agreement that would result in a breach in any material respect of any
covenant, representation or warranty or any other obligation of TriZetto or
Merger Sub under the Merger Agreement. This proxy is coupled with an interest
and is irrevocable until such time as the Voting Agreement terminates in
accordance with its terms, at which time this proxy shall expire.
Dated ____________________, 200_
--------------------------------
(Signature of Stockholder)
<PAGE>
Exhibit D to
Agreement and Plan of Reorganization
REGISTRATION RIGHTS AGREEMENT
Dated as of [__], 2000
by and between
The TriZetto Group, Inc.
and
IMS Health Incorporated
<PAGE>
This REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is made and
entered into as of [__], 2000, by and between The TriZetto Group, Inc., a
Delaware corporation ("TRIZETTO"), and IMS Health Incorporated, a Delaware
corporation ("IMS").
RECITALS
WHEREAS, TriZetto, Elbejay Acquisition Corp., a Delaware corporation
and a wholly owned subsidiary of TriZetto ("MERGER SUB"), IMS and ERISCO Managed
Care Technologies, Inc., a New York corporation and a wholly owned subsidiary of
IMS ("ERISCO"), have entered into an Agreement and Plan of Reorganization, dated
as of May 16, 2000 (the "MERGER AGREEMENT");
WHEREAS, pursuant to the Merger Agreement, IMS will receive [____]
shares of Common Stock, par value $0.001 per share, of TriZetto ("TRIZETTO
COMMON STOCK");
WHEREAS, in connection with TriZetto's previous issuance of an
aggregate of 4,545,454 shares of Series A Preferred Stock, par value $0.001 per
share, and 1,730,770 shares of Series B Preferred Stock, par value $0.001 per
share, TriZetto entered into a First Amended and Restated Investor Rights
Agreement, dated April 9, 1999 (the "INVESTOR RIGHTS AGREEMENT"), pursuant to
which the purchasers of such preferred stock (the "VENTURE CAPITALISTS") were
granted certain registration rights;
WHEREAS, the Venture Capitalists continue to have registration
rights relating to the 6,276,224 shares of TriZetto Common Stock which were
issued upon the conversion of the shares of TriZetto preferred stock held by the
Venture Capitalists on October 14, 1999;
WHEREAS, pursuant to the Investor Rights Agreement, TriZetto has
obtained the consents and any necessary waivers of the Venture Capitalists such
that TriZetto may provide the registration rights set forth in this Agreement;
and
WHEREAS, TriZetto has agreed to provide the registration rights set
forth in this Agreement;
NOW THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and subject to and
on the terms and conditions herein set forth, the parties hereto agree as
follows:
1. DEFINITIONS.
Capitalized terms used but not defined in this Agreement shall have
the respective meanings assigned to such terms in the Merger Agreement. As used
in this Agreement, the following capitalized terms shall have the following
meanings:
"AICPA" shall mean the American Institute of Certified Public
Accountants.
<PAGE>
"DEMAND REGISTRATION" shall have the meaning set forth in Section
2(a) hereof.
"DEMAND REGISTRATION STATEMENT" shall have the meaning set forth in
Section 2(a) hereof.
"EFFECTIVE TIME" shall mean the date on which the SEC declares a
Registration Statement effective or on which such Registration Statement
otherwise becomes effective.
"ERISCO" shall have the meaning set forth in the Recitals.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"INDEMNIFIED PERSON" shall have the meaning set forth in Section
6(a) hereof.
"INVESTOR RIGHTS AGREEMENT" shall have the meaning set forth in the
Recitals.
"IMS" shall have the meaning set forth in the Preamble.
"MERGER AGREEMENT" shall have the meaning set forth in the Recitals.
"MERGER SUB" shall have the meaning set forth in the Recitals.
"NASD RULES" shall mean the Rules of the National Association of
Securities Dealers, Inc., as amended from time to time.
"PERSON" shall mean an individual, partnership, corporation, trust
or unincorporated organization, or a government or agency or political
subdivision thereof.
"PIGGYBACK REGISTRATION" shall have the meaning set forth in Section
3(a) hereof.
"PROPOSED REGISTRATION" shall have the meaning set forth in Section
3(a) hereof.
"PROSPECTUS" shall mean the prospectus (including, without
limitation, any preliminary prospectus, any final prospectus and any prospectus
that discloses information previously omitted from a prospectus filed as part of
an effective registration statement in reliance upon Rule 430A under the
Securities Act) included in a Registration Statement, as amended or supplemented
by any prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Securities covered by such Registration Statement and
by all other amendments and supplements to such prospectus, including all
material incorporated by reference in such prospectus and all documents filed
after the date of such prospectus by TriZetto under the Exchange Act and
incorporated by reference therein.
"REGISTRATION EXPENSES" shall have the meaning set forth in Section
5(a) hereof.
"REGISTRABLE SECURITIES" shall mean the TriZetto Common Stock issued
to IMS in connection with the Merger, PROVIDED that a security ceases to be a
Registrable Security when it is no longer a Restricted Security.
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<PAGE>
"REGISTRATION STATEMENT" shall mean any registration statement of
TriZetto which covers Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including pre- and post-effective amendments, and all
exhibits and all material incorporated by reference in such registration
statement.
"RESTRICTED SECURITY" shall mean any security unless and until:
(i) a registration statement with respect to the sale of such
security shall have been declared effective under the Securities Act and such
security shall have been disposed of in accordance with such registration
statement,
(ii) it is distributed to the public pursuant to Rule 144 (or any
similar provision then in force) under the Securities Act,
(iii) the provisions of Section 7(b) hereof apply, or
(iv) such security shall have been otherwise transferred pursuant to
an applicable exemption under the Securities Act, new certificates for such
security not bearing a legend restricting further transfer shall have been
delivered by TriZetto and such security shall be freely transferable to the
public without registration under the Securities Act.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SEC" shall mean the Securities and Exchange Commission.
"TRIZETTO" shall have the meaning set forth in the Preamble.
"TRIZETTO COMMON STOCK" shall have the meaning set forth in the
Recitals.
"UNDERWRITTEN", "UNDERWRITTEN REGISTRATION", "UNDERWRITTEN OFFERING"
or "UNDERWRITTEN REGISTERED OFFERING" shall mean a registration in which
securities of TriZetto are sold to an underwriter for re-offering to the public
pursuant to an effective Registration Statement.
"VENTURE CAPITALISTS" shall have the meaning set forth in the
Recitals.
2. DEMAND REGISTRATIONS.
(a) NOTICE. At any time following the date two (2) years after the
Closing Date, IMS shall have the right, on not more than three (3) occasions in
the aggregate and no more frequently than once in any one (1) year period, to
make a written request to TriZetto that TriZetto file a registration statement
(a "DEMAND REGISTRATION STATEMENT") registering for offer and sale at least 20%
of the Registrable Securities then held by it with the SEC under and in
accordance with provisions of the Securities Act (a "DEMAND REGISTRATION"). All
requests made pursuant to this paragraph will specify the aggregate number of
the Registrable Securities to be registered and will also specify the intended
methods of disposition thereof.
-3-
<PAGE>
(b) RESTRICTIONS. Each Demand Registration Statement shall be filed
as soon as possible after the date IMS makes the written request for
registration under the preceding paragraph, so long as Registrable Securities
are still outstanding at each such time; PROVIDED, HOWEVER, that TriZetto shall
have the right to postpone the filing, or delay the effectiveness, of a
Registration Statement, or fail to keep such Registration Statement continuously
effective or not amend or supplement the Registration Statement or included
Prospectus, (i) if TriZetto determines based upon the advice of counsel that it
would be advisable to disclose in the Registration Statement material non-public
information, and TriZetto shall have determined in good faith, and shall have
provided written notice to IMS that such disclosure is not in the best interests
of TriZetto and its stockholders or (ii) during the period commencing 30 days
prior to the expected effective date, which date shall be determined by the
managing underwriter of such public offering, and ending 90 days following the
effective date, of any registration statement pertaining to an underwritten
public offering of securities of TriZetto (other than a registration on Form S-4
relating solely to a SEC Rule 145 transaction, or a registration relating solely
to employee benefit plans); PROVIDED FURTHER that in the case of clause (i)
above, no one such postponement shall exceed 60 days and all such postponements
in any one year period shall not exceed 120 days in the aggregate.
(c) EFFECTIVENESS. TriZetto agrees to use its reasonable best
efforts to cause each such Demand Registration Statement to be declared
effective by the SEC within 45 calendar days after filing, and to keep it
continuously effective for a period of 120 days following the dates on which
each such Demand Registration Statement is declared effective or until all
Registrable Securities included therein have been sold, if earlier.
(d) PRIORITY OF SECURITIES IN DEMAND REGISTRATIONS. In connection
with any underwritten Demand Registration, if the managing underwriter or
underwriters advise TriZetto in writing that, in its or their reasonable
opinion, the inclusion of the number of securities proposed to be registered
exceeds the number which can be sold in such offering, TriZetto will include in
such registration the number of securities which, in the opinion of such
underwriter or underwriters, can be sold as follows: (i) first, the Registrable
Securities requested to be included in such Demand Registration; (ii) second,
the TriZetto Common Stock requested to be included in such Demand Registration
by the Venture Capitalists, pro rata among the Venture Capitalists which have
requested their TriZetto Common Stock to be included therein; (iii) third, any
TriZetto Common Stock TriZetto proposes to sell; (iv) fourth, the TriZetto
Common Stock requested to be included in such Demand Registration, pro rata
among the holders of TriZetto Common Stock, other than the Venture Capitalists,
which have requested their TriZetto Common Stock to be included therein; and (v)
fifth, other TriZetto Common Stock requested to be included in such Demand
Registration.
(e) SELECTION OF UNDERWRITERS. TriZetto shall have the right, with
respect to any Registration Statement to be filed as a result of a Demand
Registration, to determine whether such registration shall be underwritten or
not and to select any managing underwriter or underwriters to administer the
offering, which managing underwriter or underwriters will be of nationally
recognized standing and which will be reasonably acceptable to IMS.
-4-
<PAGE>
(f) WITHDRAWAL OF DEMAND REGISTRATION. IMS shall have the right to
withdraw any request for registration pursuant to Section 2(a) hereof after the
Registration Statement has been filed with the SEC, but prior to the time the
Registration Statement in respect of such Registration has been declared
effective, PROVIDED, HOWEVER, the Registration requested by IMS shall be deemed
to have been effected (and, therefore, requested) for purposes of Section 2(a)
hereof unless IMS pays all Registration Expenses (as defined in Section 5
hereof) in connection with the filing of the withdrawn Registration Statement.
3. PIGGYBACK REGISTRATION RIGHTS.
(a) RIGHTS TO PIGGYBACK. At any time following the date two (2)
years after the Closing Date, subject to the last sentence of this paragraph,
whenever TriZetto proposes to file a registration statement under the Securities
Act (a "PROPOSED REGISTRATION") with respect to any proposed public offering by
TriZetto or by any holders of TriZetto Common Stock (or securities convertible
into or exchangeable or exercisable for TriZetto Common Stock) and the
registration form to be used may be used for the registration of the Registrable
Securities (a "PIGGYBACK REGISTRATION"), TriZetto will give prompt written
notice to IMS of its intention to effect such a registration and will, subject
to Section 3(b) below, include in such Piggyback Registration all Registrable
Securities with respect to which TriZetto has received written request for
inclusion therein within 15 days after receipt of TriZetto's notice. Registrable
Securities with respect to which such requests for registration have been
received will be registered by TriZetto and offered to the public pursuant to
this Section 3 on the same terms and subject to the same conditions applicable
to the registration in a Proposed Registration of TriZetto Common Stock to be
sold by TriZetto or by persons selling under such Proposed Registration. Holders
of Registrable Securities will not be entitled to include TriZetto Common Stock
pursuant to this Section 3(a) in any Registration Statement pertaining to the
registration of any securities of TriZetto in connection with mergers,
acquisitions, exchange offers, subscription offers, dividend reinvestment plans
or stock options or other employee benefit plans.
(b) PRIORITY ON PIGGYBACK REGISTRATIONS. In connection with an
underwritten Piggyback Registration, if the managing underwriter or underwriters
advise TriZetto in writing that, in its or their reasonable opinion, the
inclusion of the number of securities proposed to be registered exceeds the
number which can be sold in such offering, TriZetto will include in such
registration the number of securities which, in the opinion of such underwriter
or underwriters, can be sold as follows: (i) first, the TriZetto Common Stock
TriZetto proposes to sell or if the registration is in response to a demand
registration right of a Person (other than IMS) whose registration rights
require such a priority, the securities that the Person(s) demanding such
registration propose or proposes to sell to the extent of such a priority, (ii)
second, any securities requested to be included in such registration by the
Venture Capitalists who exercise their rights to have their securities included
in such registration, (iii) third, the Registrable Securities requested to be
included in such registration, (iv) fourth, any securities requested to be
included in such registration by a Person who exercises its rights to have its
securities included in such registration, but only to the extent of such rights,
pro rata among such Persons which have
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requested their securities to be included therein, and (v) fifth, other TriZetto
Common Stock requested to be included in such registration.
(c) SELECTION OF UNDERWRITERS. If any Piggyback Registration is an
underwritten offering, TriZetto will select a managing underwriter or
underwriters to administer the offering. As a condition to participation in such
an offering, each holder of Registrable Securities shall execute an underwriting
agreement in a customary form requested by such underwriter.
4. REGISTRATION PROCEDURES.
In connection with TriZetto's obligation to file Registration
Statements pursuant to Sections 2 or 3 hereof, TriZetto shall use its reasonable
best efforts to effect such registration to permit the sale of such Registrable
Securities in accordance with the intended method or methods of disposition
thereof, and pursuant thereto TriZetto shall:
(a) before filing a Registration Statement or Prospectus or any
amendments or supplements thereto, including documents incorporated by reference
after the initial filing of the Registration Statement, furnish to IMS and the
managing underwriters, if any, copies of all such documents proposed to be
filed, which documents will be subject to the review of IMS and such managing
underwriters, and TriZetto shall not file any Registration Statement or
amendment thereto or any Prospectus or any supplement thereto (including such
documents incorporated by reference) to which IMS or the managing underwriters,
if any, shall reasonably object;
(b) prepare and file with the SEC such amendments and post-effective
amendments to any Registration Statement, and such supplements to the
Prospectus, as may be reasonably requested by IMS or any underwriter of
Registrable Securities or as may be required by the Securities Act or any rules
or regulations promulgated thereunder or otherwise necessary to keep the
Registration Statement effective for the applicable period;
(c) cause the final Prospectus as supplemented to be filed pursuant
to Rule 424 under the Securities Act if then required by the Securities Act;
(d) comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such Registration Statement during
the applicable period in accordance with the intended methods of disposition by
the sellers thereof set forth in such Registration Statement or supplement to
the Prospectus;
(e) notify IMS and the managing underwriters, if any, promptly, and
(if requested by any such Person) confirm such notification in writing:
(1) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the
same has become effective,
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(2) of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus or for
additional information,
(3) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose,
(4) of the receipt by TriZetto of any notification with
respect to the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, and
(5) while such Registration Statement is in effect, of
the happening of any event or the existence of any state of facts
that requires the making of any changes in the Registration
Statement or the Prospectus included therein so that, as of such
date, such Registration Statement and Prospectus do not contain an
untrue statement of a material fact and do not omit to state a
material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading (which
advice shall be accompanied by an instruction to IMS to suspend the
use of the Prospectus until the requisite changes have been made);
(f) use its reasonable best efforts to prevent the issuance, and if
issued to obtain the withdrawal, of any order suspending the effectiveness of
the Registration Statement at the earliest possible time;
(g) if reasonably requested by IMS, as the case may be, or the
managing underwriter, immediately incorporate in a Prospectus supplement or
post-effective amendment such information as IMS, as the case may be, and the
managing underwriters agree is required to be included therein pursuant to the
Securities Act and the rules and regulations promulgated thereunder, relating to
the sale of the Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being sold to
such underwriters, the purchase price being paid therefor by such underwriters
and with respect to any other terms of the underwritten (or best efforts
underwritten) offering of the Registrable Securities to be sold in such
offering, including the plan of distribution therefor; and make all required
filings of such Prospectus supplement or post-effective amendment as soon as
practicable as notified of the matters to be incorporated in such Prospectus
supplement or post-effective amendment;
(h) promptly prior to the filing of any document which is to be
incorporated by reference into the Registration Statement or the Prospectus
(after initial filing of the Registration Statement) (i) provide copies of such
document to counsel to IMS and to the managing underwriters, if any, and (ii)
make TriZetto's representatives available for discussion of such document and
make such changes in such document prior to the filing thereof as counsel for
IMS or such underwriters may reasonably request; PROVIDED, HOWEVER, that nothing
herein shall prevent TriZetto from filing any document that in the reasonable
judgment of TriZetto, after consultation with counsel, is required to be filed
under the Securities Act or the Exchange Act;
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(i) furnish to IMS and each managing underwriter, without charge, at
least one signed copy of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those incorporated
by reference);
(j) deliver to IMS and the underwriters, if any, without charge, as
many copies of the Prospectus (including each preliminary Prospectus) and any
amendment or supplement thereto as such Persons may reasonably request; TriZetto
consents (except during the continuance of any event described in Section
4(e)(5) above) to the use of the Prospectus and any amendment or supplement
thereto by IMS and the underwriters, if any, in connection with the offering and
sale of the Registrable Securities covered by the Prospectus and any amendment
or supplement thereto;
(k) prior to any offering of Registrable Securities pursuant to any
Registration Statement, (i) TriZetto shall register or qualify or cooperate with
IMS and its or their counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale under the
securities or "blue sky" laws of such jurisdictions of or within the United
States of America as IMS or any underwriter reasonably requests in writing, (ii)
keep such registrations or qualifications in effect and comply with such laws so
as to permit the continuance of offers and sales in such jurisdictions for so
long as may be necessary to enable IMS or the managing underwriters, if any, to
complete its distribution of Registrable Securities pursuant to a Registration
Statement, and (iii) take any and all other actions necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by the Registration Statement; PROVIDED, HOWEVER, that in no event shall
TriZetto be obligated to (i) qualify as a foreign corporation or as a dealer in
securities in any jurisdiction where it would not otherwise be required to so
qualify but for this Section 4(k) or (ii) file any general consent to service of
process in any such jurisdiction where it is not as of the date hereof so
subject;
(l) cooperate with IMS and the managing underwriters, if any, to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold pursuant to the Registration Statement, which
certificates, if so required by any securities exchange upon which any
Registrable Securities are listed, shall be penned, lithographed or engraved, or
produced by any combination of such methods, on steel engraved borders, and
which certificates shall be free of any restrictive legends and in such
denominations and registered in such names as IMS or the managing underwriters
may request at least two business days prior to the sale of Registrable
Securities pursuant to the Registration Statement;
(m) use its reasonable best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities of or within
the United States of America as may be necessary to enable IMS or the managing
underwriters, if any, to consummate the disposition of such Registrable
Securities;
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<PAGE>
(n) if any fact contemplated by Section 4(e)(5) above shall exist,
promptly prepare a supplement or post-effective amendment to the Registration
Statement or the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities, the Prospectus will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading;
PROVIDED, HOWEVER, if the Board of Directors of TriZetto provides written notice
to IMS that it has determined that it is advisable to disclose in the
Registration Statement material non-public information, the disclosure of which
TriZetto's Board of Directors believes would be materially harmful to TriZetto
and its stockholders at that time, TriZetto shall not be required to prepare and
file such amendment, supplement or document for such period as the Board of
Directors of TriZetto believes such disclosure would be materially harmful to
TriZetto; PROVIDED that such period shall be no more than sixty calendar days.
If TriZetto notifies IMS of the occurrence of any event contemplated by Section
4(e)(5) above, IMS agrees, as a consequence of the inclusion of any of IMS's
Registrable Securities in the Registration Statement, to suspend the use of the
Prospectus until the requisite changes to the Prospectus have been made;
(o) use all reasonable best efforts to cause the Registrable
Securities covered by the Registration Statement to be listed for quotation on
the Nasdaq National Market or other stock exchange or trading system on which
the Registrable Securities primarily trade on or prior to the Effective Time of
the Registration Statement;
(p) enter into such agreements (including an underwriting agreement
in form, scope and substance as is customary in underwritten offerings) and take
all such other actions in connection therewith as may be reasonably requested by
IMS and the managing underwriters, if any, in order to expedite or facilitate
the disposition of such Registrable Securities and in such connection, whether
or not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration:
(1) make such representations and warranties to IMS and
the underwriters, if any, in form, substance and scope as are
customarily made by issuers to underwriters in underwritten
offerings;
(2) obtain opinions of counsel to TriZetto and
bring-downs of such opinions, which counsel shall be reasonably
satisfactory to IMS and to the managing underwriters, if any, and
which opinions (in form, scope and substance) shall be customary and
shall be reasonably satisfactory to IMS and to the managing
underwriters, if any, and addressed to IMS and the underwriters, if
any, covering: (i) in the case of an underwritten offering, the
matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by
IMS and the underwriters (it being agreed that the matters to be
covered shall include, without limitation, as of the date of the
opinion and as of the Effective Time of the Registration Statement
or most recent post-effective amendment thereto, as the case may be,
a statement as to, to the knowledge of such counsel, the absence
from the Registration Statement and the Prospectus,
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including the documents incorporated by reference therein, of an
untrue statement of a material fact or the omission of a material
fact required to be stated therein or necessary to make the
statements therein not misleading), and (ii) in the case of
offerings not involving an underwriter, the matters customarily
covered in opinions requested in the type of offering involved, and,
in the case of (i) or (ii), stating that the Registration Statement
complies, as to form, with the requirements of the Securities Act;
(3) to the extent permitted by the rules of the AICPA,
obtain "cold comfort" letters and updates thereof from the
independent public accountants of TriZetto (and, if necessary, from
the independent public accountants of any Subsidiary of TriZetto or
of any business acquired by TriZetto for which financial statements
and financial data are, or are required to be, included in the
Registration Statement) addressed to IMS and the underwriters, if
any, such letters to be in customary form and covering matters of
the type customarily covered in "cold comfort" letters by
underwriters in connection with underwritten offerings;
(4) if an underwriting agreement is entered into, the
same shall set forth customary indemnification and contribution
provisions and procedures; PROVIDED, that such provisions and
procedures shall be at least as favorable to IMS in every material
respect as the provisions of Section 6 hereof; and
(5) TriZetto shall deliver such documents and
certificates as may be reasonably requested by IMS and the managing
underwriters, if any, to evidence the continued validity of the
representations and warranties made pursuant to Section 4(p)(1)
above and to evidence compliance with any conditions contained in
the underwriting agreement or other agreement entered into by
TriZetto.
The above shall be done at each closing under such underwriting or similar
agreement or as and to the extent required thereunder;
(q) make available for inspection by IMS and any underwriter
participating in any disposition pursuant to such Registration Statement, and
any attorney or accountant retained by IMS or such underwriter, all pertinent
financial and other records, pertinent corporate documents and properties of
TriZetto and its Subsidiaries, cause the officers, directors, agents and
employees of TriZetto and its Subsidiaries to supply all information in each
case reasonably requested by IMS or any such underwriter, attorney or accountant
in connection with the Registration Statement, provide IMS and any such
underwriter, attorney or accountant with opportunities to discuss the business
of TriZetto and its Subsidiaries with TriZetto's officers and provide IMS and
any such underwriter, attorney or accountant with opportunities to discuss the
business of TriZetto and its Subsidiaries with the independent public
accountants who have certified TriZetto's most recent annual financial
statements in each case, as is customary for similar due diligence
investigations; PROVIDED that any records, information or documents that are
designated in writing by TriZetto, in good faith, as confidential shall be kept
confidential by such Persons unless disclosure is made in connection with a
court proceeding or required by law, or
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such records, information or documents become available to the public generally
or through a third party without an accompanying obligation of confidentiality;
and PROVIDED FURTHER that, if the foregoing inspection and information gathering
would otherwise disrupt TriZetto's conduct of its business, such inspection and
information gathering shall, to the greatest extent possible, be coordinated on
behalf of IMS and the other parties entitled thereto by one counsel designated
by and on behalf of IMS and other parties; and, PROVIDED, FURTHER, that nothing
herein shall require any waiver by TriZetto of any attorney-client privilege;
(r) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC, and make generally available to its
securityholders as soon as practicable, but in any event not later than eighteen
months after the effective date of the Registration Statement (as defined in
Rule 158(c) under the Securities Act), an earnings statement of TriZetto and its
Subsidiaries complying with Section 11(a) of the Securities Act and the rules
and regulations of the SEC thereunder (including, at the option of TriZetto,
Rule 158);
(s) in the event that any broker-dealer registered under the
Exchange Act shall be an "affiliate" (as defined in Rule 2720(b)(1) of the NASD
Rules (or any successor provision thereto)) of TriZetto or has a "conflict of
interest" (as defined in Rule 2720(b)(7) of the NASD Rules (or any successor
provision thereto)) and such broker-dealer shall underwrite, participate as a
member of an underwriting syndicate or selling group or assist in the
distribution of any Registrable Securities covered by a Registration Statement,
whether as a holder of such Registrable Securities or as an underwriter, a
placement or sales agent or a broker or dealer in respect thereof, or otherwise,
TriZetto shall assist such broker-dealer in complying with the requirements of
the NASD Rules, including, without limitation, by (A) engaging a "qualified
independent underwriter" (as defined in Rule 2720(b)(15) of the NASD Rules (or
any successor provision thereto)) to participate in the preparation of the
registration statement relating to such Registrable Securities, to exercise
usual standards of due diligence in respect thereto and to recommend the public
offering price of such Registrable Securities, (B) indemnifying such qualified
independent underwriter to the extent of the indemnification of underwriters
provided in Section 6 hereof, and (C) providing such information to such
broker-dealer as may reasonably be required in order for such broker-dealer to
comply with the requirements of the NASD Rules;
(t) use its reasonable efforts to assist IMS and the underwriters,
if any, in marketing the Registrable Securities, including causing its executive
officers to participate in such "road show" presentations and conference calls
as may be customary in the marketing of equity securities; PROVIDED, HOWEVER,
that IMS shall cause the managing underwriters or placement agents of any
Securities to give such executives reasonable advance notice concerning the
scheduling of any such presentation or call; PROVIDED, FURTHER, that such
presentations and conference calls shall be scheduled with the understanding
that the regular responsibilities of such executive officers will take priority
over any such activities; and
(u) take all other steps reasonably necessary to effect the
registration, offering and sale of the Registrable Securities covered by the
Registration Statement contemplated hereby.
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TriZetto may require IMS to furnish to TriZetto such information
regarding IMS and the distribution of such securities as is required to be
disclosed in the Registration Statement.
IMS agrees by acquisition of such Registrable Securities that, upon
receipt of any notice from TriZetto of the happening of any event of the kind
described in Section 4(e)(5) hereof, IMS will forthwith discontinue disposition
of Registrable Securities pursuant to the Registration Statement until IMS's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 4(n) hereof, or until it is advised in writing by TriZetto that the use
of the Prospectus may be resumed, and has received copies of any additional or
supplemental filings which are incorporated by reference in the Prospectus, and,
if so directed by TriZetto, IMS will deliver to TriZetto (at TriZetto's expense)
all copies, other than permanent file copies then in IMS's possession, of the
Prospectus covering such Registrable Securities current at the time of receipt
of such notice; PROVIDED that nothing in this paragraph shall prohibit or
restrict IMS from effecting sales or transfers otherwise than under a
Registration Statement. In the event TriZetto shall give any such notice, the
time periods mentioned in Section 2(c) hereof shall be extended by the number of
days during the period from and including the date of the giving of such notice
to and including the date when IMS either receives the copies of the
supplemented or amended prospectus contemplated by Section 4(n) hereof or is
advised in writing by TriZetto that the use of the Prospectus may be resumed.
5. REGISTRATION EXPENSES.
(a) All expenses incident to TriZetto's performance of, or
compliance, with this Agreement, including without limitation:
(1) all registration and filing fees (including with
respect to filings required to be made with the National Association
of Securities Dealers);
(2) fees and expenses of compliance with securities or
blue sky laws of or within the United States of America (including
reasonable fees and disbursements of counsel for the underwriters or
selling holders in connection with blue sky qualifications of the
Registrable Securities and determination of their eligibility for
investment under the laws of such jurisdictions as the managing
underwriters or IMS may designate);
(3) printing, messenger, telephone, delivery,
distribution and reproduction expenses;
(4) fees and disbursements of counsel for TriZetto
(including the expenses of any opinions required by or incident to
such performance);
(5) fees and disbursements of all independent certified
public accountants of TriZetto (including the expenses of any
special audit and "cold comfort" letters required by or incident to
such performance);
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(6) fees and disbursements of underwriters (excluding
discounts, commissions or fees of underwriters, selling brokers,
dealer managers or similar securities industry professionals
relating to the distribution of the Registrable Securities or legal
expenses of any person other than TriZetto); and
(7) fees and expenses of other Persons retained by
TriZetto
(all such expenses being, herein called "REGISTRATION EXPENSES") will be borne
by TriZetto, regardless whether the Registration Statement becomes effective.
To the extent that any Registration Expenses are reasonably
incurred, assumed or paid by IMS or any underwriter, TriZetto shall reimburse
such Person for the full amount of the Registration Expenses so incurred,
assumed or paid promptly after receipt of a written request therefor, which
shall specify in reasonable detail the nature and amount of the Registration
Expenses.
TriZetto will, in any event, pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, rating
agency fees, the fees and expenses incurred in connection with the listing of
the securities to be registered on each securities exchange on which similar
securities issued by TriZetto are then listed and the fees and expenses of any
Person, including special experts, retained by TriZetto.
(b) In connection with each Registration Statement required
hereunder, TriZetto shall not be responsible for the payment of any transfer
taxes relating to the sale or disposition of the Registrable Securities by IMS
or for any underwriting discounts and commissions attributable to the sale of
Registrable Securities by or on behalf of IMS.
6. INDEMNIFICATION.
(a) INDEMNIFICATION BY TRIZETTO. In the event of any registration of
securities of TriZetto under the Securities Act, TriZetto shall indemnify and
hold harmless (i) in the case of any registration of Registrable Securities
hereunder, IMS and each underwriter, selling agent or other securities
professional, if any, which facilitates the disposition of Registrable
Securities, and each of their respective officers and directors and each Person
who controls IMS or such underwriter, selling agent or other securities
professional within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, and (ii) in the case of any registration statement of
TriZetto, IMS, its directors and officers and each Person who controls IMS
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (each such person being sometimes referred to as an "INDEMNIFIED
PERSON") against any losses, claims, damages or liabilities, joint or several,
to which such Indemnified Person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (x) an untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement under which such Registrable Securities are to be registered under the
Securities Act, or any Prospectus contained therein or
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furnished by TriZetto to any Indemnified Person, or any amendment or supplement
thereto, or (y) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading or (z) the failure of TriZetto to comply with applicable law or
the breach by TriZetto of this Agreement, and TriZetto hereby agrees to
reimburse such Indemnified Person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such action
or claim as such expenses are incurred; PROVIDED, HOWEVER, that TriZetto shall
not be liable to any such Indemnified Person in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such Registration Statement or Prospectus, or amendment or supplement,
in reliance upon and in conformity with written information furnished to
TriZetto by such Indemnified Person expressly for use therein; PROVIDED FURTHER,
HOWEVER, that the indemnification obligations hereunder with respect to any
preliminary prospectus shall not inure to the benefit of any underwriter,
selling agent or other securities professional from whom the person asserting
any such losses, liabilities, claims, damages or expenses purchased any
securities, or any person controlling such underwriter, selling agent or other
securities professional, if a copy of the final prospectus (as then amended or
supplemented if TriZetto shall have furnished any such amendments or supplements
thereto) was not sent or given by or on behalf of such underwriter, selling
agent or other securities professional to such person, if such is required by
law, at or prior to written confirmation of the sale of such security to such
person, and if the final prospectus (as so amended or supplemented) would have
corrected the defect and given rise to such loss, liability, claim, damage or
expense.
(b) INDEMNIFICATION BY IMS AND ANY UNDERWRITERS. IMS agrees, as a
consequence of the inclusion of any of IMS's Registrable Securities in such
Registration Statement, and each underwriter, selling agent or other securities
professional, if any, which facilitates the disposition of Registrable
Securities shall agree, as a consequence of facilitating such disposition of
Registrable Securities, severally and not jointly, to (i) indemnify and hold
harmless TriZetto, its directors, officers who sign the registration statement
and each person, if any, who controls TriZetto within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, against any
losses, claims, damages or liabilities to which TriZetto or such other persons
may become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (x) an untrue statement or alleged untrue statement of a
material fact contained in such Registration Statement or Prospectus, or any
amendment or supplement, (y) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to TriZetto by IMS or such underwriter, selling agent or other
securities professional expressly for use therein, or (z) the failure of IMS to
comply with applicable law or the breach by IMS of this Agreement, and (ii)
reimburse TriZetto for any legal or other expenses reasonably incurred by
TriZetto in connection with investigating or defending any such action or claim
as such expenses are incurred.
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(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified
party under subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party under this Section 6, notify such
indemnifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party otherwise than under this Section 6, except
to the extent the indemnifying party is prejudiced by the omission. In case any
such action shall be brought against any indemnified party and it shall notify
an indemnifying party of the commencement thereof, such indemnifying party shall
be entitled to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party,
and, after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, such indemnifying party shall not be
liable to such indemnified party under this Section 6 for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (to the extent that the indemnified party is an actual or
reasonably likely potential party to such action or claim) unless such
settlement, compromise or judgment (i) includes an unconditional release of
the indemnified party from all liability arising out of such action or claim
and (ii) does not include a statement as to, or an admission of, fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 6 is unavailable to or insufficient to hold harmless an indemnified
party under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to therein, then
each indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified party in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
such indemnifying party or by such indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 6(d) were determined by
pro rata allocation (even if IMS or any underwriters, selling agents or other
securities professionals or all of them were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 6(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above shall be deemed to
include any legal or other fees or expenses
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<PAGE>
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The obligations of IMS and any underwriters,
selling agents or other securities professionals in this Section 6(d) to
contribute shall be several in proportion to the percentage of Registrable
Securities registered or underwritten, as the case may be, by them and not
joint.
(e) Notwithstanding any other provision of this Section 6, in no
event will (i) IMS be required to undertake liability to any person under this
Section 6 for any amounts in excess of the dollar amount of the proceeds to be
received by IMS from the sale of its Registrable Securities (after deducting any
fees, discounts and commissions applicable thereto) pursuant to any Registration
Statement under which such Registrable Securities are to be registered under the
Securities Act, or (ii) any underwriter, selling agent or other securities
professional be required to undertake liability to any person hereunder for any
amounts in excess of the discount, commission or other compensation payable to
such underwriter, selling agent or other securities professional with respect to
the Registrable Securities underwritten by it and distributed to the public.
(f) The obligations of TriZetto under this Section 6 shall be in
addition to any liability which TriZetto may otherwise have to any Indemnified
Person and the obligations of any Indemnified Person under this Section 6 shall
be in addition to any liability which such Indemnified Person may otherwise have
to TriZetto. The remedies provided in this Section 6 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to an
indemnified party at law or in equity.
7. RULE 144.
(a) TriZetto covenants that it will use its reasonable best efforts
to timely file the reports required to be filed by it under the Securities Act
and the Exchange Act and the rules and regulations adopted by the SEC thereunder
(or, if TriZetto is not required to file such reports, it will, upon the request
of IMS make publicly available such information as necessary to permit sales
pursuant to Rule 144 under the Securities Act), and it will take such further
action as IMS may reasonably request, all to the extent required from time to
time to enable IMS to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule 144
under the Securities Act, as such Rule may be amended from time to time, or (b)
any similar rule or regulation hereafter adopted by the SEC, including providing
any legal opinions as to the exemptions under Rule 144. Upon the request of IMS
TriZetto will deliver to IMS a written statement as to whether it has complied
with such information and requirements.
(b) A security ceases to be a Restricted Security when IMS is
permitted to sell such security to the public without restriction pursuant to
Rule 144(k) (or any similar provisions then in force). The determination as to
whether IMS is permitted to sell such security to the public
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<PAGE>
without restriction pursuant to Rule 144(k) (including, without limitation, the
determination as to whether IMS is an "affiliate" of TriZetto, as such term is
used in Rule 144), shall be made promptly and in good faith by counsel to IMS
and counsel to TriZetto at such time as IMS seeks to sell such security to the
public pursuant to Rule 144(k).
8. APPROVAL FOR LISTING.
Promptly after the date hereof and after any subsequent increase in
the number of Registrable Securities, TriZetto shall take all necessary action
to cause all of the Registrable Securities to be approved for listing, subject
to official notice of issuance, on the Nasdaq National Market or other
securities exchange or dealer quotation system on which the TriZetto Common
Stock may then be listed or authorized for quotation.
9. TERM OF REGISTRATION RIGHTS.
The rights of IMS with respect to the registration rights granted
pursuant to this Agreement shall remain in effect, subject to the terms hereof,
until the earlier of (i) ten (10) years after the Closing Date and (ii) the date
on which there are no Registrable Securities or securities which are convertible
or exchangeable for Registrable Securities issued and outstanding.
10. FURTHER AGREEMENTS.
(a) TriZetto will not file any registration statement under the
Securities Act unless it shall first have given to IMS for so long as IMS owns
beneficially (as such term is defined in the Exchange Act) 10% or more of the
TriZetto Common Stock outstanding or is otherwise deemed to be a control person
under the Securities Act, at least 10 days' prior written notice thereof and, if
so requested by IMS within 10 days after such notice, IMS shall have the right,
at any time when, in the reasonable judgment of IMS IMS is or might be deemed a
controlling person of TriZetto within the meaning of the Securities Act, (a) to
participate in the preparation and filing of each such registration statement at
the sole cost and expense of IMS and (b) to receive signed copies of the
documents specified in Section 4 hereof addressed to IMS. If any such
registration statement refers to IMS by name or otherwise as the holder of any
securities of TriZetto, then IMS shall have the right (in addition to any other
rights it may have under this Agreement) to require, in the event that such
reference to IMS by name or otherwise is not required by the Securities Act or
any rules and regulations promulgated thereunder, the deletion of the references
to IMS.
11. MISCELLANEOUS.
(a) REMEDIES. IMS, in addition to being entitled to exercise all
rights provided herein and granted by law, including recovery of damages, will
be entitled to specific performance of its rights under this Agreement. TriZetto
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Agreement and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.
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<PAGE>
(b) REGISTRATION RIGHTS OF OTHER PERSONS. TriZetto may grant to any
Person other than IMS the right to request a registration of securities of
TriZetto under the Securities Act or the right to be included as a selling
stockholder in connection with any registration of Registrable Securities;
PROVIDED, HOWEVER, that the granting of any such rights shall not conflict with
or otherwise alter any rights granted to IMS hereunder. TriZetto hereby
represents and warrants to IMS that it has obtained the consents or approvals of
the Venture Capitalists necessary to enter into this Agreement and to grant
IMS its rights hereunder.
(c) ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. TriZetto will not
intentionally take any action, or permit any change to occur, with respect to
the Registrable Securities which would (i) adversely affect the ability of IMS
to include such Registrable Securities in a registration undertaken pursuant to
this Agreement or (ii) adversely affect the marketability of such Registrable
Securities in any such registration.
(d) AMENDMENTS AND WAIVERS. This Agreement, including this Section
11(d), may be amended, and waivers or consents to departures from the provisions
hereof may be given, only by a written instrument duly executed by TriZetto and
IMS. Each holder of Registrable Securities outstanding at the time of any such
amendment, waiver or consent or thereafter shall be bound by any amendment,
waiver or consent effected pursuant to this Section 11(d), whether or not any
notice, writing or marking indicating such amendment, waiver or consent appears
on the Registrable Securities or is delivered to such holder.
(e) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or air courier guaranteeing overnight
delivery
if to IMS: IMS Health Incorporated
200 Nyala Farms
Westport, Connecticut 06880
Attention: Chief Executive Officer
Telecopy: (203) 222-4247
with copies to: IMS Health Incorporated
200 Nyala Farms
Westport, Connecticut 06880
Attention: David Stevens
Jared Finkelstein
Telecopy: (203) 222-4268
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<PAGE>
and to: Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Alan J. Sinsheimer
Keith A. Pagnani
Telecopy: (212) 558-3588
if to TriZetto: The TriZetto Group, Inc.
567 San Nicolas Drive, Suite 367
Newport Beach, California 92660
Attention: Christine A. Miller
Telecopy: (949) 219-2197
and to: Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92660-6422
Attention: K.C. Schaaf
Michael E. Flynn
Telecopy: (949) 725-4100
and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 11(e).
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged, if telecopied; and on
the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
(f) PARTIES IN INTEREST; BENEFITS OF REGISTRATION RIGHTS. The
parties to this Agreement intend that IMS shall be entitled to receive the
benefits of this Agreement and that IMS shall be bound by the terms and
provisions of this Agreement by reason of its election with respect to the
Registrable Securities which are included in a Registration Statement. All the
terms and provisions of this Agreement shall be binding upon, shall inure to the
benefit of and shall be enforceable by the respective successors and assigns of
the parties hereto. In the event that any transferee(s) of IMS shall acquire at
least 10% of the Registrable Securities in accordance with this Agreement and
the Stockholder Agreement dated concurrently herewith, in any manner, whether by
gift, bequest, purchase, operation of law or otherwise, IMS and such
transferee(s) may, without any further writing or action of any kind, jointly
exercise the registration rights hereunder in such manner and in such proportion
as IMS shall determine and, if such transferee jointly exercises such
registration rights with IMS hereunder, such transferee shall be conclusively
deemed to have agreed to be bound by and to perform all of the terms and
provisions of this Agreement to the aforesaid extent.
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<PAGE>
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without giving effect to
any provisions relating to conflicts of laws.
(j) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties hereto shall be enforceable to the fullest extent permitted by law.
(k) SURVIVAL. The respective indemnities, agreements,
representations, warranties and other provisions set forth in this Agreement or
made pursuant hereto shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of IMS, any director or officer of IMS, any agent or underwriter, any director,
officer or partner of such agent or underwriter, or any controlling person of
any of the foregoing, and shall survive the transfer and registration of the
Registrable Securities of IMS.
(l) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by TriZetto with respect to the
Registrable Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
THE TRIZETTO GROUP, INC.
By: _______________________
Name:
Title:
IMS HEALTH INCORPORATED
By: _______________________
Name:
Title:
<PAGE>
Exhibit E to
Agreement and Plan of Reorganization
STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT (this "AGREEMENT") is entered into as of
__________, 2000, by and between The TriZetto Group, Inc., a Delaware
corporation ("TRIZETTO"), and IMS Health Incorporated, a Delaware corporation
("IMS").
WHEREAS, TriZetto, Elbejay Acquisition Corp., a Delaware corporation
and a wholly-owned subsidiary of TriZetto ("MERGER SUB"), IMS and ERISCO Managed
Care Technologies, Inc., a New York corporation and wholly owned subsidiary of
IMS ("ERISCO"), have entered into an Agreement and Plan of Reorganization, dated
as of May ___, 2000 (the "MERGER AGREEMENT"), providing for, among other things,
the merger of Erisco with and into Merger Sub (the "MERGER");
WHEREAS, the respective boards of directors of each of TriZetto and
IMS have approved this Agreement;
WHEREAS, in connection with the Merger, TriZetto will issue shares
of capital stock of TriZetto to IMS;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the parties hereto are entering into a Registration Rights Agreement
(the "REGISTRATION RIGHTS AGREEMENT") with respect to the shares of capital
stock of TriZetto to be issued to IMS in connection with the Merger;
WHEREAS, the execution and delivery of this Agreement by the parties
hereto is a condition to the consummation of the Merger; and
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements as provided in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. CERTAIN DEFINITIONS. (a) Capitalized terms that are used but not
otherwise defined herein shall have the meanings given to them in the Merger
Agreement.
(b) For the purposes of this Agreement, the following terms shall
have the following meanings:
"AFFILIATE" and "ASSOCIATE" when used with reference to any Person
shall have the meanings assigned to such terms in Rule 12b-2 of the Exchange Act
as in effect of the date hereof; PROVIDED, that TriZetto and its Subsidiaries
and the officers and directors of TriZetto and its Subsidiaries who are not the
IMS Director and who are not directors or officers of IMS or any of its
Subsidiaries shall not, solely as a result of
<PAGE>
holding such office of TriZetto or any of its Subsidiaries, be deemed Affiliates
or Associates of IMS for purposes of this Agreement.
A Person shall be deemed the "BENEFICIAL OWNER", and to have
"BENEFICIAL OWNERSHIP" of, and to "BENEFICIALLY OWN," any securities as to which
such Person is or may be deemed to be the beneficial owner pursuant to Rule
13d-3 and 13d-5 under the Exchange Act, as such rules are in effect on the date
of this Agreement, as well as any securities as to which such Person has the
right to become the Beneficial Owner (whether such right is exercisable
immediately or only after the passage of time or the occurrence of conditions)
pursuant to any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with respect
to a BONA FIDE public offering of securities), or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or otherwise;
PROVIDED, HOWEVER, that no Person shall be deemed the "Beneficial Owner" or to
have "Beneficial Ownership" of, or to "Beneficially Own," any Shares solely by
virtue of the rights set forth in Section 6; PROVIDED, FURTHER, that a Person
shall not be deemed the "Beneficial Owner", or to have "Beneficial Ownership"
of, or to "Beneficially Own", any Shares (i) solely because such Shares have
been tendered pursuant to a tender or exchange offer made by such Person, or any
of such Person's Affiliates or Associates, until such tendered Shares are
accepted for payment or exchange or (ii) solely because such Person, or any of
such Person's Affiliates or Associates, has or shares the power to vote or
direct the voting of such Shares pursuant to a revocable proxy given in response
to a public proxy or consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations under the Exchange Act, except if
such power (or the arrangements relating thereto) is then reportable under Item
6 of Schedule 13D under the Exchange Act (or any similar provision of a
comparable or successor report). For purposes of this Agreement, in determining
the percentage of the outstanding Shares with respect to which a Person is the
Beneficial Owner, all Shares as to which such Person is deemed the Beneficial
Owner shall be deemed outstanding.
"BOARD" shall mean the Board of Directors of TriZetto.
"CHANGE OF CONTROL" shall mean, with respect to any party, any
transaction or event in connection with a plan pursuant to which (i) all or
substantially all of the assets of or (ii) equity interests in such party that
have the power to cast at least 50% of the votes entitled to be cast in
elections of directors (or similar officials) of such party, shall be exchanged
for, converted into or acquired for or constitute the right to receive
securities, cash or other property (whether by means of a tender or exchange
offer, reclassification, consolidation, merger, sale or other disposition of
such assets or such equity interests, compulsory exchange of equity interests,
liquidation or otherwise). In the case of a Change in Control effected through a
series of transactions or events, such Change in Control shall be deemed to have
occurred when (i) substantially all of the assets of such party or (ii) equity
interests in such party that have the power to cast at least 50% of the votes
entitled to be cast in elections of directors (or similar officials) of
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such party, shall be exchanged for, converted into or acquired for or constitute
the right to receive securities, cash or other property.
"GROUP" shall have the meaning assigned to such term in Rule 13d-5
under the Exchange Act as in effect on the date hereof.
"MINIMUM SHARE PERCENTAGE" shall mean, as of any date, 10% of the
Outstanding Shares as of such date.
"OUTSTANDING SHARES" shall mean, as of any date, the issued and
outstanding Shares as of such date, excluding any treasury Shares.
"PERMITTED TRANSFER" shall have the meaning set forth in Section 5.
"SHARES" shall mean TriZetto Common Stock and any other shares of
common stock of TriZetto.
"SUBSIDIARY" shall mean, with respect to any Person, any entity at
least 50% of the Voting Securities of which are owned directly or indirectly by
such Person.
"TRIZETTO COMMON STOCK" shall mean the Common Stock, par value
$0.001 per share, of TriZetto.
"TRANSFER" shall mean any direct or indirect sale, transfer,
assignment, pledge, hypothecation, mortgage, or other disposition or
encumbrance, PROVIDED, that a Transfer shall not include any sale, transfer,
assignment, or other disposition by operation or succession of law, merger or
otherwise.
"VOTING SECURITIES" shall mean any securities entitled to vote in
the ordinary course in the election of directors or of Persons serving in a
similar governing capacity of any partnership, limited liability company or
other entity, including the voting rights attached to such securities.
2. REPRESENTATIONS OF IMS. As of the date hereof, IMS represents and
warrants to TriZetto that:
(a) IMS does not Beneficially Own any Shares other than those Shares
to be issued to IMS in connection with the Merger;
(b) IMS has all requisite corporate power and authority to enter
into this Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement by IMS have been duly authorized by all necessary
corporate action on the part of IMS;
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<PAGE>
(c) this Agreement has been duly executed and delivered by IMS and
is the valid and binding obligation of IMS, enforceable in accordance with its
terms, except that such enforceability may be subject to the Bankruptcy and
Equity Exception;
(d) no consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required to
be obtained by IMS in connection with the execution and delivery of this
Agreement, except those that have been made or obtained or where the failure to
obtain such consents, approvals, orders, authorizations, registrations,
declarations or filings, would not prevent IMS from performing its obligations
under this Agreement or the Merger Agreement and is not reasonably likely to
have a Material Adverse Effect on IMS or Erisco; and
(e) neither the execution, delivery and performance of this
Agreement nor the consummation of the transactions contemplated hereby nor
compliance with the provisions hereof will conflict with, or result in any
violations of, or cause a breach or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, amendment,
cancellation or acceleration of any obligation contained in, or the loss of any
material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the material properties or assets of
IMS or Erisco under, any term, condition or provision of (A) the certificate of
incorporation or bylaws of IMS or (B) any Contract, permit, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to IMS or Erisco
or their respective properties or assets, other than any such conflicts,
violations, defaults, losses, liens, security interests, charges, or
encumbrances which, individually or in the aggregate, would not prevent IMS from
performing its obligations under this Agreement or the Merger Agreement and is
not reasonably likely to have a Material Adverse Effect on IMS or Erisco.
3. REPRESENTATIONS OF TRIZETTO. As of the date hereof, TriZetto
represents and warrants to IMS that:
(a) TriZetto has all requisite corporate power and authority to
enter into this Agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement by TriZetto and the consummation by
TriZetto of the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of TriZetto;
(b) this Agreement has been duly executed and delivered by TriZetto
and is the valid and binding obligation of TriZetto, enforceable in accordance
with its terms, except that such enforceability may be subject to the Bankruptcy
and Equity Exception;
(c) no consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required to
be obtained by TriZetto or any of the TriZetto Subsidiaries in connection with
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except those that have been made or obtained
or where the failure to obtain such consents, approvals, orders, authorizations,
registrations, declarations or filings, would not prevent TriZetto
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from performing its obligations under this Agreement or the Merger Agreement
and is not reasonably likely to have a Material Adverse Effect on TriZetto;
and
(d) neither the execution, delivery and performance of this
Agreement nor the consummation of the transactions contemplated hereby nor
compliance with the provisions hereof will conflict with, or result in any
violations of, or cause a breach or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, amendment,
cancellation or acceleration of any obligation contained in, or the loss of any
material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the material properties or assets of
TriZetto or any of the TriZetto Subsidiaries under, any term, condition or
provision of (A) the certificate or articles of incorporation or bylaws of
TriZetto or any of the TriZetto Subsidiaries or (B) any Contract, permit,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to TriZetto or any of the TriZetto Subsidiaries or their respective properties
or assets, other than any such conflicts, violations, defaults, losses, liens,
security interests, charges or encumbrances which, individually or in the
aggregate would not prevent TriZetto from performing its obligations under this
Agreement or the Merger Agreement and is not reasonably likely to have a
Material Adverse Effect on TriZetto.
4. STANDSTILL PROVISIONS.
4.1 From the date hereof until the earlier of (i) the fourth
anniversary of the Closing Date or (ii) the date on which (A) a Change of
Control of TriZetto shall have occurred, or (B) TriZetto shall have publicly
announced, directly or indirectly, its willingness to consider a transaction
that would constitute a Change of Control of TriZetto, IMS, without the prior
written consent of TriZetto, shall not, and shall not suffer or permit any
Subsidiaries of IMS to, whether acting alone or in concert with others:
(a) initiate or propose any stockholder proposal or participate in
the making of, or solicit stockholders for the approval of, one or more
stockholder proposals relating to TriZetto;
(b) seek the removal of any directors or a change in the composition
or size of the Board;
(c) form, join or participate in a Group with respect to any Shares,
other than a Group consisting solely of IMS and Affiliates or Associates of IMS;
(d) deposit any Shares into a voting trust or (except as provided in
this Agreement) subject any Shares to any arrangement or agreement with respect
to the voting or Transfer thereof, other than any such trust, arrangement or
agreement (i) the only parties to or beneficiaries of which are IMS or any
Affiliates or Associates of IMS and (ii) the terms of which prohibit any party
thereto from acting in a manner inconsistent with this Agreement; PROVIDED, that
all of the Shares deposited into any such trust or
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<PAGE>
subjected to any such arrangement or agreement shall be deemed to be
Beneficially Owned by IMS or Affiliates or Associates of IMS for all purposes of
this Agreement;
(e) except for Shares issued to IMS in connection with the Merger,
acquire, offer to acquire or agree to acquire, directly or indirectly, by
purchase, gift or otherwise, Beneficial Ownership of any Shares (the "STOCK
LIMITATION"); or
(f) make, or in any way participate in, directly or indirectly, any
"solicitation" of "proxies" (as such terms are used in the rules or regulations
of the Securities Exchange Commission) to vote, or seek to advise or influence
any person or entity with respect to the voting of, any Voting Securities of
TriZetto;
(g) make any public announcement with respect to, or submit a
proposal for, or offer of (with or without conditions), any merger, business
combination, recapitalization, restructuring, liquidation or other extraordinary
transaction involving TriZetto or its securities or assets;
(h) take any action which might force TriZetto to make a public
announcement regarding any of the types of matters set forth in paragraphs (a)
through (g) above;
(i) enter into discussions or arrangements with any third party with
respect to any of the foregoing;
(j) request publicly TriZetto or any of its Affiliates or
Associates, directly or indirectly, to amend or waive any provision of this
Section 4; or
(k) advise, assist (including by knowingly providing or arranging
financing for that purpose) or knowingly encourage, induce or attempt to
encourage or induce any other Person to take any actions referred to in the
foregoing paragraphs (a) through (j).
4.2 No violation of Section 4.1(e) shall be deemed to occur as a
result of the acquisition by IMS, or any Affiliate or Associate of IMS, of
Beneficial Ownership of Shares in excess of the Stock Limitation (i) as a result
of (A) any stock repurchase or similar transaction undertaken by TriZetto or its
Affiliates that shall cause IMS's percentage ownership in the Shares to exceed
the Stock Limitation even though the number of Shares Beneficially Owned by IMS
and its Affiliates and Associates remains unchanged; (B) any acquisition of
Voting Securities of another corporation by IMS or any Affiliate or Associate of
IMS in a BONA FIDE acquisition of a business, the primary purpose of which is
not to acquire Shares, which results in IMS or any such Affiliate or Associate
becoming the Beneficial Owner of additional Shares; or (C) any stock split,
stock dividend or other distribution relating to Shares; or (ii) in the event
that TriZetto invites, requests or otherwise solicits IMS or any of its
Affiliates or Associates to acquire, offer to acquire or agree to acquire, by
purchase or otherwise, Beneficial Ownership of such Shares.
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4.3 The provisions of Section 4.1 shall apply to and be binding upon
any Person to whom IMS Transfers Beneficial Ownership of Shares representing at
least the Minimum Share Percentage as of the date of such Transfer. As a
condition to any Transfer referred to in the immediately preceding sentence,
such Transferee shall, prior to such Transfer, agree in writing to be bound by
the provisions of this Agreement. Any such Transfer without compliance with the
immediately preceding sentence shall be null and void and such transferee shall
acquire no rights with respect to such Shares.
5. SHARE TRANSFERS.
5.1 From the date hereof until the earlier of (i) the date two (2)
years after the Closing Date, (ii) the date on which IMS ceases to Beneficially
Own a number of Shares at least equal to ten percent (10%) of the Outstanding
Shares as of the Closing Date, or (iii) the date on which a Change of Control of
TriZetto shall have occurred (the "RESTRICTED PERIOD"), IMS shall not, without
the prior written consent of TriZetto, Transfer any Shares that are Beneficially
Owned by IMS, except for a Transfer that complies with any of the following
subsections (each such Transfer, a "PERMITTED TRANSFER"):
(a) a Transfer of all or any of such Shares to any Affiliate of IMS;
PROVIDED, that contemporaneously with any such Transfer, such Affiliate becomes
a party to a counterpart of this Agreement;
(b) a Transfer of all or any of such Shares in a BONA FIDE pledge of
such Shares to a financial institution to secure borrowings as permitted by
applicable Law; PROVIDED, that contemporaneously with such pledge such financial
institution agrees with TriZetto that upon any foreclosure on such pledge it,
and any transferee pursuant to any disposition following default, shall be bound
by the obligations of IMS under this Agreement; or
(c) a Transfer of all or any of such Shares to any Person who has
commenced a tender or exchange offer for Shares that the Board has recommended
that the holders of Shares accept.
6. RIGHT OF FIRST REFUSAL
6.1 For the period commencing upon the termination of the Restricted
Period and continuing until the date on which IMS ceases to Beneficially Own a
number of Shares at least equal to ten percent (10%) of the Outstanding Shares
as of the Closing Date (the "RIGHT OF FIRST REFUSAL PERIOD") (unless at any time
after the date of this Agreement a Change of Control of TriZetto shall have
occurred), if IMS or any of its Affiliates propose to Transfer Beneficial
Ownership of (i) Shares representing in the aggregate at least the Minimum Share
Percentage as of the date of the Right of First Refusal Notice (as defined in
Section 6.1(a)), or (ii) Shares, together with all other Shares Beneficially
Owned by the transferee, would result in such transferee having in the aggregate
Beneficial Ownership of at least the Minimum Share Percentage as of the date
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of the First Refusal Notice, it shall give TriZetto the opportunity, in the
following manner, to purchase such Shares and shall not effect any proposed
Transfer without complying with the following procedures:
(a) NOTICE; IRREVOCABLE OFFER. IMS shall give written notice (the
"RIGHT OF FIRST REFUSAL NOTICE") to TriZetto of its or any of its Affiliates'
intent to Transfer such Shares, the number of Shares proposed to be Transferred
(the "FIRST REFUSAL SHARES") and the price, the identity of proposed
transferees, proposed payment terms and other terms (the "OFFER TERMS") on which
IMS or such Affiliate proposes to Transfer such Shares. Each Right of First
Refusal Notice shall constitute an irrevocable offer by IMS or such Affiliate to
sell to TriZetto the First Refusal Shares on the Offer Terms and the other terms
and conditions set forth in this Section 6.
(b) EXERCISE; CLOSING. TriZetto shall have the right to purchase all
but not less than all of the First Refusal Shares on the Offer Terms; PROVIDED
that TriZetto shall be required to pay all consideration for the First Refusal
Shares in cash in the event that the Offer Terms include any non-cash
consideration. The cash payable with respect to any non-cash consideration shall
be the fair market value of such non-cash consideration as mutually agreed by
the parties. TriZetto may exercise such right by giving written notice (a
"TRIZETTO ACCEPTANCE NOTICE") to IMS, within 20 days after the date of receipt
by TriZetto of a Right of First Refusal Notice, which shall state that TriZetto
is electing to purchase all of the First Refusal Shares on the Offered Terms.
The TriZetto Acceptance Notice shall constitute an irrevocable commitment to
purchase from IMS or such Affiliate the First Refusal Shares on the Offer Terms
and the other terms and conditions set forth in this Section 6. The closing of
any purchase by and sale to TriZetto of the First Refusal Shares shall take
place, to the extent legally practicable, on such date that is no less than 5
and no more than 30 days following the date of the TriZetto Acceptance Notice,
as TriZetto and IMS shall mutually agree. The closing shall be held at 10:00
a.m., local time, at the principal office of TriZetto. At such closing: (i) IMS
shall deliver to TriZetto certificates representing the First Refusal Shares
being sold (or affidavits of loss in lieu thereof), free and clear of any Lien;
(ii) TriZetto shall deliver to IMS the cash consideration to be paid for such
First Refusal Shares in accordance with this Section 6.1(b); and (iii) IMS and
TriZetto shall execute or cause to be executed such other documents and take or
cause to be taken such other actions as shall be reasonably necessary to
consummate the purchase and sale of the First Refusal Shares on the terms
contemplated by the Offer Terms and the other terms and conditions set forth in
this Section. TriZetto and IMS each will pay any costs that it incurs in
complying with the obligations set forth in this paragraph.
(c) NON-EXERCISE. If TriZetto fails to elect to purchase all the
First Refusal Shares within the 20-day time period specified in paragraph (b) of
this Section, then IMS or such Affiliate (i) shall be under no obligation to
sell any of the First Refusal Shares to TriZetto, unless IMS or such Affiliate
so elects, and (ii) may, within a period of 120 days from and after the date of
the Right of First Refusal Notice, Transfer all or less than all of the First
Refusal Shares to a proposed transferee for a price and on terms and
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conditions not materially less favorable to IMS or such Affiliate than those set
forth in the Offer Terms.
(d) SUBSEQUENT APPLICATION. If TriZetto does not elect to purchase
all the First Refusal Shares on the Offer Terms and IMS or such Affiliate shall
not have consummated the Transfer of all of the First Refusal Shares to a third
party or third parties prior to the expiration of the 120-day period specified
in the foregoing paragraph (c), then the provisions of this Section 6 shall
again apply, and IMS or such Affiliate shall not Transfer any of such First
Refusal Shares not so Transferred during the Right of First Refusal Period
without again complying with this Section.
6.2 The obligations of IMS and its Affiliates pursuant to this
Section 6 shall not apply to (i) any Permitted Transfer and (ii) a Transfer of
all or any of such Shares in a BONA FIDE firm commitment public offering
registered under the Securities Act of 1933, as amended, PROVIDED that IMS will
use its reasonable best efforts, and will instruct the managing underwriters to
use their reasonable best efforts, to achieve a broad public distribution of the
Shares.
6.3 TriZetto may assign its rights under this Section 6 if (i)
TriZetto desires to exercise such rights and (ii) TriZetto is prohibited from
exercising such rights under applicable Delaware law.
7. RIGHT OF FIRST OFFER.
7.1 During the Right of First Refusal Period (unless at any time
after the date of this Agreement a Change of Control of TriZetto shall have
occurred), if IMS or any of its Affiliates proposes to Transfer Beneficial
Ownership of any Shares, IMS or such Affiliate shall comply with the following
procedures:
(a) NOTICE; CONSULTATION. IMS or such Affiliate shall give written
notice (the "FIRST OFFER NOTICE") to TriZetto of its intent to Transfer such
Shares and the number of Shares proposed to be Transferred (the "FIRST OFFER
SHARES") and, if known, the proposed transferee. For a period of 20 days
following TriZetto's receipt of a First Offer Notice, IMS or such Affiliate
shall discuss in good faith with TriZetto the possibility of effecting such a
transaction with TriZetto, and during such 20-day period, IMS or such Affiliate
shall negotiate in good faith and exclusively with TriZetto to determine whether
it is possible to agree to such a transaction with TriZetto, but neither party
shall be obligated to enter into any agreement to do so.
(b) TRIZETTO OFFER; ACCEPTANCE. In the event that IMS or such
Affiliate and TriZetto shall not have agreed on the terms of a transaction with
respect to the First Offer Shares, TriZetto shall, at or prior to the conclusion
of such 20-day period, deliver to IMS either (i) a statement of TriZetto's final
offer price with respect to the First Offer Shares (a "TRIZETTO OFFER Notice"),
which notice shall constitute an irrevocable offer by TriZetto to IMS or such
Affiliate to acquire all of the First Offer Shares in cash at such price, or
(ii) a written notice stating that TriZetto is not interested in making a final
offer
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for the First Offer Shares (a "TRIZETTO REJECTION NOTICE"). In the event that
IMS or such Affiliate elects to sell the First Offer Shares to TriZetto pursuant
to the TriZetto Offer Notice, it shall provide written notice to such effect (an
"IMS ACCEPTANCE NOTICE") to TriZetto within 2 days of receipt of the TriZetto
Offer Notice. The closing of any purchase by and sale to TriZetto of the First
Offer Shares shall take place, to the extent legally practicable, on such date
that is no less than 5 and no more than 30 days following the date of the IMS
Acceptance Notice, as TriZetto and IMS or such Affiliate shall mutually agree.
The closing shall be held at 10:00 a.m., local time, at the principal office of
TriZetto. At such closing: (i) IMS or such Affiliate shall deliver to TriZetto
certificates representing the First Offer Shares being sold (or affidavits of
loss in lieu thereof), free and clear of any Lien; (ii) TriZetto shall deliver
to IMS or such Affiliate the cash consideration to be paid for such First Offer
Shares in accordance with the TriZetto Offer Notice; and (iii) IMS or such
Affiliate and TriZetto shall execute or cause to be executed such other
documents and take or cause to be taken such other actions as shall be
reasonably necessary to consummate the purchase and sale of the First Offer
Shares on the terms contemplated by the TriZetto Offer Notice and the other
terms and conditions set forth in this Section. TriZetto and IMS or such
Affiliate each will pay any costs that it incurs in complying with the
obligations set forth in this paragraph. In the event that IMS or such Affiliate
elects not to sell the First Offer Shares to TriZetto pursuant to the TriZetto
Offer Notice, it shall provide written notice to such effect (an "IMS REJECTION
NOTICE") within 2 days of receipt of the TriZetto Offer Notice.
(c) TRANSFERS TO THIRD PARTIES. In the event that the First Offer
Shares are not acquired by TriZetto pursuant to Sections 7.1(a) or 7.1(b), for a
period of one hundred twenty (120) days from the date of delivery of either (i)
an IMS Rejection Notice or (ii) a TriZetto Rejection Notice, IMS or such
Affiliate shall be free to negotiate and to initiate and hold discussions with
other potential purchasers, and to consummate a sale of any or all of the First
Offer Shares to one or more third parties; PROVIDED, HOWEVER, that if TriZetto
has delivered a TriZetto Offer Notice, the purchase price of such First Offer
Shares payable by each such third party must be at least equal to the purchase
price thereof set forth in such TriZetto Offer Notice, and all other terms and
conditions shall not be materially less favorable to IMS or such Affiliate than
those contained in the TriZetto Offer Notice; PROVIDED, FURTHER, that if the
closing of any such purchase is subject to the making of any necessary filings
with, the expiration of any applicable waiting periods imposed by, or obtaining
any approvals from, any Governmental Entities, such purchase may be consummated
at any time prior to 20 days after the expiration of such waiting period or the
granting of such consent or approval, as the case may be.
(d) SUBSEQUENT APPLICATION. If IMS or such Affiliate shall not have
consummated the Transfer of all of the First Offer Shares prior to the
expiration of the period specified in the foregoing paragraph (c), then the
provisions of this Section 7 shall again apply, and IMS or such Affiliate shall
not Transfer any of such Shares without again complying with this Section.
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7.2 The obligations of IMS and its Affiliates pursuant to this
Section 7 shall not apply to (i) any Permitted Transfer and (ii) a Transfer of
all or any of such Shares in a BONA FIDE firm commitment public offering
registered under the Securities Act of 1933, as amended, PROVIDED that IMS will
use its reasonable best efforts, and will instruct the managing underwriters to
use their reasonable best efforts, to achieve a broad public distribution of the
Shares.
8. BOARD REPRESENTATION.
8.1 IMS DIRECTOR. As long as IMS Beneficially Owns a number of
Shares at least equal to ten percent (10%) of the Outstanding Shares as of the
Closing Date, IMS shall be entitled to designate one individual (the "IMS
DIRECTOR") to be a Class II member of the Board. In the event that IMS shall at
any time cease to Beneficially Own a number of Shares at least equal to ten
percent (10%) of the Outstanding Shares as of the Closing Date, IMS shall
thenceforth not be entitled to designate an IMS Director under this Section 8;
PROVIDED, that the IMS Director shall remain a member of the Board until the
natural expiration of the IMS Director's term. Prior to each meeting of
TriZetto's stockholders for the election of directors to the Board at which the
term of the incumbent IMS Director is to expire, IMS shall give reasonable
advance written notice to TriZetto prior to the mailing of the proxy statement
relating to such matters requesting that TriZetto include, and TriZetto shall
include, the IMS Director as a nominee for the slate of directors to be elected
to the Board. IMS shall designate an individual reasonably acceptable to
TriZetto as the IMS Director, PROVIDED that as long as the Chief Executive
Officer ("CEO") of IMS as of the signing of the Merger Agreement is an executive
officer of IMS, such CEO shall be the individual designated by IMS as the IMS
Director.
8.2 EFFORTS TO NOMINATE AND ELECT IMS DIRECTOR. TriZetto shall
nominate and use its reasonable best efforts to take and cause to be taken all
necessary action (corporate and other) to cause the election to the Board of the
IMS Director.
8.3 In the event of consummation of either a transaction with, or a
tender or exchange offer by, any of the entities listed on Schedule 8.3 hereto
or any of their respective successors or Affiliates which results in a Change of
Control of IMS, or in the event of the acquisition of a majority equity interest
in any of the entities listed on Schedule 8.3 or any of their respective
successors or Affiliates by IMS, IMS's right to designate the IMS Director shall
immediately terminate, and IMS shall cause the then current IMS Director to
immediately resign from the Board.
9. MATTERS REQUIRING CONSENT OF IMS. For so long as IMS Beneficially
Owns a number of Shares at least equal to ten percent (10%) of the Outstanding
Shares as of the Closing Date, except as set forth on Schedule 9(a) hereto,
TriZetto shall not, and shall cause its Affiliates and Associates not to,
without the prior written consent of IMS (which can be withheld for any reason),
enter into, consummate, agree to or approve any merger, consolidation, purchase
or sale of assets or equity
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interests, business combination or similar transaction, or any equity-based
joint venture or similar transaction, with any of the entities set forth on
Schedule 9(b) hereto; PROVIDED, HOWEVER, that such consent will not be required
if the Board of Directors of TriZetto shall have determined, after consultation
with its outside legal counsel, that TriZetto is required to enter into,
consummate, agree to or approve any such transaction pursuant to its fiduciary
duties under applicable law. In the event that IMS shall enter into, consummate,
agree to or approve any merger, consolidation, purchase or sale of assets or
equity interests, business combination or similar transaction, or any
equity-based joint venture or similar transaction, with any of the entities set
forth on Schedule 8.3 hereto, the rights of IMS pursuant to this Section 9 shall
immediately terminate.
10. RIGHTS AGREEMENT. From and after the date hereof, TriZetto shall
not (i) amend or supplement the TriZetto Rights Agreement in any manner which
would adversely affect the rights of the Grandfathered Entities or (ii) adopt or
implement any other stockholder protection rights agreement or any similar plan
or arrangement unless such agreement, plan or arrangement is in no way less
favorable to the Grandfathered Entities than the TriZetto Rights Agreement.
11. MISCELLANEOUS.
(a) GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. The laws of the
State of Delaware (irrespective of its choice of law principles) will govern the
validity of this Agreement, the construction of its terms and the interpretation
and enforcement of the rights and duties of the parties hereto. The parties
hereby irrevocably submit to the jurisdiction of the courts of the State of
Delaware and the Federal courts of the United States of America located in the
State of Delaware solely in respect of the interpretation and enforcement of the
provisions of this Agreement and of the documents referred to in this Agreement,
and in respect of the transactions contemplated hereby and thereby, and hereby
waive, and agree not to assert, as a defense in any action, suit or proceeding
for the interpretation or enforcement hereof or of any such document, that it is
not subject thereto or that such action, suit or proceeding may not be brought
or is not maintainable in said courts or that the venue thereof may not be
appropriate or that this Agreement or any such document may not be enforced in
or by such courts, and the parties hereto irrevocably agree that all claims with
respect to such action or proceeding shall be heard and determined in such a
Delaware State or Federal court. The parties hereby consent to and grant any
such court jurisdiction over the person of such parties and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
11(g) or in such other manner as may be permitted by law shall be valid and
sufficient service thereof. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO
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THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 11(a).
(b) ASSIGNMENT; BINDING UPON SUCCESSORS AND ASSIGNS. Except as
expressly set forth herein, neither party hereto may assign any of its rights or
obligations hereunder without the prior written consent of the other party
hereto. This Agreement will be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
(c) SEVERABILITY. If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other Persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. The parties further agree to replace such void
or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the greatest extent possible, the economic,
business and other purposes of the void or unenforceable provision.
(d) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and the
same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, will bear the signatures of
all the parties reflected hereon as signatories.
(e) OTHER REMEDIES. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby or by law on such party,
and the exercise of any one remedy will not preclude the exercise of any other.
(f) AMENDMENT AND WAIVERS. Any term or provision of this Agreement
may be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by duly authorized officers of the party
to be bound thereby. The waiver by a party of any breach hereof or default in
the performance hereof will not be deemed to constitute a waiver of any other
default or any succeeding breach or default.
(g) NOTICES. All notices and other communications pursuant to this
Agreement shall be in writing and deemed to be sufficient if contained in a
written instrument and shall be deemed given if delivered personally, via
facsimile, sent by
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nationally recognized overnight courier or mailed by registered or certified
mail (return receipt requested), postage prepaid, to the parties at the
following address (or at such other address for a party as shall be specified by
like notice):
If to IMS: IMS Health Incorporated
200 Nyala Farms
Westport, Connecticut 06880
Attention: Chief Executive Officer
Telecopy: (203) 222-4247
With a copy to: IMS Health Incorporated
200 Nyala Farms
Westport, Connecticut 06880
Attention: David Stevens
Jared Finkelstein
Telecopy: (203) 222-4268
And to: Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Alan J. Sinsheimer
Keith A. Pagnani
Telecopy: (212) 558-3588
And if to TriZetto: The TriZetto Group, Inc.
567 San Nicolas Drive, Suite 367
Newport Beach, California 92660
Attention: Christine A. Miller
Telecopy: (949) 219-2197
With a copy to: Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92660-6422
Attention: K.C. Schaaf
Michael E. Flynn
Telecopy: (949) 725-4100
All such notices and other communications shall be deemed to have been received
(a) in the case of personal delivery, on the date of such delivery, (b) in the
case of a facsimile, when the party receiving such copy shall have confirmed
receipt of the communication, (c) in the case of delivery by nationally
recognized overnight courier, on the business day following dispatch, and (d) in
the case of mailing, on the third business day following such mailing.
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(h) CONSTRUCTION OF AGREEMENT. This Agreement has been negotiated by
the respective parties hereto and their attorneys and the language hereof will
not be construed for or against either party. A reference to a Section will mean
a Section in this Agreement unless otherwise explicitly set forth. The titles
and headings herein are for reference purposes only and will not in any manner
limit the construction of this Agreement which will be considered as a whole.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
(i) FURTHER ASSURANCES. Each party agrees to cooperate fully with
the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to evidence and reflect the transactions described
herein and contemplated hereby and to carry into effect the intents and purposes
of this Agreement.
(j) ENTIRE AGREEMENT. This Agreement, the Merger Agreement
(including the Exhibits and Schedules thereto), the Voting Agreements, the IMS
Disclosure Letter, the TriZetto Disclosure Letter, the Data Rights Agreement,
the Registration Rights Agreement, the HealthWeb License Agreement and the
Transitional Services Agreements constitute the entire understanding and
agreement of the parties hereto with respect to the subject matter hereof and
supersede all prior and contemporaneous agreements or understandings,
inducements or conditions, express or implied, written or oral, between the
parties with respect hereto other than the Confidentiality Agreement, which
shall remain in full force and effect. The express terms hereof control and
supersede any course of performance or usage of trade inconsistent with any of
the terms hereof.
(k) TERMINATION; SURVIVAL. Immediately upon the satisfaction of the
obligations of each party pursuant to Sections 4, 5, 6, 7, 8, and 9 of this
Agreement (other than Sections 1, 2, 3, 10 and 11), this Agreement shall
terminate automatically without any action by any party and such terminated
provisions of this Agreement shall not survive such termination. This Section 11
and Sections 1, 2, 3, and 10 shall survive any termination of all or any part of
this Agreement indefinitely.
(l) HEADINGS; RECITALS. All Section headings and the recitals herein
are for convenience of reference only and are not part of this Agreement, and no
construction or reference shall be derived therefrom.
(m) SPECIFIC PERFORMANCE. Each party hereto acknowledges that it
will be impossible to measure in money the damage to the other party if a party
hereto fails to comply with any of the obligations imposed by this Agreement,
that every such obligation is material and that, in the event of any such
failure, the other party will not have an adequate remedy at law or damages.
Accordingly, each party hereto agrees that injunctive relief or other equitable
remedy, in addition to remedies at law or damages, is the appropriate remedy for
any such failure and will not oppose the granting of such relief on the basis
that the other party has an adequate remedy at law. Each party hereto
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agrees that it shall not seek, and agrees to waive any requirement for, the
securing or posting of a bond in connection with any other party's seeking or
obtaining such equitable relief.
(n) THIRD PARTY BENEFICIARIES. Nothing in this Agreement, express or
implied, is intended to confer upon any third party any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this
Stockholder Agreement as of the date first above written
.
THE TRIZETTO GROUP, INC.
BY:
-----------------------------
Name:
Title:
IMS HEALTH INCORPORATED
By:
-----------------------------
Name
Title:
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Contact: Michael Gury Jodi Amendola
IMS HEALTH Communications TriZetto Communications
(203) 222-4230 (480) 657-9966
Jack Walsh Ethan Denkensohn
IMS HEALTH Investor Relations Relations TriZetto Investor
(203) 222-4250 (212) 213-0006
IMS HEALTH AND TRIZETTO TERMINATE MERGER AGREEMENT NEW STRATEGIC ALLIANCE
INCLUDES TRIZETTO'S ACQUISITION OF ERISCO; PLUS HEALTHWEB AND DATA AGREEMENT
WITH IMS HEALTH
WESTPORT, CT and NEWPORT BEACH, CA, May 16, 2000 -- IMS HEALTH (NYSE:RX) and The
TriZetto(R) Group, Inc. (Nasdaq:TZIX) today jointly announced a strategic
alliance under which TriZetto will acquire Erisco Managed Care Technologies, a
subsidiary of IMS HEALTH, for TriZetto stock. Further, IMS HEALTH and TriZetto
will enter a technology and data partnership. The alliance supersedes the merger
of the two companies announced March 29,2000, which has been terminated by the
consent of both Boards of Directors.
TriZetto is a leading provider of vertical, Internet-enabled application
services and business portals to the healthcare industry. IMS HEALTH is the
world's leading provider of information solutions to the pharmaceutical and
healthcare industries. The new agreement calls for issuance of TriZetto stock in
exchange for Erisco, a leading provider of technology solutions supporting 70
million managed care lives worldwide. Based on TriZetto's closing price on May
16, 2000, of $24.00, IMS HEALTH would receive approximately 10.63 million
TriZetto shares, representing 30.1% on a fully diluted pro forma basis, valuing
Erisco at $255 million. The transaction is structured with a customary collar
between a $21 TriZetto stock price, below which IMS HEALTH receives 12.1 million
TriZetto shares, and a $29 TriZetto stock price, above which IMS HEALTH receives
8.8 million shares. The final exchange ratio will be determined by TriZetto's
average daily price for the 15 trading days ending on the third day prior to the
closing date, which is expected in August/September 2000.
IMS HEALTH and TriZetto will remain separate, independently traded public
companies.
As part of the Erisco transaction, TriZetto's Board of Directors will
include an IMS HEALTH representative. IMS HEALTH has also committed to enter a
business contract for TriZetto's HealthWeb(SM) product and technology services.
The HealthWeb Internet portal, augmented with TriZetto's ASP technology, will
facilitate an acceleration
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of IMS HEALTH's Internet strategy. Access to new information sources will enable
the development of future IMS HEALTH products.
"This new approach retains the strategic benefits of the original
transaction in a simpler form designed to be more attractive to shareholders,"
said Victoria R. Fash, president and CEO of IMS HEALTH. "We are committed to the
IMS HEALTH business strategy, facilitated by our new partnership with TriZetto."
"We are very pleased to have developed a strong strategic relationship
with IMS HEALTH while accelerating the ASP model which has successfully driven
our industry leading position," said Jeffrey H. Margolis, TriZetto chairman and
CEO. "Erisco extends TriZetto's ability to provide the widest selection of
applications to our customers on a pre-integrated basis. TriZetto will maintain
its vendor neutral approach to the market, generating revenue from Erisco
through licensing and offering Erisco Facets(TM) and Facts on an ASP basis,
together with our other best-of-class 3rd party offerings. Erisco's strong
positive cash flow will fuel the growth of our ASP business."
Separately, IMS HEALTH reaffirmed its intent to spin-off Strategic
Technologies, a unit of IMS HEALTH. Strategic Technologies, the global market
leader in customized Pharmaceutical Relationship Management (PRM) solutions,
helps pharmaceutical companies achieve maximum return on their sales and
marketing investments. The Strategic Technologies spin-off will be structured as
a tax-free distribution to shareholders, anticipated to be complete in July
2000.
"We are re-affirming the IMS HEALTH year 2000 growth rate guidance of 15
percent constant dollar revenue growth, and 20 percent EPS growth, on a
post-transaction basis," said James Malone, chief financial officer of IMS
HEALTH.
The TriZetto acquisition of Erisco is subject to SEC regulatory clearance,
Hart-Scott Rodino approval and approval of TriZetto shareholders.
For a copy of investor kits related to this announcement, click here.
< http://www.imshealth.com/html/iik/tzixrx.htm >
The TriZetto Group, Inc. is a leading provider of vertical,
Internet-enabled application services and business portals for the healthcare
industry. As an application services provider, TriZetto hosts software for a
predictable monthly fee, saving customers significant time, money and
frustration. HealthWeb, its Internet portal, assists healthcare administrators
and professionals in performing their routine tasks and facilitates
information-exchange and e-commerce among all key healthcare participants:
providers, health plans and employers and health-plan members. Additional
information is available at http://www.trizetto.com.
IMS HEALTH is the world's leading provider of information solutions to the
<PAGE>
pharmaceutical and healthcare industries. With $1.4 billion in 1999 revenue, IMS
HEALTH operates in over 100 countries. IMS HEALTH is the largest pharmaceutical
manufacturer information partner, with over 40 years experience in the industry.
Key products and services integral to customer day-to-day operations include:
market research for prescription and over-the-counter pharmaceutical products;
sales management information to optimize sales force productivity;
pharmaceutical relationship management solutions for sales and marketing
decision-making; and technology systems and information services that support
managed care organizations. Additional information is available at
http://www.imshealth.com.
# # # This press release may contain forward-looking information
(statements that are not historical facts and relate to future performance) that
involves risks and uncertainties. The forward-looking statements are made
pursuant to the Safe Harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements may include statements
about future net revenues, profits, and financial results, the market for
TriZetto's services, future service offerings, client and partner relationships,
and TriZetto's operational capabilities. Actual results may differ materially
from those stated in any forward-looking statements based on a number of
factors, including the effectiveness of TriZetto's implementation of its
business plan, the market's acceptance of TriZetto's services, risks associated
with management of growth, reliance on third parties to supply key components of
TriZetto's services, attraction and retention of employees, variability of
quarterly operating results, including the effects of the client purchasing
patterns due to Year 2000 issues, competitive factors, risks associated with
acquisitions, changes in demand for third party products or solutions, which
form the basis of TriZetto's service offerings, and risks associated with
rapidly changing technology, as well as the risks identified in TriZetto's SEC
filings.
This press release includes statements which may constitute
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Although IMS HEALTH believes
the expectations contained in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove correct. This
information may involve risks and uncertainties that could cause actual results
of IMS HEALTH to differ materially from the forward-looking statements. Factors
which could cause or contribute to such differences include, but are not limited
to (i) the risks associated with operating on a global basis, including
fluctuations in the value of foreign currencies relative to the U.S. dollar, and
the ability to successfully hedge such risks, (ii) to the extent IMS HEALTH
seeks growth through acquisitions and joint ventures, the ability to identify,
consummate and integrate acquisitions and ventures on satisfactory terms, (iii)
the ability to develop new or advanced technologies and systems for its
businesses on time and on a cost-effective basis, (iv) regulatory, legislative
and enforcement initiatives, particularly in the areas of medical privacy and
tax, and (v) deterioration in economic conditions, particularly in the
pharmaceutical, healthcare or other industries in which IMS HEALTH's customers
operate. Additional information on factors that may affect the business and
financial
<PAGE>
results of the Company can be found in filings of the Company made from time to
time with the Securities and Exchange Commission.
WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE PROXY STATEMENT OF
TRIZETTO RELATING TO THE TRANSACTION DESCRIBED ABOVE, WHEN IT BECOMES AVAILABLE,
BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. WHEN THIS AND OTHER DOCUMENTS
RELATING TO THE TRANSACTION ARE FILED WITH THE U.S.
SECURITIES AND EXCHANGE COMMISSION, THEY MAY BE OBTAINED FREE AT THE SEC'S WEB
SITE AT www.sec.gov. YOU MAY ALSO OBTAIN EACH OF THESE DOCUMENTS (WHEN THEY
BECOME AVAILABLE) FOR FREE FROM TRIZETTO BY DIRECTING YOUR REQUEST TO THE
INVESTOR RELATIONS CONTACT PERSONS IDENTIFIED BELOW.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
TriZetto plans to file with the Securities and Exchange Commission (the
"SEC") and to mail to stockholders of TriZetto a Proxy Statement containing
information about the transaction described above. Investors and security
holders are urged to read the Proxy Statement and other documents filed with the
SEC carefully when they are available. The Proxy Statement and other filings
will contain important information about TriZetto, Erisco, the acquisition, the
persons soliciting proxies relating to the acquisition, their interests in the
acquisition, and related matters. Investors and security holders will be able to
obtain free copies of these documents through the website maintained by the SEC
at http://www.sec.gov. Investors will be able to obtain copies of the documents
free of charge from TriZetto by calling Investor Relations, telephone: (480)
657-9966. In addition to the Proxy Statement, TriZetto files annual, quarterly
and special reports, proxy statements and other information with the SEC. You
may read and copy any reports, statements or other information filed by TriZetto
at the SEC public reference rooms at 450 Fifth Street, N.W., Washington, D.C.
20549 or at any of the SEC's other public reference rooms in New York, New York
and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. TriZetto's filings with the SEC are
also available to the public from commercial document-retrieval services and at
the Web sit maintained by the SEC at http://www.sec.gov.
INVESTORS SHOULD READ THE PROXY STATEMENT CAREFULLY WHEN IT BECOMES
AVAILABLE BEFORE MAKING ANY VOTING OR INVESTMENT DECISIONS. NOTHING HEREIN SHALL
CONSTITUTE AN OFFER OR ANY SECURITIES FOR SALE.
TriZetto and its directors and executive officers, who may be considered
participants in this transaction, and certain other members of management and
employees may be soliciting proxies from TriZetto's stockholders in favor of
approval and adoption of the issuance of shares in connection with the merger
agreement. Information
<PAGE>
concerning the participants in the solicitation will be set forth in the Proxy
Statement when it is filed with the SEC. In addition, information about
TriZetto's directors and executive officers is set forth in TriZetto's Annual
Report on Form 10-K for the year ended December 31, 1999, which is filed with
the SEC.
