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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
THE TRIZETTO GROUP, INC.,
CIDADAW ACQUISITION CORP.,
RESOURCE INFORMATION MANAGEMENT SYSTEMS, INC.,
THE SHAREHOLDERS OF
RESOURCE INFORMATION MANAGEMENT SYSTEMS, INC.,
TERRY L. KIRCH
AND THOMAS H. HEIMSOTH
DATED AS OF NOVEMBER 2, 2000
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), is made and
entered into as of November 2, 2000, by and among The TriZetto Group, Inc., a
Delaware corporation ("TriZetto"), Cidadaw Acquisition Corp, a Delaware
corporation and wholly-owned subsidiary of TriZetto ("Merger Sub"), Resource
Information Management Systems Inc., an Illinois corporation ("RIMS"), the
shareholders of RIMS listed on the signature pages attached hereto (each, a
"Shareholder" and collectively, the "Shareholders"), Terry L. Kirch ("Kirch")
and Thomas H. Heimsoth ("Heimsoth"). Certain other capitalized terms used in
this Agreement are defined in Exhibit A attached hereto.
RECITALS
WHEREAS, the respective Boards of Directors of TriZetto, Merger Sub and
RIMS believe it is in the best interest of each company and their respective
stockholders to consummate the business combination transaction provided for
herein in which Merger Sub would merge with and into RIMS (the "Merger");
WHEREAS, the respective Boards of Directors of TriZetto, Merger Sub and
RIMS have approved the Merger, upon the terms and subject to the conditions set
forth in this Agreement;
WHEREAS, the Shareholders are the record owners of 100% of the issued
and outstanding shares of RIMS' capital stock, without par value (the "RIMS
Stock");
WHEREAS, the Shareholders have approved this Agreement and the Merger
in accordance with the Illinois Business Corporations Act ("IBCA") and RIMS'
charter documents;
WHEREAS, Kirch and Heimsoth are the indirect beneficial owners of the
RIMS Stock and will receive significant benefit from the consummation of the
transactions contemplated hereby;
WHEREAS, each of TriZetto, Merger Sub, the Shareholders, RIMS, Kirch
and Heimsoth desire to make certain representations, warranties, covenants and
agreements in connection with the Merger and also to prescribe various
conditions to the consummation thereof; and
WHEREAS, for Federal income tax purposes, the Merger is intended to be
qualified as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code").
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements herein
contained, the parties hereto, intending to be legally bound, hereby agree as
follows:
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ARTICLE 1
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the Delaware General Corporation Law
(the "DGCL") and the IBCA, Merger Sub shall be merged with and into RIMS at the
Effective Time of the Merger (as defined in Section 1.3). Following the Merger,
the separate corporate existence of Merger Sub shall cease, and RIMS shall
continue as the surviving corporation (the "Surviving Corporation") and shall
succeed to and assume all the rights, properties, liabilities and obligations of
Merger Sub in accordance with the DGCL and the IBCA.
1.2 CLOSING. The closing of the Merger (the "Closing") shall take place
at the offices of Stradling Yocca Carlson & Rauth at 660 Newport Center Drive,
Suite 1600, Newport Beach, California 92660 at the date and time on which the
conditions to Closing set forth in Section 9 of this Agreement shall have been
satisfied or waived by the appropriate party. The date on which the Closing
actually occurs and the transactions contemplated hereby become effective is
hereinafter referred to as the "Closing Date." At the time of the Closing,
TriZetto, Merger Sub and RIMS shall deliver the certificates and other documents
and instruments required to be delivered hereunder.
1.3 EFFECTIVE TIME. At the Closing, a certificate of merger (the
"Certificate of Merger") shall be executed and filed in accordance with the
relevant provisions of the DGCL and the IBCA and the parties shall make all
other filings, recordings or publications required by the DGCL and the IBCA in
connection with the Merger. The Merger shall become effective at such time as
the Certificate of Merger is duly filed with the Delaware Secretary of State and
the Illinois Secretary of State, or at such other time as may be specified in
the Certificate of Merger (the "Effective Time").
1.4 EFFECTS OF THE MERGER. Subject to the foregoing, the effects of the
Merger shall be as provided in the applicable provisions of the DGCL and the
IBCA.
1.5 CERTIFICATE OF INCORPORATION AND BYLAWS OF THE SURVIVING
CORPORATION. The Articles of Incorporation and Bylaws of RIMS as in effect
immediately prior to the Effective Time shall be the Articles of Incorporation
and Bylaws of the Surviving Corporation until thereafter changed or amended as
provided therein or in accordance with applicable law.
1.6 DIRECTORS AND OFFICERS. The directors and officers of Merger Sub
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation until their successors shall have been duly elected or
appointed and qualified in accordance with applicable law or until their earlier
death, resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws.
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
RIMS AND MERGER SUB
2.1 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of TriZetto, Merger Sub, RIMS, the
Shareholders, Kirch or Heimsoth:
(a) CAPITAL STOCK OF MERGER SUB. Each issued and outstanding
share of capital stock of Merger Sub shall by virtue of the Merger and without
any action on the part of any holder thereof, be converted into one share of
RIMS Stock. Such newly issued shares shall thereafter constitute all of the
issued and outstanding capital stock of the Surviving Corporation.
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(b) CONVERSION OF RIMS COMMON STOCK. Subject to other
provisions of this Section 2:
(i) Each issued and outstanding share of RIMS Stock
will be converted automatically into the right to receive:
(a) the "Cash Consideration" in the amount
of $.721154; and
(b) .62221794 shares of validly issued,
fully paid and non-assessable shares of common stock, $0.001 par value, of
TriZetto (the "TriZetto Stock"). Such TriZetto Stock shall be subject to
adjustment as set forth in Section 2.4 and 2.6 below.
(ii) At the Effective Time, all such shares of RIMS
Stock shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate representing
any such shares shall cease to have any rights with respect thereto, except the
right to receive, upon the surrender of any such certificates, certificates
representing the shares of TriZetto Stock ( together with the Cash
Consideration, the "Merger Consideration") to be issued or paid in consideration
therefor upon the surrender of such certificate in accordance with Section 2.2,
without interest.
(c) STOCK OPTIONS AND STOCK PLANS. At the Effective Time, all
outstanding vested options to purchase RIMS Stock (the "RIMS Options"), shall
cease to represent a right to acquire shares of RIMS Stock and shall be
converted automatically into an option to acquire shares of TriZetto Stock
("TriZetto Option"); provided, however, that from and after the Effective Time,
(i) the number of shares of TriZetto Stock purchasable upon exercise of such
TriZetto Option shall be equal to the number of shares of RIMS Stock that were
purchasable under such RIMS Option immediately prior to the Effective Time
multiplied by .6352769, rounding down to the nearest whole share, and (ii) the
per share exercise price under each such TriZetto Option shall be adjusted by
dividing the per share exercise price of each such RIMS Option by .6352769,
rounding down to the nearest cent ("Adjusted Exercise Price"). Such RIMS Options
shall be assumed by TriZetto under the terms of an employee option plan to be
established by TriZetto which shall provide holders of such options with
substantially the same rights and obligations as the RIMS Stock Option Plan.
Each holder of RIMS Options shall agree to be bound by the lock-up restrictions
set forth in Section 2.5 hereof. All unvested RIMS Options that do not
accelerate as a result of the Merger shall terminate immediately prior to the
Effective Time.
2.2 EXCHANGE OF CERTIFICATES.
(a) TRIZETTO STOCK EXCHANGE PROCEDURES. Immediately following
the Closing, upon receipt of the certificates representing all of the
outstanding shares of RIMS Stock from each of the Shareholders, TriZetto shall
submit to TriZetto's registrar and transfer agent, U.S. Stock Transfer
Corporation (the "Exchange Agent"), an instruction letter including a list of
the names, addresses and social security numbers or taxpayer identification
numbers of each Shareholder who has delivered the certificate or certificates
representing all shares of RIMS Stock held by such Shareholder to TriZetto. As
soon as reasonably practicable following the Effective Time, TriZetto shall
cause the Exchange Agent to issue in exchange therefor a certificate
representing that number of whole shares of TriZetto Stock, which such
Shareholder has the right to receive pursuant to the provisions of this Article
2 (less the proportionate number of shares to be placed into Escrow as provided
in Section 2.3 below). The certificates of RIMS Stock so surrendered shall, at
TriZetto's option, be duly endorsed
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to TriZetto or be accompanied by stock powers duly endorsed in blank. Upon
delivery of the above mentioned consideration, the RIMS Stock certificate so
surrendered shall be canceled. Until surrendered as contemplated by this Section
2.2, each certificate shall be deemed at any time after the Effective Time for
all corporate purposes of TriZetto to represent ownership of the number of
shares of TriZetto Stock into which the number of shares of RIMS Stock shown
thereon have been converted as contemplated by this Article 2.
(b) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions with respect to TriZetto Stock with a record
date after the Effective Time shall be paid to the holder of any unsurrendered
certificate with respect to the shares of TriZetto Stock represented thereby
until the surrender of such certificate in accordance with this Article 2.
Subject to the effect of applicable laws, following surrender of any such
certificate, there shall be paid to the record holder of the certificates
representing whole shares of TriZetto Stock issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of dividends or other
distributions, if any, with a record date on or after the Effective Time which
theretofore became payable, but which were not paid by reason of the immediately
preceding sentence, with respect to such whole shares of TriZetto Stock, and
(ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date on or after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole shares of TriZetto Stock.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY STOCK. All shares
of TriZetto Stock issued upon the surrender for exchange of certificates in
accordance with the terms of this Article 2 (including the Cash Consideration
paid pursuant to Section 2.1(b)(i)(A)) shall be deemed to have been issued (and
paid) in full satisfaction of all rights pertaining to the shares of RIMS Stock
represented thereby. From and after the Effective Time, the stock transfer books
of RIMS shall be closed and there shall be no further registration of transfers
on the stock transfer books of the Surviving Corporation of the shares of RIMS
Stock which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in this Article 2.
(d) NO FRACTIONAL SHARES. No certificates or scrip
representing fractional shares of TriZetto Stock shall be issued upon the
surrender for exchange of certificates, and such fractional share interests will
not entitle the owner thereof to vote or to any other rights of a TriZetto
stockholder.
(e) WITHHOLDING TAXES; PAYMENTS TO PUBLIC OFFICIALS. TriZetto
and Merger Sub shall be entitled to deduct and withhold from any consideration
payable or otherwise deliverable to any Shareholder pursuant to this Agreement
such amounts as TriZetto and Merger Sub may be required to deduct or withhold
therefrom under the Code or under any provision of state, local or foreign tax
law. To the extent such amounts are so deducted or withheld, such amounts shall
be treated for all purposes under this Agreement as having been paid to the
Shareholder to whom such amounts would otherwise have been paid. Neither
TriZetto nor Merger Sub shall be liable to any Shareholder for any shares of
TriZetto Stock (or dividends or distributions with respect thereto), or for any
cash amounts, delivered to any public official pursuant to any applicable
abandoned property, escheat or similar law.
2.3 DELIVERY OF TRIZETTO STOCK TO ESCROW. Pursuant to an Escrow
Agreement to be entered into on or before the Closing in substantially the form
of Exhibit B (the "Escrow Agreement"), by and among TriZetto, the Shareholders
and Bankers Trust Company of California
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N.A. (the "Escrow Agent"), TriZetto will deposit stock certificates representing
twenty percent (20%) of the shares of TriZetto Stock that would otherwise be
delivered to the Shareholders at the Closing (the "Escrow Shares") in Escrow
together with related stock powers which will be held in escrow for one year
(the "Escrow") to secure the indemnification obligations of the Shareholders,
RIMS, Kirch and Heimsoth with respect to claims made under Article 8 hereof.
2.4 ANTI-DILUTION PROVISIONS. In the event the number of shares of
TriZetto common stock issued and outstanding prior to the Effective Time changes
as a result of a stock split, stock dividend, subdivision, reclassification,
recapitalization, combination of shares or similar recapitalization with respect
to such stock or if TriZetto declares a Material dividend or distribution in
cash or property other than stock (an "Anti-Dilution Event") and the record date
therefor (in the case of a dividend) or the effective date thereof (in the case
of a stock split or similar recapitalization for which a record date is not
established) shall be prior to the Closing Date, the number of shares of
TriZetto Stock to be received pursuant to Section 2.1 shall be correspondingly
adjusted to reflect such Anti-Dilution Event.
2.5 LOCKUP PERIODS. Each of the Shareholders hereby covenants and
agrees that during each of the periods set forth below (each, a "Lock-Up Period"
and collectively, the "Lock-Up Periods"), such Shareholder shall not, directly
or indirectly, sell, offer to sell, solicit an offer to sell, contract or grant
any option or warrant to sell (including, without limitation, any short sale),
register, pledge, transfer, establish an open "put equivalent position" within
the meaning of Rule 16a-1(h) under the 1934 Act, or otherwise transfer or
dispose of any shares of the TriZetto Stock to be delivered pursuant to this
Agreement (the "Lock-Up Restriction"). The Lock-Up Restriction shall terminate
on the dates set forth below (each, a "Lock-Up Release Date"):
(a) with respect to that number of shares equal to fifty
percent (50%) of the total number of shares of TriZetto Stock delivered on the
Closing Date pursuant to Section 2.1(b)(i)(B), plus any Additional Shares issued
on such Lock-Up Release Date, on the one-year anniversary of the Effective Time
("First Lock-Up Release Date");
(b) with respect to that number of shares equal to twelve and
one-half percent (12.5%) of the total number of shares of TriZetto Stock
delivered on the Closing Date pursuant to Section 2.1(b)(i)(B), plus any
Additional Shares issued on such Lock-Up Release Date, on the fifteen-month
anniversary of the Effective Time ("Second Lock-Up Release Date");
(c) with respect to that number of shares equal to twelve and
one-half percent (12.5%) of the total number of shares of TriZetto Stock
delivered on the Closing Date pursuant to Section 2.1(b)(i)(B), plus any
Additional Shares issued on such Lock-Up Release Date, on the eighteen-month
anniversary of the Effective Time ("Third Lock-Up Release Date");
(d) with respect to that number of shares equal to twelve and
one-half percent (12.5%) of the total number of shares of TriZetto Stock
delivered on the Closing Date pursuant to Section 2.1(b)(i)(B), plus any
Additional Shares issued on such Lock-Up Release Date, on the twenty-one-month
anniversary of the Effective Time ("Fourth Lock-Up Release Date"); and
(e) with respect to that number of shares equal to twelve and
one-half percent (12.5%) of the total number of shares of TriZetto Stock
delivered on the Closing Date pursuant to Section 2.1(b)(i)(B), plus any
Additional Shares issued on such Lock-Up Release Date, on the two-year
anniversary of the Effective Time ("Final Lock-Up Release Date").
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2.6 PURCHASE PRICE ADJUSTMENT. If the average closing sales
price of the TriZetto Stock as reported on the Nasdaq National Market System
("NMS") (or other exchange or similar market on which TriZetto Stock is
regularly traded if not then traded on the NMS) for the five trading days
preceding a Lock-Up Release Date (the "Adjusted Stock Price") is less than
$17.50, as adjusted for an Anti-Dilution Event occurring after the date of this
Agreement, then TriZetto shall issue or cause to be issued by submitting an
instruction letter to its Transfer Agent instructing the Transfer Agent to issue
an additional number of shares of TriZetto Stock ("Additional Shares") within
five business days after the Lock-Up Release Date to each Shareholder, pro rata,
such that the total number of shares eligible for sale by all Shareholders on
such Lock-Up Release Date (including shares sold prior to such date) has a value
equal to $45,297,466.10, multiplied by the aggregate percentage of shares of
TriZetto Stock released as of such date, based upon such Adjusted Stock Price;
provided, however, that in no event shall TriZetto be required to issue an
aggregate number of Additional Shares in excess of twenty-five percent (25%) of
the number of shares of TriZetto Stock issued pursuant to Section 2.1(b)(i)(B)
hereof (net of any reductions pursuant to Section 8 hereof). In the event that
Additional Shares are issued pursuant to this paragraph and at any subsequent
Lock-Up Release Date the number of shares of TriZetto Stock eligible for sale on
such Lock-Up Release Date (including shares sold prior to such date) have a
value, based on the applicable Adjusted Stock Price, in excess of
$45,297,466.10, multiplied by the aggregate percentage of shares of TriZetto
Stock released as of such date, then, each Shareholder shall return for
cancellation to TriZetto such number of shares of TriZetto Stock, duly endorsed,
that have a value equal to his, her or its pro rata portion of such excess,
based on the applicable Adjusted Share Price; provided, however, that in no
event shall such number of shares to be returned by each Shareholder exceed the
aggregate number of Additional Shares previously issued to such Shareholder;
provided further, that, in the event the Shareholders are required to return
shares of TriZetto Stock pursuant to this Section 2.6 and the amount of shares
of TriZetto Stock to be returned by the Shareholders is greater than the amount
of shares of TriZetto Stock then held by the Shareholders, then, the
Shareholders shall be required to pay to TriZetto an amount in cash equal to (a)
the difference between the number of shares of TriZetto Stock to be returned by
the Shareholders and the number of shares of TriZetto Stock then held by the
Shareholders, multiplied by (b) the Adjusted Stock Price.
2.7 DELIVERY OF MERGER CONSIDERATION, OPTIONS AND RESTRICTED
STOCK. By executing this Agreement, each of the parties agrees to the method and
timing of the delivery of the Merger Consideration, Options and Restricted Stock
as set forth herein and in the Flow of Funds Memorandum attached hereto as
Exhibit G.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF RIMS,
THE SHAREHOLDERS, KIRCH AND HEIMSOTH
RIMS, each of the Shareholders, Kirch and Heimsoth, jointly and
severally, represent and warrant to TriZetto and Merger Sub that, except as set
forth in the RIMS Disclosure Schedule:
3.1 CORPORATE EXISTENCE AND POWER. RIMS and each of its Subsidiaries is
a corporation duly incorporated, validly existing and in good standing under the
laws of the State of Illinois, and has all corporate powers and authority and
all governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted, except for those licenses,
authorizations, permits, consents and approvals the absence of which would not,
individually or in the aggregate, have a Material Adverse Effect on RIMS. RIMS
and each of its
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Subsidiaries is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where such qualification is necessary, except
for those jurisdictions where the failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect on RIMS. RIMS
has heretofore delivered to TriZetto true and complete copies of the Articles of
Incorporation and Bylaws of RIMS and each of its Subsidiaries as currently in
effect.
3.2 CORPORATE AUTHORIZATION.
(a) The execution, delivery and performance by RIMS of this
Agreement and the consummation of the transactions contemplated hereby are
within RIMS' corporate powers and have been duly authorized by all necessary
corporate action. This Agreement and the Merger have been duly authorized by all
necessary corporate action of RIMS in accordance with the IBCA.
(b) RIMS' Board of Directors, either at a meeting duly called
and held or by unanimous written consent in lieu of a meeting, has unanimously
(i) determined that this Agreement and the transactions contemplated hereby
(including the Merger) are fair to and in the best interests of its
Shareholders, and (ii) approved and adopted this Agreement and the transactions
contemplated hereby (including the Merger), which approval satisfies in full any
applicable requirements of the IBCA.
(c) This Agreement has been duly executed and delivered by
each of the Shareholders, RIMS, Kirch and Heimsoth. This Agreement constitutes,
and the Transaction Documents to be executed and delivered will constitute,
legal, valid and binding obligations of each of the Shareholders, RIMS, Kirch
and Heimsoth, enforceable against each of the Shareholders, RIMS, Kirch and
Heimsoth, as applicable, in accordance with their respective terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
3.3 GOVERNMENTAL AUTHORIZATION. The execution, delivery and performance
by each of the Shareholders, RIMS, Kirch and Heimsoth of this Agreement and the
consummation by each of the Shareholders, RIMS, Kirch and Heimsoth of the
transactions contemplated hereby require no action by or in respect of, or
filing with, any governmental body, agency, official or authority, other than
(a) the filing of the Certificate of Merger and other documents in accordance
with the DGCL and the IBCA, (b) compliance with the Securities Act of 1933 (the
"1933 Act"), the Securities Exchange Act of 1934 (the "1934 Act"), or foreign or
state securities or blue sky laws, (c) actions required by the Hart-Scott-Rodino
Antitrust Improvement Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act"), or any applicable foreign antitrust law,
and (d) any other filings, approvals or authorizations which, if not obtained,
would not, individually or in the aggregate, have a Material Adverse Effect on
RIMS or Materially impair the ability of any of the Shareholders, RIMS, Kirch
and Heimsoth to consummate the transactions contemplated by this Agreement.
3.4 NON-CONTRAVENTION. The execution, delivery and performance by each
of the Shareholders, RIMS, Kirch and Heimsoth of this Agreement and the
consummation by each of the Shareholders, RIMS, Kirch and Heimsoth of the
transactions contemplated hereby do not and will not (i) contravene or conflict
with the Articles of Incorporation or Bylaws of RIMS, (ii) assuming compliance
with the matters referred to in Section 3.3, contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to any of the
Shareholders, RIMS, Kirch or Heimsoth, (iii) require the consent or other
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action of any Person under, constitute a default under, or give rise to any
right of termination, cancellation or acceleration of any right or obligation of
any of the Shareholders, RIMS, Kirch or Heimsoth or to a loss of any benefit to
which any of the Shareholders, RIMS, Kirch or Heimsoth is entitled under any
provision of any Material agreement or other instrument binding upon any of the
Shareholders, RIMS, Kirch or Heimsoth or any Material license, franchise,
permit, certificate, approval or other similar authorization affecting, or
relating in any way to, the assets or business of RIMS, (iv) result in the
creation or imposition of any Material Lien on any asset of RIMS, except, in the
case of clause (ii) , for such matters as would not, individually or in the
aggregate, have a Material Adverse Effect on RIMS or Materially impair the
ability of RIMS to consummate the transactions contemplated by this Agreement.
RIMS has taken all steps necessary to exempt the transactions contemplated by
this Agreement irrevocably from any applicable "fair price" "moratorium"
"control share acquistion" "interested shareholder" or other anti-takeover law
(however styled).
3.5 COMPLIANCE WITH LAW AND OTHER INSTRUMENTS.
(a) RIMS and each of its Subsidiaries holds all licenses,
permits and authorizations necessary for the lawful conduct of its business as
now being conducted pursuant to all applicable statutes, laws, ordinances, rules
and regulations of all governmental bodies, agencies and other authorities
having jurisdiction over it or any part of its respective operations, and there
are no violations or claimed violations by RIMS of, or action or proceeding
pending against RIMS or any of its Subsidiaries with respect to, any such
license, permit or authorization or any such statute, law, ordinance, rule or
regulation, except where the failure to obtain such licenses, permits and
authorizations or such violation or claimed violations by RIMS or such action or
proceeding pending against RIMS or any of its Subsidiaries would not have a
Material Adverse Effect on RIMS or any of its Subsidiaries. Section 3.5 of the
RIMS Disclosure Schedule sets forth all licenses, permits and authorizations
held by RIMS and each of its Subsidiaries.
(b) The business of RIMS and each of its Subsidiaries has been
and is being conducted in compliance with all applicable Laws, including without
limitation all Laws concerning privacy and/or data protection, except for
violations or failures to so comply that could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on RIMS. No
investigation or review by any Regulatory Authority with respect to RIMS or any
of its Subsidiaries is pending or, to the Knowledge of the Shareholders, RIMS,
Kirch or Heimsoth, threatened in writing, other than, in each case, those which
could not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect on RIMS or any of its Subsidiaries. RIMS has not
received any written communication in the past two years from a Regulatory
Authority that alleges that RIMS or any of its Subsidiaries is not in compliance
in any Material respect with any applicable Law.
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3.6 CAPITALIZATION.
(a) The authorized capital stock of RIMS consists of 2,000,000
shares of Class B Non-Voting common stock, 9,900,000 shares of Class C
Non-Voting common stock and 100,000 shares of Class C Voting common stock. As of
the date hereof, there are outstanding (i) no shares of Class B Non-Voting
common stock, 4,118,400 shares of Class C Non-Voting common stock and 41,600
shares of Class C Voting common stock, (ii) 504,600 RIMS Options, of which
472,400 will become vested as a result of the Merger, (iii) no RIMS Derivative
Securities, and (iv) no shares of RIMS Stock issued or relating to restricted
stock awards, or other stock based compensation arrangements.
(b) All outstanding shares of capital stock of RIMS have been
duly authorized and validly issued and are fully paid and nonassessable and free
of preemptive rights. Except as set forth in this Section 3.6, there are no
outstanding (i) shares of capital stock or other voting securities of RIMS, (ii)
securities of RIMS convertible into or exchangeable for shares of capital stock
or voting securities of RIMS, or (iii) options, restricted stock, stock
appreciation rights, other stock based compensation awards or other rights to
acquire from RIMS, or other obligation of RIMS to issue, any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of RIMS. There are no outstanding obligations of RIMS
to repurchase, redeem or otherwise acquire any securities referred to in clauses
(i), (ii) or (iii) above.
(c) As of the date hereof, there are no outstanding bonds,
debentures, notes or other indebtedness of RIMS having the right to vote (or
convertible into or exercisable for RIMS Stock having the right to vote) on any
matters on which the Shareholders may vote.
(d) As of the date hereof, there are not outstanding
contractual obligations of RIMS to repurchase, reprice, redeem or otherwise
acquire any shares of the capital stock of RIMS.
(e) All of the RIMS Stock was issued or granted in compliance
with all applicable federal and state securities laws.
(f) There are no voting agreements or voting trusts between or
among any Person or Persons relating to RIMS or the RIMS Stock. RIMS is not
obligated to issue or repurchase any shares of RIMS Stock for any purpose and no
Person has entered into any Contract (whether preemptive or contractual) for the
purchase (whether from the Shareholders, RIMS, Kirch or Heimsoth), subscription
or issuance of any unissued shares or other securities of RIMS, whether now or
in the future.
3.7 SUBSIDIARY. RIMS has no Subsidiaries and 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, except for as listed in Section 3.7 of the RIMS
Disclosure Schedule.
3.8 COMPANY FINANCIAL STATEMENTS; ABSENCE OF UNDISCLOSED LIABILITIES.
(a) RIMS has delivered to TriZetto the audited balance sheets
of RIMS as of December 31, 1997, 1998 and 1999 and the related statements of
income and stockholders equity for the fiscal years ended December 31, 1997,
1998, and 1999 (the "Financial Statements"). The RIMS
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Financial Statements present fairly, in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis, the financial
condition and results of operations of as of the dates and for the periods
indicated therein. For purposes of this Agreement, "RIMS Balance Sheet" means
the unaudited balance sheet of RIMS as of September 30, 2000, which contains no
footnotes or year end adjustments. The RIMS Balance Sheet fairly reflects the
financial condition of RIMS as of the date indicated therein (except that the
RIMS Balance Sheet is subject to normal year-end audit adjustments, which will
not, individually or in the aggregate, be Material in magnitude).
(b) RIMS does not have any liabilities or obligations of any
nature, whether absolute, accrued, unmatured, contingent or otherwise whether
due or to become due, known or unknown, or any unsatisfied judgments or any
leases of personalty or realty or unusual or extraordinary commitments that are
required to be disclosed under GAAP, except (i) as set forth in Section 3.8(b)
of the RIMS Disclosure Schedule, (ii) the liabilities recorded on the RIMS
Balance Sheet, (iii) liabilities or obligations incurred since the date of the
RIMS Balance Sheet which were incurred in the ordinary course of business and
consistent with past practice, or (iv) liabilities that would not be required by
GAAP to be disclosed in financial statements or in the notes thereto and that
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on RIMS.
3.9 ABSENCE OF CERTAIN CHANGES. Except as set forth in Section 3.9 of
the RIMS Disclosure Schedule, since the date of the RIMS Balance Sheet, the
business of RIMS has been conducted in the ordinary course consistent with past
practice and there has not been:
(a) any event, occurrence or development of a state of
circumstances or facts which would, individually or in the aggregate, have a
Material Adverse Effect on RIMS (other than adverse effects arising from the
execution and performance of this Agreement, changes in general economic
conditions or changes applicable generally to the industry) or any event,
occurrence or development which would have a Material Adverse Effect on the
ability of RIMS to consummate the Merger;
(b) any declaration, setting aside or payment of any dividend
or other distribution with respect to any shares of capital stock of RIMS, or
any repurchase, redemption or other acquisition by RIMS of any outstanding
shares of capital stock or other securities of, or other ownership interests in
RIMS;
(c) any split, combination, re-classification of any RIMS
Stock or any amendment of any term of any outstanding security of RIMS;
(d) any incurrence, assumption or guarantee by RIMS of any
indebtedness for borrowed money other than in the ordinary course and in amounts
and on terms consistent with past practices;
(e) any incurrence of any indebtedness by RIMS to the
Shareholders, Kirch or Heimsoth;
(f) any creation or other incurrence by RIMS of any Lien on
any asset other than in the ordinary course consistent with past practices;
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(g) any making of any loan, advance or capital contribution to
or investment in any Person other than loans, advances or capital contributions
to or investments in wholly-owned subsidiaries of RIMS made in the ordinary
course consistent with past practices;
(h) any transaction or commitment made, or any contract or
agreement entered into, by RIMS relating to its assets or business (including
the acquisition or disposition of any assets) or any relinquishment by RIMS of
any contract or other right, in either case, Material to RIMS, taken as a whole,
other than transactions and commitments in the ordinary course consistent with
past practices and those contemplated by this Agreement;
(i) any change in any method of accounting, method of tax
accounting or accounting practice by RIMS, except for any such change required
by reason of a concurrent change in GAAP;
(j) any (i) grant of any severance or termination pay to any
current or former director, officer or employee of RIMS, (ii) entering into of
any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any current or former director,
officer or employee of RIMS, (iii) increase in benefits payable under any
existing severance or termination pay policies or employment agreements, (iv)
increase in compensation, bonus or other benefits payable or otherwise made
available to current or former directors, officers or employees of RIMS (other
than in the ordinary course of business salary increases for employees other
than officers and directors), (v) the declaration or payment of any bonuses or
year-end payments to any current or former directors, officers or employees of
RIMS, or (vi) establishment, adoption, or amendment (except as required by
applicable law), of any collective bargaining, bonus, profit sharing, thrift,
pension, retirement, deferred compensation, compensation, stock option,
restricted stock or other benefit plan or arrangement covering any current or
former director, officer or employee of RIMS;
(k) any labor dispute, other than routine individual
grievances, or, to the Knowledge of the Shareholders, RIMS, Kirch or Heimsoth,
any activity or proceeding by a labor union or representative thereof to
organize any employees of RIMS, which employees were not subject to a collective
bargaining agreement on the date of the RIMS Balance Sheet, or any Material
lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to such employees;
(l) any tax election or any settlement of tax liability, in
either case that is Material to RIMS;
(m) asset acquisition or expenditure in excess of $100,000
individually or $500,000 in the aggregate;
(n) payment, prepayment or discharge of liability other than
in the ordinary course of business or any failure to pay any liability when due;
(o) write-offs or write-downs of any assets of RIMS;
(p) creation, termination or amendment of, or waiver of any
right under, any Material agreement of RIMS;
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(q) damage, destruction or loss having or reasonably expected
to have a Material Adverse Effect on RIMS;
(r) any event from the RIMS Balance Sheet date through the
date of this Agreement that, if taken during the period from the date of this
Agreement through the Effective Time, would constitute a breach of Section 5.1
hereof; or
(s) agreement or commitment to do any of the foregoing.
3.10 LITIGATION. Except as set forth in Section 3.10 of the RIMS
Disclosure Schedule, there is no action, suit, investigation, audit or
proceeding pending against, or to the Knowledge of the Shareholders, RIMS, Kirch
or Heimsoth threatened against or affecting, RIMS, its officers or directors or
any of its properties before any court or arbitrator or any governmental body,
agency or official. No former shareholder, employee, officer or director of RIMS
has any claim pending or to the Knowledge of the Shareholders, RIMS, Kirch or
Heimsoth threatened against RIMS, its officers or directors or any of its
properties relating to sales of RIMS Stock by RIMS or any of RIMS' current or
former shareholders. Neither RIMS nor any of its officers and directors nor any
of its properties are subject to any order, writ, judgment, decree or injunction
of any court or arbitrator or any governmental body, agency or official. Section
3.10 of the RIMS Disclosure Schedule contains a complete list of all claims
brought against RIMS, or pending since January 1, 1997, together with a brief
statement of the nature and amount of the claim, the court and jurisdiction in
which the claim was brought, the resolution (if resolved), and the availability
of insurance to cover the claim. Except as set forth on Section 3.10 of the RIMS
Disclosure Schedule, to the Knowledge of the Shareholders, RIMS, Kirch or
Heimsoth, there are no facts or circumstances that could reasonably be expected
to give rise to any actions of the type set forth in this Section 3.10.
3.11 TAXES.
(a) Except as set forth in (or resulting from matters set
forth in) Section 3.11 of the RIMS Disclosure Schedule or as could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on RIMS:
(i) RIMS has prepared and timely filed with the
appropriate governmental agencies all franchise, income and all other Tax
returns and reports required to be filed on or before the Effective Time
(collectively "Returns"), taking into account any extension of time to file
granted to or obtained on behalf of RIMS;
(ii) all Taxes of RIMS shown on such Returns or
otherwise known by RIMS to be due or payable have been timely paid in full to
the proper authorities, other than such Taxes are adequately reserved for in
accordance with generally accepted accounting principles;
(iii) all deficiencies resulting from Tax
examinations of income, sales and franchise and all other Returns filed by RIMS
in any jurisdiction in which such Returns are required to be so filed have been
paid and no claim has been made by an authority in a jurisdiction where RIMS
does not file Returns that is or may be subject to the taxation by that
jurisdiction;
(iv) no deficiency has been asserted or assessed
against the RIMS which has not been satisfied or otherwise resolved, and no
examination of RIMS is pending or, to the Knowledge of the Shareholders, RIMS,
Kirch or Heimsoth, threatened for any Material amount of
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Tax by any taxing authority and there is no dispute or claim concerning any Tax
liability of RIMS either claimed by any authority in writing, or to the
Knowledge of the Shareholders, RIMS, Kirch or Heimsoth, reasonably expected to
be claimed;
(v) no extension of the period for assessment or
collection of any Tax is currently in effect and no extension of time within
which to file any Return has been requested, which Return has not since been
filed;
(vi) all Returns filed by RIMS are correct and
complete in all respects or adequate reserves have been established with respect
to any additional Taxes that may be due (or may become due) as a result of such
Returns not being correct or complete;
(vii) to the Knowledge of the Shareholders, RIMS,
Kirch or Heimsoth, no Tax liens have been filed with respect to any Taxes;
(viii) RIMS has not made since January 1, 1997, and
will not make, any voluntary adjustment by reason of a change in its accounting
methods for any pre-Merger period;
(ix) RIMS has made timely payments of the Taxes
required to be deducted and withheld in connection with amounts paid or owing to
any employee, independent contractor, creditor, shareholder, or other third
party;
(x) RIMS is not a party to any Tax sharing or Tax
matters agreement;
(xi) to the Knowledge of the Shareholders, RIMS,
Kirch or Heimsoth, RIMS is not liable to suffer any recapture, clawback or
withdrawal of any relief or exemption from Tax howsoever arising (including the
entering into and the consummation of the Merger), and whether by virtue of any
act or omission by RIMS or by any other Person or Persons;
(xii) to the Knowledge of the Shareholders, RIMS,
Kirch or Heimsoth, RIMS is not liable to be assessed for or made accountable for
any Tax for which any other Person or Persons may be liable to be assessed or
made accountable whether by virtue of the entering into or the consummation of
the Merger or by virtue of any act or acts done by or which may be done by or
any circumstance or circumstances involving or which may involve any other
Person or Persons; and
(xiii) RIMS has not been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(b) RIMS is not a party to any agreement, contract, or
arrangement that would, as a result of the transactions contemplated hereby,
result, separately or in the aggregate, in (i) the payment of any "excess
parachute payments" within the meaning of Section 280G of the Code by reason of
the Merger, (ii) the payment of any form of compensation or reimbursement for
any Tax incurred by any Person arising under Section 280G of the Code, or (iii)
the payment of any amounts not deductible by RIMS, in whole or in part, by
reason of Section 162 of the Code.
(c) RIMS has a valid business purpose for undertaking the
Merger.
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(d) The fair market value of the Merger Consideration received
by each Shareholder will be approximately equal to the fair market value of the
RIMS Stock surrendered in the Merger.
(e) There is no present plan or intention by the shareholders
of RIMS who own 1 percent or more of the RIMS Stock, and to the Knowledge of
RIMS, the Shareholders, Kirch and Heimsoth, there is no plan or intention on the
part of the remaining shareholders (if any) of RIMS to sell, exchange, or
otherwise dispose of to TriZetto or any Affiliate of TriZetto a number of shares
of TriZetto Stock received in the Merger that would reduce the RIMS
shareholders' ownership of TriZetto Stock to a number of shares having a value,
as of the Closing Date of the Merger, of less than 50 percent of the value of
all the formerly outstanding stock of TriZetto as of the same date. For the
purposes of this representation, shares of TriZetto Stock exchanged for cash or
other property, surrendered by dissenters, or exchanged for cash in lieu of
fractional shares of TriZetto Stock will be treated as outstanding RIMS Stock on
the date of the Merger. Moreover, shares of RIMS Stock and shares of TriZetto
Stock held by RIMS shareholders and otherwise sold, redeemed or disposed of to
TriZetto, RIMS or any party related to either prior or subsequent to the Merger
will be considered in making this representation.
(f) Following the Merger, RIMS will hold at least 90 percent
of the fair market value of its net assets and at least 70 percent of the fair
market value of its gross assets and at least 90 percent of the fair market
value of Merger Sub's net assets and at least 70 percent of the fair market
value of Merger Sub's gross assets held immediately prior to the Merger. For
purposes of this representation, amounts paid by RIMS or Merger Sub to
dissenters, amounts paid by RIMS or Merger Sub to shareholders who receive cash
or other property, amounts used by RIMS or Merger Sub to pay reorganization
expenses, and all redemptions and distributions (except for regular, normal
dividends) made by RIMS will be included as assets of RIMS or Merger Sub,
respectively, immediately prior to the Merger.
(g) RIMS has no plan or intention to issue additional shares
of its stock that would result in TriZetto losing control of RIMS within the
meaning of Section 368(c) of the Code.
(h) The liabilities of RIMS assumed by TriZetto and the
liabilities to which the transferred assets of RIMS are subject were incurred by
RIMS in the ordinary course of its business.
(i) RIMS, the Shareholders, Kirch and Heimsoth will pay their
respective expenses, if any, incurred in connection with the Merger as set forth
in Section 10.3.
(j) There is no intercorporate indebtedness existing between
RIMS and TriZetto that was issued, acquired or will be settled at a discount.
(k) At the time of the Merger, RIMS will not have outstanding
any warrants, options, convertible securities, or any type of right pursuant to
which any Person could acquire stock in RIMS that, if exercised or converted,
would affect TriZetto's acquisition or retention of control in RIMS, as defined
in Section 368(c) of the Code.
(l) RIMS is not an investment company as defined in section
368(a)(2)(F)(iii) and (iv) of the Code.
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(m) RIMS is not under the jurisdiction of a court in a Title
11 or similar case within the meaning of section 368(a)(3)(A) of the Code.
(n) The fair market value of the assets of RIMS transferred to
TriZetto will equal or exceed the sum of the liabilities assumed by TriZetto
plus the amount of liabilities, if any, to which the transferred assets are
subject.
(o) After the Merger, either at least one line of RIMS'
historic business will remain or a significant portion of RIMS' assets will
remain.
3.12 RIMS EMPLOYEE BENEFIT PLANS.
(a) The attachment to Section 3.12 of the RIMS Disclosure
Schedule sets forth a list of all of RIMS' employee benefit plans, as defined in
Section 3(3) of ERISA.
(b) Section 3.12(b) of the RIMS Disclosure Schedule sets forth
a true and complete list of all other profit-sharing, deferred compensation
(including a list of participants therein), bonus, stock option, stock purchase,
stock bonus, phantom stock, vacation pay, holiday pay, severance, dependent care
assistance, excess benefit, incentive compensation, salary continuation,
medical, life or other insurance, employment, severance, termination, golden
parachute, consulting, supplemental retirement plan or agreement, supplemental
unemployment and other employee benefit plans, programs, agreements or
arrangements, including all unwritten employee benefit plans, programs,
agreements and arrangements, if any, maintained or contributed to by RIMS for
the benefit of RIMS' Employees (or former employees) or independent contractors
and/or their beneficiaries. Both of these types of plans are collectively
referred to as "Benefit Plans." An arrangement will not fail to be a Benefit
Plan simply because it only covers one individual, or because RIMS' obligations
under the plan arise by reason of its being a "successor employer" under
applicable law.
(c) RIMS has delivered or made available to TriZetto a true
and complete copy of each Benefit Plan and any related funding agreements (e.g.,
trust agreements or insurance contracts), including all amendments (and Section
3.12(b) of the RIMS Disclosure Schedule includes a description of any such
amendment that is not in writing).
(d) Except as set forth in Section 3.12(d) of the RIMS
Disclosure Schedule, RIMS does not maintain or contribute to, nor has maintained
or contributed to, any Benefit Plan that is subject to Section 302 of ERISA or
Section 412 of the Code.
(e) No Benefit Plan is a "multi-employer plan," as defined in
Section 3(37) of ERISA, nor is a plan described in Section 4063(a) of ERISA.
(f) All costs of administering and contributions required to
be made by RIMS to each Benefit Plan under the terms of that Benefit Plan,
ERISA, the Code or any other applicable law have been timely made, and are fully
deductible. All amounts properly accrued to date as liabilities of RIMS under or
with respect to each Benefit Plan (including administrative expenses and
incurred but not reported claims) for the current plan year of the Benefit Plan
have been recorded on the appropriate books, to the extent required by law or
GAAP.
(g) Each Benefit Plan has been maintained and operated in
accordance with, and complies currently with, in all Material respects, all
applicable laws, including but not limited to
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ERISA and the Code. Each Benefit Plan has been operated in all Material respects
in accordance with its terms. Furthermore, the Internal Revenue Service has
issued a favorable determination letter with respect to each Benefit Plan that
is intended to qualify under Section 401(a) of the Code, which letter, except as
set forth in Section 3.12(g)(ii) of the RIMS Disclosure Schedule, takes into
account any amendment to each such Benefit Plan, and, no event had occurred
(either before or after the date of the letter) that would disqualify the plan.
(h) No Benefit Plan is intended to provide benefits which
might require compliance with Sections 419 or 419A of the Code.
(i) No prohibited transaction has occurred with respect to any
of the Benefit Plans which is not exempt under Section 4975 of the Code and
Section 406 of ERISA. RIMS has not engaged in any transaction with respect to
any Benefit Plan which could subject it to either a Material civil penalty
assessed pursuant to Section 409, 502(i) or 502(l) of ERISA, or a Material tax
imposed pursuant to Section 4975 or 4976 of the Code.
(j) Except as set forth in Section 3.12(j) of the RIMS
Disclosure Schedule, RIMS does not maintain any plan that provides (or will
provide) medical or death benefits to one or more, current or future former
employees (including retirees) beyond their retirement or other termination of
service, other than benefits that are required to be provided pursuant to
Section 4980B of the Code or state law continuation coverage or conversion
rights.
(k) There are no proceedings or lawsuits, pending or, to the
Knowledge of the Shareholders, RIMS, Kirch or Heimsoth, threatened, and, to the
Knowledge of the Shareholders, RIMS, Kirch or Heimsoth, are no investigations
currently in progress relating to any Benefit Plan, by any administrative
agency, whether local, state or federal or by any fiduciary, participant or
beneficiary of such plan.
(l) Except as set forth in Section 3.12(l) of the RIMS
Disclosure Schedule, none of the Benefit Plans or any other employment agreement
or arrangement entered into by RIMS will entitle any current or former employee
to any benefits or other compensation that become payable solely as a result of
the consummation of this transaction.
(m) None of the Benefit Plans are subject to the tax on
unrelated business taxable income or unrelated debt-financed income under
Section 511 of the Code.
(n) Except as set forth in Section 3.12(n) of the RIMS
Disclosure Schedule, to the Knowledge of the Shareholders, RIMS, Kirch or
Heimsoth, no Benefit Plan has any interest in any annuity contract or other
investment or insurance contract issued by an insurance company that is the
subject of bankruptcy, conservatorship, rehabilitation or similar proceeding.
(o) Section 3.12(o) of the RIMS Disclosure Schedule lists each
individual who (i) has elected to continue participating in a group health plan
of RIMS pursuant to an election under COBRA, or (ii) has not made an election
under COBRA but who is still eligible to make such election.
3.13 BANKING AND FINDERS' FEES. Except as set forth in Section 3.13 of
the RIMS Disclosure Schedule, there is no investment banker, broker, finder or
other intermediary, which has been retained by or is authorized to act on behalf
of the Shareholders, RIMS, Kirch or Heimsoth who
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might be entitled to any fee or commission in connection with the transactions
contemplated by this Agreement.
3.14 ENVIRONMENTAL COMPLIANCE
(a) RIMS and each of its Subsidiaries is in compliance with
Environmental Laws (except where non-compliance would not have a Material
Adverse Effect upon RIMS) and all Environmental Permits.
(b) RIMS has not received any written notice regarding any
violation of any Environmental Laws, or any RIMS Environmental Liabilities,
including any investigatory, remedial or corrective obligations, relating to
RIMS or any of its Subsidiaries or its facilities arising under Environmental
Laws.
(c) Except as set forth in Section 3.14 of the RIMS Disclosure
Schedule:
(i) Neither RIMS nor any of its Subsidiaries caused,
nor is causing or threatening to cause, any disposals or releases of any
Hazardous Material on or under any properties which it (A) leases, occupies or
operates or (B) previously owned, leased, occupied or operated and, to the
Knowledge of the Shareholders, RIMS, Kirch or Heimsoth, no such disposals or
releases occurred prior to RIMS having taken title to, or possession or
operation of, any of such properties; and to the Knowledge of the Shareholders,
RIMS, Kirch or Heimsoth no such disposals or releases are migrating or have
migrated off of such properties in subsurface soils, groundwater or surface
waters after RIMS has taken title to, or possession or operation of any such
properties and, to the Knowledge of the Shareholders, RIMS, Kirch or Heimsoth,
no such disposals or releases are migrating or have migrated off of such
properties in subsurface soils, groundwater or surface water prior to such time;
(ii) Neither RIMS nor any of its Subsidiaries has (A)
arranged for the disposal or treatment of Hazardous Material at any facility
owned or operated by another Person, or (B) accepted any Hazardous Material for
transport to disposal or treatment facilities or other sites selected by RIMS or
any of its Subsidiaries from which facilities or sites there has been a release
or there is a release or threatened release of a Hazardous Material; any
facility identified in Section 3.14(c)(ii)(A) was duly licensed in accordance
with law and has not been listed in connection with the Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA) by the United
States Environmental Protection Agency's Comprehensive Environmental Response,
Compensation, and Liability Information System (CERCLIS) or National Priorities
List (NPL) or any equivalent or like listing of sites under state or local law
(whether for potential releases of substances listed in CERCLA or other
substances);
(iii) The Shareholders, RIMS, Kirch and Heimsoth do
not have any reason to believe or suspect that there is any, and to the
Knowledge of the Shareholders, RIMS, Kirch or Heimsoth, there is no release or
threatened release of any Hazardous Material originating from a property other
than those leased or operated by RIMS or any of its Subsidiaries has come to be
(or may come to be) located on or under properties leased, occupied or operated
by RIMS or any of its Subsidiaries;
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(iv) Neither RIMS nor any of its Subsidiaries has
ever installed, used, buried or removed any surface impoundment or underground
tank or vessel on properties owned, leased, occupied or operated by RIMS or any
of its Subsidiaries;
(v) RIMS and each of its Subsidiaries are and have
been in compliance in all Material respects with all federal, state, local or
foreign laws, ordinances, regulations, permits, approvals and authorizations
relating to air, water, industrial hygiene and worker health and safety,
anti-pollution, hazardous or toxic wastes, materials or substances, pollutants
or contaminants, and to the Knowledge of the Shareholders, RIMS, Kirch or
Heimsoth no condition exists on any of the real property owned by or used in the
business of RIMS or any of its Subsidiaries that would constitute a Material
violation of any such law or that constitutes or threatens to constitute a
public or private nuisance; and
(vi) There has been no litigation, administrative
proceedings or investigations or any other actions, claims, demands notices of
potential responsibility or requests for information brought or, to the
Knowledge of the Shareholders, RIMS, Kirch or Heimsoth, threatened against RIMS
or any of its Subsidiaries or any settlement reached by it with any Person or
Persons alleging the presence, disposal, release or threatened release of any
Hazardous Material on, from or under any of such properties or as otherwise
relating to potential environmental liabilities or the actual or alleged injury
to human health or the environment by reason of the current conditions or
operation of the facilities of RIMS or any of its Subsidiaries or past condition
and operations or activities of the facilities of RIMS or any of its
Subsidiaries.
3.15 COLLECTIVE BARGAINING ARRANGEMENTS. Neither RIMS nor any of its
Subsidiaries is a party to or bound by any employee collective bargaining
agreement, nor is RIMS or any of its Subsidiaries a party to or affected by or,
to the Knowledge of the Shareholders, RIMS, Kirch or Heimsoth, threatened with,
any dispute or controversy with a union or with respect to unionization or
collective bargaining involving the employees of RIMS.
3.16 ACCOUNTS RECEIVABLE; UNEARNED INCOME.
(a) The accounts receivable reflected on the RIMS Balance
Sheet are owned free and clear by RIMS, except as set forth on Section 3.16 of
the RIMS Disclosure Schedule, and are based on RIMS' reasonable judgment and its
normal credit review procedures, business practices and GAAP, and are fully
collectible in accordance with their terms in an amount not less than their
aggregate book value, except for any amounts that become uncollectible after the
Closing Date due to actions taken by TriZetto which could reasonably be expected
to have a Material Adverse Effect on the collectibility of the accounts
receivable. "Aggregate book value", for this purpose, shall mean the aggregate
recorded amounts of such accounts receivable, less the aggregate recorded
allowance for doubtful accounts, trade allowances and return allowances, all as
established in accordance with GAAP consistently applied. Except as set forth in
Section 3.16(a) of the RIMS Disclosure Schedule, all accounts receivable for
customer collections and billings prior to the Closing Date have been properly
recorded on RIMS' books and records on a timely basis and in the month in which
RIMS' efforts and activities generating such income were expended.
(b) The unearned income reflected on the RIMS Balance Sheet is
based on RIMS' reasonable judgment, business practices, as established in
accordance with GAAP consistently applied. Except as set forth in Section
3.16(a) of the RIMS Disclosure Schedule, all unearned income relating to
contracts executed prior to the Closing Date have been properly
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recorded on RIMS' books and records on a timely basis and in the month in which
RIMS received the cash payment.
3.17 INVENTORIES. The consolidated inventories reflected on the RIMS
Balance Sheet have been valued in accordance with GAAP consistently applied at
the lower of cost or market value and consists solely of merchandise usable or
salable in the ordinary course of business at not less than the value thereof
reflected on the RIMS Balance Sheet. The inventory conforms to customary trade
standards for such inventory, and proper recognition has been given in the RIMS
Balance Sheet to damaged, obsolete, slow-moving, irregular or defective
inventory. Since the RIMS Balance Sheet, there have been no changes to the
inventory reflected therein, except in the ordinary course of business.
3.18 INTERESTS IN REAL PROPERTY. Section 3.18 of the RIMS Disclosure
Schedule is the complete and correct list and brief description of all real
property leased by RIMS or any of its Subsidiaries on the Closing Date. Neither
RIMS nor any of its Subsidiaries owns any real property. All real property
leases to which RIMS or any of its Subsidiaries is a party are valid and in full
force and effect and are valid and binding on the parties thereto, assuming
enforceability as to the parties other than RIMS or its Subsidiaries, and
neither RIMS nor any of its Subsidiaries has received any notice of, or has any
Knowledge of facts or circumstances that could reasonably be expected to result
in, a default of any Material provision thereof which has not been cured. To the
Knowledge of the Shareholders, RIMS, Kirch or Heimsoth, all improvements and
fixtures made by or at the direction of RIMS or its Subsidiaries on the real
properties leased by RIMS or its Subsidiaries 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
RIMS or its Subsidiaries in such buildings or structures) and fixtures used by
RIMS or its Subsidiaries in the conduct of its business are in good operating
condition and repair, ordinary wear and tear excepted, and are sufficient for
the type and magnitude of their respective operations.
3.19 PERSONAL PROPERTY. Except as set forth in Section 3.19 of the RIMS
Disclosure Schedule, RIMS and each of its Subsidiaries has good and marketable
title, free and clear of all title defects, security interests, pledges,
options, claims, liens, encumbrances and restrictions of any nature whatsoever
to all inventory and receivables and to any item of machinery, equipment, or
tangible personal property reflected on the RIMS Balance Sheet or used in the
business by RIMS or each of its Subsidiaries (regardless of whether reflected on
the RIMS Balance Sheet). All the machinery, equipment and other tangible
personal property used in the business by RIMS is in good operating condition
and repair, normal wear and tear excepted. At the Closing Date, RIMS will
possess all of the personal property wherever located used to conduct its
business as conducted prior to the Closing.
3.20 EMPLOYEES, DIRECTORS AND OFFICERS. Section 3.20 of the RIMS
Disclosure Schedule comprises a complete and correct list of all of RIMS'
present employees, officers and directors ("Employees"), including the direct
compensation (including wages, salaries and actual or anticipated bonuses) to be
paid in the current fiscal year to such Persons. Except as set forth on Section
3.20 of the RIMS Disclosure Schedule, no unpaid salary, other than for the
immediately preceding pay period and other than pursuant to the existing
deferred compensation plans of RIMS is now payable to any of such officers,
directors or employees.
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3.21 PATENTS, INTELLECTUAL PROPERTY; SOFTWARE; AND YEAR 2000
COMPLIANCE.
(a) RIMS and each of its Subsidiaries owns or has the right to
use all Intellectual Property Material to the operation of the business of RIMS
or any Subsidiary as currently conducted or to products or services currently
under development by RIMS or any Subsidiary (collectively, "RIMS Material
Intellectual Property"), and, except as set forth on Section 3.21(a) of the
Disclosure Schedule, has 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. Such Intellectual Property constitutes all Intellectual
Property necessary for the conduct of its business in the manner conducted
immediately prior to the Closing. All RIMS Material Intellectual Property is
either owned by RIMS or its Subsidiaries free and clear of all Liens or is used
pursuant to a license agreement; each such license agreement is valid and
enforceable and in full force and effect; neither RIMS nor any Subsidiary is in
Material Default thereunder; and to the Knowledge of the Shareholders, RIMS,
Kirch or Heimsoth, no corresponding licensor is in Material Default thereunder.
None of the RIMS Material Intellectual Property infringes or otherwise conflicts
with any Intellectual Property or other right of any Person; except as set forth
on Section 3.21(a) of the Disclosure Schedule, there is no pending or, to the
Knowledge of the Shareholders, RIMS, Kirch or Heimsoth, threatened (in writing)
litigation, adversarial proceeding, administrative action or other challenge or
claim relating to any RIMS Material Intellectual Property; there is no
outstanding Order relating to any RIMS Material Intellectual Property; and to
the Knowledge of the Shareholders, RIMS, Kirch or Heimsoth, there is currently
no infringement by any Person of any RIMS Material Intellectual Property; the
RIMS Material Intellectual Property owned, used or possessed by RIMS and each of
its Subsidiaries is sufficient and adequate to conduct the business of RIMS and
each of its Subsidiaries to the full extent as such business is currently
conducted. To the Knowledge of the Shareholders, RIMS, Kirch or Heimsoth and
except as set forth on Section 3.21(a) of the Disclosure Schedule, the Products
do not include any Intellectual Property that is in the public domain.
(b) RIMS and each of its Subsidiaries has taken reasonable
steps to protect, maintain and safeguard its respective RIMS Material
Intellectual Property, including any RIMS Material Intellectual Property 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,
except where the failure to take such steps, execute such nondisclosure
agreements or make such filings and registrations could not reasonably be
expected in the aggregate to have a Material Adverse Effect on RIMS or its
Subsidiaries.
(c) Each of RIMS and its Subsidiaries is the sole and
exclusive owner of all Owned Software that is required to conduct the business
of RIMS and each of its Subsidiaries to the extent such businesses are currently
conducted, including, without limitation, the products and services currently
under development by RIMS and each of its Subsidiaries. A true and complete list
of all Material Owned Software of RIMS and each of its Subsidiaries is set forth
on Section 3.21(c) of the Disclosure Schedule. All of the Owned Software of RIMS
and any of its Subsidiaries is Year 2000 Compliant. A true and complete list of
all Material Third Party Software used by RIMS is set forth on Section 3.21(c)
of the Disclosure Schedule. To the Knowledge of the Shareholders, RIMS, Kirch or
Heimsoth, all Material Third Party Software currently used by RIMS and each of
its Subsidiaries is Year 2000 Compliant.
(d) Each of RIMS and its Subsidiaries is the sole and
exclusive owner of all Owned Databases that are required to conduct the
businesses of RIMS and each of its Subsidiaries to
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the extent such businesses are currently conducted, including, without
limitation, the products and services currently under development by RIMS and
each of its Subsidiaries. A true and complete list of all Material Owned
Databases of RIMS and each of its Subsidiaries is set forth on Section 3.21(d)
of the Disclosure Schedule. All of the Owned Databases of RIMS and each of its
Subsidiaries are Year 2000 Compliant. A true and complete list of all Material
Third Party Databases used by RIMS and each of its Subsidiaries has heretofore
been made available to TriZetto. To the Knowledge of the Shareholders, RIMS,
Kirch or Heimsoth, all Material Third Party Databases currently used by RIMS and
each of its Subsidiaries are Year 2000 Compliant.
(e) No Material confidential or trade secret information of
RIMS or any of its Subsidiaries has been provided to any Person except subject
to written confidentiality agreements, except for any such disclosure which has
not resulted and could not reasonably be expected to result in a Material
Adverse Effect on RIMS or any of its Subsidiaries.
(f) RIMS and each of its Subsidiaries have valid copyrights in
all Material copyrightable material whether or not registered with the U.S.
copyright office, including all copyrights in the Products containing Material
copyrightable material. To the Knowledge of the Shareholders, RIMS, Kirch or
Heimsoth, consummation of the transactions contemplated hereby will not alter or
impair the validity of any copyrights or copyright registrations.
(g) Except as set forth in Section 3.21(g) of the RIMS
Disclosure Schedule: (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 any
adaptations, translations, or derivative works based on the Products, or any
portion thereof; (B) RIMS has not granted to any third party any exclusive
rights of any kind with respect to any of the Products, including territorial
exclusivity or exclusivity with respect to particular versions, implementations
or translations of any of the Products; and (C) RIMS has not granted any third
party any right to market any product utilizing any Product under any "private
label" arrangements pursuant to which RIMS is not identified as the source of
such goods. Each document or instrument identified pursuant to this Section is
listed in Section 3.21(g) of the RIMS Disclosure Schedule and true and correct
copies of such documents or instruments have been furnished to TriZetto. No
third party has any right to manufacture, reproduce, distribute, sublicense,
market or exploit any works or materials of which any of the Products are a
derivative work.
(h) Each of the Products: (A) substantially complies with all
specifications set forth therefor in any contract, agreement, advertisement or
other promotional material for such Products at the time such Product was
delivered pursuant to such contract or agreement or such advertisement or
promotional material was used, 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 RIMS' business; and (B) can be recreated from its
associated source code and related documentation by reasonably experienced
technical personnel without undue burden.
(i) RIMS has made available to TriZetto all current end user
documentation relating to the use, maintenance or operation of each of the
Products, all of which is true and accurate in all Material respects.
(j) To the Knowledge of the Shareholders, RIMS, Kirch or
Heimsoth, no employee of RIMS or any of its Subsidiaries 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
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such employee with RIMS or any other party because of the nature of the business
conducted by RIMS or any of its Subsidiaries or proposed to be conducted by RIMS
or any of its Subsidiaries.
(k) Except as set forth in Section 3.21(k) of the RIMS
Disclosure Schedule, no Third Party Technology is included in the Products.
(l) If RIMS is obligated to repair or replace products or
services previously provided by RIMS that are not Year 2000 Compliant in order
to meet RIMS' 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 the Shareholders, RIMS, Kirch
or Heimsoth, RIMS has repaired or replaced those products and services to make
them Year 2000 Compliant in all Material respects.
3.22 CONTRACTS.
(a) Except as described in Section 3.22(a) of the RIMS
Disclosure Schedule, neither RIMS nor any Subsidiary is a party to any:
(i) employment, change in control or severance
agreements;
(ii) contract relating to the borrowing of money in
excess of $100,000 by RIMS or any of its Subsidiaries, or the guaranty of any
obligation for the borrowing of money by RIMS or any of its Subsidiaries;
(iii) contract that involves the payment or receipt
by RIMS or any of its Subsidiaries of more than $100,000 over the remaining term
of the contract;
(iv) contract with the Shareholders or any Affiliate
of the Shareholders;
(v) contract that requires the consent of, or
terminates or becomes terminable by, any Person other than RIMS or any of its
Subsidiaries as a result of the transactions contemplated by this Agreement;
(vi) contracts that are otherwise Material to the
business of RIMS or any of its Subsidiaries and are not for the purchase or sale
of goods or services in the ordinary course of business;
(vii) have a remaining term of more than one year
from the date of this Agreement;
(viii) are distributorship or other agreements
relating to the marketing, distributing or sublicensing of RIMS' products or
products of its Subsidiaries.
(b) To the Knowledge of the Shareholders, RIMS, Kirch or
Heimsoth, all of the other parties to such agreements are in compliance with all
Material provisions of all such agreements and no fact exists which is, or with
the passage of time could become, a default under any of the aforementioned
contracts. RIMS has previously made available to TriZetto complete and correct
copies of all the contracts, agreements and documentation relating to the items
listed in Section 3.22 (a) of the RIMS Disclosure Schedule.
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3.23 AFFILIATE TRANSACTIONS. Except as set forth in Section 3.23 of the
RIMS Disclosure Schedule, there are no Material contracts or other Material
transactions between RIMS and any (a) officer or director of RIMS, (b) of the
Shareholders, or (c) Affiliate of any such officer, director or Shareholder.
3.24 INSURANCE AND BANKING FACILITIES. Section 3.24 of the RIMS
Disclosure Schedule comprises a complete and correct list of (i) all contracts
of insurance and indemnity of or relating to RIMS or any of its Subsidiaries
(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 RIMS or any of its Subsidiaries 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 RIMS knows
of no circumstance (including without limitation the consummation of the
transactions contemplated by this Agreement), which has caused, or might cause,
any such contract to be canceled or terminated. There is no Material claim by
RIMS or any of its Subsidiaries under any insurance policies of RIMS or any of
its Subsidiaries as to which coverage has been questioned, denied or disputed by
the underwriters of such policies.
3.25 POWERS OF ATTORNEY AND SURETYSHIPS. Except as set forth in Section
3.25 of the RIMS Disclosure Schedule, RIMS does not have any powers of attorney
outstanding (other than a power of attorney issued in the ordinary course of
business with respect to tax matters or to customs agents and customs brokers),
and, except for obligations as an endorser of negotiable instruments incurred in
the ordinary course of business, RIMS does not have any obligations or
liabilities (absolute or contingent) as guarantor, surety, co-signer, endorser,
co-maker, indemnitor or otherwise respecting the obligation of any other Person.
3.26 MINUTES AND STOCK RECORDS. RIMS has caused TriZetto to be given
access to complete and correct copies of the minute books and stock records of
RIMS and each of its Subsidiaries. Such items contain a complete and correct
record in all Material respects of all proceedings and actions taken at all
meetings of, and all actions taken by written consent by, the holders of capital
stock of RIMS and each of its Subsidiaries and its Board of Directors, and all
original issuances and subsequent transfers and repurchases of its capital
stock.
3.27 CUSTOMERS. Section 3.27 of the RIMS Disclosure Schedule lists (i)
RIMS' top 20 customers by billings (collectively, the "Customers"), by the
revenues received by RIMS from each such Customer during 1998, 1999 and 2000
year-to-date. To the Knowledge of the Shareholders, RIMS, Kirch or Heimsoth,
there are no oral or written notice or other indication from any of the
Customers stating that such Customer intends to terminate its business
relationship with RIMS or Materially reduce the volume of business it does with
RIMS.
3.28 FULL DISCLOSURE. All of the representations and warranties made by
the Shareholders, RIMS, Kirch and Heimsoth in this Agreement, and all statements
set forth in the certificates delivered by the Shareholders, RIMS, Kirch and
Heimsoth at the Closing pursuant to this Agreement, are true, correct and
complete in all Material respects and do not contain any untrue statement of a
Material fact or omit to state any Material fact necessary in order to make such
representations, warranties or statements, in light of the circumstances under
which they were made, misleading. The copies of all documents furnished by the
Shareholders, RIMS, Kirch and Heimsoth pursuant to the terms of this Agreement
are complete and accurate copies of the original documents.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF TRIZETTO AND MERGER SUB
TriZetto and Merger Sub, jointly and severally, represent and warrant
to each of the Shareholders, RIMS, Kirch and Heimsoth that, except as set forth
in TriZetto Disclosure Schedule or in TriZetto's SEC Filings which have been
provided to each of the Shareholders, RIMS, Kirch and Heimsoth prior to the date
hereof:
4.1 CORPORATE EXISTENCE AND POWER. Each of TriZetto and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation. Each of TriZetto and Merger Sub has all
requisite corporate powers and authority and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not, individually or in the
aggregate, have a Material Adverse Effect on TriZetto. TriZetto is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where such qualification is necessary, except for those
jurisdictions where the failure to be so qualified would not, individually or in
the aggregate, have a Material Adverse Effect on TriZetto. TriZetto has
heretofore delivered to RIMS true and complete copies of TriZetto's Certificate
of Incorporation and Bylaws as currently in effect.
4.2 CORPORATE AUTHORIZATION.
(a) The execution, delivery and performance by TriZetto of
this Agreement and the Transaction Documents and the consummation of the
transactions contemplated hereby and thereby are within TriZetto's corporate
powers and have been duly authorized by all necessary corporate action.
(b) TriZetto's board of directors, at a meeting duly called
and held, has (i) determined that this Agreement and the Transaction Documents
and the transactions contemplated hereby and thereby (including the Merger) are
in the best interests of TriZetto's stockholders, and (ii) approved and adopted
this Agreement and the Transaction Documents and the transactions contemplated
hereby and thereby (including the Merger), which approval satisfies in full any
applicable requirements of Subchapter 9 of the DGCL.
(c) This Agreement has been duly executed and delivered by
TriZetto and Merger Sub. This Agreement constitutes, and the Transaction
Documents to be executed and delivered will constitute legal, valid and binding
obligations of TriZetto and Merger Sub, enforceable against TriZetto and Merger
Sub, as applicable, in accordance with their respective terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(d) At the Closing Date and at the time of issuance, the
TriZetto Stock issued pursuant to this Agreement will be duly authorized,
validly issued, fully paid and nonassessable and will not be subject to
preemptive rights.
4.3 GOVERNMENTAL AUTHORIZATION. The execution, delivery and performance
by TriZetto and Merger Sub of this Agreement and the Transaction Documents and
the consummation by TriZetto and Merger Sub of the transactions contemplated
hereby and thereby require no action by or
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in respect of, or filing with, any governmental body, agency, official or
authority, other than (a) the filing of the Certificate of Merger and other
documents in accordance with the DGCL and the IBCA, (b) compliance with the 1933
Act, the 1934 Act, or foreign or state securities or blue sky laws; (c) actions
required by the HSR Act, and the rules and regulations promulgated thereunder,
or any applicable foreign antitrust law; (d) authorization for inclusion of the
shares of TriZetto Stock to be issued in the Merger and the transactions
contemplated hereby on Nasdaq, subject to official notice of issuance; and (e)
any other filings, approvals or authorizations which, if not obtained, would
not, individually or in the aggregate, have a Material Adverse Effect on
TriZetto or Merger Sub or Materially impair the ability of TriZetto or Merger
Sub to consummate the transactions contemplated by this Agreement.
4.4 NON-CONTRAVENTION. The execution, delivery and performance by
TriZetto and Merger Sub of this Agreement and the Transaction Documents and the
consummation by TriZetto and Merger Sub of the transactions contemplated hereby
and thereby do not and will not (i) contravene or conflict with the Certificate
of Incorporation or Bylaws of TriZetto and Merger Sub or the charter documents
of the TriZetto Subsidiaries, (ii) assuming compliance with the matters referred
to in Section 4.3, contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to TriZetto and Merger Sub or the TriZetto Subsidiaries,
(iii) require the consent or other action of any Person under, constitute a
default under, or give rise to any right of termination, cancellation or
acceleration of any right or obligation of TriZetto and Merger Sub or the
TriZetto Subsidiaries or to a loss of any benefit to which TriZetto and Merger
Sub or the TriZetto Subsidiaries is entitled under any provision of any
agreement or other instrument binding upon TriZetto and Merger Sub or the
TriZetto Subsidiaries or any license, franchise, permit, certificate, approval
or other similar authorization affecting, or relating in any way to, the assets
or business of TriZetto, or (iv) result in the creation or imposition of any
Lien on any asset of TriZetto or the TriZetto Subsidiaries, except, in the case
of clauses (ii) through (iv), for such matters as would not, individually or in
the aggregate, have a Material Adverse Effect on TriZetto or Materially impair
the ability of TriZetto and Merger Sub to consummate the transactions
contemplated by this Agreement.
4.5 COMPLIANCE WITH LAW AND OTHER INSTRUMENTS.
(a) TriZetto and the TriZetto Subsidiaries hold all Material
licenses, permits and authorizations necessary for the lawful conduct of its
business as now being conducted pursuant to all applicable statutes, laws,
ordinances, rules and regulations of all governmental bodies, agencies and other
authorities having jurisdiction over it or any part of its respective
operations, and there are no violations or claimed violations by TriZetto of, or
action or proceeding pending against TriZetto or any of its Subsidiaries with
respect to, any such license, permit or authorization or any such statute, law,
ordinance, rule or regulation.
(b) The business of TriZetto and each of its Subsidiaries has
been and is being conducted in compliance with all applicable Laws, including
without limitation all Laws concerning privacy and/or data protection, except
for violations or failures to so comply that could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on TriZetto.
Since the Most Recent 10-Q Date, no investigation or review by any Regulatory
Authority with respect to TriZetto or any of its Subsidiaries is pending or, to
the Knowledge of TriZetto, threatened in writing, other than, in each case,
those which could not reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect on TriZetto. TriZetto has not received any
written communication since the Most Recent 10-Q Date from a Regulatory
Authority
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that alleges that TriZetto or any of its Subsidiaries is not in compliance in
any Material respect with any applicable Law.
4.6 CAPITALIZATION.
(a) The authorized capital stock of TriZetto consists of
95,000,000 shares of TriZetto Stock and 5,000,000 shares of preferred stock of
TriZetto. As of October 31, 2000, there were outstanding (i) 33,863,896 shares
of TriZetto Stock, (ii) zero shares of preferred stock of TriZetto, and (iii)
employee stock options to purchase an aggregate of 4,963,244 shares of TriZetto
and (iv) a warrant to purchase 300,000 shares of TriZetto Stock. 7,293,699
shares of TriZetto Stock have been reserved for issuance pursuant to TriZetto's
employee stock purchase plan and TriZetto's stock option plan.
(b) All outstanding shares of capital stock of TriZetto have
been duly authorized and validly issued and are fully paid and nonassessable.
Except as set forth in this Section 4.6, and except for changes since October
31, 2000, resulting from the exercise of stock options outstanding on such date,
there are no outstanding (i) shares of capital stock or other voting securities
of TriZetto, (ii) securities of TriZetto convertible into or exchangeable for
shares of capital stock or voting securities of TriZetto, or (iii) options,
restricted stock, stock appreciation rights, other stock-based compensation
awards or other rights to acquire from TriZetto, or other obligation of TriZetto
to issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of TriZetto. There are no
outstanding obligations of TriZetto or the TriZetto Subsidiaries to repurchase,
redeem or otherwise acquire any securities referred to in clauses (i), (ii) or
(iii) above.
(c) As of the date hereof, there are no outstanding bonds,
debentures, notes or other indebtedness of TriZetto having the right to vote (or
convertible into or exercisable for TriZetto Stock having the right to vote) on
any matters on which TriZetto stockholders may vote.
(d) As of the date hereof, there are no outstanding
contractual obligations of TriZetto to repurchase, reprice, redeem or otherwise
acquire any shares of the capital stock of TriZetto.
(e) All of the TriZetto Stock was issued or granted in
compliance with all applicable federal and state securities laws.
(f) Except for rights to purchase TriZetto Stock issued to
employees or consultants of TriZetto and repurchase rights pursuant to
contractual arrangements with employees and consultants, TriZetto is not
obligated to issue or repurchase any shares of TriZetto Stock for any purpose
and no Person has entered into any Contract (whether preemptive or contractual)
for the purchase from TriZetto, subscription or issuance of any unissued shares
or other securities of TriZetto, whether now or in the future.
4.7 SEC FILINGS OF TRIZETTO. TriZetto has timely filed with the
Securities and Exchange Commission (the "SEC") all reports required to be filed
by it since its initial public offering in October 1999 ("SEC Filings"),
including but not limited to the report on Form 10-Q for the period ended June
30, 2000 (such date being the "Most Recent 10-Q Date"), filed with the SEC on
August 14, 2000. The SEC Filings (a) complied in all Material respects with the
requirements of the 1933 Act and the 1934 Act as the case may be at the time
they were filed (or if amended or
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superseded by a filing prior to the date of this Agreement, then on the date of
such filing) and (b) did not as of the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of Material fact or omit to state a
Material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. TriZetto has timely filed all required forms, reports and
documents required to be filed with the SEC and the NASD.
4.8 TRIZETTO FINANCIAL STATEMENTS.
(a) The audited consolidated financial statements for its
fiscal year ended December 31, 1999 and the unaudited consolidated financial
statements for the six months ended June 30, 2000 are complete and correct in
all Material respects in accordance with the books and records of TriZetto, and
present fairly the financial position of TriZetto, at the dates indicated and
the results of its operations and the changes in stockholders equity for the
period then ended, in accordance with GAAP, consistently applied.
(b) TriZetto does not have any liabilities or obligations of
any nature, whether absolute, accrued, unmatured, contingent or otherwise
whether due or to become due, known or unknown, or any unsatisfied judgments or
any leases of personalty or realty or unusual or extraordinary commitments that
are required to be disclosed under GAAP, except (i) as set forth in Section
4.8(b) of the TriZetto Disclosure Schedule, (ii) as disclosed in the SEC
Filings, (iii) liabilities or obligations incurred since the Most Recent 10-Q
Date which were incurred in the ordinary course of business and consistent with
past practice, or (iv) liabilities that would not be required by GAAP to be
disclosed in financial statements or in the notes thereto and that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on TriZetto.
4.9 ABSENCE OF CERTAIN CHANGES. Since the Most Recent 10-Q Date and
except as disclosed in the SEC Filings, the business of TriZetto has been
conducted in the ordinary course and there has not been:
(a) any event, occurrence or development of a state of
circumstances or facts which would, individually or in the aggregate, have a
Material Adverse Effect on TriZetto (other than adverse effects arising from the
execution and performance of this Agreement, changes in general economic
conditions or changes applicable generally to the industry) or any event,
occurrence or development which would have a Material Adverse Effect on the
ability of TriZetto to consummate the Merger;
(b) any declaration, setting aside or payment of any dividend
or other distribution with respect to any shares of capital stock of TriZetto,
or any repurchase, redemption or other acquisition by TriZetto of any
outstanding shares of capital stock or other securities of, or other ownership
interests in TriZetto other than pursuant to restricted stock purchase or stock
option agreements with employees or consultants;
(c) any split, combination, re-classification of any TriZetto
Stock or any amendment of any term of any outstanding equity security of
TriZetto; or
(d) any agreement or commitment to do any of the foregoing.
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4.10 LITIGATION. There is no action, suit, investigation, audit or
proceeding pending against or, to the knowledge of TriZetto, threatened against
or affecting, TriZetto, its officers or directors, the TriZetto Subsidiaries or
any of their respective properties before any court or arbitrator or any
governmental body, agency or official which, would, individually or in the
aggregate, have a Material Adverse Effect on TriZetto. No former stockholder,
employee, officer or director or TriZetto has any claim pending or, to the
Knowledge of TriZetto, threatened against TriZetto, its officers or directors or
any of its properties relating to sales of TriZetto Stock by TriZetto or any of
TriZetto's current or former stockholders. Neither TriZetto, the TriZetto
Subsidiaries nor any of their respective properties, nor to the knowledge of
TriZetto any of its officers or directors, is subject to any order, writ,
judgment, decree or injunction of any court or arbitrator or any governmental
body, agency or official. No Material claims have been brought against TriZetto
since the Most Recent 10-Q Date which could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on TriZetto. To the
Knowledge of TriZetto, there are no facts or circumstances that could reasonably
be expected to give rise to any actions set forth in this Section 4.10.
4.11 BANKING AND FINDERS' FEES. Except as set forth in Section 4.11 of
the TriZetto Disclosure Schedule, there is and will be no investment banker,
broker, finder or other intermediary retained by or authorized to act on behalf
of TriZetto or any of the TriZetto Subsidiaries who might be entitled to any fee
or commission from RIMS or any of the TriZetto Subsidiaries upon consummation of
the transactions contemplated by this Agreement.
4.12 TAX MATTERS.
(a) The Merger is intended to qualify as a reorganization
under Section 368(a)(1)(A) of the Code. In respect thereof, neither TriZetto or
the TriZetto Subsidiaries, has taken any action to prevent the Merger from
qualifying as a reorganization within 368(a) of the Code.
(b) No examination of TriZetto is currently pending or, to the
Knowledge of TriZetto, threatened for any Material amount of Tax by any taxing
authority and there is no dispute or claim concerning any Material Tax liability
of TriZetto either claimed by any authority in writing, or to the Knowledge of
TriZetto, reasonable expected to be claimed. Since the Most Recent 10-Q Date,
TriZetto has prepared and timely filed with the appropriate governmental
agencies all Material franchise, income and all other Material Tax returns and
reports required to be filed on or before the Closing Date (collectively
"TriZetto Returns"), taking into account any extension of time to file granted
to or obtained on behalf of the TriZetto.
(c) TriZetto has a valid business purpose for undertaking the
Merger.
(d) The fair market value of the Merger Consideration received
by each Shareholder will be approximately equal to the fair market value of the
RIMS Stock surrendered in the Merger.
(e) Prior to the Merger, TriZetto will be in control of Merger
Sub within the meaning of Section 368(c) of the Internal Revenue Code.
(f) TriZetto has no plan or intention to reacquire any of the
TriZetto Stock issued in the Merger, except as otherwise contemplated by this
Agreement.
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(g) TriZetto has no plan or intention to liquidate RIMS; to
merge RIMS with or into another corporation (other than Merger Sub and/or other
entities controlled by TriZetto); to sell or otherwise dispose of the RIMS Stock
except for transfers of stock to corporations controlled by TriZetto; or to
cause RIMS to sell or otherwise dispose of any of the assets of RIMS or any of
the assets acquired from Merger Sub, except for dispositions made in the
ordinary course of business or in transfers described in Section 368(a)(2)(C) of
the Code.
(h) The liabilities of Merger Sub assumed by RIMS and the
liabilities to which the transferred assets of Merger Sub are subject were
incurred by Merger Sub in the ordinary course of its business.
(i) Following the Merger, TriZetto presently intends to
continue the historic business of RIMS or use a significant portion of RIMS'
historic business assets in a business.
(j) TriZetto will pay its respective expenses, if any,
incurred in connection with the Merger.
(k) There is no intercorporate indebtedness existing between
RIMS and TriZetto that was issued, acquired or will be settled at a discount.
(l) TriZetto is not an investment company as defined in
section 368(a)(2)(F)(iii) and (iv) of the Code.
(m) TriZetto does not own, nor has it owned during the past
five years prior to the Effective Time, any shares of RIMS Stock.
4.13 TRIZETTO EMPLOYEE BENEFIT PLANS.
(a) Each TriZetto Benefit Plan has been maintained and
operated in accordance with, and complies currently with, in all Material
respects, all applicable laws, including but not limited to ERISA and the Code.
Each TriZetto Benefit Plan has been operated in all Material respects in
accordance with its terms.
(b) Except as set forth in the SEC Filings, there are no
proceedings or lawsuits, pending or, to the Knowledge of TriZetto, threatened,
and, to the Knowledge of TriZetto, are no investigations currently in progress,
relating to any TriZetto Benefit Plan, by any administrative agency, whether
local, state or federal or by any fiduciary, participant or beneficiary of such
plan.
4.14 ENVIRONMENTAL COMPLIANCE
(a) TriZetto and each of its Subsidiaries is in compliance
with Environmental Laws (except where non-compliance would not have a Material
Adverse Effect upon TriZetto) and all Environmental Permits.
(b) Since the Most Recent 10-Q Date, TriZetto has not received
any written notice regarding any violation of any Environmental Laws, or any
TriZetto Environmental Liabilities, including any investigatory, remedial or
corrective obligations, relating to TriZetto or any of its Subsidiaries or its
facilities arising under Environmental Laws.
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(c) Since the Most Recent 10-Q Date, and except as set forth
in the SEC Filings or Section 4.14 of the TriZetto Disclosure Schedule:
(i) TriZetto and each of its Subsidiaries are and
have been in compliance in all Material respects with all federal, state, local
or foreign laws, ordinances, regulations, permits, approvals and authorizations
relating to air, water, industrial hygiene and worker health and safety,
anti-pollution, hazardous or toxic wastes, materials or substances, pollutants
or contaminants, and to the Knowledge of TriZetto, no condition exists on any of
the real property owned by or used in the business of TriZetto or any of its
Subsidiaries that would constitute a Material violation of any such law or that
constitutes or threatens to constitute a public or private nuisance; and
(ii) There has been no litigation, administrative
proceedings or investigations or any other actions, claims, demands notices of
potential responsibility or requests for information brought or, to the
Knowledge of TriZetto, threatened against TriZetto or any of its Subsidiaries or
any settlement reached by it with any Person or Persons alleging the presence,
disposal, release or threatened release of any Hazardous Material on, from or
under any of such properties or as otherwise relating to potential environmental
liabilities or the actual or alleged injury to human health or the environment
by reason of the current conditions or operation of the facilities of TriZetto
or any of its Subsidiaries or past condition and operations or activities of the
facilities of TriZetto or any of its Subsidiaries.
4.15 COLLECTIVE BARGAINING ARRANGEMENTS. Except as set forth in the SEC
Filings, neither TriZetto nor any of its Subsidiaries is a party to or bound by
any employee collective bargaining agreement, nor is TriZetto or any of its
Subsidiaries a party to or affected by or, to the Knowledge of TriZetto,
threatened with, any dispute or controversy with a union or with respect to
unionization or collective bargaining involving the employees of TriZetto.
4.16 PATENTS, INTELLECTUAL PROPERTY; SOFTWARE; AND YEAR 2000
COMPLIANCE.
(a) TriZetto and each of its Subsidiaries owns or has the
right to use all Intellectual Property Material to the operation of the business
of TriZetto or any Subsidiary as currently conducted or to products or services
currently under development by TriZetto or any Subsidiary (collectively,
"TriZetto Material Intellectual Property") and is current in all of its
obligations under licenses or sublicenses with third parties required for use of
all TriZetto Material Intellectual Property. Such Intellectual Property
constitutes all Intellectual Property necessary for the conduct of its business
in the manner conducted immediately prior to the Closing. All TriZetto Material
Intellectual Property is either owned by TriZetto or its Subsidiaries free and
clear of all Liens or is used pursuant to a license agreement; each such license
agreement is valid and enforceable and in full force and effect; neither
TriZetto nor any Subsidiary is in Material Default thereunder; and to the
Knowledge of TriZetto, no corresponding licensor is in Material Default
thereunder. None of the TriZetto Material Intellectual Property infringes or
otherwise conflicts with any Intellectual Property 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 Material Intellectual Property; there is no
outstanding Order relating to any TriZetto Material Intellectual Property; to
the Knowledge of TriZetto, there is currently no infringement by any Person of
any TriZetto Material Intellectual Property; and the TriZetto Material
Intellectual Property owned, used or possessed by TriZetto and each of its
Subsidiaries is sufficient and adequate to conduct the business of TriZetto and
each of its Subsidiaries to the full extent as such business is currently
conducted.
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(b) TriZetto and each of its Subsidiaries has taken reasonable
steps to protect, maintain and safeguard its respective TriZetto Material
Intellectual Property, including any TriZetto Material Intellectual Property 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,
except where the failure to take such steps, execute such nondisclosure
agreements or make such filings and registrations could not reasonably be
expected in the aggregate to have a Material Adverse Effect on TriZetto.
(c) Each of TriZetto and its Subsidiaries is the sole and
exclusive owner of all Owned Software that is required to conduct the business
of TriZetto and each of its Subsidiaries to the extent such businesses are
currently conducted, including, without limitation, the products and services
currently under development by TriZetto and each of its Subsidiaries. All of the
Owned Software of TriZetto and any of its Subsidiaries is Year 2000 Compliant.
To the Knowledge of TriZetto, all Material Third Party Software currently used
by TriZetto and each of its Subsidiaries is Year 2000 Compliant.
(d) Each of TriZetto and its Subsidiaries is the sole and
exclusive owner of all Owned Databases that are required to conduct the
businesses of TriZetto and each of its Subsidiaries to the extent such
businesses are currently conducted, including, without limitation, the products
and services currently under development by TriZetto and each of its
Subsidiaries. All of the Owned Databases of TriZetto and each of its
Subsidiaries are Year 2000 Compliant. To the Knowledge of TriZetto, all Material
Third Party Databases currently used by TriZetto and each of its Subsidiaries
are Year 2000 Compliant.
(e) No Material confidential or trade secret information of
TriZetto or any of its Subsidiaries has been provided to any Person except
subject to written confidentiality agreements, except for any such disclosure
which has not resulted and could not reasonably be expected to result in a
Material Adverse Effect on TriZetto or any of its Subsidiaries.
(f) TriZetto and each of its Subsidiaries have valid
copyrights in all Material copyrightable material whether or not registered with
the U.S. copyright office.
(g) To the Knowledge of TriZetto, no employee of TriZetto or
any of its Subsidiaries 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 any of its Subsidiaries or
proposed to be conducted by TriZetto or any of its Subsidiaries.
(h) If TriZetto is obligated to repair or replace products or
services previously provided by TriZetto that are not Year 2000 Compliant in
order to meet TriZetto'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 has repaired
or replaced those products and services to make them Year 2000 Compliant in all
Material respects.
4.17 CONTRACTS. Except as set forth in the SEC Filings, to TriZetto's
Knowledge, neither it nor any of its Subsidiaries 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 TriZetto, any of its Subsidiaries or any other party under, any
Contract to which TriZetto or any of its Subsidiaries is a party and which
would, if terminated or modified, have
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insofar as can reasonably be foreseen, a Material Adverse Effect on TriZetto. To
the Knowledge of TriZetto, all of the other parties to such agreements are in
compliance with all Material provisions of all such agreements.
4.18 AFFILIATE TRANSACTIONS. Except as set forth in the SEC Filings and
Section 4.18 of the TriZetto Disclosure Schedule, there are no Material
contracts or other Material transactions between TriZetto and any (a) officer or
director of TriZetto, (b) shareholder of TriZetto, or (c) Affiliate of any such
officer, director or shareholder.
4.19 INSURANCE. TriZetto has in full force and effect all contracts of
insurance or indemnity customary and appropriate for a company of its size. 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 TriZetto
knows of no circumstance (including without limitation the consummation of the
transactions contemplated by this Agreement), which has caused, or might cause,
any such contract to be canceled or terminated. There is no Material claim by
TriZetto or any of its Subsidiaries under any insurance policies of TriZetto or
any of its Subsidiaries as to which coverage has been questioned, denied or
disputed by the underwriters of such policies.
4.20 MERGER SUB. Merger Sub is and will be at all times prior to the
Effective Time a wholly-owned subsidiary of TriZetto newly formed for the sole
purpose of effecting the Merger. Merger Sub will engage in no other Material
activities or operations not related to such purpose.
4.21 FULL DISCLOSURE. All of the representations and warranties made by
TriZetto and Merger Sub in this Agreement, and all statements set forth in the
certificates delivered by TriZetto and Merger Sub at the Closing pursuant to
this Agreement, are true, correct and complete in all Material respects and do
not contain any untrue statement of a Material fact or omit to state any
Material fact necessary in order to make such representations, warranties or
statements, in light of the circumstances under which they were made,
misleading. The copies of all documents furnished by TriZetto pursuant to the
terms of this Agreement are complete and accurate copies of the original
documents.
ARTICLE 5
COVENANTS OF THE SHAREHOLDERS, RIMS, KIRCH AND HEIMSOTH
5.1 CONDUCT OF RIMS BUSINESS. Prior to the Closing Date, except with
the prior written consent of TriZetto or as expressly contemplated by this
Agreement, RIMS shall, and shall cause its Subsidiaries to:
(a) conduct its business in substantially the same manner as
presently being conducted and refrain from entering into any transaction or
Contract other than in the ordinary course of business and consistent with past
practices; and not make any Material change in its methods of management,
marketing, accounting, or operations;
(b) obtain approval from TriZetto prior to undertaking any
Material new business opportunity outside the ordinary course of business;
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(c) confer at the request of TriZetto with one or more
designated representatives of TriZetto to report Material operational matters
and to report the general status of ongoing business operations;
(d) notify TriZetto of any governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated), adjudicatory proceedings or submissions involving any Material
property or other Material Assets;
(e) (i) grant to any current or former director, officer or
employee of RIMS any increase in compensation or benefits, except for cost of
living raises in the ordinary course of business, and except for employees who
are not officers or directors in the ordinary course of business consistent with
past practice, (ii) grant to any such director, officer, or employee any
increase in severance or termination pay including the vesting of shares of RIMS
Stock (or other property), (iii) enter into any employment, deferred
compensation, severance or termination agreement or arrangement with or for the
benefit of any such current or former director, officer or employee, or (iv) pay
any bonuses to any director, officer, employee or consultant;
(f) except in the ordinary course of business and consistent
with past practices, not (i) create or incur any new indebtedness outside of
RIMS' bridge loan and line of credit from American National Bank and Trust
Company (or, even if in the ordinary course of business, not in excess of
$500,000 in the aggregate), or (ii) release or create any Liens of any nature
whatsoever except for Permitted Liens;
(g) except in the ordinary course of business and, even if in
the ordinary course of business, then not in an amount to exceed $200,000
individually or $1,000,000 in the aggregate, not make or commit to make any
capital expenditure, or enter into any lease of capital equipment as lessee or
lessor;
(h) not enter into, terminate or Materially amend any Material
strategic alliance agreement or any other Material Contract relating to the
distribution, sale, license or marketing by third parties of RIMS' products or
services;
(i) not amend the Charter, Bylaws or other governing
instruments of RIMS or any of its Subsidiaries, except as contemplated by this
Agreement;
(j) not make any changes in its accounting methods or
practices or revalue its Assets, except for (i) those changes required by GAAP,
and (ii) changes in its tax accounting methods or practices that may be
necessitated by changes in applicable Tax laws;
(k) not issue, sell, pledge, encumber, authorize the issuance
of, enter into any Contract to issue, sell, pledge, encumber, or authorize the
issuance of, or otherwise permit to become outstanding, any additional shares of
RIMS Stock, or any stock appreciation rights, or any option, warrant,
conversion, or other right to acquire any such stock, or any security
convertible into any such stock, or pay or declare or agree to pay or declare
any dividend or other distribution with respect to any RIMS Stock, except for
shares to be issued pursuant to this Agreement;
(l) not make any loan to any Person or increase the aggregate
amount of any loan currently outstanding to any Person, except for usual and
customary advances to employees made in the ordinary course of business;
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(m) not sell any Material Asset or make any Material
commitment relating to its Assets other than in the ordinary course of business
or for the leases to be sold pursuant to Section 9.1(t), or enter into or
terminate any lease of real estate other than in the ordinary course of
business;
(n) not purchase or redeem, or agree to purchase or redeem,
any security of RIMS (including any share of RIMS Stock);
(o) not waive any stock repurchase rights, accelerate, amend
or change the period of exercisability of options or restricted stock, reprice
options granted under any employee, consultant, director, or other stock plans
or authorized cash payments in exchange for any options granted under any of
such plans;
(p) not grant any severance or termination pay to any officer
or employee except pursuant to written agreements outstanding or policies
existing on the date hereof or adopt any new severance plan;
(q) not transfer or license to any Person or otherwise extend,
amend or modify any rights to the Intellectual Property of RIMS or any of its
Subsidiaries, or enter into any grants of future patent rights, other than in
the ordinary course of business consistent with past practice;
(r) not acquire or agree to acquire or be acquired by merging
or consolidating with, or by purchasing any Person, interest in, portion of or
the capital or the Assets of, or by any other manner, any business or any Person
or division thereof, otherwise acquire or agree to acquire any Assets which are
Material, individually or in the aggregate, to the business of RIMS or any of
its Subsidiaries or enter into any joint ventures, strategic partnerships or
alliances, except as contemplated hereby;
(s) not Materially modify or amend, or terminate any Material
Contract or agreement to which RIMS or any of its Subsidiaries is a party or
waive, release, or assign any Material rights or claims thereunder, in any such
case in a manner Materially adverse to TriZetto;
(t) will not take any actions that would make any
representation and warranty of RIMS hereunder inaccurate in any Material respect
at the Effective Time; or
(u) authorize any of, or commit or agree to take any of, the
foregoing actions.
5.2 NO SOLICITATION.
(a) From and after the date of this Agreement until the
Effective Time or termination of this Agreement pursuant to Article 11, the
Shareholders, RIMS, Kirch and Heimsoth 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 5.2;
(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. The Shareholders, RIMS, Kirch
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and Heimsoth 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 RIMS or any of its Subsidiaries or any
investment banker, attorney or other advisor or representative of the
Shareholders, RIMS, Kirch or Heimsoth or any of its Subsidiaries shall be deemed
to be a breach of this Section 5.2 by the Shareholders, RIMS, Kirch and
Heimsoth.
(b) In addition to the obligations of the Shareholders, RIMS,
Kirch and Heimsoth set forth in Section 5.2(a) hereof, the Shareholders, RIMS,
Kirch and Heimsoth shall immediately advise TriZetto orally and in writing of
any request for non-public information or any inquiry with respect to RIMS which
any 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. The Shareholders, RIMS, Kirch
and Heimsoth 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.
5.3 CONSENTS AND FILINGS. Upon the terms and subject to the conditions
hereof, the Shareholders, RIMS, Kirch and Heimsoth agree to use all reasonable
efforts to (a) obtain the consents required and (b) take all other actions
necessary to effect the transactions contemplated hereby.
5.4 ACCESS. RIMS shall afford to TriZetto, and to the officers,
employees, accountants, counsel, financial advisors and other representatives of
TriZetto, access during normal business hours during the period prior to the
Effective Time to all of RIMS' properties, books, contracts, commitments,
personnel and records and, during such period, RIMS shall furnish promptly to
TriZetto, (a) a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of federal
or state securities laws and (b) all other information concerning its business,
properties and personnel as TriZetto or its representatives may request. Except
to the extent otherwise required by law, TriZetto will hold any confidential
information obtained pursuant to this Section 5.4 in accordance with the
Confidentiality Letter dated July 20, 2000, between TriZetto and RIMS (the
"Confidentiality Letter").
5.5 NOTIFICATION OF CERTAIN MATTERS. RIMS shall give prompt notice to
TriZetto of (i) the occurrence or non-occurrence, to RIMS' Knowledge, of any
event the occurrence or non-occurrence of which would cause any Shareholder or
RIMS representation or warranty contained in this Agreement to be untrue or
inaccurate at or prior to the Effective Time and (ii) any failure of the
Shareholders, RIMS, Kirch or Heimsoth to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 5.5
shall not limit or otherwise affect the remedies available hereunder to
TriZetto.
5.6 STANDSTILL. The Shareholders, RIMS, Kirch and Heimsoth agree that,
for a period of one year from the date of this Agreement, neither the
Shareholders, RIMS nor any of their Affiliates will: (i) acquire, offer to
acquire, or agree to acquire, directly or indirectly, by purchase or otherwise,
any voting securities or direct or indirect rights to acquire any voting
securities of TriZetto or any of its Subsidiaries, or of any successor to or
Person in control of TriZetto, or any assets of TriZetto or any of its
Subsidiaries or divisions (other than the transactions contemplated herein) or
of any such
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successor or controlling Person; (ii) make, or in any way participate in,
directly or indirectly, any "solicitation" of "proxies" (as such terms are used
in the rules of the SEC) to vote, or seek to advise or influence any Person or
entity with respect to the voting of, any voting securities of TriZetto; (iii)
deposit any voting securities of TriZetto or any of its Subsidiaries in a voting
trust or subject any voting securities of TriZetto or any of its Subsidiaries to
any arrangement or agreement with respect to the voting of such voting
securities; (iv) join a partnership, limited partnership, syndicate or other
group, or otherwise act in concert with any other Person, for the purpose of
acquiring, voting or disposing of voting securities of TriZetto or any of its
Subsidiaries; (v) make any public announcement with respect to, or submit a
proposal for, or offer of (with or without conditions) any extraordinary
transaction involving TriZetto or its securities or assets (other than the
transactions contemplated herein); or (vi) form, join or in any way participate
in a "group" (as defined in Section 13(d)(3) of the 1934 Act) in connection with
any of the foregoing. The Shareholders will immediately advise TriZetto of any
inquiry or proposal made to the Shareholders with respect to any of the
foregoing. Notwithstanding anything to the contrary stated herein, the
Shareholders, RIMS, Kirch and Heimsoth shall not be prohibited by this Section
5.6 from contacting the Chief Executive Officer, the Board of Directors of
TriZetto or any member of the Board of Directors of TriZetto to request a waiver
of any of the foregoing; provided, however, that the waiver of any of the
foregoing must be executed by an executive officer of TriZetto duly authorized
by the Board of Directors of TriZetto. In addition, notwithstanding anything to
the contrary stated herein, a Shareholder is permitted to invest in mutual funds
or similar investment vehicles that purchase, hold and sell securities of
TriZetto; provided, however, that such Shareholder does not exert any control
over the investment decisions of such mutual fund or investment vehicle.
ARTICLE 6
COVENANTS OF TRIZETTO
6.1 OBLIGATIONS OF MERGER SUB. TriZetto shall take all action to cause
Merger Sub perform its obligations under this Agreement and to consummate the
Merger on the terms and conditions set forth in this Agreement.
6.2 NASDAQ LISTING. TriZetto shall file a notice of issuance covering
the shares of TriZetto Stock issuable to the Shareholders pursuant to this
Agreement. TriZetto shall use its commercially reasonable best efforts to have
such shares approved for listing on the Nasdaq National Market, subject to
official notice of issuance, prior to the Effective Time.
6.3 EMPLOYEES AND EMPLOYEE BENEFITS.
(a) TriZetto and its affiliates shall provide RIMS Employees
(as defined below) with (a) retirement and savings benefits, (b) health and
medical benefits, (c) severance benefits, and (d) other employee benefits that
are, in the case of each such category of benefits, no less favorable in the
aggregate than the comparable benefits provided to comparable employees of
TriZetto and its affiliates immediately before the Effective Time.
(b) From and after the Effective Time, TriZetto shall treat
all service by RIMS Employees (as defined below) with RIMS and its affiliates
and their respective predecessors prior to the Effective Time for all purposes
as service with TriZetto (except to the extent such treatment would result in
duplicative accrual on or after the Effective Time of benefits for the same
period of service), and, with respect to any medical or dental benefit plan in
which RIMS Employees
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participate after the Effective Time, TriZetto shall waive or cause to be waived
any pre-existing condition exclusions and requirements (provided, however, that
no such waiver shall apply to pre-existing condition of any RIMS Employee who
was, as of the Effective Time, excluded from participation in a RIMS benefit
plan by virtue of such pre-existing condition).
(c) Nothing in Section 6.3 shall be construed to impose upon
TriZetto and its affiliates any obligation to continue the employment of any
RIMS Employee following the Effective Time. For purposes of this Section 6.3(c),
"RIMS Employees" shall mean Persons who are, as of the Effective Time, employees
of RIMS or any of its Subsidiaries.
6.4 BRIDGE LOAN. Following the Closing Date, TriZetto shall take all
action necessary to ensure that the Heimsoth and Kirch are released from any and
all obligations that they may have with respect to RIMS' bridge loan from
American National Bank and Trust Company.
6.5 RIMS EMPLOYEE STOCK. Immediately after the Closing, TriZetto shall
issue and deliver to the Persons and in the respective amounts set forth on
Exhibit C, an aggregate number of shares of TriZetto Stock equal to $2,000,000
divided by the average closing sales price of the TriZetto Stock as reported on
the NMS (or other exchange or similar market on which TriZetto is regularly
traded if not then traded on NMS) for the five trading days beginning on the
second full trading day prior to the public announcement of the execution of
this Agreement (the "RIMS Employee Shares"), which shares shall vest at the rate
of 25% per year pursuant to a four year vesting schedule and shall be
conditioned on continued employment with TriZetto.
ARTICLE 7
COVENANTS OF TRIZETTO AND RIMS
7.1 CONSENTS; APPROVALS. Prior to Closing, each of RIMS and TriZetto
shall use their respective commercially reasonable best efforts to obtain all
consents, waivers, approvals, authorizations or orders necessary (including,
without limitation, all governmental and regulatory rulings and approvals) such
that the transactions contemplated herein will not constitute a default (or an
event which with notice or lapse of time or both would become a default) under
any Material contract, agreement, lease, license, permit, franchise, or other
instrument or obligation to which it or any of its Subsidiaries is a party. RIMS
and TriZetto shall make all filings (including, without limitation, all filings
with the governmental or regulatory agencies) required in connection with the
authorization, execution and delivery of this Agreement by RIMS and TriZetto and
the consummation by them of the transactions contemplated hereby.
7.2 NOTICES OF CERTAIN EVENTS. RIMS and TriZetto shall promptly notify
the other party of:
(a) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency in connection with the transactions contemplated by this
Agreement; and
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(c) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge, threatened against, relating to or involving or
otherwise affecting such party that, if pending on the date of this Agreement,
would have been required to be disclosed pursuant to Articles 2, 3 or 4 or that
relate to the consummation of the transactions contemplated by this Agreement or
any other development causing a breach of any representation or warranty made by
a party hereunder.
7.3 FURTHER ACTION. Upon the terms and subject to the conditions
hereof, each of the parties hereto shall use all commercially reasonable best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all other things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement, to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, and otherwise
to satisfy or cause to be satisfied all conditions precedent to its obligations
under this Agreement.
7.4 PUBLIC ANNOUNCEMENTS. TriZetto and RIMS shall consult with each
other before issuing any press release with respect to this Agreement or the
transactions contemplated herein, and except as may be required by applicable
law as advised by counsel, will not issue any such press release or make any
such public statement without the prior written consent of the other party.
7.5 TRANSFER TAXES. TriZetto and RIMS shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees, and any similar taxes which become payable in
connection with the transactions contemplated hereby that are required or
permitted to be filed on or before the Effective Time. TriZetto, Merger Sub, the
Shareholder and RIMS agree that the Shareholders (prior to the Merger) and the
Surviving Corporation (following the Merger) will pay any real property,
transfer or gains tax, stamp tax, stock transfer tax, or other similar tax
imposed on the Merger or the surrender of the RIMS Stock pursuant to the Merger
(collectively, "Transfer Taxes"), excluding any Transfer Taxes as may result
from the transfer of beneficial interests in the RIMS Stock other than as a
result of the Merger, and any penalties or interest with respect to the Transfer
Taxes. The Shareholders agree to cooperate with TriZetto in the filing of any
returns with respect to the Transfer Taxes.
7.6 HART-SCOTT-RODINO; REASONABLE EFFORTS.
(a) The parties agree to use their commercially reasonable
best efforts to take all actions necessary to comply with the HSR Act and to
make all necessary filings with applicable authorities thereunder.
(b) The parties further agree to use commercially reasonable
best efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including (A) the obtaining of all other
necessary actions or nonactions, waivers, consents, licenses, permits,
authorizations, orders and approvals from governmental authorities and the
making of all other necessary registrations and filings, (B) the obtaining of
all consents, approvals or waivers from third parties related to or required in
connection with the Merger that are necessary to consummate the Merger and the
transactions contemplated by this Agreement or required to
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prevent a Material Adverse Effect on TriZetto or RIMS from occurring prior to or
after the Effective Time, (C) to ensure that the Merger constitutes a tax-free
reorganization within the meaning of Section 368(a)(1)(A), (D) the satisfaction
of all conditions precedent to the parties' obligations hereunder, and (E) the
execution and delivery of any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement. Notwithstanding the foregoing or any other provision of this
Agreement, nothing in this Section 7.6(b) shall limit a party's right to
terminate this Agreement pursuant to Section 10.1, so long as such party has up
to then complied with its obligations under this Section 7.6(b).
7.7 BLUE SKY LAWS. TriZetto shall take any action required to be taken
under any applicable provincial or state securities laws (including "Blue Sky"
laws) in connection with the issuance of the TriZetto Stock in the Merger;
provided, however, that neither TriZetto nor RIMS shall be required to register
or qualify as a foreign corporation or to take any action that would subject it
to service of process in any jurisdiction where any such entity is not now so
subject, except as to matters and transactions arising solely from the offer and
sale of TriZetto Stock.
7.8 FURTHER ACTION. Upon the terms and subject to the conditions
hereof, each of the parties hereto shall use reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all other things
necessary, proper or advisable to consummate and make effective as promptly as
practicable, and to the extent practicable, on or before December 31, 2000, the
transactions contemplated by this Agreement, to obtain in a timely manner all
necessary waivers, consents and approvals and to effect all necessary
registrations and filings, and to otherwise satisfy or cause to be satisfied all
conditions precedent to its obligations under this Agreement. The foregoing
covenant shall not include any obligation by TriZetto to agree to divest,
abandon, license or take similar action with respect to any assets (tangible or
intangible) of TriZetto or RIMS.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNIFICATION OF TRIZETTO AND MERGER SUB.
(a) Subject to the limitations contained in this Article 8,
the Shareholders, Kirch and Heimsoth shall severally defend, indemnify and hold
harmless TriZetto and Merger Sub and their respective officers, directors,
stockholders, employees and agents from and against any and all losses, claims,
judgments, liabilities, demands, charges, suits, penalties, costs or expenses,
including court costs and attorneys' fees ("Claims and Liabilities") with
respect to or arising from (i) the breach of any warranty or any inaccuracy of
any representation made by the Shareholders or RIMS in this Agreement (as each
such representation or warranty would read if all qualifications as to knowledge
or materiality, including without limitation the definition of Material Adverse
Effect, were deleted therefrom), or (ii) the breach of any covenant or agreement
made by the Shareholders or RIMS in this Agreement.
(b) With respect to Subsection 8.1(a), the Shareholders, Kirch
and Heimsoth shall be liable to TriZetto for any Claims and Liabilities only for
those Claims and Liabilities that exceed, in the aggregate, $400,000 (the
"Deductible Amount"); provided, however, that the Deductible Amount shall not
apply to the indemnification obligations for breach of any representations and
warranties set forth in Section 3.6 and 3.11 hereof. Further, the Shareholders'
aggregate liability
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under Subsection 8.1(a) (other than with respect to any intentional or willful
breach or failure to perform) shall in no event exceed the value of the Escrow
Shares, and TriZetto's sole recourse against the Shareholders, Kirch and
Heimsoth for any Claims and Liabilities shall be against the Escrow Shares.
TriZetto's right to bring a claim against the Shareholders, Kirch and Heimsoth
to indemnify TriZetto for any Claims and Liabilities with respect to or arising
from the breach of any warranty or any inaccuracy of any representation made by
the Shareholders, Kirch, Heimsoth or RIMS in this Agreement shall expire on the
date one (1) year after the Effective Time.
(c) In addition to the obligations set forth in 8.1(a) above,
the Shareholders, Kirch and Heimsoth shall defend, indemnify and hold harmless
TriZetto and Merger Sub and their respective officers, directors, stockholders,
employees and agents against any and all Claims and Liabilities with respect to
or arising from any claims for any right to receive Merger Consideration or any
equity interest in or right to acquire any equity interest in RIMS, TriZetto or
Merger Sub made by any Person who is not a holder of RIMS Stock or RIMS Options
on the Effective Date.
(d) Notwithstanding the disclosures set forth in Section 3.21
of the RIMS Disclosure Schedule, the Shareholders, Kirch and Heimsoth shall
severally defend, indemnify and hold harmless TriZetto and Merger Sub and their
respective officers, directors, stockholders, employees and agents against any
and all Claims and Liabilities with respect to, or arising from, any claims for
infringement of any of the Material RIMS Intellectual Property, including,
without limitation, those claims or potential claims for infringement set forth
on Section 3.21 of the RIMS Disclosure Schedule. The Shareholders', Kirch's and
Heimsoth's aggregate liability under 8.1(a) above and this Subsection 8.1(d)
shall in no event exceed the value of the Escrow Shares.
8.2 LIMITATIONS. Anything to the contrary notwithstanding, TriZetto
shall not be indemnified and held harmless in respect of any Claims and
Liabilities which are covered by insurance owned by the Shareholders, RIMS,
Kirch or Heimsoth 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 in determining the amount of indemnification
to be provided hereunder.
8.3 INDEMNIFICATION OF RIMS. TriZetto shall defend, indemnify and hold
harmless RIMS, and its officers, directors, shareholders, employees and agents
from and against any and all Claims and Liabilities with respect to or arising
from (i) breach of any warranty or any inaccuracy of any representation made by
TriZetto or Merger Sub, or (ii) breach of any covenant or agreement made by
TriZetto or Merger Sub in this Agreement; provided, however, notwithstanding
anything to the contrary TriZetto's liability hereunder shall be limited to
$5,000,000 provided, however, that this dollar limit shall not apply to any
Shareholder's claims for failure of TriZetto to perform or comply with its
obligations pursuant to Article 2 or its covenants in Article 6.
8.4 CLAIMS PROCEDURE. Promptly after the receipt by any indemnified
party (the "Indemnitee") of notice of the commencement of any action or
proceeding against such Indemnitee, such Indemnitee shall, if a claim with
respect thereto is or may be made against any indemnifying party (the
"Indemnifying Party") pursuant to this Article 8, give such Indemnifying Party
written notice of the commencement of such action or proceeding and give such
Indemnifying Party a copy of such claim and/or process and all legal pleadings
in connection therewith. The failure to give such notice shall not relieve any
Indemnifying Party of any of its indemnification obligations contained in this
Article 8, except where, and solely to the extent that, such failure actually
and Materially prejudices the rights of such Indemnifying Party. Such
Indemnifying Party shall have, upon request
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within thirty (30) days after receipt of such notice, but not in any event after
the settlement or compromise of such claim, the right to defend, at his or its
own expense and by his or its own counsel reasonably acceptable to the
Indemnitee, any such matter involving the asserted liability of the Indemnitee;
provided, however, that if the Indemnitee determines that, as a result of an
existing or prospective business relationship between TriZetto or any of the
TriZetto Subsidiaries on the one hand and any other party or parties to such
claim on the other hand, or as a result of other reasonable circumstances, there
is a reasonable probability that a claim may Materially and adversely affect it,
other than solely as a result of money payments required to be reimbursed in
full by such Indemnifying Party under this Article 8 or if a conflict of
interest exists between Indemnitee and the Indemnifying Party, the Indemnitee
shall have the right to defend, compromise or settle such claim or suit; and,
provided, further, that such settlement or compromise shall not, unless
consented to in writing by such Indemnifying Party, which shall not be
unreasonably withheld, be conclusive as to the liability of such Indemnifying
Party to the Indemnitee. In any event, the Indemnitee, such Indemnifying Party
and its counsel shall cooperate in the defense against, or compromise of, any
such asserted liability, and in cases where the Indemnifying Party shall have
assumed the defense, the Indemnitee shall have the right to participate in the
defense of such asserted liability at the Indemnitee's own expense. In the event
that such Indemnifying Party shall decline to participate in or assume the
defense of such action, prior to paying or settling any claim against which such
Indemnifying Party is, or may be, obligated under this Article 8 to indemnify an
Indemnitee, the Indemnitee shall first supply such Indemnifying Party with a
copy of a final court judgment or decree holding the Indemnitee liable on such
claim or, failing such judgment or decree, the terms and conditions of the
settlement or compromise of such claim. An Indemnitee's failure to supply such
final court judgment or decree or the terms and conditions of a settlement or
compromise to such Indemnifying Party shall not relieve such Indemnifying Party
of any of its indemnification obligations contained in this Article 8, except
where, and solely to the extent that, such failure actually and Materially
prejudices the rights of such Indemnifying Party. If the Indemnifying Party is
defending the claim as set forth above, the Indemnifying Party shall have the
right to settle the claim only with the consent of the Indemnitee; provided,
however, that if the Indemnitee shall fail to consent to the settlement of such
a claim by the Indemnifying Party, which settlement (i) the claimant has
indicated it will accept, and (ii) includes an unconditional release of the
Indemnitee and its Affiliates by the claimant and imposes no Material
restrictions on the future activities of the Indemnitee and its affiliates, the
Indemnifying Party shall have no liability with respect to any payment required
to be made to such claimant in respect of such claim in excess of the proposed
amount of settlement. If the Indemnitee is defending the claim as set forth
above, the Indemnitee shall have the right to settle or compromise any claim
against it after consultation with, but without the prior approval of, any
Indemnifying Party, provided, however, that such settlement or compromise shall
not, unless consented to in writing by such Indemnifying Party, which shall not
be unreasonably withheld, be conclusive as to the liability of such Indemnifying
Party to the Indemnitee.
8.5 AGREEMENT OF THE SHAREHOLDERS. By virtue of the acceptance by the
Shareholders of the consideration payable by TriZetto to the Shareholders upon
the Closing and consummation of the transactions contemplated herein, the
Shareholders will, without the need for any further action on their part, have
agreed and consented to (i) their indemnification and other obligations under
this Article 8; (ii) all of the terms and conditions of the Escrow Agreement and
the establishment of the Escrow and pursuant to the terms and conditions of this
Agreement and the Escrow Agreement to secure their indemnification obligations
under this Article 8.
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8.6 EXCLUSIVE REMEDY. Each of the parties hereto acknowledges and
agrees that, from and after the Closing Date, its sole and exclusive monetary
remedy with respect to any and all claims relating to the subject matter of this
Agreement shall be pursuant to the indemnification provisions set forth in this
Article 8, except that nothing in this Agreement shall be deemed to constitute a
waiver of any injunctive or other equitable remedies or any tort claims of, or
causes of action arising from, intentionally fraudulent misrepresentation or
deceit.
ARTICLE 9
CONDITIONS TO MERGER
9.1 CONDITIONS TO OBLIGATIONS OF TRIZETTO AND MERGER SUB. The
obligations of TriZetto and the Merger Sub to consummate the transactions
contemplated herein are also subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Shareholders, RIMS, Kirch and Heimsoth contained in this
Agreement and in any certificate or other writing delivered to TriZetto pursuant
hereto shall be true and correct on and as of the Effective Time with the same
force and effect as if made on and as of the Effective Time, and TriZetto and
Merger Sub shall have received a certificate to such effect signed by the
President and the Chief Executive Officer of RIMS;
(b) AGREEMENTS AND COVENANTS. RIMS and each of the
Shareholders shall have performed or complied with all agreements and covenants
required by this Agreement to be performed or complied with by them on or prior
to the Effective Time, and TriZetto shall have received a certificate to such
effect signed by the President and Chief Executive Officer of RIMS;
(c) CONSENTS OBTAINED. All consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made, by the Shareholders, RIMS, Kirch and Heimsoth for the authorization,
execution and delivery of this Agreement and the consummation by it of the
transactions contemplated hereby shall have been obtained and made by the
Shareholders, RIMS, Kirch and Heimsoth;
(d) THE SHAREHOLDERS. At or prior to the Closing, the
Shareholders shall hold 100% of the issued and outstanding shares of the RIMS
Stock;
(e) RIMS DERIVATIVE SECURITIES. As of the Closing, other than
the RIMS Options, there shall be no outstanding RIMS Derivative Securities;
(f) ESCROW AGREEMENT. The Escrow Agreement in the form of
Exhibit B shall have been entered into by the Shareholders;
(g) NON-COMPETITION AND NON-SOLICITATION AGREEMENT. The
Non-Competition and Non-Solicitation Agreement in the form of Exhibit D shall
have been entered into by Kirch and Heimsoth;
(h) RESIGNATIONS. At the Closing, RIMS shall cause to be
delivered to TriZetto duly signed resignations, effective immediately after the
Closing, of all directors and officers of RIMS (other than those directors and
officers designated in writing by TriZetto to RIMS at least one
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day before the Closing Date), or shall take such other action as is necessary to
assure that such Persons are not directors or officers of RIMS after the
Closing;
(i) OPINION OF COUNSEL. TriZetto shall have received the
opinion of Sachnoff & Weaver, Ltd., counsel to RIMS, dated as of the Closing
Date, in such form as is reasonably acceptable to TriZetto;
(j) REGISTRATION RIGHTS AGREEMENT. The Registration Rights
Agreement in the form attached hereto as Exhibit E shall have been entered into
by the Shareholders;
(k) EMPLOYMENT AGREEMENTS. Kirch and Heimsoth shall have
entered into an Employment Agreement dated as of the Closing Date with TriZetto,
in the form attached hereto as Exhibit F;
(l) NO INJUNCTIONS. No temporary restraining order,
preliminary or permanent injunction issued by any court of competent
jurisdiction preventing the consummation of the transactions contemplated herein
shall be in effect;
(m) OUTSTANDING INDEBTEDNESS. All outstanding indebtedness
between RIMS and any employee of RIMS shall have been paid in full;
(n) TERMINATION OF SHAREHOLDERS AGREEMENT. Kirch and Heimsoth
shall have terminated, or caused to be terminated, that certain Shareholder's
Agreement dated October 27, 1997 among RIMS, Kirch and Heimsoth.
(o) AMENDMENT TO RIMS OPTIONS. Each holder of RIMS Options
shall have entered into an agreement with RIMS amending his or her option
agreement to provide that in the event of a merger transaction as contemplated
by this Agreement, all vested RIMS Options may be substituted for new options of
comparable value covering shares of the acquiring corporation, with appropriate
adjustments as to the number of shares and exercise price.
(p) BANK FEE. The Shareholders, Kirch and Heimsoth shall have
paid or otherwise discharged the success fee payable to American National Bank
and Trust Company of Chicago ("ANB") pursuant to the bridge loan by ANB to RIMS
and shall have delivered to TriZetto written evidence of such payment reasonably
satisfactory to TriZetto.
(q) TERMINATION AGREEMENTS. Each RIMS employee who is a party
to a Termination Agreement shall have agreed to terminate such agreement prior
to the Effective Time and RIMS shall have delivered to TriZetto written evidence
of such termination reasonably satisfactory to TriZetto.
(r) ACCOUNTS RECEIVABLE WITH EMPLOYEES. Each employee of RIMS
who is indebted to RIMS prior to the Effective Date shall have paid in full to
RIMS all amounts so owed and RIMS shall have delivered to TriZetto written
evidence of payment reasonably satisfactory to TriZetto; provided that the
remaining balance under notes payable by Kirch and Heimsoth, not to exceed
$86,423.61 and $85,717.95, respectively, plus accrued interest shall be
foregiven by RIMS.
(s) OWNERSHIP OF AUTOMOBILES. RIMS shall have transferred all
right, title and interest in and to the automobiles owned by RIMS and used by
Kirch and Heimsoth as of the date of this Agreement in the conduct of business
on behalf of RIMS to Kirch and Heimsoth, respectively;
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provided that all sales taxes, transfer taxes and all other costs and expenses
incurred in connection with such transfer shall be borne by Kirch and Heimsoth,
respectively.
(t) SALE OF LEASES. RIMS shall have sold all right, title and
interest in and to the leases in its lease portfolio, as set forth in Schedule
9.1(t), to an unrelated third party for an amount equal to at least $2,200,000.
9.2 CONDITIONS TO OBLIGATIONS OF RIMS, THE SHAREHOLDERS, KIRCH AND
HEIMSOTH. The obligations of RIMS, the Shareholders, Kirch and Heimsoth to
consummate the transactions contemplated herein are also subject to the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of TriZetto and Merger Sub contained in this Agreement and in any
certificate or other writing delivered to TriZetto pursuant hereto shall be true
and correct in all respects on and as of the Effective Time, with the same force
and effect as if made on and as of the Effective Time and RIMS shall have
received a certificate to such effect signed by the President and the Chief
Executive Officer of TriZetto;
(b) AGREEMENTS AND COVENANTS. TriZetto and Merger Sub shall
have performed or complied with all agreements and covenants required by this
Agreement to be performed or complied with by them on or prior to the Closing
and RIMS shall have received a certificate to such effect signed by the
President and the Chief Executive Officer of TriZetto;
(c) CONSENTS OBTAINED. All Material consents, waivers,
approvals, authorizations or orders required to be obtained, and all filings
required to be made, by TriZetto and Merger Sub for the authorization, execution
and delivery of this Agreement and the consummation by them of the transactions
contemplated hereby shall have been obtained and made by TriZetto and Merger
Sub, except where the failure to receive such consents, etc. would not
reasonably be expected to have a Material Adverse Effect on TriZetto;
(d) OPINION OF COUNSEL. RIMS shall have received the opinion
of Stradling Yocca Carlson & Rauth, a Professional Corporation, counsel to
TriZetto, dated as of the Closing Date, in such form as may be reasonably
satisfactory to RIMS;
(e) REGISTRATION RIGHTS AGREEMENT. The Registration Rights
Agreement in the form attached hereto as Exhibit E shall have been entered into
by TriZetto; and
(f) NO INJUNCTIONS. No temporary restraining order,
preliminary or permanent injunction issued by any court of competent
jurisdiction preventing the consummation of the transactions contemplated herein
shall be in effect.
ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding anything contained in this Agreement
to the contrary, this Agreement may be terminated at any time prior to the
Effective Time (notwithstanding any approval of this Agreement by the board of
directors of TriZetto or RIMS or the Shareholders):
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(a) by mutual written agreement duly authorized by the board
of directors of TriZetto and RIMS;
(b) by the board of directors of TriZetto if any condition to
the obligation of TriZetto or Merger Sub under this Agreement to be complied
with or performed by RIMS at or before the Closing shall not have been complied
with or performed at the time required for such compliance or performance and
such noncompliance or nonperformance shall not have been waived by TriZetto;
(c) by the board of directors of RIMS if any condition to the
obligation of RIMS under this Agreement to be complied with or performed by
TriZetto at or before the Closing shall not have been complied with or performed
at the time required for such compliance or performance and such noncompliance
or nonperformance shall not have been waived by RIMS; or
(d) by either TriZetto or RIMS if the Merger shall not have
been consummated by December 31, 2000; provided, however, that the right to
terminate this Agreement under this Section 10.1(d) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of the Closing to occur on or before
such date).
10.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to Section 10.1, this Agreement, except for the provisions of
the second sentence of Section 5.4, shall become void and have no effect,
without any liability on the part of any party or its directors, officers or
stockholders. No termination of this Agreement shall affect the obligations
contained in the Confidentiality Letter, which will survive in accordance with
its terms. Notwithstanding the foregoing, nothing in this Section 10.2 shall
relieve any party to this Agreement of liability for a Material breach of any
provision of this Agreement and provided, further, however, that if it shall be
judicially determined that termination of this Agreement was caused by an
intentional breach of this Agreement by either party, then, in addition to other
remedies at law or equity for breach of this Agreement, the breaching party
shall indemnify and hold harmless the non-breaching parties for their respective
out-of-pocket costs, fees and expenses of their counsel, accountants, financial
advisors and other experts and advisors as well as fees and expenses incident to
negotiation, preparation and execution of this Agreement and related
documentation, preparation of filings, and any litigation by third parties
resulting from the execution of this Agreement.
10.3 FEES AND EXPENSES. Except as otherwise set forth in this Article
10, all fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses, whether or not the Merger is consummated. Without limiting the
generality of the foregoing, the Shareholders, Kirch and Heimsoth will pay all
of the fees and expenses incurred in connection with the transactions
contemplated by this Agreement for the Shareholders', Kirch's, Heimsoth's and
RIMS' legal, financial and accounting, and other advisors. TriZetto will pay all
the fees and expenses incurred in connection with the transaction contemplated
by the Agreement for TriZetto's legal, financial and accounting advisors. In the
event this Agreement is terminated for any reason, RIMS shall reimburse TriZetto
for one-half of the filing fee paid in connection with compliance under the HSR
Act pursuant to this Agreement.
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ARTICLE 11
GENERAL PROVISIONS
11.1 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS, ETC.
The representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time and shall
continue in full force and effect for a period of one year following the
Effective Time. The covenants and agreements of the parties contained in this
Agreement shall survive the Effective Time unless and until they are otherwise
terminated pursuant to their terms as a matter of applicable laws.
11.2 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified; (b) when sent by confirmed facsimile if sent during normal
business hours of the recipient, if not, then on the next business day; (c) five
days after having been sent by registered or certified mail, return receipt
requested, postage prepaid; or (d) two days after deposit with a nationally
recognized overnight courier, specifying two day delivery, with written
verification of receipt. All communications shall be sent to the parties at the
following addresses or facsimile numbers specified below (or at such other
address or facsimile number for a party as shall be designated by ten days
advance written notice to the other parties hereto):
(a) If to TriZetto or Merger Sub:
The TriZetto Group, Inc.
567 San Nicolas Drive, Suite 360
Newport Beach, California 92660
Attn: Jeffrey H. Margolis
Ph: (949) 719-2200
Fax: (949) 219-2199
with a copy to (which shall not constitute notice):
Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Attn: K.C. Schaaf, Esq.
Ph: (949) 725-4155
Fax: (949) 725-4100
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(b) If to the Shareholders, RIMS, Kirch or Heimsoth:
Resource Information Management Systems, Inc.
500 Technology Drive
Naperville, Illinois 60563
Attn: Terry Kirch
Ph: (630) 369-5300
Fax: (630) 369-9672
Terry L. Kirch
500 Technology Drive
Naperville, Illinois 60563
Ph: (630) 369-5300
Fax: (630) 369-9672
Thomas H. Heimsoth
500 Technology Drive
Naperville, Illinois 60563
Ph: (630) 369-5300
Fax: (630) 369-9672
with a copy to (which shall not constitute notice):
Sachnoff & Weaver, Ltd.
30 S. Wacker Drive
29th Floor
Chicago, IL 60606
Attn : William N. Weaver, Jr.
Ph: (312) 207-6401
Fax: (312) 207-6400
11.3 AMENDMENT. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties, whether before or after any
stockholder approval of the issuance of the Merger Consideration has been
obtained; provided, that after any such approval by the holders of TriZetto
Stock, there shall be made no amendment that pursuant to the rules and
regulations of Nasdaq requires further approval by such stockholders without the
further approval of such stockholders.
11.4 WAIVER. At any time prior to the Closing, any party hereto may
with respect to any other party hereto (a) extend the time for performance of
any of the obligations or other acts, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, or (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
11.5 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure
or delay on the part of any party hereto in the exercise of any right hereunder
shall impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty or agreement herein, nor shall any
single or partial exercise of any such right preclude other or further
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exercise thereof or of any other rights. Except as otherwise provided hereunder,
all rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
11.6 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.7 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible, in an acceptable manner, to the end that
transactions contemplated hereby are fulfilled to the extent possible.
11.8 ENTIRE AGREEMENT. This Agreement (including the RIMS Disclosure
Schedule and the TriZetto Disclosure Schedule together with the Transaction
Documents and the exhibits and schedules attached hereto and thereto and the
certificates referenced herein) constitutes the entire agreement and supersedes
all prior agreements and undertakings both oral and written, among the parties,
or any of them, with respect to the subject matter hereof and, except as
otherwise expressly provided herein.
11.9 ASSIGNMENT. No party may assign this Agreement or assign its
respective rights or delegate their duties (by operation of law or otherwise),
without the prior written consent of the other party. This Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
11.10 PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, including, without limitation, by way of subrogation, other than
Section 8.4 (which is intended to be for the benefit of the Indemnified Parties
and the others specifically referenced therein as beneficiaries of the
agreements contained in Section 8.4, and may be enforced by such Indemnified
Parties and other Persons).
11.11 GOVERNING LAW. This Agreement will be governed by, and construed
and enforced in accordance with the laws of the State of California as applied
to contracts that are executed and performed in California, without regard to
the principles of conflicts of law thereof. Each party hereby agrees that if
such party commences legal proceedings for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, such proceedings (including all counterclaims) shall be
conducted in the state or federal courts sitting in the county and state where
such party (i.e., the plaintiff in such proceedings) is located (except that
actions to enforce a judgment or for specific performance may be located
elsewhere as necessary), and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court or that such suit, action or proceeding is improper. Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address in effect for notices to it under this Agreement and
agrees that such service shall constitute
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good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law.
11.12 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement. This Agreement shall
become effective when counterparts have been signed by each of the parties and
delivered by facsimile or other means to the other party. Any party who delivers
a signature page via facsimile agrees to later deliver an original counterpart
to all other parties.
11.13 ATTORNEYS FEES. If any action or proceeding relating to this
Agreement or the Escrow Agreement, or the enforcement of any provision of this
Agreement or the Escrow Agreement is brought by a party hereto against any party
hereto, the prevailing party shall be entitled to recover reasonable attorneys'
fees, costs and disbursements (in addition to any other relief to which the
prevailing party may be entitled).
11.14 GENDER. For purposes of this Agreement, references to the
masculine gender shall include feminine and neuter genders and entities.
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<PAGE> 51
IN WITNESS WHEREOF, the parties have caused this Agreement and Plan of
Merger to be executed as of the date first written above by their respective
officers thereunto duly authorized.
THE TRIZETTO GROUP, INC., a Delaware
corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
CIDADAW ACQUISITION CORP., a Delaware
corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
RESOURCE INFORMATION MANAGEMENT SYSTEMS,
INC., an Illinois corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
----------------------------------------
Thomas H. Heimsoth
----------------------------------------
Terry L. Kirch
[Signature Page to Agreement and Plan of Merger]
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THE SHAREHOLDERS
PRAIRIE STREET PARTNERS, L.P.
By: Kirch Family Trust of 2000, its
General Partner
By: American National Bank and Trust
Co. of Chicago, its Trustee
By:
----------------------------
Name:
--------------------------
Its:
---------------------------
TIMBERLEE PARTNERS
By:
--------------------------------
Name: Terry Kirch
Its: General Partner
DOVE HILL HOLDING PARTNERSHIP, L.P.
By: Hatchwood Family Trust, its
General Partner
By: American National Bank and
Trust Co. of Chicago, its
Trustee
By:
----------------------------
Name:
--------------------------
Its:
---------------------------
----------------------------------------
Thomas H. Heimsoth
[Signature Page to Agreement and Plan of Merger]
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EXHIBIT A
CERTAIN DEFINITIONS
The following terms, as used in the Purchase Agreement, have the following
meanings:
"1933 ACT" shall have the meaning as set forth in Section 3.3 of the
Agreement.
"1934 ACT" shall have the meaning as set forth in Section 3.3 of the
Agreement.
"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, stock sale or similar transaction involving RIMS; (B) any sale,
lease (other than in the ordinary course of business), exchange, transfer,
license (other than in the ordinary course of business), acquisition or
disposition of more than 5% of the Assets of RIMS; or (C) any liquidation or
dissolution of RIMS.
"AFFILIATE" shall mean with respect to any Person, any individual,
corporation, partnership, firm, joint venture, limited liability company,
association, joint-stock company, trust, unincorporated organization or
Governmental Entity, or Person directly or indirectly controlling, controlled by
or under common control with a Person, including all officers and directors of
such Person.
"AGREEMENT" shall have the meaning as set forth in the Preamble.
"ANTI-DILUTION EVENT" shall have the meaning as set forth in Section
2.4 of the Agreement.
"ASSETS" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible, accrued or
contingent, or otherwise relating to or utilized in such Person's business,
directly or indirectly, in whole or in part, whether or not carried on the books
and records of such Person, and whether or not owned in the name of such Person
or any Affiliate of such Person and wherever located.
"BENEFIT PLANS" shall have the meaning as set forth in Section 3.12(b)
of the Agreement.
"CERTIFICATE OF MERGER" shall have the meaning as set forth in Section
1.3 of the Agreement.
"CLAIMS AND LIABILITIES" shall have the meaning as set forth in Section
8.1 of the Agreement.
"CLOSING" shall have the meaning as set forth in Section 1.2 of the
Agreement.
"CLOSING DATE" shall have the meaning as set forth in Section 1.2 of
the Agreement.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
"CODE" shall have the meaning as set forth in the Recitals.
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"CONFIDENTIALITY LETTER" shall have the meaning as set forth in Section
5.4 of the Agreement.
"CONTRACT" means any written or oral agreement, arrangement,
commitment, contract, indenture, instrument, lease, obligation, plan,
restriction, understanding or undertaking of any kind or character, or other
document to which any Person is a party or by which such Person is bound or
affecting such Person's capital stock, Assets or business.
"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.
"DEDUCTIBLE AMOUNT" shall have the meaning as set forth in Section
8.1(b) of the Agreement.
"DEFAULT" shall mean (i) any breach or violation of or default under
any Contract, Order or Permit, (ii) any occurrence of any event that with the
passage of time or the giving of notice or both would constitute a breach or
violation of or default under any Contract, Order or Permit, or (iii) any
occurrence of any event that with or without the passage of time or the giving
of notice would give rise to a right to terminate or revoke, change the current
terms of, or renegotiate, or to accelerate, increase, or impose any Liability
under, any Contract, Order or Permit.
"DGCL" shall have the meaning as set forth in Section 1.1 of the
Agreement.
"EFFECTIVE TIME" shall have the meaning as set forth in Section 1.3 of
the Agreement.
"EMPLOYEES" shall have the meaning as set forth in Section 3.19 of the
Agreement.
"ENVIRONMENTAL LAWS" mean any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, codes, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and governmental restrictions, relating to
human health, the environment or to emissions, discharges or releases of
pollutants, contaminants or other Hazardous Substances or wastes into the
environment, including without limitation ambient air, surface water, ground
water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants or other Hazardous Substances or wastes or the clean-up
or other remediation thereof.
"ENVIRONMENTAL PERMITS" means, with respect to any Person, all permits,
licenses, franchises, certificates, approvals and other similar authorizations
of governmental authorities relating to or required by Environmental Laws and
affecting, or relating in any way to, the business of such Person as currently
conducted.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
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"ESCROW" shall have the meaning as set forth in Section 2.3 of the
Agreement.
"ESCROW AGENT" shall have the meaning as set forth in Section 2.3 of
the Agreement.
"ESCROW AGREEMENT" shall have the meaning as set forth in Section 2.3
of the Agreement.
"ESCROW SHARES" shall have the meaning as set forth in Section 2.3 of
the Agreement.
"EXCHANGE AGENT" shall have the meaning as set forth in Section 2.2(a)
of the Agreement.
"FINANCIAL STATEMENTS" shall have the meaning as set forth in Section
3.8 of the Agreement.
"GAAP" shall have the meaning as set forth in Section 3.8 of the
Agreement.
"GOVERNMENTAL ENTITY" shall mean any government or any agency, bureau,
board, directorate, commission, court, department, official, political
subdivision, tribunal, or other instrumentality of any government, whether
federal, state or local, domestic or foreign.
"HAZARDOUS MATERIAL" means any toxic, radioactive, corrosive or
otherwise hazardous substance, including petroleum, its derivatives, by-products
and other hydrocarbons, or any substance having any constituent elements
displaying any of the foregoing characteristics, which in any event is regulated
under any Environmental Law.
"HSR" shall have the meaning as set forth in Section 3.3 of the
Agreement.
"IBCA" shall have the meaning as set forth in the Recitals.
"INDEMNIFYING PARTY" shall have the meaning as set forth in Section 8.4
of the Agreement.
"INDEMNITEE" shall have the meaning asset forth in Section 8.4 of the
Agreement.
"INTELLECTUAL PROPERTY" shall mean all rights, privileges and
priorities provided under applicable Law relating to intellectual property,
whether registered or unregistered, including without limitation all (i) (a)
inventions, discoveries, processes, formulae, designs, methods, techniques,
procedures, concepts, developments, technology, mask works, and confidential
information, new and useful improvements thereof and know-how relating thereto,
whether or not patented or eligible for patent protection; (b) copyrights and
copyrightable works, including computer applications, programs, Products,
Software, databases and related items; (c) trademarks, service marks, trade
names, brand names, product names, corporate names, logos and trade dress, the
goodwill of any business symbolized thereby, and all common-law rights relating
thereto; and (d) trade secrets, data and other confidential information; and
(ii) all registrations, applications, recordings, and licenses or other similar
agreements related to the foregoing.
"KEY EMPLOYEES" shall have the meaning set forth in Section 9.2(n) of
the Agreement.
"KNOWLEDGE OF KIRCH AND HEIMSOTH" shall mean the actual knowledge of
Kirch and Heimsoth, and knowledge that a reasonable Person in such capacity
should have after due inquiry.
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"KNOWLEDGE OF RIMS" means the actual knowledge of Kirch, Heimsoth, Jeff
Heimsoth, Jerry Horwitz and Dan Contilli, and knowledge that a reasonable Person
in such capacity should have after due inquiry.
"KNOWLEDGE OF THE SHAREHOLDERS" means the actual knowledge of the
Shareholders, and knowledge that a reasonable Person in such capacity should
have after due inquiry.
"LAW" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its Assets,
liabilities or business, including those promulgated, interpreted or enforced by
any Regulatory Authority.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect to such asset.
"MATERIAL" AND "MATERIALLY" for purposes of this Agreement shall be
determined in light of the facts and circumstances of the matter in question;
provided that any specific monetary amount stated in this Agreement shall
determine materiality in that instance.
"MATERIAL ADVERSE EFFECT" means, with respect to any Person, a Material
adverse effect on the condition (financial or otherwise), business, assets or
liabilities of such Person and its Subsidiaries taken as a whole.
"MERGER" shall have the meaning as set forth in the Recitals.
"MERGER CONSIDERATION" shall have the meaning as set forth in Section
2.1(b)(ii) of the Agreement.
"MERGER SUB" shall have the meaning as set forth in the Preamble.
"NASD" means National Association of Securities Dealers, Inc.
"NMS" shall have the same meaning as set forth in Section 2.6 of the
Agreement.
"ORDER" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or writ
of any federal, state, local or foreign or other court, arbitrator, mediator,
tribunal, administrative agency or Regulatory Authority.
"OWNED DATABASES" means all Databases other than Third Party Databases.
"OWNED SOFTWARE" means all Software other than Third Party Software.
"PERSON" means an individual, a corporation, a partnership, an
association, a trust, a limited liability company or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
"PERMIT" shall mean any federal, state, local, and foreign governmental
approval, authorization, certificate, consent, easement, filing, franchise,
letter of good standing, license, notice, permit, qualification, registration or
right of or from any Governmental Entity (or any extension, modification,
amendment or waiver of any of these) to which any Person is a party or that is
or may be binding upon or inure to the benefit of any Person or its securities,
Assets or business, or any
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notice, statement, filing or other communication to be filed with or delivered
to any Governmental Entity.
"PERMITTED LIENS" shall mean (a) Liens for taxes and assessments or
governmental charges or levies not at the time due or in respect of which the
validity thereof shall currently be contested in good faith by appropriate
proceedings; (b) Liens in respect of pledges or deposits under workers'
compensation laws or similar legislation, carriers', warehousemen's, mechanics',
laborers' and materialmen's and similar Liens, if the obligations secured by
such Liens are not then delinquent or are being contested in good faith by
appropriate proceedings; and (c) Liens incidental to the conduct of the business
of RIMS which were not incurred in connection with the borrowing of money or the
obtaining of advances or credits and which do not in the aggregate materially
detract from the value of its property or materially impair the use thereof in
the operation of its business.
"PRODUCTS" means the Software applications developed or owned by RIMS
and all related products, including any Intellectual Property related thereto.
"REGULATORY AUTHORITIES" shall mean, collectively, the Federal Trade
Commission, the United States Department of Justice, and all foreign, federal,
state and local regulatory agencies and other Governmental Entities or bodies
having jurisdiction over the parties and their respective Assets, employees,
businesses and/or Subsidiaries, including the NASD and the SEC.
"RETURNS" shall have the meaning as set forth in Section 3.11(a)(i) of
the Agreement.
"RIMS" shall have the meaning as set forth in the Preamble.
"RIMS BALANCE SHEET" shall have the meaning as set forth in Section 3.8
of the Agreement.
"RIMS CONVERTIBLE SECURITY" means any note, evidence of indebtedness,
stock or other security that is convertible into or exchangeable for any shares
of the capital stock of RIMS.
"RIMS DERIVATIVE SECURITY" shall mean (a) any RIMS Warrant, (b) any
RIMS Convertible Security, (c) any warrant, option, right or other security that
entitles the holder thereof to purchase or otherwise acquire any RIMS
Convertible Security; and (d) any note, evidence of indebtedness, stock or other
security that is convertible into or exchangeable for any RIMS Warrant.
"RIMS DISCLOSURE SCHEDULE" shall mean the written disclosure schedule
delivered on or prior to the date hereof by RIMS to TriZetto that is arranged in
paragraphs corresponding to the numbered and lettered paragraphs corresponding
to the numbered and lettered paragraphs contained in the Agreement.
"RIMS EMPLOYEES" shall have the meaning set forth in Section 6.4(c) of
the Agreement.
"RIMS ENVIRONMENTAL LIABILITIES" mean any and all liabilities of or
relating to RIMS, whether contingent or fixed, actual or potential, known or
unknown, which (i) arise under or relate to matters covered by Environmental
Laws and (ii) relate to actions occurring or conditions existing on or prior to
the Closing Date.
"RIMS MATERIAL INTELLECTUAL PROPERTY" shall have the meaning set forth
in Section 3.21(a) of the Agreement.
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"RIMS OPTION" means any option granted, whether exercisable or not
exercisable and not exercised or expired, to a current or former employee,
director, consultant, advisor or independent contractor of RIMS or any
predecessor thereof to purchase RIMS Stock.
"RIMS OPTION NUMBER" shall have the meaning as set forth in Section
2.1(b)(i)(b)(1) of the Agreement.
"RIMS STOCK" shall have the meaning as set forth in the Recitals.
"RIMS WARRANT" means any warrant, option, right or other security that
entitles the holder thereof to purchase or otherwise acquire any shares of the
capital stock of RIMS.
"SEC" shall have the meaning as set forth in Section 4.7 of the
Agreement.
"SEC FILINGS" shall have the meaning as set forth in Section 4.7 of the
Agreement.
"SHAREHOLDERS" shall have the meaning as set forth in the Preamble.
"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.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of capital stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"SURVIVING CORPORATION" shall have the meaning as set forth in Section
1.1 of the Agreement.
"TRIZETTO" shall have the meaning as set forth in the Preamble.
"TRIZETTO BENEFIT PLAN" means each profit-sharing, deferred
compensation, bonus, stock option, stock purchase, stock bonus, phantom stock,
vacation pay, holiday pay, severance, dependent care assistance, excess benefit,
incentive compensation, salary continuation, medical, life or other insurance,
employment, severance, termination, golden parachute, consulting, supplemental
retirement plan or agreement, supplemental unemployment and other employee
benefit plans, programs, agreements or arrangements, including all unwritten
employee benefit plans, programs, agreements and arrangements, if any,
maintained or contributed to by TriZetto for the benefit of TriZetto's Employees
(or former employees) or independent contractors and/or their beneficiaries.
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"TRIZETTO DISCLOSURE SCHEDULE" shall mean the written disclosure
schedule delivered on or prior to the date hereof by TriZetto to the
Shareholders and RIMS that is arranged in paragraphs corresponding to the
numbered and lettered paragraphs corresponding to the numbered and lettered
paragraphs contained in the Agreement.
"TRIZETTO ENVIRONMENTAL LIABILITIES" mean any and all liabilities of or
relating to TriZetto, whether contingent or fixed, actual or potential, known or
unknown, which (i) arise under or relate to matters covered by Environmental
Laws and (ii) relate to actions occurring or conditions existing on or prior to
the Closing Date.
"TRIZETTO STOCK" shall have the meaning as set forth in Section
2.1(b)(1) of the Agreement.
"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.
"TAXING AUTHORITY" shall mean any governmental authority responsible
for the imposition of Taxes.
"THIRD PARTY DATABASES" means Databases licensed or leased to RIMS or
any of its Subsidiaries by third parties.
"THIRD PARTY LICENSES" means all licenses and other agreements with
third parties relating to any Intellectual Property or products that RIMS is
licensed or otherwise authorized by such third parties to use, market,
distribute or incorporate into products marketed and distributed by RIMS.
"THIRD PARTY TECHNOLOGY" means all Intellectual Property and products
owned by third parties and licensed pursuant to Third Party Licenses.
"THIRD PARTY SOFTWARE" means Software licensed or leased to RIMS or
its Subsidiaries by third parties, including commonly available "shrink wrap"
software copyrighted by third parties.
"TRANSFER TAXES" shall have the meaning as set forth in Section 7.5 of
this Agreement.
"TRANSACTION DOCUMENTS" means the Agreement, the Escrow Agreement, the
Non-Competition and Non-Solicitation Agreement, the Registration Rights
Agreement, the Confidentiality Letter, and any other document executed and
delivered pursuant hereto together with any exhibits or schedules to such
documents.
"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 RIMS'
provision of the products, services, and other item(s) at issue will be affected
by any dates/times prior to, on, after, or spanning
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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) RIMS' supply of the product(s),
service(s), and other item(s) will not be interrupted, delayed, decreased, or
otherwise affected by the advent of the year 2000.
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