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EXHIBIT 2.3
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PARTNERSHIP INTEREST PURCHASE AGREEMENT
DATED AS OF FEBRUARY 5, 1999
BY AND AMONG
THE TRIZETTO GROUP, INC.,
THE TRIZETTO ACQUISITION GROUP, LLC,
HEALTHWEB SYSTEMS, LTD.,
HEALTHWEB GENERAL PARTNER, INC.,
[*]
AND
[*]
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[*] Confidential portions omitted and filed separately with the Securities and
Exchange Commission.
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PARTNERSHIP INTEREST PURCHASE AGREEMENT
THIS PARTNERSHIP PURCHASE AGREEMENT (the "Agreement"), is made and
entered into as of February 5, 1999, by and among The TriZetto Group, Inc., a
Delaware corporation ("TriZetto"), TriZetto Acquisition Group, LLC, a Delaware
limited liability company and wholly-owned subsidiary of TriZetto ("TAG"),
HealthWeb Systems, Ltd., a Texas limited partnership ("HealthWeb"), HealthWeb
General Partner, Inc., a Texas corporation ("HWGP"), [*] and [*] (collectively,
HWGP, [*] and [*] shall be referred to as the "HealthWeb Partners").
RECITALS
WHEREAS, HWGP owns a one percent (1%) general partnership interest in
HealthWeb and ▇▇▇▇▇ and ▇▇▇▇▇ own an thirteen and one-half percent (13.5%) and
three percent (3%) limited partnership interest in HealthWeb, respectively;
WHEREAS, Creative Business Solutions, Inc., a Texas corporation ("CBS")
owns a eighty-seven and one-half percent (87.5%) limited partnership interest in
HealthWeb;
WHEREAS, all of the issued and outstanding stock of CBS is being
acquired concurrently herewith by TriZetto pursuant to a Stock Purchase
Agreement entered into by and among CBS, TriZetto, [*] (the "Stock Purchase
Agreement");
WHEREAS, as a condition to the Stock Purchase Agreement, TriZetto and
its affiliates are to acquire all of the issued and outstanding partnership
interests of HealthWeb; and
WHEREAS, TriZetto and TAG desire to acquire, and the HealthWeb Partners
desire to sell, all of their respective partnership interests in HealthWeb.
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:
ARTICLE I
PURCHASE AND SALE OF INTERESTS
1.1. THE PURCHASE AND SALE OF INTERESTS.
(a) Upon the terms and subject to the conditions set forth
in this Agreement, TriZetto and TAG agree to purchase from the HealthWeb
Partners, and the HealthWeb Partners agree to sell, assign, transfer, convey and
deliver to TriZetto and TAG at the Closing (as defined in Section 1.2), their
partnership interests in HealthWeb (the "Interests").
(b) In consideration for the sale of the Interests, TriZetto
and TAG shall cumulatively pay to the HealthWeb Partners on the Closing Date the
following consideration (the "Purchase Price"): (i) [*], (ii) [*] (the "TriZetto
Common Stock"), and (iii) [*] in substantially the form attached hereto as
Exhibit A, less the expenses payable by the HealthWeb Partners pursuant to
Section 7.3 below, unless
[*] Confidential portions omitted and filed separately with the Securities and
Exchange Commission.
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otherwise paid by the HealthWeb Partners on or prior to the Closing Date.
Notwithstanding the foregoing, fractional shares of TriZetto Common Stock that
would be issuable to any holder of HealthWeb Interests shall be treated in
accordance with Section 1.3.
1.2. CLOSING. The delivery of the Interests and payment of the
Purchase Price (the "Closing") shall take place at the offices of ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, on February 5, 1999, or such other date and time as shall be
mutually agreed upon by TriZetto and HealthWeb, but in no event later than
February 28, 1999 (the "Closing Date").
1.3. EXCHANGE OF INTERESTS FOR PURCHASE PRICE. At the Closing, (a)
the HealthWeb Partners shall deliver the Interests in form for transfer to
TriZetto and TAG; (b) HealthWeb shall deliver the minute book, partnership
records and any other records relating to the Interests of HealthWeb; and (c)
TriZetto shall deliver to the HealthWeb Partners payment of the Purchase Price
subject to the deposit of Escrow Shares (defined below in Section 1.4) in
accordance with Section 1.4. No fractional shares of TriZetto Common Stock shall
be issued, and each holder of HealthWeb Interests who would otherwise be
entitled to receive a fraction of a share of TriZetto Common Stock (after
aggregating all fractional shares of TriZetto Common Stock to be received by
such holder), shall receive from TriZetto a whole number of shares rounded up or
down to the nearest whole share, with .5 being rounded up.
1.4. ESCROW SHARES AND ESCROW AGREEMENT. Pursuant to an Escrow
Agreement to be entered into on or before the Closing in substantially the form
of Exhibit B (the "Escrow Agreement"), among TriZetto, the Escrow Agent and the
HealthWeb Partners (as those terms are defined herein or in the Escrow
Agreement), TriZetto will withhold, pro rata, from the Purchase Price that would
otherwise be delivered to holders of HealthWeb Interests, twenty percent (20%)
of the shares of TriZetto Common Stock issued in the transaction (the "Escrow
Shares"). TriZetto will deposit in an escrow pursuant to the Escrow Agreement
stock certificates representing the Escrow Shares and related stock powers (the
"Escrow"). The Escrow Shares and such stock powers, any other property with
respect thereto delivered to the Escrow Agent as provided in the Escrow
Agreement, and the Promissory Notes which shall have a right of offset will be
held as collateral to secure the indemnification obligations of the HealthWeb
Partners under Article V hereof in accordance with the Escrow Agreement and the
Promissory Notes.
1.5 EXCHANGE OF INTERESTS AND PAYMENT OF CONSIDERATION.
(a) TRIZETTO EXCHANGE PROCEDURES. At the Closing, upon
surrender of the Interests for transfer to TriZetto and TAG, each HealthWeb
Partner shall receive in exchange therefor the consideration set forth on
Schedule II. Upon delivery of the above mentioned consideration, the HealthWeb
Interests shall be transferred to TriZetto and TAG.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF HEALTHWEB
AND THE HEALTHWEB PARTNERS
HealthWeb and the HealthWeb Partners, jointly and severally, represent
and warrant to TriZetto and TAG that, except as set forth in the HealthWeb
Disclosure Schedule:
2.1. LIMITED PARTNERSHIP EXISTENCE AND POWER. HealthWeb is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of Texas, and has all limited partnership powers and authority and
all material governmental licenses, authorizations, consents and
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approvals required to carry on its business as now conducted. HealthWeb is duly
qualified to do business and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification 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 HealthWeb. HealthWeb has heretofore delivered to
TriZetto and TAG true and complete copies of HealthWeb's Agreement of Limited
Partnership of HealthWeb, dated as of August 1, 1997, as amended by First
Amendment to Agreement of Limited Partnership of HealthWeb, dated as of
September 7, 1998, and all of the exhibits thereto (as so amended, the
"Partnership Agreement"). The Partnership Agreement has not been further amended
or modified except as contemplated by this Agreement.
2.2. CORPORATE POWER AND AUTHORITY. HWGP is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Texas, and has all corporate powers and authority and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted. HWGP is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification 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 HWGP. HWGP has heretofore delivered to TriZetto and
TAG true and complete copies of HWGP's Certificate of Incorporation and Bylaws
as currently in effect.
2.3. AUTHORIZATION OF HWGP, HEALTHWEB AND HEALTHWEB PARTNERS.
(a) HWGP has taken all corporate action necessary in order
to execute, deliver and perform its obligations under this Agreement. This
Agreement has been duly executed and delivered by HWGP, and is a legal, valid
and binding obligation of HWGP enforceable against HWGP in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(b) This Agreement and the transactions contemplated hereby
have been approved by the HWGP shareholders pursuant to the General Corporation
Law of the State of Texas.
(c) This Agreement has been duly executed and delivered by
each of ▇▇▇▇▇ and ▇▇▇▇▇ and is a legal, valid and binding obligation of each of
them, enforceable against them in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(d) HealthWeb has taken all action necessary in order to
execute, deliver and perform its obligations under this Agreement. This
Agreement is a legal, valid and binding obligation of each of it, enforceable
against it in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
2.3. NON-CONTRAVENTION. The execution, delivery and performance by
HealthWeb, HWGP and the HealthWeb Partners of this Agreement and the
consummation by HealthWeb, HWGP and the HealthWeb Partners of the transactions
contemplated hereby do not and will not (i) contravene or conflict with
HealthWeb's Certificate of Limited Partnership or the Partnership Agreement,
(ii) contravene or conflict with the Certificate of Incorporation or Bylaws of
HWGP, (iii) 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 HealthWeb, HWGP or any of the HealthWeb Partners, (iv)
constitute a default under or give rise to a right of
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termination, cancellation or acceleration of any right or obligation of
HealthWeb or HWGP or to a loss of any benefit to which HealthWeb or HWGP is
entitled under any provision of any agreement, contract or other instrument
binding upon HealthWeb or HWGP or any license, franchise, permit or other
similar authorization held by HealthWeb or HWGP, or (v) result in the creation
or imposition of any Lien on any asset of HealthWeb or HWGP, except, in the case
of clauses (iii) through (v) above, as would not, individually or in the
aggregate, have a Material Adverse Effect on HealthWeb or HWGP.
2.4. COMPLIANCE WITH LAW AND OTHER INSTRUMENTS. HealthWeb holds 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, to the knowledge of the HealthWeb
Partners, claimed violations by HealthWeb of any such license, permit or
authorization or any such statute, law, ordinance, rule or regulation.
2.5. LIMITED PARTNERSHIP STRUCTURE. Section 2.5 of the HealthWeb
Disclosure Schedule contains a true and complete description of the ownership of
HealthWeb. Other than as contemplated in this Agreement, there are no
outstanding options or other arrangements to purchase Interests in HealthWeb.
There are no outstanding obligations of HealthWeb or HWGP to repurchase, redeem
or otherwise acquire any Interests. There are no outstanding bonds, debentures,
notes or other indebtedness of HealthWeb or HWGP having the right to vote (or
convertible into or exercisable for Interests) on any matters on which Interests
may vote.
2.6 SUBSIDIARY. HealthWeb has no subsidiaries as of the date of this
Agreement.
2.7. HEALTHWEB FINANCIAL STATEMENTS. HealthWeb has delivered to
TriZetto and TAG its unaudited balance sheet as of December 31, 1997 and
December 31, 1998 (the "HealthWeb Balance Sheet") and its unaudited income
statement for the twelve months ended December 31, 1997 and for the twelve
months ended December 31, 1998 (collectively, the "HealthWeb Financial
Statements"). The HealthWeb Financial Statements present fairly, in all material
respects, the financial condition and results of operations of HealthWeb as of
the dates and for the periods indicated therein, in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis, subject
to normal year-end audit adjustments (other than reserves for contingent
liabilities, all of which are reflected in the HealthWeb Financial Statements),
none of which are material.
2.8. ABSENCE OF CERTAIN CHANGES. Except as contemplated by this
Agreement or otherwise disclosed on Section 2.8 of the HealthWeb Disclosure
Schedule, since the date of HealthWeb Balance Sheet, HealthWeb has conducted its
business in all material respects 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 has had a Material Adverse Effect on HealthWeb
(other than effects arising from or relating to conditions, including, without
limitation, economic or political developments, applicable generally to the
industry); or
(b) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital stock of
HealthWeb, or any repurchase, redemption or other acquisition by HealthWeb or
any such Subsidiary, except for any acquisition pursuant to employee
compensation or other such plans of HealthWeb;
(c) any amendment of any term of any outstanding security of
HealthWeb;
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(d) any incurrence, assumption or guarantee by HealthWeb of
any indebtedness for borrowed money other than in the ordinary course of
business and in amounts and on terms consistent with past practice;
(e) any creation or assumption by HealthWeb of any Lien on
any material asset other than in the ordinary course of business consistent with
past practice;
(f) any making of any loan, advance or capital contribution
to or investment in any person other than loans, advances or capital
contributions to or investments in the Subsidiary of HealthWeb made in the
ordinary course of business consistent with past practice;
(g) any change in any method of accounting or accounting
practice by HealthWeb, except for any such change required by reason of a
concurrent change in GAAP; or
(h) any (i) grant of any severance or termination pay to any
director, officer or employee of HealthWeb, (ii) entering into of any
employment, deferred compensation or other similar agreement (or any amendment
to any such existing agreement) with any director, officer or employee of
HealthWeb, (iii) increase in benefits payable under any existing severance or
termination pay policies or employment agreements or (iv) increase in
compensation, bonus or other benefits payable to directors, officers or
employees of HealthWeb, in each case other than in the ordinary course of
business consistent with past practice.
2.9. LITIGATION. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of the HealthWeb Partners,
threatened against or affecting, HealthWeb, its officers or directors, any
Affiliate of HealthWeb, 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, reasonably be expected to have a Material
Adverse Effect on HealthWeb. Neither HealthWeb, its officers or directors, any
Affiliate of HealthWeb, or any of their respective properties is subject to any
order, writ, judgment, decree or injunction of any court or arbitrator or any
governmental body, agency or official. Section 2.9 of the HealthWeb Disclosure
Schedule contains a complete list of all claims filed against HealthWeb, or
pending since January 1, 1996, 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.
2.10. TAXES. Except as set forth on Section 2.10 of the HealthWeb
Disclosure Schedule, HealthWeb has filed all material Tax returns required to
have been filed on or before the date hereof, and all Taxes shown to be due on
such Tax returns have been timely paid. HealthWeb has not agreed in writing to
waive any statute of limitations in respect of Taxes of HealthWeb. No issues
that have been raised in writing by the relevant Taxing Authority in connection
with the examination of such Tax returns are currently pending, except for any
written notice of such issues the subject matter of which has either been
substantially resolved or would otherwise not have a Material Adverse Effect on
HealthWeb. The amounts provided for taxes on the HealthWeb Financial Statements
are sufficient for the payment of all accrued and unpaid U.S. federal, state,
provincial, or local taxes, interest, penalties, assessments and deficiencies
for all periods prior to the dates of such balance sheets to the extent such
taxes are obligations of HealthWeb. Section 2.10 of the HealthWeb Disclosure
Schedule lists all unresolved audits, examinations, contests and proceedings
(including written notices of intent to audit or examine) with respect to United
States federal and state income Tax returns of HealthWeb for periods beginning
on or after January 1, 1994.
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2.11. HEALTHWEB EMPLOYEE BENEFIT PLANS.
(a) HealthWeb has made available to TriZetto and TAG correct
and complete copies of all HealthWeb Employee Plans and HealthWeb Benefit
Arrangements.
(b) HealthWeb does not maintain and is not required to
contribute to, any "employee pension benefit plan" (as such term is defined in
Section 3(2) of ERISA), on behalf of any employee of HealthWeb other than a plan
provided to TriZetto and TAG as described in Section 2.11(a). HealthWeb has made
available to TriZetto and TAG, with respect to each of such plans correct and
complete copies of (i) all plan documents, amendments and trust agreements, (ii)
the most recent Annual Report (Form 5500 Series) and accompanying schedules, as
filed and (iii) the current summary plan description.
(c) HealthWeb does not contribute, and is not obligated to
contribute, to any Multiemployer Plan with respect to employees of HealthWeb.
2.12. BANKING AND FINDERS' FEES. There is and will be no investment
banker, broker, finder or other intermediary retained by or authorized to act on
behalf of, HealthWeb who might be entitled to any fee or commission from
HealthWeb, TriZetto, TAG or any of their Affiliates upon consummation of the
transactions contemplated by this Agreement.
2.13. ENVIRONMENTAL COMPLIANCE
(a) HealthWeb and its Affiliates are in compliance with
Environmental Laws, except for such noncompliance as would not reasonably be
expected to have a Material Adverse Effect on HealthWeb.
(b) Since January 1, 1996, neither HealthWeb nor any
Affiliate has received any written notice regarding any violation of any
Environmental Laws, or any HealthWeb Environmental Liabilities, including any
investigatory, remedial or corrective obligations, relating to HealthWeb, its
Affiliates or their respective facilities arising under Environmental Laws,
except for any such written notice the subject matter of which has either been
substantially resolved or would otherwise not reasonably be expected to have a
Material Adverse Effect on HealthWeb.
(c) Except as set forth in Section 2.13 of the HealthWeb
Disclosure Schedule:
(i) HealthWeb or its Affiliates have not caused, and
are not causing or threatening to cause, any disposals or releases of any
Hazardous Material on or under any properties which it (A) leases, occupies or
operates or (B) previously owned, leased, occupied or operated and, to the
knowledge of the HealthWeb Partners, no such disposals or releases occurred
prior to HealthWeb or its Affiliates having taken title to, or possession or
operation of, any of such properties; and, to the knowledge of the HealthWeb
Partners, no such disposals or releases are migrating or have migrated off of
such properties in subsurface soils, groundwater or surface waters after
HealthWeb or its Affiliates have taken title to, or possession or operation of
any such properties and, to the knowledge of HealthWeb, its Affiliates or the
HealthWeb Partners, 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) HealthWeb has neither (A) arranged for the
disposal or treatment of Hazardous Material at any facility owned or operated by
another person, or (B) accepted any Hazardous Material for transport to disposal
or treatment facilities or other sites selected by HealthWeb or its Affiliates
from which facilities or sites there has been a release or there is a release or
threatened release of a Hazardous
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Material; any facility identified in Section 2.13(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) HealthWeb, its Affiliates or the HealthWeb
Partners have no actual knowledge of, or any reason to believe or suspect that,
any release or threatened release of any Hazardous Material originating from a
property other than those leased or operated by HealthWeb or its Affiliates have
come to be (or may come to be) located on or under properties leased, occupied
or operated by HealthWeb or its Affiliates;
(iv) HealthWeb or its Affiliates have never
installed, used, buried or removed any surface impoundment or underground tank
or vessel on properties owned, leased, occupied or operated by HealthWeb or its
Affiliates;
(v) HealthWeb is and has 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 no
condition exists on any of the real property owned by or used in the business of
HealthWeb 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 HealthWeb, its Affiliates or the HealthWeb Partners, threatened
against HealthWeb or its Affiliates or any settlement reached by any of them,
with, any person or persons alleging the presence, disposal, release or
threatened release of any Hazardous Material on, from or under any of such
properties or as otherwise relating to potential environmental liabilities.
(d) This Section 2.13 contains the sole and exclusive
representations and warranties of HealthWeb and the HealthWeb Partners with
respect to any Environmental, Health and Safety Matters, including, without
limitation, any arising under any Environmental Laws.
2.14. COLLECTIVE BARGAINING ARRANGEMENTS. HealthWeb is not a party to
or bound by any employee collective bargaining agreement; HealthWeb is not a
party to or affected by or, to the knowledge of HealthWeb or the HealthWeb
Partners, threatened with, any dispute or controversy with a union or with
respect to unionization or collective bargaining involving the employees of
HealthWeb.
2.15. ACCOUNTS RECEIVABLE. The accounts receivable reflected on the
HealthWeb Balance Sheet are owned free and clear by HealthWeb and are based on
HealthWeb's reasonable judgment and its normal credit review procedures,
business practices and GAAP, collectible in accordance with their terms in an
amount not less than their aggregate book value. "Aggregate book value", for
this purpose, shall mean the recorded amounts of such accounts receivable less
any recorded allowance for doubtful accounts, trade allowances and return
allowances, all as established in accordance with GAAP consistently applied.
2.16. INVENTORIES. The consolidated inventories reflected on the
HealthWeb Balance Sheet have been valued in accordance with GAAP consistently
applied.
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2.17. INTERESTS IN REAL PROPERTY. Section 2.17 of the HealthWeb
Disclosure Schedule is the complete and correct list and brief description of
all real property leased by HealthWeb on the Closing Date. HealthWeb does not
own any real property. All real property leases to which HealthWeb 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 HealthWeb, and
HealthWeb is not in default of any material provision thereof. All improvements
and fixtures made by or at the direction of HealthWeb on real properties leased
by HealthWeb 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 HealthWeb in such
buildings or structures) and fixtures used by HealthWeb in the conduct of their
businesses are in good operating condition and repair, ordinary wear and tear
excepted, and are sufficient for the type and magnitude of their respective
operations.
2.18. PERSONAL PROPERTY. Except as set forth in Section 2.18 of the
HealthWeb Disclosure Schedule, HealthWeb 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 HealthWeb Balance Sheet or used in the business by
HealthWeb (regardless of whether reflected on the HealthWeb Balance Sheet). All
the machinery, equipment and other tangible personal property used in the
business by HealthWeb is in good operating condition and repair, normal wear and
tear excepted. At the Closing Date, HealthWeb will possess all of the personal
property wherever located used to conduct its business as conducted prior to the
Closing.
2.19. DIRECTORS AND OFFICERS. Section 2.19 of the HealthWeb Disclosure
Schedule comprises a complete and correct list of all present officers, managers
and members of HealthWeb.
2.20. CERTAIN TRANSACTIONS. Except as set forth on Schedule 2.20 of
the HealthWeb Disclosure Schedule, neither HealthWeb nor any of its respective
Affiliates are presently a party to any agreement or arrangement with HealthWeb:
(i) providing for the furnishing of raw materials, products or services to or
by, or (ii) providing for the sale or rental of real or personal property to or
from, any such entity.
2.21. INTELLECTUAL PROPERTY; SOFTWARE; AND YEAR 2000 COMPLIANCE.
2.21.1 INTELLECTUAL PROPERTY, SOFTWARE AND PRODUCTS.
(a) Section 2.21.1(a) of the HealthWeb Disclosure
Schedule contains (a) a complete and correct list of all Intellectual Property,
Software and Products relating to or used in the business or operations of the
business of HealthWeb, and (b) a complete and correct list of all persons who
have contributed to the creation or development of the Intellectual Property,
Software and Products. Except as set forth in Section 2.21.1(a) of the HealthWeb
Disclosure Schedule, no HealthWeb Partner, employee or contractor, nor any of
their respective Affiliates, has any right, title or interest in or to any
Intellectual Property, Software or Products.
(b) Except as set forth in Section 2.21.1(b) of the
HealthWeb Disclosure Schedule, HealthWeb own all right, title and interest in
and to all Intellectual Property and Software used in or necessary for the
conduct of HealthWeb's business as presently conducted, including, without
limitation, all Intellectual Property and Software developed or discovered in
connection with or contained in or related to HealthWeb's Products, free and
clear of all liens, mortgages, charges, pledges, claims and encumbrances
(including without limitation any distribution rights and royalty rights).
Except as disclosed in Section 2.21.1(b) of the HealthWeb Disclosure Schedules,
all persons who have contributed to the creation or development of the
Intellectual Property, Software and Products have executed an Assignment of
Rights Agreement transferring any and all ownership rights to HealthWeb. None of
the Products contain any codes or
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modules which have been created or developed by third parties. Such Intellectual
Property and Software constitutes all Intellectual Property and Software
necessary for the conduct of its business in the manner conducted immediately
prior to the Closing. To the knowledge of HealthWeb or the HealthWeb Partners,
HealthWeb has not infringed nor is infringing upon any Intellectual Property or
Software rights of others. Except as set forth in Section 2.21.1(b) of the
HealthWeb Disclosure Schedules, HealthWeb has the exclusive right to use, sell,
license and dispose of, and has the right to bring actions for infringement of
all Intellectual Property, Software and Products used in connection with their
business. To the best knowledge of the HealthWeb Partners, the Products do not
include any Intellectual Property or Software that is in the public domain.
(c) Except as set forth in Section 2.21.1(c) of the
HealthWeb Disclosure Schedule, no claims have been asserted against HealthWeb by
any person challenging HealthWeb's use or distribution (including manufacture,
marketing license, or sale) of any Product or products utilized by HealthWeb
(including, without limitation, Third Party Technology), or challenging or
questioning the validity or effectiveness of any license or agreement relating
thereto (including, without limitation, the Third Party Licenses). To the best
knowledge of HealthWeb, there is no valid basis for any claim of the type
specified in this Section 2.21.1(c).
(d) Except as set forth in Section 2.21.1(d) of the
HealthWeb Disclosure Schedule, HealthWeb has valid copyrights in all material
copyrightable material whether or not registered with the U.S. copyright office,
including all copyrights in the Products containing material copyrightable
material. Consummation of the transactions contemplated hereby will not alter or
impair the validity of any copyrights or copyright registrations.
(e) Except as set forth in Section 2.21.1(e) of the
HealthWeb Disclosure Schedule: (i) no third party (including any OEM or site
license customer) has any right to manufacture, reproduce, distribute, sell,
sublicense, market or exploit any of the Products or any adaptations,
translations, or derivative works based on the Products, or any portion thereof;
(ii) HealthWeb 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 (iii) HealthWeb has not granted any third party any
right to market any product utilizing any Product under any "private label"
arrangements pursuant to which HealthWeb is not identified as the source of such
goods. Each document or instrument identified pursuant to this Section is listed
in Section 2.21.1(e) of the HealthWeb Disclosure Schedule and true and correct
copies of such documents or instruments have been furnished to TriZetto. Except
as set forth in Section 2.21.l(e) of the HealthWeb Disclosure Schedule, 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.
(f) Except as set forth in Section 2.21.l(f) of the
HealthWeb Disclosure Schedule, each of the Products: (i) substantially complies
with all specifications set forth therefor in any contract, agreement,
advertisement or other promotional material for such products and with all other
warranty requirements, other than bugs or fixes required or expected in the
ordinary course of business and not otherwise material to HealthWeb's business;
and (ii) can be recreated from its associated source code and related
documentation by reasonably experienced technical personnel without undue
burden.
(g) HealthWeb has furnished TriZetto with all end
user documentation relating to the use, maintenance or operation of each of the
Products, all of which is true and accurate in all material respects.
(h) Except as set forth in Section 2.21.l(h) of the
HealthWeb Disclosure Schedule, to the best knowledge of HealthWeb, no employee
of HealthWeb is in violation of any term of
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any employment contract, patent disclosure agreement or any other contract or
agreement relating to the relationship of any such employee with HealthWeb or
any other party because of the nature of the business conducted by HealthWeb or
proposed to be conducted by HealthWeb.
(i) Except as set forth in Section 2.21.1(i) of the
HealthWeb Disclosure Schedule, no Third Party Technology is included in the
Products.
2.21.2 YEAR 2000 COMPLIANCE
(a) Products and Services.
(i) Except as set forth in Section 2.21.2(a)
of the HealthWeb Disclosure Schedule, to the HealthWeb Partners' knowledge, all
of HealthWeb's products and services are Year 2000 Compliant in all material
respects.
(ii) Except as set forth in Section 2.21.2(a)
of the HealthWeb Disclosure Schedule, if HealthWeb is obligated to repair or
replace products or services previously provided by HealthWeb that are not Year
2000 Compliant in order to meet HealthWeb's contractual obligations, to avoid
personal injury or other liability, to avoid misrepresentation claims, or to
satisfy any other obligations or requirements, to the HealthWeb Partners'
knowledge HealthWeb has repaired or replaced those products and services to make
them Year 2000 Compliant in all material respects.
(iii) Except as set forth in Section 2.21.2(a)
of the HealthWeb Disclosure Schedule, HealthWeb has furnished TriZetto with
true, correct and complete copies of any customer agreements and other materials
and correspondence in which HealthWeb has furnished (or could be deemed to have
furnished) assurances as to the performance and/or functionality of HealthWeb's
products or services on or after January 1, 2000.
(b) Computer Software and Systems. Except as set
forth in Section 2.21.2(b) of the HealthWeb Disclosure Schedule, to the
HealthWeb Partners' knowledge, all of HealthWeb's software, systems and computer
are Year 2000 Compliant in all material respects.
(c) Suppliers. Except as set forth in Section
2.21.2(c) of the HealthWeb Disclosure Schedule, to the HealthWeb Partners'
knowledge, all vendors of products or services to HealthWeb, and their
respective products, services and operations, are Year 2000 Complaint in all
material respects. Except as set forth in Section 2.21.2(c) of the HealthWeb
Disclosure Schedule, to the knowledge of the HealthWeb Partners after a
reasonably diligent investigation, each such vendor will continue to furnish its
products or services to HealthWeb, without interruption or material delay, on
and after January 1, 2000.
2.22. CONTRACTS. Section 2.22 of the HealthWeb Disclosure Schedule
describes, and HealthWeb has caused to be delivered to TriZetto and TAG complete
and correct copies of, all currently effective contracts to which HealthWeb is a
party or by which HealthWeb or any of its respective properties or assets are
bound which (i) involve the payment or receipt by HealthWeb of more than $25,000
over the remaining term of the contract; (ii) are financing documents, loan
agreements or promissory notes; (iii) are otherwise material to the business of
HealthWeb and are not for the purchase or sale of goods or services in the
ordinary course of business; (iv) have a remaining term of more than one year
from the date of this Agreement; or (v) are distributorship or other agreements
relating to the marketing of products. HealthWeb and, to the knowledge of the
HealthWeb Partners, all of the other parties to such agreements, are in
compliance with all material provisions of all such agreements
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and, to the knowledge of the HealthWeb Partners, no fact exists which is, or
with the passage of time could become, a default under any of the aforementioned
agreements.
2.23. INSURANCE AND BANKING FACILITIES. Section 2.23 of the HealthWeb
Disclosure Schedule comprises a complete and correct list of (i) all contracts
of insurance and indemnity of or relating to HealthWeb (except insurance related
to employee benefits) in force at the date of this Agreement (including name of
insurer or indemnitor, agent, annual charge, coverage and expiration date); (ii)
the names and locations of all banks in which HealthWeb 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 HealthWeb knows of no
circumstance (including without limitation the consummation of the transaction
contemplated by this Agreement) which has or might cause any such contract to be
canceled or terminated.
2.24. PERSONNEL. Section 2.24 of the HealthWeb Disclosure Schedule
comprises a complete and correct list of, and HealthWeb has caused TriZetto to
be furnished with complete and correct copies of (or, if not in writing, a
description of the terms of), (i) all employment contracts, collective
bargaining agreements, and all compensation plans, agreements, programs,
practices, commitments or other arrangements of any type, including stock,
bonus, profit sharing, incentive compensation, pension and retirement agreements
respecting or affecting any employees of HealthWeb; and (ii) all insurance,
health, medical, hospitalization, dependent care, severance, fringe or other
employee benefit plans, agreements, programs, practices, commitments or other
arrangements of any type in effect for employees of HealthWeb. Section 2.24 of
the HealthWeb Disclosure Schedule includes a list of all employees of HealthWeb.
HealthWeb has been and is in compliance with the terms of, and any laws or
regulations applicable to, all such plans, agreements, practices, commitments or
programs, except where failure to so comply would not, individually or in the
aggregate, have a Material Adverse Effect on HealthWeb.
2.25. POWERS OF ATTORNEY AND SURETYSHIPS. HealthWeb 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, HealthWeb 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.
2.26. MINUTES AND PARTNERSHIP RECORDS. HealthWeb has caused TriZetto
to be given access to complete and correct copies of the minute books and
partnership records of HealthWeb. 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 partnership of
HealthWeb, and all original issuances and subsequent transfers and repurchases
of the Interests of HealthWeb.
2.27. INVESTMENT REPRESENTATIONS BY EACH HEALTHWEB PARTNER. Each
HealthWeb Partner represents and warrants that:
(a) He is acquiring the TriZetto Common Stock for his own
account, not as nominee or agent, for investment and not with a view to, or for
resale in connection with, any distribution or public offering thereof within
the meaning of the Securities Act.
(b) He understands that (i) the shares of TriZetto Common
Stock have not been registered under the Securities Act by reason of a specific
exemption therefrom, that they must be held indefinitely, and that he must,
therefore, bear the economic risk of such investment indefinitely, unless a
subsequent disposition thereof
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is registered under the Securities Act or is exempt from such registration; (ii)
the Shares and each certificate representing Shares will be endorsed with the
following legend:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS PURSUANT TO SEC
RULE 144 OR RULE 144A OR THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE 1933 ACT COVERING SUCH SECURITIES OR THE
COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT
SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE
1933 ACT."
and (iii) TriZetto will instruct any transfer agent not to register the transfer
of any of the Shares unless the conditions specified in the foregoing legend are
satisfied; provided, however, that no such opinion of counsel shall be necessary
if the sale, transfer or assignment is made pursuant to SEC Rule 144 or Rule
144A and the transferor provides TriZetto with evidence reasonably satisfactory
to TriZetto and TAG and its counsel that the proposed transaction satisfies the
requirements of Rule 144 or Rule 144A.
(c) He acknowledges that he is able to fend for himself, can
bear the economic risk of the investment and has such knowledge and experience
in financial or business matters that he is capable of evaluating the merits and
risks of the investment in the Shares.
(d) He understands that the TriZetto Stock he is acquiring
is characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the HealthWeb in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act,
only in certain limited circumstances, and he represents that he is familiar
with SEC Rule 144 and Rule 144A, as presently in effect, and understands the
resale limitations imposed thereby and by the Securities Act.
2.28. FULL DISCLOSURE. All of the representations and warranties made
by HealthWeb and the HealthWeb Partners in this Agreement, and all statements
set forth in the certificates delivered by HealthWeb and the HealthWeb Partners
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.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TRIZETTO AND TAG
TriZetto, and TAG where applicable, represent and warrant to HealthWeb
and the HealthWeb Partners that, except as set forth in TriZetto Disclosure
Schedule:
3.1. EXISTENCE AND POWER.
(a) TriZetto is duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and has all corporate
powers and authority and all material governmental licenses,
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authorizations, consents and approvals required to carry on business as now
conducted. TriZetto is duly qualified to do business as a foreign corporation
and in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such qualification
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 taken as a whole. TriZetto has delivered to HealthWeb true and complete
copies of the Certificate of Incorporation and Bylaws of TriZetto as currently
in effect.
(b) TAG, a wholly-owned subsidiary of TriZetto, is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware, and has all limited liability company powers
and authority and all material governmental licenses, authorizations, consents
and approvals required to carry on its business as now conducted. TAG is duly
qualified to do business and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification 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 TAG.
3.2. AUTHORIZATION.
(a) TriZetto has taken all corporate action necessary in
order to execute, deliver and perform its obligations under this Agreement. This
Agreement has been duly executed and delivered by TriZetto and is a legal, valid
and binding obligation of TriZetto, enforceable against TriZetto, in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
(b) TAG has taken all action necessary in order to execute,
deliver and perform its obligations under this Agreement. This Agreement has
been duly executed and delivered by TAG, and is a legal, valid and binding
obligation of TAG enforceable against TAG in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
3.3. NON-CONTRAVENTION. The execution, delivery and performance by
TriZetto and TAG of this Agreement and the consummation by TriZetto and TAG of
the transactions contemplated hereby do not and will not (i) contravene or
conflict with the Certificate of Incorporation or Bylaws of TriZetto, (ii)
contravene or conflict with TAG's Certificate of Formation or Operating
Agreement, (iii) 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 or any Subsidiary of TriZetto, (iv) constitute a
default under or give rise to a right of termination, cancellation or
acceleration of any right or obligation of TriZetto or any Subsidiary of
TriZetto or to a loss of any benefit to which TriZetto or any Subsidiary of
TriZetto is entitled under any provision of any agreement, contract or other
instrument binding upon TriZetto or any Subsidiary of TriZetto or any license,
franchise, permit or other similar authorization held by TriZetto or any
Subsidiary of TriZetto, or (v) result in the creation or imposition of any Lien
on any asset of TriZetto or any Subsidiary of TriZetto, except, in the case of
clauses (iii) through (v) above, as would not, individually or in the aggregate,
have a Material Adverse Effect on TriZetto.
3.4. CAPITALIZATION.
(a) The authorized capital stock of TriZetto consists of (a)
30,000,000 shares of common stock, $.001 par value (the "TriZetto Common Stock")
and (b) 10,391,608 shares of preferred stock. As of January 31, 1999 there were
outstanding: (i) 9,216,730 shares of TriZetto Common Stock $.001 par value,
including all shares restricted under a compensation plan or arrangement of
TriZetto, (ii) 4,545,454 shares of
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TriZetto Series A Preferred Stock, (iii) warrants to purchase an aggregate of
162,595 shares of TriZetto Stock, and (iv) 1,329,128 outstanding options to
purchase shares of TriZetto Common Stock.
(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 3.4 and except for changes since January 31,
1999 resulting from the exercise of employee stock options or warrants
outstanding on such date, there are outstanding (i) no shares of capital stock
or other voting securities of TriZetto, (ii) no securities of TriZetto
convertible into or exchangeable for shares of capital stock or voting
securities of TriZetto, and (iii) no options or other rights to acquire from
TriZetto, and no obligation of TriZetto to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of TriZetto (the items in clauses (i), (ii) and (iii) being
referred to collectively as the "TriZetto Securities"). There are no outstanding
obligations of TriZetto to repurchase, redeem or otherwise acquire any TriZetto
Securities.
(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 Securities having the right to
vote) on any matters on which stockholders of TriZetto may vote.
3.5. TRIZETTO FINANCIAL STATEMENTS. TriZetto has delivered to
HealthWeb its unaudited balance sheet as of December 31, 1997 (the "TriZetto
Balance Sheet") and an unaudited Balance Sheet, Statement of Cash Flows and
Statement of Operations for the twelve months ended December 31, 1998
(collectively, the "TriZetto Financial Statements"). The TriZetto Financial
Statements present fairly, in all material respects, the financial condition and
results of operations of TriZetto as of the dates and for the periods indicated
therein, in conformity with GAAP applied on a consistent basis, subject to
normal year-end audit adjustments (other than reserves for contingent
liabilities, all of which are reflected in TriZetto Financial Statements), none
of which are material.
3.6. ABSENCE OF CERTAIN CHANGES. Except as contemplated by this
Agreement or disclosed in Section 3.6 of TriZetto Disclosure Schedule since the
date of TriZetto Balance Sheet TriZetto, has conducted its business 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 has had a Material Adverse Effect on TriZetto
(other than effects arising from or relating to conditions, including, without
limitation, economic or political developments, applicable generally to the
industry); or
(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 or any
such Subsidiary of TriZetto, except for any acquisition pursuant to employee
compensation or other such plans of TriZetto;
(c) any amendment of any term of any outstanding security of
TriZetto or any Subsidiary of TriZetto;
(d) any incurrence, assumption or guarantee by TriZetto or
any Subsidiary of TriZetto of any indebtedness for borrowed money other than in
the ordinary course of business and in amounts and on terms consistent with past
practice;
(e) any creation or assumption by TriZetto or any Subsidiary
of TriZetto of any Lien on any material asset other than in the ordinary course
of business consistent with past practice;
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(f) any making of any loan, advance or capital contribution
to or investment in any person other than loans, advances or capital
contributions to or investments in wholly owned Subsidiaries of TriZetto made in
the ordinary course of business consistent with past practice;
(g) any change in any method of accounting or accounting
practice by TriZetto or any Subsidiary of TriZetto, except for any such change
required by reason of a concurrent change in generally accepted accounting
principles; or
(h) any (i) grant of any severance or termination pay to any
director, officer or employee of TriZetto or any Subsidiary of TriZetto, (ii)
entering into of any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any director,
officer or employee of TriZetto or any Subsidiary of TriZetto, (iii) increase in
benefits payable under any existing severance or termination pay policies or
employment agreements of TriZetto or (iv) increase in compensation, bonus or
other benefits payable to directors, officers or employees of TriZetto or any
Subsidiary of TriZetto, in each case other than in the ordinary course of
business consistent with past practice.
3.7. LITIGATION. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of TriZetto threatened against
or affecting TriZetto or any Subsidiaries of TriZetto 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, reasonably be expected
to have a Material Adverse Effect on TriZetto. Neither TriZetto, its officers
and directors nor its Subsidiaries or any Affiliate of TriZetto, or any of their
respective properties is subject to any order, writ, judgment, decree or
injunction. Section 3.7 of the TriZetto Disclosure Schedule contains a complete
list of all claims filed against TriZetto, or pending since January 1, 1996,
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.
3.8. TAXES. TriZetto and its Subsidiaries have filed all material Tax
returns required to have been filed on or before the date hereof, and all Taxes
shown to be due on such Tax returns have been timely paid. Neither TriZetto nor
its Subsidiaries have agreed in writing to waive any statute of limitations in
respect of Taxes of TriZetto or such Subsidiaries. No issues that have been
raised in writing by the relevant taxing authority in connection with the
examination of such Tax returns are currently pending, except for any written
notice of such issues the subject matter of which has either been substantially
resolved or would otherwise not have a Material Adverse Effect on TriZetto. The
amounts provided for taxes on the TriZetto Financial Statements are sufficient
for the payment of all accrued and unpaid U.S. federal, state, provincial, or
local taxes, interest, penalties, assessments and deficiencies for all periods
prior to the dates of such balance sheets to the extent such taxes are
obligations of TriZetto and its Subsidiaries. Section 3.9 of the Disclosure
Schedule lists all unresolved audits, examinations, contests and proceedings
(including written notices of intent to audit or examine) with respect to United
States federal, foreign and state income tax Returns of TriZetto for periods
beginning on or after January 1, 1994.
3.9. TRIZETTO EMPLOYEE BENEFIT PLANS.
(a) TriZetto has made available to HealthWeb correct and
complete copies of all TriZetto Employee Benefit Plans and TriZetto Benefit
Arrangements.
(b) Neither TriZetto nor its Subsidiaries maintains, or is
required to contribute to, any "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA, or any similar foreign law, on behalf of any
employee of TriZetto or its Subsidiaries other than a plan provided to HealthWeb
as described in Section 3.9(a). TriZetto has made available to HealthWeb, with
respect to each of such plans correct and
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complete copies of (i) all plan documents, amendments and trust agreements, (ii)
the most recent Annual Report (Form 5500 Series) and accompanying schedules, as
filed (or similar documents with respect to any foreign plans) and (iii) the
current summary plan description.
(c) TriZetto does not contribute, and is not obligated to
contribute, to any Multiemployer Plan with respect to employees of TriZetto or
its Subsidiaries.
(d) TriZetto's 1998 Stock Option Plan is a "qualified plan"
as defined by the Internal Revenue Code of 1986, as amended from time to time.
3.10. BANKING AND FINDERS' FEES. There is and will be no investment
banker, broker, finder or other intermediary retained by or authorized to act on
behalf of TriZetto or any of its Subsidiaries who might be entitled to any fee
or commission from TriZetto or any of its Subsidiaries upon consummation of the
transactions contemplated by this Agreement.
3.11. ENVIRONMENTAL COMPLIANCE.
(a) TriZetto and its Subsidiaries are in compliance with
Environmental Laws, except for such noncompliance as would not reasonably be
expected to have a Material Adverse Effect on TriZetto.
(b) Since January 1, 1996, neither TriZetto nor any of its
Subsidiaries has 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 and TAG
or its Subsidiaries or their respective facilities arising under Environmental
Laws, except for any such written notice the subject matter of which has either
been substantially resolved or would otherwise not reasonably be expected to
have a Material Adverse Effect on TriZetto.
(c) Except as set forth in Section 3.11 of the TriZetto
Disclosure Schedule:
(i) TriZetto, its Subsidiaries or its Affiliates
have not caused, and is not causing or threatening to cause, any disposals or
releases of any Hazardous Material on or under any properties which it (A)
leases, occupies or operates or (B) previously owned, leased, occupied or
operated and to the knowledge of TriZetto no such disposals or releases occurred
prior to TriZetto and TAG, its Subsidiaries or its Affiliates having taken title
to, or possession or operation of, any of such properties; and, to the knowledge
of TriZetto, such disposals or releases are migrating or have migrated off of
such properties in subsurface soils, groundwater or surface waters after
TriZetto, its Subsidiaries or its Affiliates has taken title to, or possession
or operation of any such properties and, to the knowledge of TriZetto, its
Subsidiaries or its Affiliates, 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) TriZetto, its Subsidiaries or its Affiliates
have neither (A) arranged for the disposal or treatment of Hazardous Material at
any facility owned or operated by another person, or (B) accepted any Hazardous
Material for transport to disposal or treatment facilities or other sites
selected by TriZetto, its Subsidiaries or its Affiliates 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 3.11(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
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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) TriZetto, its Subsidiaries or its Affiliates
have no actual knowledge of, or any reason to believe or suspect that, any
release or threatened release of any Hazardous Material originating from a
property other than those leased or operated by TriZetto, its Subsidiaries or
its Affiliates has come to be (or may come to be) located on or under properties
leased, occupied or operated by TriZetto, its Subsidiaries or its Affiliates;
(iv) TriZetto, its Subsidiaries or its Affiliates
have never installed, used, buried or removed any surface impoundment or
underground tank or vessel on properties owned, leased, occupied or operated by
TriZetto, its Subsidiaries or its Affiliates;
(v) TriZetto and its Subsidiary are and have been in
compliance in all material respects for the last three years with all federal,
state, local or foreign laws, ordinances, regulations, permits, approvals and
authorizations relating to air, water, industrial hygiene and worker health and
safety, anti-pollution, hazardous or toxic wastes, materials or substances,
pollutants or contaminants, and no condition exists on any of the real property
owned by or used in the business of TriZetto or 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 TriZetto, its Subsidiaries or its Affiliates, threatened against
TriZetto, its Subsidiaries or its Affiliates or any settlement reached by any of
them, with, any person or persons alleging the presence, disposal, release or
threatened release of any Hazardous Material on, from or under any of such
properties or as otherwise relating to potential environmental liabilities.
(d) This Section 3.11 contains the sole and exclusive
representations and warranties of TriZetto and its Subsidiaries with respect to
any Environmental, Health and Safety Matters, including, without limitation, any
arising under any Environmental Laws.
3.12. INVESTMENT INTENT. The HealthWeb Interests to be acquired by
TriZetto and TAG are being and will be acquired by TriZetto and TAG for their
own accounts for investment and not with any present intention to distribute.
3.13. INTELLECTUAL PROPERTY; SOFTWARE; YEAR 2000 COMPLIANCE.
3.13.1 INTELLECTUAL PROPERTY, SOFTWARE AND PRODUCTS.
(a) Section 3.13.1(a) of the TriZetto Disclosure
Schedule contains (a) a complete and correct list of all Intellectual Property,
Software and products relating to or used in the business or operations of the
business of TriZetto and its Subsidiaries, and (b) a complete and correct list
of all persons who have contributed to the creation or development of the
Intellectual Property, Software and products. Except as set forth in Section
3.13.1(a) of the TriZetto Disclosure Schedule, no TriZetto stockholder, employee
or contractor, nor any of their respective Affiliates, has any right, title or
interest in or to any Intellectual Property, Software or products.
(b) Except as set forth in Section 3.13.1(b) of the
TriZetto Disclosure Schedule, TriZetto and its Subsidiaries own all right, title
and interest in and to all Intellectual Property and Software
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used in or necessary for the conduct of TriZetto's and its Subsidiaries'
businesses as presently conducted, including, without limitation, all
Intellectual Property and Software developed or discovered in connection with or
contained in or related to TriZetto's or its Subsidiaries' products, free and
clear of all liens, mortgages, charges, pledges, claims and encumbrances
(including without limitation any distribution rights and royalty rights).
Except as disclosed in Section 3.13.1(b) of the TriZetto Disclosure Schedules,
all persons who have contributed to the creation or development of the
Intellectual Property, Software and products have executed an Assignment of
Rights Agreement or similar document transferring any and all ownership rights
to TriZetto. None of the products contain any codes or modules which have been
created or developed by third parties. Such Intellectual Property and Software
constitutes all Intellectual Property and Software necessary for the conduct of
its business in the manner conducted immediately prior to the Closing. To the
knowledge of TriZetto neither TriZetto nor its Subsidiaries have infringed nor
are infringing upon any Intellectual Property or Software rights of others.
Except as set forth in Section 3.13.1(b) of the TriZetto Disclosure Schedules,
TriZetto and its Subsidiaries have the exclusive right to use, sell, license and
dispose of, and has the right to bring actions for infringement of all
Intellectual Property, Software and products used in the connection with their
businesses. To the best knowledge of TriZetto, the products do not include any
Intellectual Property or Software that is in the public domain.
(c) Except as set forth in Section 3.13.1(c) of the
TriZetto Disclosure Schedule, no claims have been asserted against TriZetto or
its Subsidiaries by any person challenging TriZetto's or its Subsidiaries' use
or distribution (including manufacture, marketing license, or sale) of any
product or products utilized by TriZetto or its Subsidiaries (including, without
limitation, Third Party Technology), or challenging or questioning the validity
or effectiveness of any license or agreement relating thereto (including,
without limitation, the Third Party Licenses). To the best knowledge of
TriZetto, there is no valid basis for any claim of the type specified in this
Section 3.13.1(c).
(d) Except as set forth in Section 3.13.1(d) of the
TriZetto Disclosure Schedule, TriZetto or 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. Consummation of the transactions contemplated hereby
will not alter or impair the validity of any copyrights or copyright
registrations.
(e) Except as set forth in Section 3.13.1(e) of the
TriZetto Disclosure Schedule: (i) no third party (including any OEM or site
license customer) has any right to manufacture, reproduce, distribute, sell,
sublicense, market or exploit any of the products or any adaptations,
translations, or derivative works based on the products, or any portion thereof;
(ii) TriZetto or its Subsidiaries have 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 (iii) TriZetto or
its Subsidiaries have not granted any third party any right to market any
product utilizing any product under any "private label" arrangements pursuant to
which TriZetto or its Subsidiaries have not identified as the source of such
goods. Each document or instrument identified pursuant to this Section is listed
in Section 3.13.1(e) of the TriZetto Disclosure Schedule and true and correct
copies of such documents or instruments have been furnished to HealthWeb. Except
as set forth in Section 3.13.1(e) of the TriZetto Disclosure Schedule, 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.
(f) Except as set forth in Section 3.13.1(f) of the
TriZetto Disclosure Schedule, each of the products: (i) substantially complies
with all specifications set forth therefor in any contract, agreement,
advertisement or other promotional material for such products and with all other
warranty
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requirements, other than bugs or fixes required or expected in the ordinary
course of business and not otherwise material to TriZetto's business; and (ii)
can be recreated from its associated source code and related documentation by
reasonably experienced technical personnel without undue burden.
(g) TriZetto has furnished CBS with all end user
documentation relating to the use, maintenance or operation of each of the
products, all of which is true and accurate in all material respects.
(h) Except as set forth in Section 3.13.1(h) of the
TriZetto Disclosure Schedule, to the best knowledge of TriZetto, no employee of
TriZetto is in violation of any term of any employment contract, patent
disclosure agreement or any other contract or agreement relating to the
relationship of any such employee with TriZetto or any other party because of
the nature of the business conducted by TriZetto or proposed to be conducted by
TriZetto.
(i) Except as set forth in Section 3.13.1(i) of the
TriZetto Disclosure Schedule, no Third Party Technology is included in the
products.
3.13.2 YEAR 2000 COMPLIANCE.
(a) Products and Services.
(i) Except as set forth in Section 3.13.2(a)
of the TriZetto Disclosure Schedule, to the TriZetto Stockholders knowledge, all
of TriZetto's products and services and its Subsidiaries' products and services
are Year 2000 Compliant in all material respects.
(ii) Except as set forth in Section 3.13.2(a)
of the TriZetto Disclosure Schedule, 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 TriZetto Stockholders
knowledge TriZetto has repaired or replaced those products and services to make
them Year 2000 Compliant in all material respects.
(iii) Except as set forth in Section 3.13.2(a)
of the TriZetto Disclosure Schedule, TriZetto has furnished CBS with true,
correct and complete copies of any customer agreements and other materials and
correspondence in which TriZetto has furnished (or could be deemed to have
furnished) assurances as to the performance and/or functionality of TriZetto's
products or services and its Subsidiaries' on or after January 1, 2000.
(b) Computer Software and Systems. Except as set
forth in Section 3.13.2(b) of the TriZetto Disclosure Schedule, to the TriZetto
knowledge, all of TriZetto's software and systems and its Subsidiaries'
computers are Year 2000 Compliant in all material respects.
(c) Suppliers. Except as set forth in Section
3.13.2(c) of the TriZetto Disclosure Schedule, to TriZetto's knowledge, all
vendors of products or services to TriZetto and its Subsidiaries, and their
respective products, services and operations, are Year 2000 Complaint in all
material respects. Except as set forth in Section 3.13.2(c) of the TriZetto
Disclosure Schedule, to the knowledge of TriZetto after a reasonably diligent
investigation, each such vendor will continue to furnish its products or
services to TriZetto and its Subsidiaries, without interruption or material
delay, on and after January 1, 2000.
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3.14. COMPLIANCE WITH LAW AND OTHER INSTRUMENTS. TriZetto holds 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 respect
operations, and there are no material violations or, to the knowledge of
TriZetto, claimed violations by TriZetto of any such license, permit or
authorization or any such statute, law, ordinance, rule or regulation, except
where such violations would not have a Material Adverse Effect on TriZetto.
3.15. FULL DISCLOSURE. All of the representations and warranties made
by TriZetto in this Agreement, and all statements set forth in the certificates
delivered by TriZetto 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.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 FURTHER ACTION. Upon the terms and subject to the conditions
hereof, each of the parties hereto shall use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all other things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, to obtain in a
timely manner all necessary waivers, consents and approvals and to effect all
necessary registrations and filings, and otherwise to satisfy or cause to be
satisfied all conditions precedent to its obligations under this Agreement.
4.2. PUBLIC ANNOUNCEMENTS. TriZetto, TAG and HealthWeb shall consult
with each other before issuing any press release with respect to this Agreement,
and shall not issue any such press release or make any such public statement
without the prior consent of the other party, which shall not be unreasonably
withheld.
4.3. TRANSFER TAXES. TriZetto and HealthWeb 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 Closing. TriZetto and HealthWeb agree
that HealthWeb will pay any real property transfer or gains tax, stamp tax,
stock transfer tax, or other similar tax imposed on the transfer of the
Interests pursuant to this Agreement (collectively, "Transfer Taxes"), excluding
any Transfer Taxes as may result from the transfer of beneficial interests in
the Interests other than as a result of this Agreement, and any penalties or
interest with respect to the Transfer Taxes. HealthWeb agrees to cooperate with
TriZetto in the filing of any returns with respect to the Transfer Taxes.
ARTICLE V
INDEMNIFICATION
5.1. INDEMNIFICATION OF TRIZETTO.
(a) Subject to the limitations contained in this Article V,
the HealthWeb Partners shall, jointly and severally, on a pro rata basis,
defend, indemnify and hold harmless TriZetto, TAG, its officers, directors,
stockholders, employees, attorneys, accountants and agents from and against any
and all losses, claims,
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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 HealthWeb or a HealthWeb Partner in this Agreement;
(ii) the breach of any covenant or agreement made by HealthWeb or a HealthWeb
Partner in this Agreement; or (iii) relating to the Separation Agreement entered
into on December 14, 1998 by and between HealthWeb and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
(b) With respect to Subsection 5.1(a), the HealthWeb
Partners shall be liable to TriZetto and TAG for any Claims and Liabilities only
if the aggregate amount of all Claims and Liabilities, when combined with the
Claims and Liabilities pursuant to Article V of that certain Stock Purchase
Agreement dated concurrently herewith, exceeds $[*] (the "Basket Amount"), in
which case the HealthWeb Partners shall be obligated to indemnify TriZetto for
all such Claims and Liabilities without regard to the Basket Amount. Further,
the HealthWeb Partners' aggregate liability under Subsection 5.1(a) (other than
with respect to any intentional or willful breach or failure to perform) shall
in no event exceed the aggregate amount of consideration placed in the Escrow
Account plus the Promissory Notes and cash issued or paid hereunder.
(c) The indemnification obligations of the HealthWeb
Partners under this Section 5.1 shall first be satisfied by an offset to the
Promissory Note and second, out of the Escrow Account. Thereafter, TriZetto and
TAG shall have recourse against the HealthWeb Partners under this Section 5.1
subject to the limitations set forth in Section 5.1(b).
5.2 LIMITATIONS. Anything to the contrary notwithstanding, TriZetto
and TAG shall not be indemnified and held harmless in respect of any Claims and
Liabilities which are (a) covered by insurance owned by HealthWeb, to the extent
that any net loss is reduced by such insurance, or (b) satisfied out of the
proceeds of the Escrow Account to the extent that any net loss is reduced by
such proceeds.
5.3 INDEMNIFICATION OF HEALTHWEB. TriZetto and TAG shall defend,
indemnify and hold harmless the HealthWeb Partners against and in respect to all
Claims and Liabilities with respect to or arising from (i) breach of any
warranty or any inaccuracy of any representation made by TriZetto and TAG, or
(ii) breach of any covenant or agreement made by TriZetto and TAG in this
Agreement.
5.4 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 V, give such Indemnifying Party
written notice of the commencement of such action or proceeding and give such
Indemnifying Party a copy of such claim and/or process and all legal pleadings
in connection therewith. The failure to give such notice shall not relieve any
Indemnifying Party of any of his or its indemnification obligations contained in
this Article V, except where, and solely to the extent that, such failure
actually and materially prejudices the rights of such Indemnifying Party. Such
Indemnifying Party shall have, upon request within thirty (30) days after
receipt of such notice, but not in any event after the settlement or compromise
of such claim, the right to defend, at his or its own expense and by his or its
own counsel, 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 its
Subsidiaries on the one hand and any other party or parties to such claim on the
other hand, or as a result of other reasonable circumstances, there is a
reasonable probability that a claim may materially and adversely affect him or
it, other than solely as a result of money payments required to be reimbursed in
full by such Indemnifying Party under this Article V, the Indemnitee shall have
the right to defend, compromise or settle such claim or suit; and, provided,
further, that such settlement or compromise shall not, unless consented to in
writing by such Indemnifying Party, which should not be unreasonably withheld,
be conclusive as to the liability of such Indemnifying Party to the
[*] Confidential portions omitted and filed separately with the Securities and
Exchange Commission.
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Indemnitee. In any event, the Indemnitee, such Indemnifying Party and his or its
counsel shall cooperate in the defense against, or compromise of, any such
asserted liability, and in cases where the Indemnifying Party shall have assumed
the defense, the Indemnitee shall have the right to participate in the defense
of such asserted liability at the Indemnitee's own expense. In the event that
such Indemnifying Party shall decline to participate in or assume the defense of
such action, prior to paying or settling any claim against which such
Indemnifying Party is, or may be, obligated under this Article V to indemnify an
Indemnitee, the Indemnitee shall first supply such Indemnifying Party with a
copy of a final court judgment or decree holding the Indemnitee liable on such
claim or, failing such judgment or decree, the terms and conditions of the
settlement or compromise of such claim. An Indemnitee's failure to supply such
final court judgment or decree or the terms and conditions of a settlement or
compromise to such Indemnifying Party shall not relieve such Indemnifying Party
of any of his or its indemnification obligations contained in this Article V,
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, which should not be unreasonably withheld, 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.
5.5 TREATMENT OF INDEMNITY PAYMENTS. Any payment made to TriZetto
and TAG pursuant to this Article V or the Escrow Agreement shall be treated as a
reduction in the consideration paid by TriZetto in connection with this
Agreement.
5.6 SOLE REMEDY. After the Closing, the rights set forth in this
Article V shall be each party's sole and exclusive remedies against the other
party thereto for misrepresentations or breaches of covenants contained in this
Agreement. Notwithstanding the foregoing, nothing herein shall prevent any of
the Indemnified Parties from bringing an action based upon allegations of fraud
or other intentional breach of an obligation of or with respect to either party
in connection with this Agreement. In the event such action is brought, the
prevailing party's attorneys' fees and costs shall be paid by the nonprevailing
party.
ARTICLE VI
CONDITIONS TO CLOSING
6.1. CONDITIONS TO OBLIGATION OF EACH PARTY TO CLOSE THE TRANSACTION.
The respective obligations of each party to close the transaction shall be
subject to the satisfaction at or prior to the Closing of the following
conditions:
(a) NO INJUNCTIONS. No temporary restraining order,
preliminary or permanent injunction issued by any court of competent
jurisdiction preventing the consummation of the transaction shall be in effect.
(b) ESCROW AGREEMENT. The Escrow Agreement in the form of
Exhibit B shall have been entered into by TriZetto, Banker's Trust, and each of
the HealthWeb Partners.
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(c) RESTRICTED STOCK AGREEMENT. The Restricted Stock
Agreement in the form of Exhibit G shall have been entered into by TriZetto and
each of [*] and [*]. The Company represents that each of the Company's
employee shareholders have executed a form of Restricted Stock Agreement which
contains identical provisions relating to the right of first refusal and
termination.
6.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF TRIZETTO AND TAG. The
obligations of TriZetto and TAG to close the transaction are also subject to the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of HealthWeb and the HealthWeb Partners contained in this Agreement
shall be true and correct in all material respects on and as of the Closing,
with the same force and effect as if made on and as of the Closing and TriZetto
shall have received a certificate to such effect signed by the President and the
Chief Financial Officer of HealthWeb and the HealthWeb Partners;
(b) AGREEMENTS AND COVENANTS. HealthWeb and the HealthWeb
Partners shall have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed or complied
with by it on or prior to the Closing and TriZetto shall have received a
certificate to such effect signed by the President and Chief Financial Officer
of HealthWeb and the HealthWeb Partners; and
(c) CONSENTS OBTAINED. All material consents, waivers,
approvals, authorizations or orders required to be obtained, and all filings
required to be made, by HealthWeb 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 HealthWeb.
(d) OPINION OF COUNSEL. TriZetto shall have received the
opinion of McGuire, Woods, Battle & ▇▇▇▇▇▇ LLP, and ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
counsel to HealthWeb, dated as of the Closing, in the form attached hereto as
Exhibit E.
(e) EMPLOYMENT AGREEMENT. At the Closing, TriZetto shall
have entered into an employment agreement with [*] on the terms of the form of
employment agreement as set forth as Exhibit C substantially hereto (the
"Employment Agreement").
(f) NON-COMPETITION AGREEMENT. At the Closing, TriZetto
shall have entered into a non-competition agreement with each of [*] and [*] on
substantially the terms of the form of non-competition agreement as set forth as
Exhibit D hereto (the "Non-Competition Agreement").
(g) INTELLECTUAL PROPERTY RIGHTS. HealthWeb shall deliver to
TriZetto and TAG evidence that HealthWeb possesses all intellectual property
rights and software rights, including but not limited to copies of all software
licenses and executed assignments of rights as executed by each consultant or
employee who assisted in its development.
(h) PAYMENT ON INDEBTEDNESS. Each HealthWeb Partner shall
have paid off his indebtedness to HealthWeb, including accrued interest, and
HealthWeb shall have delivered evidence thereto to TriZetto and TAG.
(i) CBS shall have paid off the Promissory Note issued to
[*] on October 15, 1997 and cancelled the HealthWeb Interests which are held by
[*] as collateral thereunder. TriZetto shall be entitled to deduct the payoff
amount from the cash consideration paid hereunder.
[*] Confidential portions omitted and filed separately with the Securities and
Exchange Commission.
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(j) [*] and [*] shall have executed an Assignment of Rights
Agreement in the form of Exhibit H.
6.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF HEALTHWEB. The
obligation of HealthWeb and the HealthWeb Partners to close the transaction is
also subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of TriZetto and TAG contained in this Agreement shall be true and
correct in all respects on and as of the Closing, with the same force and effect
as if made on and as of the Closing and HealthWeb shall have received a
certificate to such effect signed by the President and the Chief Financial
Officer of TriZetto;
(b) AGREEMENTS AND COVENANTS. TriZetto and TAG shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or prior to
the Closing and HealthWeb shall have received a certificate to such effect
signed by the President and the Chief Financial 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 TAG 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 TAG,
except where the failure to receive such consents, etc. would not reasonably be
expected to have a Material Adverse Effect on TriZetto and TAG.
(d) OPINION OF COUNSEL. HealthWeb shall have received the
opinion of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to TriZetto and TAG, dated
as of the Closing, in the form attached hereto as Exhibit F.
(e) ISSUANCE OF OPTIONS. Each of [*] and [*] shall have
received options to purchase shares of TriZetto in accordance with his
respective employment agreement.
ARTICLE VII
TERMINATION
7.1. TERMINATION. This Agreement may be terminated at any time prior
to the Closing, notwithstanding the approval thereof by HealthWeb Partners:
(a) by mutual written consent duly authorized by the Board
of Directors of TriZetto or by the HealthWeb Partners; or
(b) by the Board of Directors of TriZetto if any condition
to the obligation of TriZetto under this Agreement to be complied with or
performed by HealthWeb 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 HealthWeb Partners if any condition to the
obligation of HealthWeb 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 HealthWeb; or
[*] Confidential portions omitted and filed separately with the Securities and
Exchange Commission.
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(d) by either TriZetto or HealthWeb if the Closing shall not have
been consummated by February 28, 1999; provided, however, that the right to
terminate this Agreement under this Section 7.1(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).
7.2. EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to Article VII, this Agreement shall forthwith become void
and there shall be no liability on the part of any party hereto or any of its
directors, officers, stockholders or Affiliates except (i) as set forth in
Article VII and Section 7.1 hereof, and (ii) that, except as otherwise provided
in Article VII, nothing herein shall relieve any party from liability for any
breach by such party except as set forth in Section 7.3 hereof.
7.3. FEES AND EXPENSES.
(a) Except as set forth in this Article VII, 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 Closing is consummated. Without limiting the generality of the
foregoing, the HealthWeb Partners will pay, on a pro rata basis according to
their ownership of Interests, all of the fees and expenses incurred in
connection with the transactions contemplated by this Agreement for HealthWeb
and the HealthWeb Partners' legal, financial and accounting advisors, including,
without limitation, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and Fennebresque, Clark, ▇▇▇▇▇▇▇▇ & Hay, and
McGuire, Woods, Battle & ▇▇▇▇▇▇, LLP and ▇▇▇▇▇ Liddell & ▇▇▇▇ LLP.
ARTICLE VIII
GENERAL PROVISIONS
8.1. EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS;
DISCLOSURES.
(a) The representations and warranties in this Agreement or
in any instrument delivered pursuant to this Agreement shall survive the Closing
and shall continue in full force and effect for a period of two (2) years
following the Closing except for Section 2.5, Section 2.13, Section 3.4 and
Section 3.11 which shall survive until the expiration of the applicable statute
of limitations (as the same may be extended from time to time). The covenants
and agreements of the parties contained in this Agreement shall survive the
Closing unless and until they are otherwise terminated pursuant to their terms
as a matter of applicable laws.
(b) Notwithstanding any other provision in this Agreement to
the contrary, any disclosure made with reference to one or more sections of the
HealthWeb Disclosure Schedule or the TriZetto Disclosure Schedule shall be
deemed disclosed with respect to each other section therein as to which such
disclosure is relevant.
8.2. NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made if and when delivered personally or by overnight courier to the parties
at the following addresses or sent by electronic transmission, with confirmation
received, to the telecopy numbers specified below (or at such other address or
telecopy number for a party as shall be specified by like notice):
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(a) If to TriZetto or TAG
The TriZetto Group, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇
Ph: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇.▇. ▇▇▇▇▇▇, Esq.
Ph: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to HealthWeb or the HealthWeb Partners
HealthWeb Systems, Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ph: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
McGuire, Woods, Battle & ▇▇▇▇▇▇, LLP
Bank of America Corporate Center Suite 2900
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Ph: (▇▇▇) ▇▇▇-▇▇▇▇
8.3. CERTAIN DEFINITIONS. The following terms, as used herein, have
the following meanings:
"Affiliate" shall mean any individual, corporation, partnership,
firm, joint venture, limited liability company, association, joint-stock
company, trust, unincorporated organization or Governmental Entity, or
person directly or indirectly controlling, controlled by or under common
control with HealthWeb, including all officers and directors of
HealthWeb.
"Agreement" shall have the meaning as set forth in the Preamble.
"Claims and Liabilities" shall have the meaning as set forth in
Section 5.1 of the Agreement.
"Closing" shall have the meaning as set forth in Section 1.2 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
Materials or wastes into the environment, including without limitation
ambient air, surface
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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 Materials or
wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"Escrow" shall have the meaning as set forth in Section 1.4 of
the Agreement.
"Escrow Agreement" shall have the meaning set forth in Section
1.4 of the Agreement.
"Escrow Shares" shall have the meaning set forth in Section 1.4
of the Agreement.
"GAAP" shall have the meaning as set forth in Section 2.7 of the
Agreement.
"Hazardous Material" means any toxic, radioactive, corrosive or
otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any
constituent elements displaying any of the foregoing characteristics,
which in any event is regulated under any Environmental Law.
"HealthWeb" shall have the meaning as set forth in the Preamble.
"HealthWeb Balance Sheet" shall have the meaning as set forth in
Section 2.7 of the Agreement.
"HealthWeb Benefit Arrangement" means any employment, severance
or similar contract or arrangement whether or not written or any plan,
policy, fund, program or contract or arrangement (whether or not
written) providing for compensation, bonus, profit-sharing, stock
option, or other stock related rights or other forms of incentive or
deferred compensation, vacation benefits, insurance coverage (including
any self-insured arrangements), health or medical benefits, disability
benefits, worker's compensation, supplemental unemployment benefits,
severance benefits and post-employment or retirement benefits (including
compensation, pension, health, medical or life insurance or other
benefits) that (i) is not a HealthWeb Employee Plan, (ii) is entered
into, maintained, administered or contributed to, as the case may be, by
HealthWeb and (iii) covers any employee or former employee of HealthWeb.
"HealthWeb Disclosure Schedule" shall mean the written
disclosure schedule delivered on or prior to the date hereof by
HealthWeb to TriZetto and TAG.
"HealthWeb Employee Plan" means any "employee benefit plan", as
defined in Section 3(3) of ERISA, that (i) is subject to any provision
of ERISA, (ii) is maintained, administered or contributed to by
HealthWeb and (iii) covers any employee or former employee of HealthWeb.
"HealthWeb Environmental Liabilities" mean any and all
liabilities of or relating to HealthWeb, 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 Time.
"HealthWeb 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
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contractor of HealthWeb or any predecessor thereof to purchase Shares
pursuant to HealthWeb's Option Plan (as defined below).
"HealthWeb Partner" shall have the meaning as set forth in the
Preamble.
"Intellectual Property" means patents, patent applications,
patent licenses, copyrights, copyright licenses, trademarks, trademark
applications and trademark licenses, trade names, service marks, service
names, licenses, trade secrets and any other know-how or intellectual
property rights, and rights in any thereof (insofar as it is practical
to list or describe such rights).
"Interests" shall have the meaning as set forth in Section 1.1.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect
to such asset.
"Material Adverse Effect" means, with respect to any Person, a
material adverse effect on the condition (financial or otherwise),
business, assets or liabilities of such Person and its Subsidiaries
taken as a whole.
"Multiemployer Plan" means each HealthWeb Employee Arrangement
or each TriZetto Employee Arrangement, as the case may be, that is a
multiemployer plan, as defined in Section 3(37) or Section 4001(a)(3) of
ERISA, or any similar foreign law or regulation.
"Person" means an individual, a corporation, a partnership, an
association, a trust, a limited liability company or any other entity or
organization, including a government or political subdivision or any
agency or instrumentality thereof.
"Products" means the Remedy Software, Respond Software, Live-Doc
Software, Care Line Software, Directory Studio, Managed Care Information
System and all related products, including any Intellectual Property
related thereto.
"Software" means software programs and rights in any thereof
(insofar as it is practical to list or describe such rights).
"Subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50%
of the total voting power of shares of capital stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person (or a combination thereof); or (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).
"TAG" shall have the meaning as set forth in the Preamble.
"Taxes" shall mean all income, gross receipts, sales, transfer,
use, employment, franchise, profits, property and other taxes, fees,
stamp taxes and duties, assessments, and charges of any kind whatsoever
(whether payable directly or by withholding), together with any interest
thereof and any penalties, additions to tax or additional amounts
imposed by any Taxing Authority.
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"Taxing Authority" shall mean any governmental authority
responsible for the imposition of Taxes.
"Third Party Licenses" means all licenses and other agreements
with third parties relating to any Intellectual Property or products
that HealthWeb is licensed or otherwise authorized by such third parties
to use, market, distribute or incorporate into products marketed and
distributed by HealthWeb.
"Third Party Technology" means all Intellectual Property and
products owned by third parties and licensed pursuant to Third Party
Licenses.
"Transfer Taxes" shall have the meaning as set forth in Section
4.3 of this Agreement.
"TriZetto" shall have the meaning as set forth in the Preamble.
"TriZetto Balance Sheet" shall have the meaning as set forth in
Section 3.5 of the Agreement.
"TriZetto Benefit Arrangement" means any employment, severance
or similar contract or arrangement whether or not written or any plan,
policy, fund, program or contract or arrangement (whether or not
written) providing for compensation, bonus, profit-sharing, stock
option, or other stock related rights or other forms of incentive or
deferred compensation, vacation benefits, insurance coverage (including
any self-insured arrangements), health or medical benefits, disability
benefits, worker's compensation, supplemental unemployment benefits,
severance benefits and post-employment or retirement benefits (including
compensation, pension, health, medical or life insurance or other
benefits) that (i) is not a TriZetto Employee Plan, (ii) is entered
into, maintained, administered or contributed to, as the case may be, by
TriZetto or any of its Subsidiaries and (iii) covers any employee or
former employee employed in the United States.
"TriZetto Common Stock" shall have the meaning set forth in
Section 1.1(b) of the Agreement.
"TriZetto Disclosure Schedule" shall mean the written disclosure
schedule delivered on or prior to the date hereof by TriZetto to
HealthWeb that is arranged in paragraphs corresponding to the numbered
and lettered paragraphs corresponding to the numbered and lettered
paragraphs contained in the Agreement.
"TriZetto Employee Plan" means any "employee benefit plan", as
defined in Section 3(3) of ERISA, that (i) is subject to any provision
of ERISA, (ii) is maintained, administered or contributed to by TriZetto
or any of its Subsidiaries and (iii) covers any employee or former
employee of TriZetto.
"TriZetto Environmental Liabilities" means any and all
liabilities of or relating to TriZetto and TAG or any of its
Subsidiaries, 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.
"TriZetto Financial Statements" shall have the meaning as set
forth in Section 3.5 of the Agreement.
"Year 2000 Compliant" means that (1) the products, services, or
other item(s) at issue accurately process, provide and/or receive all
date/time data (including calculating, comparing,
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sequencing, processing and outputting) within, from, into, and between
centuries (including the twentieth and twenty-first centuries and the
years 1999 and 2000), including leap year calculations, and (2) neither
the performance nor the functionality of the company's provision of the
products, services, and other item(s) at issue will be affected by any
dates/times prior to, on, after, or spanning January 1, 2000. The design
of the products, services, and other item(s) at issue to ensure
compliance with the foregoing warranties and representations includes
proper date/time data century recognition and recognition of 1999 and
2000, calculations that accommodate single century and multi-century
formulae and date/time values before, on, after, and spanning January 1,
2000, and date/time data interface values that reflect the century,
1999, and 2000. In particular, but without limitation, (i) no value for
current date/time will cause any error, interruption, or decreased
performance in or for such product(s), service(s), and other item(s),
(ii) all manipulations of date and time related data (including
calculating, comparing, sequencing, processing, and outputting) will
produce correct results for all valid dates and times when used
independently or in combination with other products, services, and/or
items, (iii) date/time elements in interfaces and data storage will
specify the century to eliminate date ambiguity without human
intervention, including leap year calculations, (iv) where any date/time
element is represented without a century, the correct century will be
unambiguous for all manipulations involving that element, (v)
authorization codes, passwords, and zaps (purge functions) will function
normally and in the same manner during, prior to, on and after January
1, 2000, including the manner in which they function with respect to
expiration dates and CPU serial numbers, and (vi) the company's supply
of the product(s), service(s), and other item(s) will not be
interrupted, delayed, decreased, or otherwise affected by the advent of
the year 2000.
8.4. AMENDMENT. This Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective Boards of Directors at any
time prior to the Closing. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
8.5. 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.
8.6. 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.
8.7. 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.
8.8. ENTIRE AGREEMENT. This Agreement (inclusive of HealthWeb
Disclosure Schedule and TriZetto Disclosure Schedule) 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.
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8.9. ASSIGNMENT. This Agreement shall not be assigned by operation of
law or otherwise.
8.10. 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 5.6 (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 5.6, and may be enforced by such Indemnified
Parties and other persons).
8.11. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
8.12. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of California
applicable to contracts executed and fully performed within the State of
California.
8.13. 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.
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IN WITNESS WHEREOF, the parties have caused this Partnership Interests
Purchase Agreement 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: [Signature Illegible]
-------------------------------------
Name: [Illegible]
-------------------------------------
Title:
-------------------------------------
TRIZETTO ACQUISITION GROUP, LLC,
a Delaware limited liability company
By: [Signature Illegible]
-------------------------------------
Name: [Illegible]
-------------------------------------
Title: President & CFO & Treasurer
-------------------------------------
HEALTHWEB PARTNERS
HEALTHWEB GENERAL PARTNER, INC.,
a Texas corporation
By: /s/ [*]
-------------------------------------
Name: [*]
-------------------------------------
Title: [*]
-------------------------------------
/s/ [*]
----------------------------------------
[*]
/s/ [*]
----------------------------------------
[*]
[*] Confidential portions omitted and filed separately with the Securities and
Exchange Commission.
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