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EXHIBIT 2.7
WARRANT ESCROW AGREEMENT
This WARRANT ESCROW AGREEMENT made as of November 29, 1999
("Agreement"), by and among The TriZetto Group, Inc., a Delaware corporation
with an office at 000 Xxx Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx
00000 (the "Company"), the Xxxxxxx Securityholders listed on the signature pages
attached hereto ("Xxxxxxx Securityholders"), Silavon, Inc., a Delaware
corporation ("Silavon"), ABS Capital Partners, L.P. (the "Representative"), and
Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx, a Professional Corporation (the "Escrow
Agent").
WHEREAS, the Company is purchasing from the Xxxxxxx Securityholders all
of the issued and outstanding capital stock of Xxxxxxx Corporation, a Delaware
corporation ("Xxxxxxx") which immediately prior to the Closing, will consist of
(i) 1,186,559 shares of Series A Stock, (ii) 235,000 shares of Series B Stock,
(iii) 92,749.03 shares of Series C Stock, and (iv) 938,519 shares of Common
Stock, pursuant to a Stock Purchase Agreement dated as of the date hereof (the
"Stock Purchase Agreement"), the terms of which (including the capitalized terms
not otherwise defined herein) are specifically incorporated by reference herein;
and
WHEREAS, the Company, the Xxxxxxx Securityholders and Silavon desire to
provide for the deposit with the Escrow Agent of $5,000,000 of the Cash Portion
of the Purchase Price (such amount referred to herein as the "Escrowed Funds")
until the release of the Escrowed Funds to QCA Health Plan, Inc. ("QCA") in
connection with the consummation of the QCA Transactions (as defined in the
Supplement to the Xxxxxxx Disclosure Schedule), or otherwise, in the manner
contemplated by this Agreement; and
WHEREAS, the Xxxxxxx Securityholders have caused the organization of
Silavon, which is expected to be wholly-owned by the Xxxxxxx Securityholders
upon consummation of the QCA Transactions, and desire to assign all of their
right, title and interest in and to the Escrowed Funds to Silavon pursuant to
the terms of this Agreement as consideration for the purchase of shares of
common stock of Silavon as previously approved by the Board of Directors of
Silavon; and
WHEREAS, the Escrow Agent has consented to act as escrow agent and to
receive and hold the Escrowed Funds to be deposited pursuant to the Stock
Purchase Agreement in escrow for the account of the Company, upon the terms set
forth therein and herein.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. ASSIGNMENT OF ESCROWED FUNDS. As consideration for the purchase by
the Xxxxxxx Securityholders of shares of common stock of Silavon in accordance
with the terms previously approved by the Board of Directors of Silavon, the
Xxxxxxx Securityholders hereby assign all of their right, title and interest in
and to the Escrowed Funds to Silavon.
2. ESCROW DEPOSIT. Pursuant to the Stock Purchase Agreement, the Escrow
Agent shall receive and hold in escrow the Escrowed Funds paid by the Company,
in a non-interest bearing account for Silavon (the "Escrow Account"). Upon the
payment of the Escrowed Funds to the Escrow Agent, the Escrow Agent shall
deposit the Escrowed Funds in the Escrow Account that shall be maintained on
behalf of the Company at Xxxxx Fargo Bank, 0 Xxxxxxxxx Xxxxx, Xxxxxxx Xxxxx,
Xxxxxxxxxx 00000 (Account No. 0643108848).
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3. LIMITATION OF ESCROW AGENT'S DUTIES. All parties hereto acknowledge
that the duties of the Escrow Agent hereunder are solely ministerial in nature,
and have been requested for their convenience. The Escrow Agent shall not be
deemed to be the agent of any party hereto, or to have any legal or beneficial
interest in the Escrow Account. The parties agree that the Escrow Agent shall
not be liable for any act or omission taken or suffered in good faith with
respect to this Agreement unless such act or omission is the result of the gross
negligence or willful misconduct of the Escrow Agent. The parties acknowledge
and agree that the Escrow Agent is counsel for the Company.
4. BOOKS. The Escrow Agent shall keep accurate books and records of all
transactions hereunder. The Company and the Representative shall have access to
such books and records at all reasonable times.
5. RELEASE OF ESCROWED FUNDS. If, on or before 11:59 p.m. (Newport
Beach, California time), November 30, 1999 (or such later date as determined by
the Company in its sole discretion) the Company and the Representative deliver
to the Escrow Agent release notices in the forms attached hereto as Exhibit A
and Exhibit B stating that the Escrow Agent is authorized to release the
Escrowed Funds to QCA on behalf of Silavon (the "Release Notice"), then the
Escrow Agent shall continue to hold the Escrowed Funds on behalf of Silavon
until such time as the Representative provides wire transfer instructions for
the transfer of the Escrowed Funds to QCA on behalf of Silavon; provided
however, that, if the Escrow Agent does not receive wire transfer instructions
from the Representative for the transfer of the Escrowed Funds to QCA on behalf
of Silavon by the close of business (Newport Beach, California time) on the
third business day following November 30, 1999, the Escrow Agent shall contact
QCA directly to obtain appropriate wire transfer or other delivery instructions.
The Company, the Xxxxxxx Securityholders and Silavon acknowledge and agree that
the Company shall retain all right, title and interest in and to the Escrowed
Funds unless and until the Escrow Agent receives a fully executed Release Notice
pursuant to the terms of this Section 5, and that the Company shall have no
right, title or interest in and to the Escrowed Funds following receipt by the
Escrow Agent of a fully executed Release Notice.
6. RETURN OF ESCROWED FUNDS. If by 11:59 p.m. (Newport Beach, California
time), November 30, 1999 (or such later date as determined by the Company in its
sole discretion) the Escrow Agent has not received a Release Notice from the
Company and the Representative, the Escrow Agent shall return to the Company, by
wire transfer on the next business day, an amount equal to the Escrowed Funds.
7. TERMINATION. This Agreement and the obligations of the Escrow Agent
hereunder shall cease in case the provisions of Paragraph 5 hereof become
operative on the date such provisions become operative and the Escrow Agent
takes all steps therein required to be performed by it, or in case the
provisions of paragraph 6 hereof become operative on the date such provisions
become operative and the Escrow Agent fully complies therewith.
8. LIABILITY OF ESCROW AGENT. Nothing herein contained shall be deemed
to obligate the Escrow Agent to pay or transfer any moneys hereunder, unless the
provisions of this Agreement and the Stock Purchase Agreement have been complied
with by the parties hereto. The Escrow Agent shall not be responsible in any
manner for obtaining confirmation as to the consummation of the QCA
Transactions. The Escrow Agent shall use reasonable diligence in the performance
of its obligations hereunder, but shall be fully protected and indemnified by
the Company with respect to any action taken or suffered under this Agreement in
good faith by the Escrow Agent, and the Company hereby agrees to so indemnify
the Escrow Agent from and against any and all costs, claims, expenses and
liabilities
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(including reasonable attorneys' fees and expenses and amounts paid in
settlement). The Escrow Agent may consult with other counsel, and shall be fully
protected in respect to any action taken or suffered under this Agreement in
good faith by the Escrow Agent in accordance with the opinion of such counsel.
The Escrow Agent shall not be bound or in any way affected by any notice of any
modification, cancellation, abrogation, or rescission of this Agreement, or of
any fact or circumstance affecting or alleged to affect the rights or
liabilities of the parties hereto other than as in this Agreement set forth, or
affecting or alleged to affect the rights or liabilities or any other person,
unless such modification, cancellation, abrogation, rescission, fact or
circumstance is signified to it in writing, delivered to the Escrow Agent,
signed by all the parties to this Agreement, and by all such other persons, nor,
in the case of a modification, unless such modification shall be satisfactory
to, and assented to in writing by, the Escrow Agent. The Escrow Agent may resign
effective upon notice to the Company and the Representative.
9. COMPENSATION. The Escrow Agent is acting as such as an accommodation
to the Company, and is not receiving any separate fees as compensation for its
services hereunder, other than indemnification as provided herein and
reimbursement of its expenses.
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Warrant Escrow Agreement as of the date first set forth above.
"ESCROW AGENT"
STRADLING, YOCCA, XXXXXXX & XXXXX, a
professional corporation
By:
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X.X. Xxxxxx, Vice President
"COMPANY"
THE TRIZETTO GROUP, INC.
By:
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"REPRESENTATIVE"
ABS CAPITAL PARTNERS, L.P.
By: ABS Partners, L.P.,
its General Partner
By:
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Name: Xxxxxxxxx X. Xxxxxx
Title: General Partner
"XXXXXXX SECURITYHOLDERS"
ABS CAPITAL PARTNERS, L.P.
By: ABS Partners, L.P.,
its General Partner
By:
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Name: Xxxxxxxxx X. Xxxxxx
Title: General Partner
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BANCBOSTON INVESTMENTS INC.
By:
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Name: Xxxxxx X. Xxxxx
Title: Vice President
ST. XXXX FIRE AND MARINE INSURANCE
COMPANY
By:
------------------------------------
Name: Xxxxxxx X. Xxx
Title: Authorized Representative
ST. XXXX VENTURE CAPITAL V, L.L.C.`
By:
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Name: Xxxxxxx X. Xxx
Title:
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EDISON VENTURE FUND III, L.P.
By: Edison Partners III, L.P.,
its General Partner
By:
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Name: Xxxxxx X. Xxxxx
Title: General Partner
XXXXX EMPLOYEE FUND, L.P.
By:
------------------------------------
Name: Xxxxx X. Xxxxxx
Title: General Partner
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XXXXX PARTNERS II, L.P.
By: GWW Partners, L.P.,
its General Partner
By:
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Name: Xxxxx X. Xxxxxx
Title: General Partner
XXXXX PARTNERS INTERNATIONAL II, L.P.
By: GWW Partners, L.P.,
its General Partner
By:
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Name: Xxxxx X. Xxxxxx
Title: General Partner
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"SILAVON"
SILAVON, INC.
By:
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Name: Xxxxxxxxx X. Xxxxxx
Title: President and Chief Executive
Officer
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Exhibit A
RELEASE NOTICE
Pursuant to Section 5 of that certain Warrant Escrow Agreement made as
of November 29, 1999 ("Escrow Agreement") by and among The TriZetto Group, Inc.,
a Delaware corporation (the "Company"), the Xxxxxxx Securityholders listed on
the signature pages thereto ("Xxxxxxx Securityholders"), Silavon, Inc., a
Delaware corporation ("Silavon"), ABS Capital Partners, L.P. (the
"Representative"), and Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx, a Professional
Corporation (the "Escrow Agent"), the undersigned hereby certifies: (1) the
Assignment of Warrant in the form of Exhibit A has been executed and delivered;
and (2) the Note Option Agreement in the form of Exhibit B has been executed and
delivered.
Accordingly, the undersigned hereby instructs the Escrow Agent to
release the Escrowed Funds to QCA Health Plan, Inc. ("QCA") on behalf of Silavon
in accordance with the terms of Section 5 of the Escrow Agreement and to hold
such Escrowed Funds on behalf of Silavon until such time as the Escrowed Funds
are delivered to QCA on behalf of Silavon in accordance with the terms of the
Escrow Agreement. Capitalized terms not defined herein shall have the meanings
ascribed to them in the Escrow Agreement.
"REPRESENTATIVE"
ABS CAPITAL PARTNERS, L.P.
By: ABS Partners, L.P.,
its General Partner
By:
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Name: Xxxxxxxxx X. Xxxxxx
Title: General Partner
APPROVED:
"Company"
THE TRIZETTO GROUP, INC.
By:
-------------------------------
Its:
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Exhibit B
RELEASE NOTICE
Pursuant to Section 5 of that certain Warrant Escrow Agreement made as
of November 29, 1999 ("Escrow Agreement") by and among The TriZetto Group, Inc.,
a Delaware corporation (the "Company"), the Xxxxxxx Securityholders listed on
the signature pages thereto ("Xxxxxxx Securityholders"), Silavon, Inc., a
Delaware corporation ("Silavon"), ABS Capital Partners, L.P. (the
"Representative"), and Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx, a Professional
Corporation (the "Escrow Agent"), the undersigned hereby certifies: (1) the
filings and approvals contained in paragraphs two through six of that certain
Consent Order dated November 19, 1999 of the Insurance Commissioner of the State
of Arkansas shall have been satisfied.
Accordingly, the undersigned hereby instructs the Escrow Agent to
release the Escrowed Funds to QCA Health Plan, Inc. ("QCA") on behalf of Silavon
in accordance with the terms of Section 5 of the Escrow Agreement and to hold
such Escrowed Funds on behalf of Silavon until such time as the Escrowed Funds
are delivered to QCA on behalf of Silavon in accordance with the terms of the
Escrow Agreement. Capitalized terms not defined herein shall have the meanings
ascribed to them in the Escrow Agreement.
THE "COMPANY"
THE TRIZETTO GROUP, INC.
By:
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Its:
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APPROVED:
"REPRESENTATIVE"
ABS CAPITAL PARTNERS, L.P.
By: ABS Partners, L.P.,
its General Partner
By:
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Name: Xxxxxxxxx X. Xxxxxx
Title: General Partner
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