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EXHIBIT 10.24
$15,000,000.00
AMENDMENT NO. 2
TO
LOAN AND SECURITY AGREEMENT
originally dated as of September 11, 2000
by and among
THE TRIZETTO GROUP, INC.
CREATIVE BUSINESS SOLUTIONS, INC.
FINSERV HEALTH CARE SYSTEMS, INC.
HEALTHCARE MEDIA ENTERPRISES, INC.
HEALTHWEB, INC.
MARGOLIS HEALTH ENTERPRISES, INC.
NOVALIS CORPORATION
TRIZETTO APPLICATION SERVICES, INC.
DIGITAL INSURANCE SYSTEMS CORPORATION
HEALTH NETWORKS OF AMERICA, INC.
NOVALIS DEVELOPMENT CORPORATION
NOVALIS DEVELOPMENT & LICENSING CORPORATION
NOVALIS SERVICES CORPORATION
ERISCO, INC.
RESOURCE INFORMATION MANAGEMENT SYSTEMS, INC.
WINTHROP FINANCIAL GROUP, INC.
OPTION SERVICES GROUP, INC.
PRINCIPAL FINANCIAL ASSOCIATES, INC.
(collectively, "Borrower")
and
HELLER HEALTHCARE FINANCE, INC.
("Lender")
Amended as of December 28, 2000
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AMENDMENT NO. 2 TO LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 2 TO LOAN AND SECURITY AGREEMENT (this
"Amendment") is made as of this 28th day of December, 2000, by and among THE
TRIZETTO GROUP, INC., a Delaware corporation ("TriZetto"), CREATIVE BUSINESS
SOLUTIONS, INC., a Texas corporation ("CBS"); FINSERV HEALTH CARE SYSTEMS, INC.,
a New York corporation ("Finserv"); HEALTHCARE MEDIA ENTERPRISES, INC., a
Delaware corporation ("HME"); HEALTHWEB, INC., a Delaware corporation
("HealthWeb"); MARGOLIS HEALTH ENTERPRISES, INC., a California corporation
("Margolis"); NOVALIS CORPORATION, a Delaware corporation ("Novalis"); TRIZETTO
APPLICATION SERVICES, INC., a Colorado corporation ("TriZetto Application");
DIGITAL INSURANCE SYSTEMS CORPORATION, an Ohio corporation ("Digital"); HEALTH
NETWORKS OF AMERICA, INC., a Maryland corporation ("Health Networks"); NOVALIS
DEVELOPMENT CORPORATION, a Delaware corporation ("Novalis Development"); NOVALIS
DEVELOPMENT & LICENSING CORPORATION, an Indiana corporation ("Novalis
Licensing"); NOVALIS SERVICES CORPORATION, a Delaware corporation ("Novalis
Services" and, collectively with TriZetto, CBS, Finserv, HME, HealthWeb,
Margolis, Novalis, TriZetto Application, HMP, Digital, Health Networks, Novalis
Development and Novalis Licensing, the "Original Borrower"), ERISCO, INC., a New
York corporation ("Erisco"), RESOURCE INFORMATION MANAGEMENT SYSTEMS, INC., an
Illinois corporation ("RIMS"), WINTHROP FINANCIAL GROUP, INC., an Illinois
corporation ("Winthrop"), OPTION SERVICES GROUP, INC., an Illinois corporation
("Option Services"), PRINCIPAL FINANCIAL ASSOCIATES, INC., an Illinois
corporation ("Financial Services" and collectively with RIMS, Winthrop and
Option Services, "New Borrower") (New Borrower, collectively with Original
Borrower and Erisco, the "Borrower"), and HELLER HEALTHCARE FINANCE, INC., a
Delaware corporation ("Lender").
RECITALS
A. Pursuant to that certain Loan and Security Agreement dated
September 11, 2000, by and between Original Borrower, Elbejay Acquisition Corp.,
a Delaware corporation ("LBJ"), Healthcare Media Private Limited, an India
company and subsidiary of HME ("HMP") and Lender (the "Original Loan Agreement"
and as amended by that certain Amendment No. 1 to Loan and Security Agreement
dated as of October 17, 2000 and as it may be further amended, modified and
restated from time to time, the "Loan Agreement"), Lender agreed to make
available to Original Borrower, LBJ and HMP a revolving credit facility (the
"Loan").
B. On December 1, 2000, Cidadaw Acquisition Corp., a Delaware
corporation and wholly owned subsidiary of TriZetto ("Cidadaw"), merged with and
into RIMS, the separate corporate existence of Cidadaw ceased, and RIMS survived
the merger as a wholly owned subsidiary of TriZetto.
C. Lender and Borrower believe it is in their mutual best interests
that, among other things, (i) HMP be removed as a Borrower under the Loan
Agreement, (ii) the accounts of Erisco and New Borrower be added to the
Borrowing Base (as defined in the Loan Agreement), (iii) New
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Borrower be added as a Borrower under the Loan Agreement pursuant to Section 2
herein and (iv) the Loan Agreement be otherwise modified in connection with the
terms hereof.
NOW, THEREFORE, in consideration of the foregoing, the terms and
conditions set forth in this Amendment, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Lender and Borrower hereby agree as follows:
SECTION 1.DEFINITIONS. Unless otherwise defined in this Amendment,
all capitalized terms shall have the meanings assigned to such terms in the Loan
Agreement.
SECTION 2.REMOVAL OF HMP AS BORROWER; ADDITION OF NEW BORROWER.
(a) Original Borrower, Erisco, New Borrower and Lender
agree that, upon the effectiveness of this Amendment, HMP shall be removed as a
"Borrower" for purposes of and as defined in the Loan Agreement and the other
Loan Documents.
(b) Original Borrower, Erisco, New Borrower and Lender
agree that, upon satisfaction of the conditions set forth in this Amendment, New
Borrower shall constitute a "Borrower" for purposes of and as defined in the
Loan Agreement and the other Loan Documents. Accordingly, New Borrower hereby
agrees to be bound by all of the conditions, covenants, representations,
warranties, and other agreements set forth in the Loan Agreement, and hereby
agrees to promptly execute all further documentation required by Lender to be
executed by New Borrower, consistent with the terms of this Amendment, the Loan
Agreement and the other Loan Documents.
SECTION 3.CONFIRMATION OF REPRESENTATIONS AND WARRANTIES. Each entity
comprising Borrower, including without limitation Erisco and New Borrower,
hereby (a) confirms that all of the representations and warranties set forth in
Article IV of the Loan Agreement are true and correct with respect to such
Borrower, and (b) specifically represents and warrants to Lender that it has
good and marketable title to all of its respective Collateral, free and clear of
any lien or security interest in favor of any other person or entity other than
Permitted Liens.
SECTION 4.GRANT BY NEW BORROWER OF SECURITY INTEREST.
(a) Pursuant to and in accordance with the terms of Article III of
the Loan Agreement, and consistent with the intent of the parties, as security
for the payment of the Obligations of Borrower, including without limitation New
Borrower, to Lender, New Borrower hereby assigns and grants to Lender a
continuing first priority lien on and security interest in, on and to the
following property of New Borrower, all of which property shall, in the
aggregate, be deemed to be and treated for all purposes as "Collateral" under
the Loan Agreement, as follows:
(i) All of Borrower's now-owned and hereafter acquired or
arising Accounts, accounts receivable and rights to payment of every
kind and description, and all of Borrower's contract rights, chattel
paper, documents and instruments with respect thereto, and all of
Borrower's rights, remedies, security and liens, in, to and in
respect of the Accounts, including, without limitation, rights of
stoppage in transit, replevin, repossession
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and reclamation and other rights and remedies of an unpaid vendor,
lienor or secured party, guaranties or other contracts of suretyship
with respect to the Accounts, deposits or other security for the
obligation of any Account Debtor, and credit and other insurance;
(ii) All moneys, securities and other property and the
proceeds thereof, now or hereafter held or received by, in transit
to, in possession of, or under the control of Lender or a bailee or
Affiliate of Lender, from or for Borrower, whether for safekeeping,
pledge, custody, transmission, collection or otherwise, and all of
Borrower's deposits (general or special), balances, sums and credits
with Lender at any time existing;
(iii) All of Borrower's right, title and interest in, to
and in respect of all goods relating to, or which by sale have
resulted in, Accounts, including, without limitation, all goods
described in invoices or other documents or instruments with respect
to, or otherwise representing or evidencing, any Account, and all
returned, reclaimed or repossessed goods;
(iv) All of Borrower's now owned or hereafter acquired
deposit accounts into which Accounts are deposited, including the
Lockbox Account;
(v) All of Borrower's now owned and hereafter acquired or
arising general intangibles and other property of every kind and
description with respect to, evidencing or relating to its Accounts,
accounts receivable and other rights to payment, including, but not
limited to, all existing and future customer lists, choses in action,
claims, books, records, ledger cards, contracts, licenses, formulae,
tax and other types of refunds, returned and unearned insurance
premiums, rights and claims under insurance policies, and computer
programs, information, software, records, and data, as the same
relates to the Accounts;
(vi) The proceeds (including, without limitation,
insurance proceeds) of all of the foregoing.
(b) On the execution of this Amendment by the parties and thereafter
as Lender deems necessary in its sole discretion, Erisco and New Borrower shall
execute and deliver, or have executed and delivered, to Lender (all in form and
substance satisfactory to Lender in its sole discretion:
(i) UCC-1 Financing Statements pursuant to the Uniform
Commercial Code in effect in the jurisdiction(s) in which each of
Erisco and New Borrower operates, which Lender may file in any
jurisdiction where any Collateral is or may be located and in any
other jurisdiction that Lender deems appropriate: provided, that a
carbon, photographic, or other reproduction or other copy of this
Amendment, the Loan Agreement or of a financing statement is
sufficient as and may be filed in lieu of a financing statement; and
(ii) any other agreements, documents, instruments and
writings deemed necessary by Lender, or as Lender may otherwise
request from time to time in its sole discretion to evidence, perfect
or protect Lender's lien and security interest in the Collateral
under this Amendment, the Loan Agreement or the other Loan Documents.
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(c) Prior to the execution hereof, and thereafter (as and when
determined by Lender in its reasonable discretion), Lender will perform the
searches described in clauses (i) and (ii) below against each of Erisco and New
Borrower (the results of which are to be consistent with each of Erisco's New
Borrower's representations and warranties under this Amendment and the Loan
Agreement), all at Borrower's expense:
(i) Uniform Commercial Code searches with the Secretary of
State and local filing offices of each jurisdiction where each of
Erisco and New Borrower maintains its executive offices, a place of
business or assets; and
(ii) Judgment, federal tax lien and corporate and
partnership tax lien searches, in each jurisdiction searched under
clause (i) above; and
In addition, prior to the execution hereof, at Borrower's expense,
New Borrower shall obtain and deliver to Lender good standing certificates
showing Erisco and New Borrower to be in good standing in its state of
incorporation and in each other state in which it is doing and currently intends
to do business for which qualification is required.
(d) With respect to the Collateral pledged to Lender pursuant to
Section 4(a) of this Amendment, Borrower, including without limitation each
entity comprising New Borrower, hereby agrees to abide by the covenants and
agreements set forth in Section 3.3, Section 3.4 and Section 3.6 of the Loan
Agreement.
SECTION 5. AMENDMENT TO LOAN AGREEMENT.
(a) Section 6.23 of the Loan Agreement is hereby amended to replace
the first sentence of such section with the following provision:
"Borrower will not at any time allow its "tangible net
worth" to fall below $12,000,000.00. For purposes of this
Section 6.23, "tangible net worth" shall be defined as
Borrower's net worth minus all intangibles, including
without limitation goodwill, all calculated in accordance
with GAAP."
(b) A new Section 6.27 is hereby added to the Loan Agreement as
follows:
"SECTION 6.27. EXCESS CASH. At all times after
April 1, 2001 and throughout the term of this Agreement
thereafter, Borrower shall maintain, in the accounts set
forth on Schedule 6.27 and incorporated herein by
reference, an "excess cash" balance, not including the
proceeds of any and all Revolving Credit Loans made by
Lender hereunder, equal, in the aggregate, to at least Six
Million and No/100 Dollars ($6,000,000.00) (the "Cash
Balance"); provided that, if at any time after April 1,
2001, Borrower shall fail to maintain the Cash Balance as
required hereunder, Borrower shall be required to notify
Lender in writing of such event. Upon the failure of
Borrower to maintain the Cash Balance as required
hereunder, in addition to
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any other rights or remedies Lender may have under the
Agreement, Lender shall be entitled, in its sole
discretion, on the earlier of (a) Lender's receipt of such
written notice from Borrower hereunder, and (b) Lender's
otherwise becoming aware of Borrower's failure to maintain
the Cash Balance as required hereunder, to immediately
reduce the advance rate set forth in Section 2.1(d) of
this Agreement to sixty percent (60%) from eighty percent
(80%)." For purposes hereof, "excess cash" shall mean
Borrower's cash and cash equivalents, short-term
investments, and certificates of deposit and/or commercial
paper with a maturity date of greater than ninety (90)
days that Borrower can sell on the open market at any
time."
(c) Section 7.4 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:
"SECTION 7.4. RESTRICTION ON FUNDAMENTAL CHANGES; NO
CHANGE IN OPERATION OR CONTROL. Borrower will not: (i)
enter into any transaction of merger or consolidation
except as set forth on Schedule 7.4 hereof; (ii)
liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution); provided, that Borrower may
liquidate or dissolve the business of Principal Financial
Associates, Inc. only without such liquidation or
dissolution constituting either a violation by Borrower of
this Section 7.4 or an Event of Default under this
Agreement; (iii) convey, sell, lease, sublease (other than
the subleases currently in existence as reflected on
Borrower's financial statements), transfer or otherwise
dispose of, in one transaction or a series of
transactions, any of its assets, or the capital stock of
any subsidiary of Borrower, whether now owned or hereafter
acquired, other than in the ordinary course of business;
or (iv) acquire by purchase or otherwise all or any
substantial part of the business or assets of, or stock or
other evidence of beneficial ownership of, any Person,
other than the Acquisition (as defined in the Term Note)
and such acquisitions approved in writing by Lender.
Borrower agrees that compliance with this Section 7.4 is a
material inducement to Lender's advancing credit under
this Agreement. Borrower further agrees that in addition
to all other remedies available to Lender, Lender shall be
entitled to specific enforcement of the covenants in this
Section 7.4, including without limitation injunctive
relief."
SECTION 6.INTENTIONALLY LEFT BLANK.
SECTION 7.ENFORCEABILITY. This Amendment constitutes the legal, valid
and binding obligation of New Borrower, and is enforceable against New Borrower
in accordance with its terms.
SECTION 8.EFFECTIVE DATE. The obligation of Lender to enter into and
perform this Amendment and to make Revolving Credit Loans under the Loan
Agreement is subject to the following conditions precedent:
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(a) Lender shall have received two (2) executed originals of this
Amendment, the Certificate of Validity and all other Loan Documents required to
be executed and delivered hereunder or under the Loan Agreement, including but
not limited to updated Schedules to the Loan Agreement; provided, that Borrower
shall only be obligated to provide Lender with one (1) original of the executed
Amended and Restated Revolving Credit Note;
(b) Lender shall have received all searches and good standing
certificates required under Section 4(c) hereof;
(c) Borrower, including without limitation Erisco and New Borrower,
shall have complied and then be in compliance with all of the terms, covenants
and conditions set forth in this Amendment, the Loan Agreement and the other
Loan Documents;
(d) There shall have occurred and be continuing no Event of Default
and no event which, with the giving of notice or lapse of time or both, could
constitute an Event of Default;
(e) Lender shall have received an executed secretary's certificate,
together with all attachments thereto, including but not limited to Board of
Directors resolutions of each of Erisco and New Borrower and copies of any other
action taken by each of Erisco and New Borrower to authorize the execution,
delivery and performance of this Amendment and the borrowing of the Loan under
the Loan Documents, from each of Erisco and New Borrower, all substantially in
the form provided to Borrower;
(f) Lender shall have received an executed certificate of chief
financial officer from each entity comprising Borrower, substantially in the
form provided to Borrower;
(g) Lender shall have received a written opinion of counsel for New
Borrower, dated the date of this Agreement, with respect to New Borrower only
and substantially in the form of the opinion previously delivered by counsel for
Original Borrower in connection with the execution and delivery of the Original
Loan Agreement by Original Borrower;
(h) Lender shall have received and approved an updated Borrowing Base
Certificate of Borrower;
(i) Borrower shall have satisfied the conditions set forth in Section
5.1(l) (landlord estoppels) of the Loan Agreement;
(j) Lender shall have receive executed UCC-1 financing statements
with respect to the Collateral being pledged by Erisco and New Borrower pursuant
to Section 4 of this Amendment;
(k) Borrower, including without limitation New Borrower, as
applicable, shall have provided Lender with any other executed documents or
other information required to be provided pursuant to the closing checklist
provided by Lender to Borrower or otherwise reasonably requested by Lender.
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SECTION 9.COSTS. Borrower shall be responsible for the payment of all
costs of Lender incurred in connection with the preparation of this Amendment,
the Amended and Restated Revolving Credit Note, the UCC-1 Financing Statements,
the searches described above, all filing fees, and all reasonable document
preparation fees of Lender's in-house counsel.
SECTION 10. NO NOVATION. Lender's agreement to add New Borrower shall
not constitute a novation of the debt evidenced by the Revolving Credit Note (as
amended and restated hereby and by the Amended and Restated Revolving Credit
Note dated of even date herewith), nor shall it constitute a waiver of the
Lender's right of consent in connection with any future addition of new
borrowers.
SECTION 11. REFERENCE TO THE EFFECT ON THE LOAN AGREEMENT.
(a) Upon the effectiveness of this Amendment, each
reference in the Loan Agreement to "this Agreement," "hereunder," "hereof,"
"herein" or words of similar import shall mean and be a reference to the Loan
Agreement as amended by this Amendment.
(b) Except as specifically amended above, the Loan
Agreement, and all other Loan Documents, shall remain in full force and effect,
and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided in this Amendment, operate as
a waiver of any right, power or remedy of Lender, nor constitute a waiver of any
provision of the Loan Agreement, or any other documents, instruments and
agreements executed or delivered in connection with the Loan Agreement.
SECTION 12. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of Maryland without regard to
any otherwise applicable conflicts of laws principles thereof. Without limiting
the effectiveness of any other provision of this Amendment, the Loan Agreement
or the other Loan Document, New Borrower expressly agrees to be bound by the
provisions of Section 9.16, 9.18, 9.19 and 9.20 of the Loan Agreement.
SECTION 13. HEADINGS. Section headings in this Amendment are included
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
SECTION 14. COUNTERPARTS. This Amendment may be executed in any
number of counterparts (and by facsimile), each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
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[SIGNATURES FOLLOW]
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IN WITNESS WHEREOF, the parties have caused this Amendment No. 2 to
Loan and Security Agreement to be executed as of the date first written above.
LENDER:
HELLER HEALTHCARE FINANCE, INC.,
a Delaware corporation
By: /s/ Brett Robinson
----------------------------------------
Name: Brett Robinson
Title: Vice President
ORIGINAL BORROWER:
THE TRIZETTO GROUP, INC.,
a Delaware corporation
By: /s/ Michael J. Sunderland
----------------------------------------
Name: Michael J. Sunderland
Title: Chief Financial Officer/Secretary
CREATIVE BUSINESS SOLUTIONS, INC.,
a Texas corporation
By: /s/ Michael J. Sunderland
----------------------------------------
Name: Michael J. Sunderland
Title: Chief Financial Officer/Secretary
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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FINSERV HEALTH CARE SYSTEMS, INC.,
a New York corporation
By: /s/ Michael J. Sunderland
-----------------------------------------
Name: Michael J. Sunderland
Title: Chief Financial Officer/Secretary
HEALTHCARE MEDIA ENTERPRISES, INC.,
a Delaware corporation
By: /s/ Michael J. Sunderland
-----------------------------------------
Name: Michael J. Sunderland
Title: Chief Financial Officer/Secretary
HEALTHWEB, INC., a Delaware corporation
By: /s/ Michael J. Sunderland
-----------------------------------------
Name: Michael J. Sunderland
Title: Chief Financial Officer/Secretary
MARGOLIS HEALTH ENTERPRISES, INC.,
a California corporation
By: /s/ Michael J. Sunderland
-----------------------------------------
Name: Michael J. Sunderland
Title: Chief Financial Officer/Secretary
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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NOVALIS CORPORATION, a Delaware
corporation
By: /s/ Michael J. Sunderland
------------------------------------------
Name: Michael J. Sunderland
Title: Chief Financial Officer/Secretary
TRIZETTO APPLICATION SERVICES, INC.,
a Colorado corporation
By: /s/ Michael J. Sunderland
------------------------------------------
Name: Michael J. Sunderland
Title: Chief Financial Officer/Secretary
DIGITAL INSURANCE SYSTEMS CORPORATION,
an Ohio corporation
By: /s/ Michael J. Sunderland
-------------------------------------------
Name: Michael J. Sunderland
Title: Chief Financial Officer/Secretary
HEALTH NETWORKS OF AMERICA, INC.,
a Maryland corporation
By: /s/ Michael J. Sunderland
-------------------------------------------
Name: Michael J. Sunderland
Title: Chief Financial Officer/Secretary
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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NOVALIS DEVELOPMENT CORPORATION,
a Delaware corporation
By: /s/ Michael J. Sunderland
----------------------------------------
Name: Michael J. Sunderland
Title: Chief Financial Officer/Secretary
NOVALIS DEVELOPMENT & LICENSING CORPORATION,
an Indiana corporation
By: /s/ Michael J. Sunderland
----------------------------------------
Name: Michael J. Sunderland
Title: Chief Financial Officer/Secretary
NOVALIS SERVICES CORPORATION
a Delaware corporation
By: /s/ Michael J. Sunderland
----------------------------------------
Name: Michael J. Sunderland
Title: Chief Financial Officer/Secretary
ERISCO:
ERISCO, INC., a New York corporation
By: /s/ Michael J. Sunderland
----------------------------------------
Name: Michael J. Sunderland
Title: Chief Financial Officer/Secretary
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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NEW BORROWER:
RESOURCE INFORMATION
MANAGEMENT SYSTEMS, INC.,
an Illinois corporation
By: /s/ Michael J. Sunderland
----------------------------------------
Name: Michael J. Sunderland
Title: Chief Financial Officer/Secretary
WINTHROP FINANCIAL GROUP, INC.,
an Illinois corporation
By: /s/ Michael J. Sunderland
----------------------------------------
Name: Michael J. Sunderland
Title: Chief Financial Officer/Secretary
OPTION SERVICES GROUP, INC., an
Illinois corporation
By: /s/ Michael J. Sunderland
----------------------------------------
Name: Michael J. Sunderland
Title: Chief Financial Officer/Secretary
PRINCIPAL FINANCIAL ASSOCIATES, INC.,
an Illinois corporation
By: /s/ Michael J. Sunderland
----------------------------------------
Name: Michael J. Sunderland
Title: Chief Financial Officer/Secretary
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