EXHIBIT 10.50

 

SUBORDINATED PROMISSORY NOTE

 

$37,414,284.00

  Dated: December 21, 2004

 

FOR VALUE RECEIVED, The TriZetto Group, Inc., a Delaware corporation (the
“Company”), hereby promises to pay to the order of IMS HEALTH INCORPORATED, a
Delaware corporation (“Payee”), the principal amount of THIRTY SEVEN MILLION
FOUR HUNDRED FOURTEEN THOUSAND TWO HUNDRED EIGHTY FOUR DOLLARS (the “Principal
Amount”), plus interest as set forth below from the date of this Note on the
unpaid balance. All principal and interest is to be paid without setoff or
counterclaim as set forth below. The Company further agrees as follows:

 

  (1) Interest and Maturity. The Note will bear simple interest at an annual
rate equal to 5.75% from the date of this Note until this Note is paid in full;
provided, however, that if this Note is not paid in full by the Maturity Date
(as defined below), the unpaid interest will automatically be added to the
Principal Amount and this Note will then bear interest at an annual rate equal
to 12.00%, compounded monthly on the 21st day of each calendar month, from and
including the Maturity Date to but excluding the date on which all outstanding
amounts owing under this Note are paid in full. Interest shall be calculated on
the basis of a year of 365 days and charged for the actual number of days
elapsed. Accrued interest shall be payable in cash at the time the Company pays
the principal amount of this Note. All outstanding amounts owing under this
Note, including unpaid interest and principal, are due and payable on January
21, 2005 (the “Maturity Date”).

 

  (2) Manner of Payment. All payments of principal and interest on this Note
shall be made by wire transfer of immediately available funds to an account
designated in writing by Payee.

 

  (3) Prepayment. This Note may be pre-paid by the Company at any time without
penalty.

 

  (4) Acceleration. This Note shall automatically become immediately due and
payable if (a) the Company commences any proceeding in bankruptcy or for
dissolution, liquidation, winding-up, or other relief under State or Federal
bankruptcy laws; (b) such proceedings are commenced against the Company, or a
receiver or trustee is appointed for the Company or a substantial part of its
property, and such proceeding or appointment is not dismissed or discharged
within 60 days after its commencement; (c) the Company is unable to, or admits
in writing its inability to, pay its debts when they become due; (d) the Company
makes an assignment for the benefit of creditors, or petitions or applies to any
tribunal for the appointment of a custodian, receiver or trustee for it or a
substantial portion of its assets or has a receiver, custodian or trustee
appointed for all or a substantial portion of its assets; or (e) the Company
takes any action effectuating, approving or consenting to any of the foregoing.

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  (5) Subordination

 

(a) Subordination and Standby.

 

(i) Indebtedness. Unless and until all Senior Indebtedness has been paid in
full, Payee agrees that it shall not accept or receive, by payment, setoff, or
in any other manner, from the Company the whole or any part of any sums which
may now or hereafter be owing to Payee on account of the Subordinated
Indebtedness; provided, however, that so long as no default in the payment when
due of any amounts owing under the Senior Loan Documents, and no other default
which is the subject of a Payment Blockage Notice (as defined below), has
occurred and is continuing under the Senior Loan Documents, the Company may make
payments to Payee under the Subordinated Indebtedness upon maturity of this Note
or, at the option of the Company, at such earlier time as the Company elects to
pre-pay all or any portion of this Note. Payee agrees that the Subordinated
Indebtedness is and shall be expressly Subordinate and Junior in Right of
Payment.

 

(ii) Liens. Payee agrees that it shall not obtain from the Company any Liens
against any of the Collateral for any purpose including to secure the
Subordinated Indebtedness. In the event that Payee obtains any such Liens in
violation of the provisions of this Note, any and all of such Liens shall in
each case be subordinate to the Liens in the Collateral held by Senior Lenders
to secure the Senior Indebtedness. Unless and until all of the Senior
Indebtedness has been paid in full:

 

(A) Payee shall not, directly or indirectly, commence, prosecute, or participate
in any lawsuit, action, or proceeding, whether private, judicial, equitable,
administrative, or otherwise (including, without limitation, any bankruptcy case
against the Company or any of the Company’s assets), provided that, Payee may
file a proof of claim in an Insolvency Proceeding involving the Company, which
proof of claim shall indicate Payee’s subordination hereunder;

 

(B) Payee shall not demand or accept any payment on the Subordinated
Indebtedness, except to the extent expressly permitted under the terms of
Section 5(a)(i) hereof; and

 

(C) Payee shall have no right either to (a) obtain a Lien on or possess any
assets of the Company, or (b) enforce any Liens in, foreclose, levy, or execute
upon, or collect or attach any of any of the Company’s assets, whether by
judicial action or otherwise.

 

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(iii) Payment Blockage; Release of Payment Blockage. If a default has occurred
and is continuing under the Senior Loan Documents, the Senior Lenders (or a
representative thereof) shall have the right to deliver to the Company and Payee
a notice of such default demanding that payments be suspended on the
Subordinated Indebtedness (a “Payment Blockage Notice”). Once a Payment Blockage
Notice has been so delivered, payments on the Subordinated Indebtedness shall be
suspended as contemplated by Section 5(a)(i) for so long as such default
continues; provided, however, that if such default continues for a period of
more than 180 days without the Senior Lenders accelerating demand for payment of
the Senior Indebtedness in accordance with its terms, then, until the Senior
Lenders demand payment of the Senior Indebtedness, the Company shall,
notwithstanding the terms of Section 5(a)(i), be permitted to make payments
under the Subordinated Indebtedness in accordance with the terms of this Note
and Payee shall have the right to institute proceedings to enforce payment of
this Note and to levy on assets to enforce payment of this Note.

 

(b) Insolvency Proceeding.

 

(i) The subordination provisions set forth herein shall continue in full force
and effect upon the commencement of a Bankruptcy Case as contemplated under
Section 510(a) of the Bankruptcy Code (all references herein to the Company
being deemed to apply to the Company as a debtor-in-possession and to a trustee
for the Company’s estate in a Bankruptcy Case), and irrespective of the terms of
any plan of reorganization adopted therein, to and shall apply with full force
and effect with respect to all Indebtedness incurred by the Company, subsequent
to such commencement.

 

(ii) The subordination arrangements set forth here shall continue in full force
and effect notwithstanding the occurrence of any Bankruptcy Case, and in
furtherance thereof the Liens granted by the Borrower to Senior Lenders shall be
reinstated to the extent any Senior Lender is required to turn over, redeem,
refund, pay, or otherwise transfer to the bankruptcy estate of the Company any
amount received on account of the Senior Indebtedness (or as a result thereof
any portion of the Liens granted by the Payee to Senior Lenders that is
released), and the Senior Indebtedness so reinstated shall have the same
benefits hereunder as if the Senior Indebtedness had never been paid.

 

(c) Modifications of Indebtedness.

 

(i) Senior Indebtedness Modifications. Nothing contained in this Note shall
preclude the Senior Lenders from discontinuing the extension of credit to the
Company (whether under the Senior Loan Agreement or otherwise) or from taking
(without notice to Payee) any

 

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other action in respect of the Senior Indebtedness or the Collateral which the
Senior Lender is otherwise entitled to take with respect to the Senior
Indebtedness or the Collateral. The Senior Lender shall have the right, without
notice to or consent from Payee, to amend, supplement, or modify the Senior
Indebtedness, in any manner whatsoever. Payee waives notice of any such action,
amendment, supplement, or modification, and agrees that no such action,
amendment, supplement, or modification shall affect, release, or impair the
provisions of this Note.

 

(ii) Subordinated Indebtedness Modifications. Payee understands and agrees that
none of the Subordinated Indebtedness, or any of the documents, instruments, and
agreements evidencing such Indebtedness, including, without limitation, this
Note, be modified or amended without the prior written consent of Senior
Lenders.

 

(d) Payments Received by Payee. Except to the extent expressly permitted by
Sections 5(a)(i) or 5(a)(iii), if any payment, distribution, Collateral, or
proceeds thereof is received by Payee from the Company with respect to the
Subordinated Indebtedness prior to the payment in full of all of the Senior
Indebtedness, Payee shall receive and hold the same in trust as trustee for the
benefit of the Senior Lenders and shall forthwith deliver such payment,
distribution, or proceeds to Senior Lender in precisely the form received
(except for the endorsement or assignment by Payee where necessary), for
application on any of the Senior Indebtedness, due or not due, in which case
that amount shall be deemed an amount paid on the Senior Indebtedness rather
than this Note and Payee shall, after payment in full of the Senior
Indebtedness, be subrogated to the rights of the Senior Lenders with respect to
that amount. In the event of the failure of Payee to make any such endorsement
or assignment to Senior Lender, Senior Lender and any of its officers or agents
are hereby irrevocably authorized to make such endorsement or assignment.

 

  (6) Waivers; Governing Law. (a) The Company hereby waives presentment, demand
for performance, notice of non-performance, protest, notice of protest and
notice of dishonor. No delay on the part of Payee in exercising any right
hereunder shall operate as a waiver of such right or any other right hereunder
and any waiver of any right hereunder by Payee shall be in writing, duly signed
by Payee, shall only apply with respect to the specific instance involved and
shall not impair any other rights of Payee or the obligations of the Company in
any other respect or at any other time. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
No course of dealing between the Company and Payee shall operate as a waiver of
any rights by Payee. This Note is being delivered in and shall be construed in
accordance with the laws of the State of New York, without regard to conflicts
of law principles.

 

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(b) Payee shall not (i) contest, protest, object to, interfere with, seek to
enjoin or invoke or utilize any provision of any document, law or equitable
principle, or otherwise take any action whatsoever which might prevent, delay,
or impede any exercise of rights or remedies by Senior Lenders under any Senior
Loan Document or applicable law in respect of the Collateral, including without
limitation, any action of foreclosure, or (ii) contest the validity or
enforceability of the Senior Indebtedness or the validity, perfection, priority,
or enforceability of the Liens granted by any the Company to Senior Lenders (it
being understood and agreed that the terms of this Note shall govern even if
part or all of the Senior Indebtedness or the Liens granted by the Company in
favor of Senior Lenders are avoided, disallowed, set aside, or otherwise
invalidated in any judicial proceeding or otherwise). Payee waives any and all
rights it may have to require Senior Lender to marshal assets, to exercise
rights or remedies in a particular manner, or to forbear from exercising such
rights and remedies in any particular manner or order. Subordinated Creditor
hereby waives and postpones any right it may have to be subrogated to the rights
of Senior Lender unless and until all Senior Indebtedness has been paid in full.

 

  (7) Notices. All notices and other communications pursuant to this Note shall
be in writing and deemed to be sufficient if contained in a written instrument
and shall be deemed to be given if delivered personally, via facsimile, sent by
nationally recognized overnight courier or mailed by registered or certified
mail (return receipt requested), postage prepaid, to the parties at the
following address (or such other address for a party as shall be specified by
like notices):

 

Notices to the Company:

       

The TriZetto Group, Inc.

         

567 San Nicholas Drive, Suite 367

         

Newport Beach, CA 92660

         

Facsimile No.: (949) 219-2198

         

Attention: General Counsel

         

With a copy to:

         

K.C. Schaaf

         

Stradling Yocca Carlson & Rauth

         

660 Newport Center Drive, Suite 1600

         

Newport Beach, CA 92660-6422

         

Facsimile No.: (949) 725-4100

Notices to Payee:

       

IMS Health Incorporated

         

1499 Post Road

         

Fairfield, CT 06824

         

Facsimile No.: (203) 319-4552

         

Attention: General Counsel

         

With a copy to:

         

Keith A. Pagnani

         

Sullivan & Cromwell LLP

         

125 Broad Street

         

New York, NY 10004

         

Facsimile No.: (212) 558-3588

 

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All such notices and other communications shall be deemed to have been received
(a) in the case of personal delivery, on the date of such delivery, (b) in the
case of a facsimile, when the party receiving such copy shall have confirmed
receipt of the communication, (c) in the case of delivery by nationally
recognized overnight courier, on the business day following dispatch, and (d) in
the case of mailing, on the third business day following such mailing.

 

  (8) Severability. If any provision in this Note is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions in
this Note will remain in full force and effect. Any provision of this Note held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.

 

  (9) Assignment of Note. The Company shall not be permitted to assign or
transfer this Note or any of its obligations under this Note in any manner
whatsoever except with the prior written consent of Payee.

 

  (10) Successors and Assigns. Subject to the restrictions contained in Section
8 above, the rights and obligations of the Company and Payee of this Note shall
be binding upon and benefit the successors, assigns, heirs, administrators and
transferees of the parties.

 

  (11) Amendments. This Note may be modified only by written agreement signed by
the party against whom enforcement of any waiver, change or discharge is sought
and subject to Section 12 below.

 

  (12) Third Party Beneficiary. The Senior Lenders are intended third party
beneficiaries of the agreements set forth in Section 5 of this Note. Payee
understands and agrees that none of the Subordinated Indebtedness or any other
document, instrument or agreement evidencing all or any part of the Subordinated
Indebtedness may be modified or amended without the prior written consent of
Senior Lender.

 

  (13) Entire Agreement. This Note constitutes the final written expression of
all of the terms of the agreement between the parties hereto regarding the
subject matter hereof, is a complete and exclusive statement of those terms, and
supersedes all prior and contemporaneous agreements, understandings and
representations between the parties.

 

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  (14) Definitions. As used in this Note, the following terms shall have the
following meanings:

 

“Bankruptcy Case” means any proceeding commenced by or against the Company,
under any provision of the Bankruptcy Code or under any other federal or state
bankruptcy or insolvency law, including assignments for the benefit of
creditors, the appointment of a receiver, formal or informal moratoria,
compositions, extensions generally with its creditors, or proceedings seeking
reorganization, arrangement, liquidation, dissolution, or the winding up of the
Company, or other similar relief, and all converted or succeeding cases in
respect thereof

 

“Bankruptcy Code” means the United States Bankruptcy Code (11 U.S.C. Section
101, et seq.), as amended, and any successor statute.

 

“Collateral” means all assets and property of Company of any kind or nature,
whether real or personal, tangible or intangible, now existing or hereafter
created or acquired, wherever located, and any proceeds thereof, at any time
subject to a Lien in favor of Senior Lender under any of the Senior Loan
Documents.

 

“Indebtedness” means (a) all obligations for borrowed money, (b) all obligations
evidenced by bonds, debentures, notes, or other similar instruments and all
reimbursement or other obligations in respect of letters of credit, bankers
acceptances, interest rate swaps, or other financial products, (c) all
obligations as a lessee under capital leases, (d) all obligations or liabilities
of others secured by a Lien on any asset of the Company, irrespective of whether
such obligation or liability is assumed, (e) all obligations to pay the deferred
purchase price of assets (other than trade payables incurred in the ordinary
course of business and repayable in accordance with customary trade practices),
(f) all obligations owing under hedge agreements, and (g) any obligation
guaranteeing or intended to guarantee (whether directly or indirectly
guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation
of any other party that constitutes Indebtedness under any of clauses (a)
through (f) above.

 

“Insolvency Proceeding” means any proceeding commenced by or against any person
under any provision of the Federal Bankruptcy Code, or under any other
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria, compositions, extensions generally with creditors, or
proceedings seeking reorganization, arrangement, or other similar relief.

 

“Lien” means any interest in an asset securing an obligation owed to, or a claim
by, any party other than the owner of the asset, irrespective of whether (a)
such interest is based on the common law, statute, or contract, (b) such
interest is recorded or perfected, and (c) such interest is

 

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contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances. Without limiting the generality of
the foregoing, the term “Lien” includes the lien or security interest arising
from a mortgage, deed of trust, encumbrance, notice of Lien, levy or assessment,
pledge, hypothecation, assignment, deposit arrangement, security agreement,
conditional sale or trust receipt, or from a lease, consignment, or bailment for
security purposes and also includes reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases, and other
title exceptions and encumbrances affecting real property.

 

“Senior Lender” means Wells Fargo Foothill, Inc. and “Senior Lenders” means
Wells Fargo Foothill, Inc. and each of the other lenders that are parties to the
Senior Loan Agreement.

 

“Senior Indebtedness” means all obligations (whether now outstanding or
hereafter incurred, contingent or non-contingent, liquidated or unliquidated, or
primary or secondary) of the Company in respect of (a) principal under the
Senior Loan Agreement or any other Senior Loan Document (or any refinancing
agreement entered into with respect thereto), (b) interest and premium, if any,
in respect of the Indebtedness referred to in clause (a) above, (c) all fees
payable pursuant to any Senior Loan Document (or a refinancing agreement entered
into with respect thereto), (d) all other obligations (including costs,
expenses, or otherwise) of the Company to the Senior Lenders under or arising
pursuant to any Senior Loan Document (or to any third party under provisions of
a refinancing agreement entered into with respect thereto), including all costs
and expenses incurred by the Senior Lenders in connection with its (or their)
enforcement of any rights or remedies under the Senior Loan Documents,
including, by way of example, attorneys fees, court costs, appraisal and
consulting fees, auctioneer fees, rent, storage, insurance premiums, and like
items, and irrespective of whether allowable as a claim against the Company in
any Insolvency Proceeding, and (e) post-petition interest on the Indebtedness
referred to in clauses (a) through (d) above, at the rate provided for in the
instrument or agreements evidencing such Indebtedness, accruing subsequent to
the commencement of an Insolvency Proceeding (whether or not such interest is
allowed as a claim in such Insolvency Proceeding).

 

“Senior Loan Agreement” means that certain Credit Agreement entered into among
the Company, the lenders identified therein, and Senior Lender, as the arranger
and administrative agent for the lenders therein, dated December , 2004.2004, as
amended (including any amendment and restatement thereof), modified, renewed,
refunded, replaced, or refinanced in whole or in part from time to time.

 

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“Senior Loan Documents” means the Senior Loan Agreement and any note or notes
executed by the Company in connection with the Senior Loan Agreement and payable
to any lenders under the Senior Loan Agreement, and any other agreement entered
into, now or in the future, by the Company and any Senior Lenders in connection
with the Senior Loan Agreement, as amended (including any amendment and
restatement thereof), modified, renewed, refunded, replaced, or refinanced in
whole or in part from time to time, including any agreement extending the
maturity of, consolidating, or otherwise restructuring all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement and
whether by the same or any other agent, lender, or group and whether or not
increasing the amount of Indebtedness that may be incurred thereunder.

 

“Subordinate and Junior in Right of Payment” means that (a) no part of the
Subordinated Indebtedness shall have any claim to the assets of the Company on a
parity with or prior to the claim of the Senior Indebtedness, and (b) unless and
until the Senior Indebtedness has been paid in full, except to the extent
expressly permitted pursuant to Sections 5(a)(i) and 5(a)(iii) of this Note,
Payee shall not take, demand, or receive from the Company, and the Company shall
not make, give, or permit, directly or indirectly, by set-off, redemption,
purchase, or in any other manner, any payment on account of the Subordinated
Indebtedness.

 

“Subordinated Indebtedness” shall mean, collectively, all Indebtedness and other
obligations of the Company to Payee under this Note or under any other document,
instrument, or agreement relating to Indebtedness under this Note, whether the
sums represent principal, interest, dividends, costs, attorneys fees, charges,
or other obligations relating to Indebtedness under this Note due or not due,
whether incurred directly or indirectly and whether absolute or contingent,
including, without limitation, any claim for breach of a representation or
warranty or any right of rescission.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Company has executed this Note as of the day and year
first written above.

 

THE TRIZETTO GROUP, INC.

By

 

/s/ James C. Malone

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Name:

 

James C. Malone

Title:

 

Chief Financial Officer

 

Accepted:

 

IMS HEALTH INCORPORATED

By

 

/s/ Robert H. Steinfeld

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Name:

 

Robert H. Steinfeld

Title:

 

Senior Vice President, General Counsel

and Corporate Secretary