Exhibit 99.2
AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
HCIA INC.
VS&A COMMUNICATIONS PARTNERS III, L.P.
VS&A-HCIA, L.L.C.
AND
VS&A-HCIA, INC.
DATED AS OF OCTOBER 11, 1999
TABLE OF CONTENTS
ARTICLE I THE MERGER .......................................................... 1
SECTION 1.1 The Merger ...................................................... 1
SECTION 1.2 Closing ......................................................... 1
SECTION 1.3 Effective Time .................................................. 1
SECTION 1.4 Effects of the Merger ........................................... 2
SECTION 1.5 Limited Liability Company Agreement of the Surviving LLC ........ 2
SECTION 1.6 Stockholders' Meeting ........................................... 2
SECTION 1.7 Directors and Officers of the Surviving LLC ..................... 2
ARTICLE II EFFECT OF THE MERGER ON THE EQUITY INTERESTS OF THE CONSTITUENT
ENTITIES EXCHANGE OF CERTIFICATES .......................................... 2
SECTION 2.1 Effect on Capital Stock ......................................... 2
(a) Cancellation of Treasury Stock and Acquiror-Owned Stock .......... 3
(b) Conversion of HCIA Common Stock .................................. 3
(c) Acquiror and LLC Equity Interests ................................ 3
(d) Options .......................................................... 3
SECTION 2.2 Exchange of Certificates ........................................ 3
(a) Exchange Agent ................................................... 3
(b) Exchange Procedures .............................................. 3
(c) No Further Ownership Rights in HCIA Common Stock ................. 4
(d) Termination of Exchange Fund ..................................... 4
(e) No Liability ..................................................... 4
(f) Investment of Exchange Fund ...................................... 4
(g) Lost Certificates ................................................ 4
ARTICLE III REPRESENTATIONS AND WARRANTIES .................................... 4
SECTION 3.1 Representations and Warranties of Acquiror and the LLC .......... 4
(a) Organization, Standing and Corporate Power ....................... 4
(b) Authority; Noncontravention ...................................... 4
(c) Compliance with Applicable Laws; Litigation ...................... 5
(d) Brokers .......................................................... 5
(e) Ownership of HCIA Common Stock ................................... 5
(f) Full Disclosure .................................................. 6
SECTION 3.2 Representations and Warranties of HCIA .......................... 6
(a) Organization, Standing and Corporate Power ....................... 6
(b) Subsidiaries ..................................................... 6
(c) Capital Structure ................................................ 6
(d) Authority; Noncontravention ...................................... 7
(e) SEC Documents; Undisclosed Liabilities ........................... 7
(f) Information Supplied ............................................. 8
(g) Absence of Certain Changes or Events ............................. 8
(h) Compliance with Applicable Laws; Litigation ...................... 9
(i) Absence of Changes in Benefit Plans .............................. 9
(j) Benefit Plans .................................................... 9
(k) Taxes ............................................................10
(l) Voting Requirements ..............................................11
(m) State Takeover Statutes ..........................................11
(n) Brokers ..........................................................11
(o) Opinion of Financial Advisor .....................................11
(p) Ownership of Acquiror Equity Interests ...........................11
(q) Intellectual Property ............................................11
(r) Certain Contracts ................................................13
(s) HCIA Rights Agreement ............................................14
(t) Environmental Liability ..........................................14
i
(u) Insurance ....................................................... 14
(v) Transactions with Affiliates .................................... 15
(w) Employment Matters .............................................. 15
(x) Title and Condition of Properties ............................... 15
(y) Net Operating Loss Carryforwards ................................ 15
(z) Full Disclosure ................................................. 15
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS ........................... 15
SECTION 4.1 Conduct of Business ............................................. 15
(a) Conduct of Business by HCIA ..................................... 15
(b) Other Actions ................................................... 17
(c) Advice of Changes ............................................... 17
SECTION 4.2 No Solicitation by HCIA ......................................... 17
ARTICLE V ADDITIONAL AGREEMENTS ................................................ 18
SECTION 5.1 Access to Information; Confidentiality .......................... 18
SECTION 5.2 Best Efforts .................................................... 18
SECTION 5.3 Indemnification, Exculpation and Insurance ...................... 19
SECTION 5.4 Fees and Expenses ............................................... 19
SECTION 5.5 Public Announcements ............................................ 20
SECTION 5.6 Conveyance Taxes ................................................ 20
SECTION 5.7 Employee Benefits ............................................... 20
ARTICLE VI CONDITIONS PRECEDENT ................................................ 20
SECTION 6.1 Conditions to Each Party's Obligation to Effect the Merger ...... 20
(a) Stockholder Approval ............................................ 20
(b) Governmental, Regulatory and Other Approvals .................... 20
(c) No Injunctions or Restraints .................................... 20
SECTION 6.2 Conditions to Obligations of HCIA ............................... 20
(a) Representations and Warranties .................................. 20
(b) Performance of Obligations of Acquiror .......................... 21
(c) Opinion ......................................................... 21
(d) Certificate ..................................................... 21
SECTION 6.3 Conditions to Obligations of Acquiror ........................... 21
(a) Representations and Warranties .................................. 21
(b) Performance of Obligations of HCIA .............................. 21
(c) HCIA Rights Agreement ........................................... 21
(d) Opinion ......................................................... 21
(e) Material Adverse Change ......................................... 21
(f) Consents ........................................................ 21
(g) Certificate ..................................................... 21
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER .................................. 21
SECTION 7.1 Termination ..................................................... 21
SECTION 7.2 Effect of Termination ........................................... 22
SECTION 7.3 Amendment ....................................................... 23
SECTION 7.4 Extension; Waiver ............................................... 23
ARTICLE VIII GENERAL PROVISIONS ................................................ 24
SECTION 8.1 Nonsurvival of Representations and Warranties ................... 24
SECTION 8.2 Notices ......................................................... 24
SECTION 8.3 Definitions ..................................................... 25
SECTION 8.4 Interpretation .................................................. 25
SECTION 8.5 Counterparts .................................................... 25
SECTION 8.6 Entire Agreement; No Third-Party Beneficiaries .................. 25
SECTION 8.7 Governing Law ................................................... 25
SECTION 8.8 Assignment ...................................................... 25
ii
SECTION 8.9 Headings, Etc. ................................................. 25
SECTION 8.10 Severability ................................................... 25
SECTION 8.11 Transfer and Similar Taxes ..................................... 26
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THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION (this
"Agreement") is dated as of October 11, 1999, among HCIA INC., a Maryland
corporation ("HCIA"), VS&A Communications Partners III, L.P., a Delaware
limited partnership ("Acquiror"), VS&HCIA, L.L.C., a Delaware limited
liability company wholly owned by the Acquiror and its affiliate, VS&A
Communication Parallel Partners III, L.P. (the "LLC"), and VS&HCIA, INC., a
Delaware corporation and a wholly owned subsidiary of the LLC (the "Merger
Sub").
WITNESSETH:
WHEREAS, the parties have entered into an agreement and plan of
reorganization dated as of August 11, 1999 (the "Original Merger Agreement")
providing, among other things, for the merger of Merger Sub into HCIA;
WHEREAS, the parties wish to amend the Original Merger Agreement to
provide, among other things, for the merger of HCIA into the LLC instead of the
merger of Merger Sub into HCIA;
WHEREAS, the Board of Directors of HCIA, the General Partner of Acquiror
and the Managing Member of the LLC (together, the "Constituent Entities") have
each approved the merger of HCIA with and into the LLC (the "Merger"), upon the
terms and subject to the conditions set forth in this Agreement, whereby each
issued and outstanding share of common stock, par value $.01 per share, of HCIA
("HCIA Common Stock," which reference shall be deemed to include the associated
HCIA Rights (as defined in Section 3.2(c)), other than shares owned by HCIA or
Acquiror, will be converted into the right to receive the Merger Consideration
(as defined in Section 2.1(b));
WHEREAS, the Board of Directors of HCIA and the Managing Member of the LLC
have each approved the transactions contemplated by this Agreement;
WHEREAS, pursuant to an agreement, dated as of August 11, 1999, as amended
as of the date hereof, among the Acquiror and certain stockholders of HCIA (the
"Voting Agreement"), such stockholders have agreed, pursuant to the terms and
conditions thereof, to vote all of the shares of HCIA Common Stock held by them
in favor of the Merger;
WHEREAS, the Board of Directors of HCIA has resolved to recommend to its
stockholders the approval and adoption of this Agreement and the Merger and the
consummation of the transactions contemplated hereby upon the terms and subject
to the conditions set forth herein; and
WHEREAS, HCIA and Acquiror desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth herein, the parties agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Maryland General
Corporation Law (the "MGCL") and the Delaware Limited Liability Company Act
(the "DLLCA"), HCIA shall be merged with and into the LLC at the Effective Time
(as defined in Section 1.3). Following the Effective Time, the separate
corporate existence of HCIA shall cease and the LLC shall be the successor or
surviving limited liability company in the Merger (the "Surviving LLC") and
shall succeed to and assume all the rights and obligations of HCIA in
accordance with the MGCL and the DLLCA.
SECTION 1.2 CLOSING. The closing of the Merger (the "Closing") will take
place on a date to be specified by the parties (the "Closing Date"), which
shall be no later than the second business day after satisfaction or waiver of
the conditions set forth in Article VI, unless another time or date is agreed
to by the parties hereto. The Closing will be held at the offices of ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇.
SECTION 1.3 EFFECTIVE TIME. Subject to the provisions of this Agreement,
as soon as practicable on the Closing Date, the parties shall cause the Merger
to be consummated by filing articles and certificates of merger or other
appropriate documents (in any such case, the "Certificate of Merger") executed
in accordance with the relevant provisions of the MGCL and the DLLCA and shall
make all other filings or recordings required under the MGCL and the DLLCA. The
Merger shall become effective at such time as the Certificate of Merger is duly
filed with the Delaware Secretary of State, or at such subsequent date or time
as HCIA and the LLC shall agree and specify in the Certificate of Merger (the
time the Merger becomes effective is hereinafter referred to as the "Effective
Time").
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SECTION 1.4 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in the MGCL and the DLLCA.
SECTION 1.5 LIMITED LIABILITY COMPANY AGREEMENT OF THE SURVIVING LLC. At
the Effective Time, the limited liability company agreement of the LLC, as in
effect immediately prior to the Effective Time, shall be the limited liability
company agreement of the Surviving LLC, until thereafter amended in accordance
with applicable law.
SECTION 1.6 STOCKHOLDERS' MEETING.
HCIA, acting through its Board of Directors, shall, in accordance with
applicable law as promptly as practicable following the date of this Agreement:
(a) duly call, give notice of, convene and hold a special meeting of its
stockholders (the "HCIA Stockholders Meeting") as promptly as practicable
following the execution of this Agreement for the purpose of considering
and taking action upon the approval of the Merger and the adoption of this
Agreement and shall, subject to the provisions of Section 4.2(b), recommend
to its stockholders the approval of this Agreement, the Merger and the
other transactions contemplated hereby;
(b) prepare and file a definitive proxy statement with the Securities and
Exchange Commission (the "SEC") and cause the definitive proxy statement,
including any amendment or supplement thereto (the "Proxy Statement"), to
be mailed to its stockholders relating to the merger and this agreement,
provided that no amendment or supplement to the Proxy Statement shall be
made by HCIA without consultation with the Acquiror and its counsel, and
(y) to obtain the necessary approvals for the Merger and this Agreement
from its stockholders; and
(c) subject to the provisions of Section 4.2(b) hereof, (x) include in
the Proxy Statement the recommendation of the Board of Directors that the
stockholders of HCIA approve the Merger, this Agreement and the
transactions contemplated hereby, (y) use its best efforts to solicit from
stockholders of HCIA proxies in favor of approval and adoption of this
Agreement and the Merger and to take all other actions necessary or in the
Acquiror's reasonable judgment advisable to secure such vote and (z)
cooperate with the Acquiror and the LLC with respect to each of the
foregoing matters. Notwithstanding the foregoing, HCIA and its Board of
Directors may take and disclose to stockholders a position contemplated by
Rule 14e-2 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), if required to do so by the provisions of the
Exchange Act applicable to HCIA, may comply with Rule 14d-9 promulgated
under the Exchange Act if required to do so by the provisions of the
Exchange Act applicable to HCIA, and may make all other disclosures
required by the provisions of the Exchange Act applicable to HCIA.
(d) If at any time prior to the Effective Time any information relating
to Acquiror or HCIA, or any of their respective affiliates, officers or
directors, should be discovered by Acquiror or HCIA which should be set
forth in an amendment or supplement to the Proxy Statement, so that any
document would not include any misstatement of a material fact or omit to
state any material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, the party
which discovers such information shall promptly notify the other parties
hereto in writing and an appropriate amendment or supplement describing
such information shall be promptly filed with the SEC and, to the extent
required by law, disseminated to the stockholders of HCIA.
(e) HCIA's obligations under this Section 1.6 shall at all times remain
subject to the provisions of Sections 4.2(b), in the event that under the
circumstances described therein, the Board of Directors of HCIA shall have
received and accepted a Superior Proposal.
SECTION 1.7 DIRECTORS AND OFFICERS OF THE SURVIVING LLC. The Managing
Member of the Surviving LLC shall, from and after the Effective Time, be the
Managing Member of the Surviving LLC until its successor shall have been duly
elected or appointed or qualified or until its resignation or removal in
accordance with the limited liability company agreement of the LLC.
ARTICLE II
EFFECT OF THE MERGER ON THE EQUITY INTERESTS
OF THE CONSTITUENT ENTITIES;
EXCHANGE OF CERTIFICATES
SECTION 2.1 EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue
of the Merger and without any action on the part of Acquiror, the LLC, HCIA or
the holder of any shares of the following securities:
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(a) CANCELLATION OF TREASURY STOCK AND ACQUIROR-OWNED STOCK. Each share
of HCIA Common Stock that as of the Effective Time is owned by HCIA as
treasury stock or is owned by Acquiror or the LLC shall automatically be
canceled and retired and shall cease to exist, and no consideration shall
be delivered in exchange therefor.
(b) CONVERSION OF HCIA COMMON STOCK. Each issued and outstanding share of
HCIA Common Stock (other than shares to be canceled in accordance with
Section 2.1(a)), shall be converted into the right to receive $11.00 in
cash, without interest (the "Merger Consideration"). As of the Effective
Time, all such shares of HCIA Common Stock shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to exist,
and each holder of a certificate representing any such shares of HCIA
Common Stock shall cease to have any rights with respect thereto, except
the right to receive the Merger Consideration.
(c) ACQUIROR AND LLC EQUITY INTERESTS. At and after the Effective Time,
each unit or other equity interest of Acquiror and the LLC issued and
outstanding immediately prior to the Closing Date shall remain an issued
and outstanding unit or other equity interest of Acquiror and the LLC and
shall not be affected by the Merger.
(d) OPTIONS. Except as otherwise agreed to in writing between HCIA and
the holder of any option to purchase shares of HCIA Common Stock
(collectively, the "HCIA Stock Options"), and as consented to by Acquiror,
in its sole discretion, as of the Effective Time, each outstanding Option
granted under the HCIA Stock Plans (as defined in Section 3.2(c)), whether
or not then exercisable, shall be canceled by HCIA, and as of the Effective
Time, the former holder thereof shall be entitled to receive from HCIA in
consideration for such cancellation an amount in cash equal to the product
of (i) the number of shares of HCIA Common Stock previously subject to such
HCIA Stock Option (whether or not vested or exercisable) and (ii) the
excess, if any, of the Merger Consideration per share over the exercise
price per share of such HCIA Stock Option, such payments to be made at the
option of the Acquiror on the Closing Date or as promptly as practicable
following the Effective Time and in no event later than ten days following
the Closing Date and to be reduced by the amount of withholding or other
taxes required by law to be withheld by the Surviving LLC. Except as
provided herein or as otherwise agreed by the parties, the HCIA Stock Plans
shall terminate as of the Effective Time, and the provisions in any other
plan, program or arrangement providing for the issuance or grant of any
other interest in respect of the capital stock of HCIA or any of its
subsidiaries shall be terminated as of the Effective Time so that on and
after the Effective Time no holder of HCIA Stock Options shall have any
option to purchase shares of capital stock or any other equity interest in
HCIA and HCIA shall exercise its commercially reasonable best efforts to
ensure that following the Effective Time, no current or former employee or
director shall have any HCIA Stock Option to purchase shares of the HCIA
Common Stock under any HCIA Stock Plan or otherwise. Prior to the Effective
Time, the Board of Directors (or, if appropriate, any committee
administering the HCIA Stock Plans) shall adopt such resolutions or take
such actions as are necessary, subject if necessary, to obtaining consents
of the holders of HCIA Stock Options, to carry out the terms of this
Section 2.1(d).
SECTION 2.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. As of the Effective Time, Acquiror shall deposit, or
shall cause to be deposited, with such bank or trust company as may be
designated by Acquiror (the "Exchange Agent") for the benefit of the
holders of HCIA Common Stock, cash in the aggregate amount equal to the
product of (i) the number of shares of HCIA Common Stock outstanding
immediately prior to the Effective Time (other than shares to be canceled
pursuant to Section 2.1(a)) multiplied by (ii) the Merger Consideration
(the "Exchange Fund").
(b) EXCHANGE PROCEDURES. As soon as practicable after the Effective Time,
the Exchange Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of HCIA Common Stock (the "Certificates") whose shares
were converted into the right to receive the Merger Consideration pursuant
to Section 2.1, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent,
and shall otherwise be in customary form) and (ii) instructions for use in
surrendering the Certificates in exchange for the Merger Consideration.
Upon surrender of a Certificate for cancellation to the Exchange Agent,
together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Exchange Agent, the holder
of such Certificate shall be entitled to receive in exchange therefor the
amount of the Merger Consideration into which the number of shares of HCIA
Common Stock previously represented by such Certificate(s) so surrendered
shall have been converted pursuant to this Agreement, and the Certificate
so surrendered shall forthwith be canceled. The Exchange Agent shall mail a
check to such holder as soon as practicable after receipt of the
appropriate documents. In the event of a surrender of a Certificate
representing shares of HCIA Common Stock which are not registered in the
transfer records of HCIA under the name of the person surrendering such
Certificate, the Merger Consideration may be
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paid to a person other than the person in whose name the Certificate so
surrendered is registered if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and if the person requesting such
surrender shall pay any transfer or other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered
holder of such Certificate or establish to the satisfaction of Acquiror, in
its sole discretion, that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.2, each Certificate
shall be deemed at any time after the Effective Time to represent only the
right to receive upon such surrender the Merger Consideration which the
holder thereof has the right to receive in respect of such Certificate
pursuant to the provisions of this Article II. No interest shall be paid or
will accrue on the Merger Consideration payable to holders of Certificates
pursuant to the provisions of this Article II.
(c) NO FURTHER OWNERSHIP RIGHTS IN HCIA COMMON STOCK. The Merger
Consideration paid upon the surrender for exchange of Certificates in
accordance with the terms of this Article II shall be deemed to have been
issued (and paid) in full satisfaction of all rights pertaining to the
shares of HCIA Common Stock theretofore represented by such Certificates,
and there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of HCIA Common
Stock which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to Acquiror, the
Surviving LLC or the Exchange Agent for any reason, they shall be canceled
and exchanged as provided in this Article II.
(d) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund which
remains undistributed to the holders of the Certificates for six months
after the Effective Time shall be delivered to Acquiror, upon demand, and
any holders of the Certificates who have not theretofore complied with this
Article II shall thereafter look only to Acquiror for payment of their
claim for Merger Consideration,
(e) NO LIABILITY. None of HCIA, Acquiror, the LLC, the Surviving LLC or
the Exchange Agent shall be liable to any person in respect of any cash or
other distribution payable from the Exchange Fund, in each case delivered
to a public official pursuant to any applicable abandoned property, escheat
or similar law.
(f) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest cash
included in the Exchange Fund, as directed by Acquiror, on a daily basis.
Any interest and other income resulting from such investments shall be paid
to Acquiror.
(g) LOST CERTIFICATES. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and; the posting
by such person of a bond in such amount as the Surviving LLC may direct as
indemnity against any claim that may be made against it with respect to
such Certificate, the Exchange Agent shall issue in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration with respect to
the shares of HCIA Common Stock formerly represented thereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND THE LLC .
Except as disclosed in the Disclosure Schedule delivered by Acquiror and to
HCIA on August 11, 1999 in accordance with the Original Merger Agreement (the
"Acquiror Disclosure Schedule"), Acquiror and the LLC jointly and severally
represent and warrant to HCIA as follows as of August 11, 1999 (unless another
date is specified, in which case as of such other date):
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of Acquiror and its
subsidiaries (as defined in Section 8.3) is a corporation or other legal
entity duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is organized and has the requisite
corporate or other power, as the case may be, and authority to carry on its
business as now being conducted, except, as to subsidiaries, for those
jurisdictions where the failure to be so organized, existing or in good
standing individually or in the aggregate would not have a material adverse
effect on Acquiror. Each of Acquiror and its subsidiaries is duly qualified
or licensed to do business and is in good standing in each jurisdiction in
which the nature of its business or the ownership, leasing or operation of
its properties makes such qualification or licensing necessary, except for
those jurisdictions where the failure to be so qualified or licensed or to
be in good standing individually or in the aggregate would not have a
material adverse effect on Acquiror.
(b) AUTHORITY; NONCONTRAVENTION. Each of Acquiror, the LLC and the Merger
Sub has or will have all requisite power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by each of Acquiror, the LLC and
the Merger Sub, and the consummation by Acquiror and the LLC of the
transactions contemplated hereby, have been or will be duly authorized by,
all necessary action on the part of Acquiror, the LLC and the Merger Sub.
This Agreement has been or will be duly executed and
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delivered by Acquiror, the LLC and the Merger Sub and, assuming the due
authorization, execution and delivery thereof by HCIA, constitutes (or will
constitute, as the case may be) the legal, valid and binding obligation of
Acquiror, the LLC and the Merger Sub, enforceable against Acquiror, the LLC
and the Merger Sub in accordance with its terms. The execution and delivery
of this Agreement by the Acquiror, the LLC and the Merger Sub does not, and
the consummation of the transactions contemplated hereby and compliance
with the provisions of this Agreement will not, conflict with, or result in
any violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a benefit under, or result in the
creation of any lien, security interest or encumbrance ("Liens") upon any
of the properties or assets of Acquiror or any of its subsidiaries or in
any restriction on the conduct of Acquiror's business or operations under,
(i) the certificate of limited partnership and the limited partnership
agreement of Acquiror (the "Acquiror Certificate") or the comparable
organizational documents of any of its subsidiaries, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, trust document, lease or
other agreement, instrument, permit, concession, franchise, license or
similar authorization applicable to Acquiror or any of its subsidiaries or
their respective properties or assets or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Acquiror or any of its subsidiaries or their respective
properties or assets, other than, in the case of clauses (ii) and (iii),
any such conflicts, violations, defaults, rights, losses, restrictions or
Liens that individually or in the aggregate would not (x) have a material
adverse effect on Acquiror or (y) reasonably be expected to impair the
ability of Acquiror or the LLC to perform its obligations under this
Agreement. No consent, approval, order or authorization of, action by or in
respect of, or registration, declaration or filing with, any federal,
state, local or foreign government, any court, administrative, regulatory
or other governmental agency, commission or authority or any
nongovernmental self-regulatory agency, commission or authority (a
"Governmental Entity") is required by or with respect to Acquiror or any of
its subsidiaries in connection with the execution and delivery of this
Agreement by Acquiror, or the consummation by Acquiror or the LLC of the
transactions contemplated hereby, except for: (1) the filing of a
pre-merger notification and report form by Acquiror under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), or filings or notifications under the antitrust, competition or
similar laws of any foreign jurisdiction; (2) the filing with the SEC of
such reports under Sections 13(a), 13(d), 15(d) or 16(a) of the Exchange
Act, as may be required in connection with this Agreement and the
transactions contemplated hereby; (3) the filing of the Certificates of
Merger with the Maryland State Department of Assessments and Taxation and
the Secretary of State of the State of Delaware appropriate documents with
the relevant authorities of other states in which Acquiror is qualified to
do business and such filings with Governmental Entities as may be necessary
to satisfy the applicable requirements of state securities or "blue sky"
laws; and (4) such consents, approvals, orders or authorizations the
failure of which to be made or obtained individually or in the aggregate
would not (x) have a material adverse effect on Acquiror or (y) reasonably
be expected to impair the ability of Acquiror or the LLC to perform its
obligations under this Agreement.
(c) COMPLIANCE WITH APPLICABLE LAWS; LITIGATION. As of August 11, 1999,
no action, demand, requirement or investigation by any Governmental Entity
and no suit, action or proceeding by any person, in each case with respect
to Acquiror or any of its subsidiaries or any of their respective
properties, is pending or, to the best knowledge (as defined in Section
8.3) of Acquiror, threatened, other than, in each case, those the outcome
of which individually or in the aggregate would not (A) have a material
adverse effect on Acquiror or (B) reasonably be expected to impair the
ability of Acquiror or the LLC to perform its obligations under this
Agreement or prevent or materially delay the consummation of any of the
transactions contemplated hereby or thereby.
(d) BROKERS. Except for Veronis, Suhler & Associates Inc., no broker,
investment banker, financial advisor or other person is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of Acquiror.
(e) OWNERSHIP OF HCIA COMMON STOCK. To the knowledge of Acquiror, as of
August 11, 1999 or at any time within twelve months prior to August 11,
1999, neither Acquiror nor any subsidiary thereof, other than pursuant to
the Voting Agreement, (i) beneficially owns (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, or (ii) is party to any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of, in each case, shares of capital stock of
HCIA.
5
(f) FULL DISCLOSURE. None of the representations or warranties made by
Acquiror herein or in any schedule hereto, including the Acquiror
Disclosure Schedule, or any certificate furnished by Acquiror pursuant to
this Agreement, contains or will contain at the Effective Time any untrue
statement of a material fact, or omits or will omit at the Effective Time,
to state any material fact necessary in order to make the statements
contained herein or therein, in the light of the circumstances under which
made, not misleading.
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF HCIA. Except as disclosed in
the Disclosure Schedule delivered by HCIA to Acquiror on August 11, 1999 in
accordance with the Original Merger Agreement (the "HCIA Disclosure Schedule"),
HCIA represents and warrants to Acquiror as follows as of August 11, 1999
(unless another date is specified, in which case as of such other date):
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of HCIA and its
subsidiaries (as defined in Section 8.3) is a corporation or other legal
entity duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is organized and has the requisite
corporate or other power, as the case may be, and authority to carry on its
business as now being conducted, except, as to subsidiaries, for those
jurisdictions where the failure to be so organized, existing or in good
standing individually or in the aggregate would not have a material adverse
effect on HCIA. Each of HCIA and its subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in
which the nature of its business or the ownership, leasing or operation of
its properties makes such qualification or licensing necessary, except for
those jurisdictions where the failure to be so qualified or licensed or to
be in good standing individually or in the aggregate would not have a
material adverse effect on HCIA. HCIA has delivered to Acquiror true,
correct and complete copies of the minute books of HCIA and each of its
subsidiaries.
(b) SUBSIDIARIES. The HCIA Disclosure Schedule includes all the
subsidiaries of HCIA. All the outstanding shares of capital stock of, or
other equity interests in, each such subsidiary have been validly issued
and are fully paid and nonassessable and are owned directly or indirectly
by HCIA, free and clear of all Liens and free of any other restriction
(including any restriction on the right to vote, sell or otherwise dispose
of such capital stock or other ownership interests). Except as set forth in
the HCIA Disclosure Schedule, HCIA does not own any equity interest in any
person.
(c) CAPITAL STRUCTURE. The authorized capital stock of HCIA consists of
50,000,000 shares of HCIA Common Stock, and 500,000 shares of preferred
stock, par value $.01 per share ("HCIA Preferred Stock"). As of August 11,
1999: (i) 11,851,125 shares of HCIA Common Stock were issued and
outstanding; (ii) no shares of HCIA Common Stock were held by HCIA in its
treasury; (iii) no shares of HCIA Preferred Stock were issued and
outstanding; (iv) 2,927,038 shares of HCIA Common Stock were reserved for
issuance pursuant to all stock option, restricted stock or other
stock-based compensation, benefits or savings plans, agreements or
arrangements in which current or former employees, consultants or directors
of HCIA or its subsidiaries participate as of the date hereof, complete and
correct copies of which, in each case as amended as of the date hereof,
have been made available to Acquiror (such plans, collectively, the "HCIA
Stock Plans"); and (v) 118,511.25 shares of HCIA Preferred Stock designated
as Series A Junior Participating Preferred Stock were reserved for issuance
upon the exercise of preferred stock purchase rights (the "HCIA Rights")
issued pursuant to the Stockholders Rights Agreement, dated as of April 23,
1997, between HCIA and ▇▇▇▇▇ ▇▇▇▇▇▇ Shareholder Services, L.L.C., as rights
agent (the "HCIA Rights Agreement"). The HCIA Disclosure Schedule sets
forth a complete and correct list, as of August 11, 1999, of the number of
shares of HCIA Common Stock subject to HCIA Stock Options, including,
without limitation, the number of employee stock options or other rights to
purchase or receive HCIA Common Stock granted under the HCIA Stock Plans
(collectively, "HCIA Employee Stock Options"). All outstanding shares of
capital stock of HCIA are, and all shares which may be issued pursuant to
this Agreement or otherwise will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
Except as set forth in this Section 3.2(c), and except for changes
resulting from the issuance of shares of HCIA Common Stock pursuant to the
exercise after August 11, 1999 of HCIA Employee Stock Options which were
issued prior to August 11, 1999, (x) there are not issued, reserved for
issuance or outstanding (A) any shares of capital stock or other voting
securities of HCIA, (B) any securities of HCIA or any HCIA subsidiary
convertible into or exchangeable or exercisable for shares of capital stock
or voting securities of HCIA, (C) any warrants, calls, options or other
rights to acquire from HCIA or any HCIA subsidiary, and any obligation of
HCIA or any HCIA subsidiary to issue, any capital stock, voting securities
or securities convertible into or exchangeable or exercisable for capital
stock or voting securities of HCIA, and (y) there are no outstanding
obligations of HCIA or any HCIA subsidiary to repurchase, redeem or
otherwise acquire any such securities or to issue, deliver or sell, or
cause to be issued, delivered or sold, any such securities. There are no
outstanding (A) securities of HCIA or any HCIA subsidiary convertible into
or exchangeable or exercisable for shares of capital stock or other voting
securities or ownership interests in any HCIA subsidiary, (B) warrants,
calls, options or other rights to acquire from HCIA or any HCIA subsidiary,
or obligations of
6
HCIA or any HCIA subsidiary to issue, any capital stock, voting securities
or other ownership interests in, or any securities convertible into or
exchangeable or exercisable for any capital stock, voting securities or
ownership interests in, any HCIA subsidiary or (C) obligations of HCIA or
any HCIA subsidiary to repurchase, redeem or otherwise acquire any such
outstanding securities of HCIA subsidiaries or to issue, deliver or sell,
or cause to be issued, delivered or sold, any such securities. Neither HCIA
nor any HCIA subsidiary is a party to any agreement restricting the
purchase or transfer of, relating to the voting of, requiring registration
of, or granting any preemptive or, except as provided by the terms of the
HCIA Employee Stock Options, antidilutive rights with respect to, any
securities of the type referred to in the two preceding sentences. Other
than as set forth on the HCIA Disclosure Schedule, all outstanding shares
of capital stock of the subsidiaries of HCIA are owned free and clear of
all Liens, and HCIA does not directly or indirectly beneficially own any
securities or other beneficial ownership interests in any other entity.
(d) AUTHORITY; NONCONTRAVENTION. HCIA has all requisite corporate power
and authority to enter into this Agreement and, subject to the HCIA
Stockholder Approval (as defined in Section 3.2(l)), to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by HCIA and the consummation by HCIA of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of HCIA, subject, in the case of the Merger, to the HCIA
Stockholder Approval. This Agreement has been duly executed and delivered
by HCIA and, assuming the due authorization, execution and delivery thereof
by Acquiror, constitutes the legal, valid and binding obligation of HCIA,
enforceable against HCIA in accordance with its terms. The execution and
delivery of this Agreement by HCIA does not, and the consummation of the
transactions contemplated hereby and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any
obligation or loss of a benefit under, or result in the creation of any
Lien upon any of the properties or assets of HCIA or any of its
subsidiaries or any restriction on the conduct of HCIA's, or any of its
subsidiaries' business or operations under, (i) the articles of
incorporation of HCIA, as amended (the "HCIA Articles"), or bylaws or the
comparable organizational documents of any of its subsidiaries, (ii) except
for such conflicts, violations or defaults, or rights of termination,
cancellation or acceleration that may arise solely as a result of the
merger of HCIA with and into the LLC, rather than the merger of the Merger
Sub with and into HCIA, any loan or credit agreement, note, bond, mortgage,
indenture, trust document, lease or other agreement, instrument, permit,
concession, franchise, license or similar authorization applicable to HCIA
or any of its subsidiaries or their respective properties or assets or
(iii) subject to the governmental filings and other matters referred to in
the following sentence, any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to HCIA or any of its subsidiaries
or their respective properties or assets, other than, in the case of
clauses (ii) and (iii), any such conflicts, violations, defaults, rights,
losses, restrictions or Liens that individually or in the aggregate would
not (x) have a material adverse effect on HCIA or any of its subsidiaries
or (y) reasonably be expected to impair the ability of HCIA to perform its
obligations under this Agreement. No consent, approval, order or
authorization of, action by, or in respect of, or registration, declaration
or filing with, any Governmental Entity is required by or with respect to
HCIA or any of its subsidiaries in connection with the execution and
delivery of this Agreement by HCIA or the consummation by HCIA of the
transactions contemplated hereby, except for (1) the filing of a pre-merger
notification and report form by HCIA under the HSR Act or filings or
notifications under the antitrust, competition or similar laws of any
foreign jurisdiction; (2) the filing with the SEC of (A) the Proxy
Statement relating to the HCIA Stockholders' Meeting, and (B) such reports
under Sections 13(a), 13(d), 15(d) or 16(a) of the Exchange Act as may be
required in connection with this Agreement and the transactions
contemplated hereby; (3) the filing of the Certificates of Merger with the
Maryland State Department of Assessments and Taxation and the Secretary of
State of the State of Delaware and appropriate documents with the relevant
authorities of other states in which HCIA is qualified to do business and
such filings with Governmental Entities as may be necessary to satisfy the
applicable requirements of state securities or "blue sky" laws; and (4)
such consents, approvals, orders or authorizations the failure of which to
be made or obtained individually or in the aggregate would not (x) have a
material adverse effect on HCIA or any of its subsidiaries or (y)
reasonably be expected to impair the ability of HCIA to perform its
obligations under this Agreement. The HCIA Disclosure Schedule sets forth a
list of all third party consents and approvals required to be obtained by
HCIA in connection with this Agreement under the Material Contracts prior
to the consummation of the transactions contemplated by this Agreement,
except for such consents and approvals that may be required solely as a
result of the merger of HCIA with and into the LLC, rather than the merger
of the Merger Sub with and into HCIA.
(e) SEC DOCUMENTS; UNDISCLOSED LIABILITIES. HCIA has filed all required
registration statements, prospectuses, reports, schedules, forms,
statements and other documents (including exhibits and all other
information incorporated therein) with the SEC since December 31, 1996 (as
such documents have been amended since the time of their filing
7
collectively the "HCIA SEC Documents"). As of their respective dates, the
HCIA SEC Documents complied in all material respects with the requirements
of the Securities Act of 1933, as amended ("the Securities Act"), or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such HCIA SEC Documents, and none of
the HCIA SEC Documents when filed contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. None of
HCIA's subsidiaries is required to file any forms, reports or other
documents with the SEC. The consolidated financial statements of HCIA and
its subsidiaries included in the HCIA SEC Documents have been prepared from
and are in accordance with the books and records of HCIA and its
consolidated subsidiaries, comply as to form, as of their respective dates
of filing with the SEC, in all respects with applicable accounting
requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present the consolidated financial position
of HCIA and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments which are not material). Except (i) as reflected
in such financial statements or in the notes thereto or (ii) for
liabilities incurred in connection with this Agreement or the transactions
contemplated hereby, neither HCIA nor any of its subsidiaries has any
liabilities or obligations of any nature which, individually or in the
aggregate, would have a material adverse effect on HCIA.
(f) INFORMATION SUPPLIED. None of the information supplied or to be
supplied by HCIA specifically for inclusion or incorporation by reference
in the Proxy Statement will, at the date it is first mailed to HCIA's
stockholders or at the time of the HCIA Stockholders' Meeting, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement will comply as to form in all respects with
the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representation or warranty is made by HCIA with
respect to statements made or incorporated by reference therein based on
information supplied by Acquiror specifically for inclusion or
incorporation by reference in the Proxy Statement.
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for liabilities incurred
in connection with this Agreement or the transactions contemplated hereby,
and except as permitted by Section 4.1(a), since December 31, 1998, HCIA
and its subsidiaries have conducted their business only in the ordinary
course consistent with past practice and there has not been (i) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of HCIA's capital
stock or any redemption or other acquisition by HCIA of any shares of its
capital stock, (ii) any split, combination or reclassification of any of
HCIA's capital stock or any issuance or the authorization of any issuance
of any other securities in respect of, in lieu of or in substitution for
shares of HCIA's capital stock, except for issuances of HCIA Common Stock
upon exercise or conversion of HCIA Employee Stock Options, in each case
awarded prior to the date hereof in accordance with their present terms,
(iii) except as set forth in the HCIA Disclosure Schedule, (A) any granting
by HCIA or any of its subsidiaries to any current or former director,
officer, consultant or other key employee of HCIA or its subsidiaries of
any increase in compensation, bonus, insurance or other benefits, except
for normal increases as a result of promotions, normal increases of base
pay or target bonuses in the ordinary course of business or as was required
under any employment agreements in effect as of December 31, 1998, (B) any
granting by HCIA or any of its subsidiaries to any such current or former
director, officer, consultant or employee of any increase in severance or
termination pay, or (C) any entry by HCIA or any of its subsidiaries into,
or any amendment of, any employment, deferred compensation, consulting
(other than those for annual compensation of $100,000 or less), severance,
termination or indemnification agreement with any such current or former
director, officer, consultant or key employee, (iv) except insofar as may
have been required by a change in GAAP, any change in accounting methods,
principles or practices by HCIA materially affecting its assets,
liabilities or business, (v) any tax election that individually or in the
aggregate would have a material adverse effect on HCIA or any of its tax
attributes or any settlement or compromise of any material income tax
liability, (vi) any entry into or any amendment to any agreement,
commitment or transaction by HCIA or any subsidiary thereof which is
material to HCIA or any subsidiary thereof other than agreements entered
into in the ordinary course of business with person or entities not
affiliated with HCIA or (vii) any action taken by HCIA or any of the HCIA
subsidiaries during the period from January 1, 1999 through August 11, 1999
that, if taken during the period from August 11, 1999 through the Effective
Time, would constitute a breach of Section 4.1(a). From August 11, 1999
through the date of this Agreement, neither HCIA nor any of its
subsidiaries, nor the Board of Directors of HCIA nor any committee thereof
has taken or permitted any action that, if taken or permitted during the
period from August 11, 1999 through the Effective Time, would constitute a
breach of Section 4.2.
8
(h) COMPLIANCE WITH APPLICABLE LAWS; LITIGATION.
(i) HCIA, its subsidiaries and employees hold all permits, licenses,
variances, exemptions, orders, registrations and approvals of all
Governmental Entities which are required for the operation of the
businesses of HCIA and its subsidiaries (the "HCIA Permits") except where
the failure to have any such HCIA Permits individually or in the
aggregate would not have a material adverse effect on HCIA.
(ii) Except as specifically disclosed in the HCIA Disclosure Schedule,
HCIA and its subsidiaries are in compliance with the terms of the HCIA
Permits and all applicable local, state, federal and foreign laws, rules,
regulations, and ordinances (collectively "Applicable Laws") relating to
HCIA and its subsidiaries or their businesses or properties, except where
the failure to be in compliance with such Applicable Laws individually or
in the aggregate would not have a material adverse effect on HCIA or any
of its subsidiaries. As of August 11, 1999, except as disclosed in the
HCIA Disclosure Schedule, no action, demand, requirement or investigation
by any Governmental Entity and no suit, action or proceeding by any
person, in each case with respect to HCIA or any of its subsidiaries or
any of their respective properties, is pending or, to the best knowledge
of HCIA, threatened, other than, in each case, those the outcome of which
individually or in the aggregate would not (A) have a material adverse
effect on HCIA or (B) reasonably be expected to impair the ability of
HCIA to perform its obligations under this Agreement or prevent or delay
the consummation of any of the transactions contemplated hereby.
(iii) Neither HCIA nor any HCIA subsidiary is subject to any
outstanding order, injunction, judgment or decree which has had or,
insofar as can be reasonably foreseen, individually or in the aggregate
will have, a material adverse effect on HCIA.
(i) ABSENCE OF CHANGES IN BENEFIT PLANS. The HCIA Disclosure Schedule
lists the following employee benefit plans sponsored or maintained by HCIA
and or its subsidiaries: (1) pension, profit sharing, deferred
compensation, incentive compensation (other than agreements with 50
salespersons entered into in the ordinary course of business, copies of
which have been provided to Acquiror), bonus, stock option, stock purchase,
phantom stock, vacation, severance, disability, medical, hospitalization,
dental, life insurance or other plans, arrangements or understandings
providing pension, welfare or incentive compensation benefits, or (2)
employment agreements, consulting agreements, management retention and
severance agreements with any current or former officers, key employees,
consultants or directors of HCIA or any subsidiary thereof (collectively,
the "HCIA Benefit Plans"). HCIA has delivered to Acquiror or provided to
Acquiror for review true and complete copies of (i) plan documents (as
applicable) and summary plan descriptions with respect to all "employee
welfare benefit plans" and "employee pension benefit plans" (within the
meaning of Sections 3(1) or 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) sponsored or maintained by HCIA or its
subsidiaries ("ERISA Plans"), (ii) plan documents or summary descriptions
of all bonus or incentive compensation plans, programs and arrangements for
employees of HCIA and/or its subsidiaries including, without limitation,
stock option and stock purchase plans, (iii) all severance and employment
agreements of HCIA with directors, consultants, officers or employees, (iv)
all written and unwritten severance programs and policies of each of HCIA
and each HCIA subsidiary, and (v) all plans or arrangements of HCIA and
each HCIA subsidiary relating to its employees which contain change in
control provisions. HCIA has or will deliver to Acquiror true and complete
copies of the IRS Form 5500 filed in the most recent plan year with respect
to any ERISA Plan, including, as applicable, all schedules thereto and
financial statements with attached opinions of independent auditors. Except
as set forth in the HCIA Disclosure Schedule, since December 31, 1998,
there has not been any adoption or amendment in any respect by HCIA or any
of its subsidiaries of any HCIA Benefit Plan, or any change in the manner
in which contributions to any HCIA deferred compensation plan is made or
the basis on which such contributions are determined. Since December 31,
1998, neither HCIA nor any HCIA subsidiary has amended any stock option or
stock bonus plan to accelerate the vesting of, or release restrictions on,
awards thereunder, or to provide for such acceleration in the event of a
change in control.
(j) BENEFIT PLANS.
(i) The HCIA Benefit Plans have been operated, and are, in substantial
compliance with the applicable provisions of ERISA, the Internal Revenue
Code of 1986, as amended (the "Code") and all other Applicable Laws and
the terms of such benefit plans, except for any failures to be in such
compliance that individually or in the aggregate would not have a
material adverse effect on HCIA. Each HCIA Benefit Plan that is intended
to be qualified under Section 401(a) or 401(k) of the Code has received a
favorable determination letter from the IRS that it is so qualified and
each trust established in connection with any HCIA Benefit Plan that is
intended to be exempt from federal income taxation under Section 501(a)
of the Code has received a determination letter from
9
the IRS that such trust is so exempt. To the best knowledge of HCIA, no
fact or event has occurred since the date of any determination letter
from the IRS which is reasonably likely to affect adversely the qualified
status of any such HCIA Benefit Plan or the exempt status of any such
trust.
(ii) No HCIA Benefit Plan is subject to Title IV of ERISA or is a
"multi-employer plan" within the meaning of Section 3(37) of ERISA, and
neither HCIA nor any other organization which is a member of a
"controlled group" of organizations (within the meaning of Sections
414(b), (c), (m) or (o) of the Code) of which HCIA is a member, has ever
maintained, or been obligated to contribute to, a plan subject to Title
IV of ERISA or a multi-employer plan.
(iii) No HCIA Benefit Plan provides medical benefits (whether or not
insured), with respect to current or former employees after retirement or
other termination of service (other than coverage mandated by applicable
law or benefits, the full cost of which is borne by the current or former
employee) other than individual arrangements the amounts of which are not
material.
(iv) Neither HCIA nor any of its subsidiaries is a party to any
collective bargaining agreement or other labor union contract. As of
August 11, 1999, there is no labor dispute, strike or work stoppage
against HCIA or any of its subsidiaries pending or, to the best knowledge
of HCIA, threatened which may interfere with the respective business
activities of HCIA or any of its subsidiaries. As of August 11, 1999,
none of HCIA, any of its subsidiaries or any of their respective
representatives or employees has committed any unfair labor practice in
connection with the operation of the respective businesses of HCIA or any
of its subsidiaries, and there is no charge or complaint against HCIA or
any of its subsidiaries by the National Labor Relations Board or any
comparable governmental agency pending or, to the best knowledge of HCIA,
threatened against HCIA or any of its subsidiaries.
(v) Except as set forth in the HCIA Disclosure Schedule, no employee
of HCIA will be entitled to any payment (whether severance pay or
otherwise), additional benefits or any acceleration of the time of
payment or vesting of any benefits under any HCIA Benefit Plan as a
result of the transactions contemplated by this Agreement (either alone
or in conjunction with any other event such as a termination of
employment).
(vi) There are no material unresolved claims or disputes under the
terms of, or in connection with, any HCIA Benefit Plan (other than
routine undisputed claims for benefits), and no action, legal or
otherwise, has been commenced with respect to any material claim.
(vii) To the best knowledge of HCIA, no non-exempt "prohibited
transaction" (within the meaning of Section 4975(c) of the Code)
involving any HCIA Benefit Plan has occurred that could subject HCIA to
any tax penalty or other cost or liability (by indemnification or
otherwise). All contributions required to be made under the terms of any
HCIA Benefit Plan have been timely made.
(k) TAXES.
(i) Except as set forth in the HCIA Disclosure Schedule each of HCIA
and its subsidiaries has filed all federal, state, foreign, local,
income, sales and other tax returns and reports required to be filed by
it (taking into account applicable extensions) and all such returns and
reports are complete and correct in all material respects, or requests
for extensions to file such returns or reports have been timely filed,
granted and have not expired. HCIA and each of its subsidiaries has paid
(or HCIA has paid or caused to be paid on its behalf) all taxes shown as
due on such returns, and the most recent financial statements contained
in the HCIA SEC Documents reflect an adequate reserve in accordance with
GAAP for all taxes payable by HCIA and its subsidiaries for all taxable
periods and portions thereof accrued through the date of such financial
statements.
(ii) No deficiencies for any taxes have, to the best knowledge of
HCIA, been proposed, asserted or assessed against HCIA or any of its
subsidiaries that are not adequately reserved for, except for
deficiencies that individually or in the aggregate would not have a
material adverse effect on HCIA. Except as provided in the HCIA
Disclosure Schedule, all of the federal income tax returns of the
affiliated group of which HCIA is the common parent have closed by virtue
of the applicable statute of limitations.
(iii) Except as set forth in the HCIA Disclosure Schedule, neither
HCIA nor any HCIA subsidiary has made any parachute payments as such term
is defined in Section 280G of the Code, neither is obligated to make any
parachute payments, and neither is a party to any agreement that under
certain circumstances could obligate it, or any successor in interest, to
make any parachute payments that will not be deductible under Section
280G of the
10
Code. Neither HCIA nor any HCIA subsidiary is obligated to make
reimbursement or gross-up payments to any person in respect to excess
parachute payments.
(iv) No federal, state, local or foreign audits, examinations or other
administrative proceedings have been commenced or, to the best knowledge
of HCIA, are pending with regard to any taxes or tax returns of HCIA or
of any of its subsidiaries. No written notification has been received by
HCIA or by any of its subsidiaries that such an audit, examination or
other proceeding is pending or threatened with respect to any taxes due
from or with respect to or attributable to HCIA or any of its
subsidiaries or any tax return filed by or with respect to HCIA or any of
its subsidiaries. To the best of HCIA's knowledge, there is no dispute or
claim concerning any tax liability of HCIA or any of its subsidiaries
either claimed or raised by any United States or foreign taxing authority
in writing.
(v) During their most recent five taxable years, respectively, neither
HCIA nor any of its subsidiaries has made a change in tax accounting
methods, received a ruling from any taxing authority or signed an
agreement with any taxing authority which has or would be reasonably
likely to have a material adverse effect on HCIA or any of its
subsidiaries. Neither HCIA nor any of its subsidiaries is required to
include in income any adjustment pursuant to Section 481(a) of the Code
or any similar provision of foreign, state or local law, by reason of a
voluntary change in tax accounting method (nor has any taxing authority
proposed in writing any such adjustment or change of accounting method).
(vi) Neither HCIA nor any of its subsidiaries is a party to, is bound
by or has any obligation under any tax sharing agreement, tax
indemnification agreement or similar contract or arrangement. Neither
HCIA nor any of its subsidiaries is aware of any potential liability or
obligation to any person as a result of, or pursuant to, any such
agreement, contract or arrangement. Neither HCIA nor any of its
subsidiaries has any liability for taxes of another person by contract or
otherwise.
(l) VOTING REQUIREMENTS. The affirmative vote at the HCIA Stockholders'
Meeting (the "HCIA Stockholder Approval") of the holders of a majority of
all outstanding shares of HCIA Common Stock entitled to vote at a duly
convened and held meeting of HCIA stockholders is the only vote of the
holders of any class or series of HCIA's capital stock necessary to approve
and adopt this Agreement and the transactions contemplated hereby,
including the Merger.
(m) STATE TAKEOVER STATUTES. On August 11, 1999, the Board of Directors
of HCIA adopted a resolution or resolutions approving this Agreement and
the transactions contemplated hereby and, assuming the accuracy of
Acquiror's representation and warranty contained in Section 3.1(e), such
approval constitutes approval of the Merger and the other transactions
contemplated hereby by the HCIA Board of Directors under the provisions of
Sections 3-602 and 3-701 ET SEQ. of the MGCL such that Sections 3-602 and
3-701 ET SEQ. of the MGCL do not apply to this Agreement or the
transactions contemplated hereby. No state takeover statute other than
Sections 3-602 and 3-701 ET SEQ. of the MGCL (which have been rendered
inapplicable) is applicable to the Merger or the other transactions
contemplated hereby.
(n) BROKERS. Except as set forth in the HCIA Disclosure Schedule, no
broker, investment banker, financial advisor or other person is entitled to
any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of HCIA.
(o) OPINION OF FINANCIAL ADVISOR. The Board of Directors of HCIA has
received the opinion of Deutsche Bank Securities Inc., dated August 11,
1999, to the effect that, as of such date, the Merger Consideration is fair
from a financial point of view to the holders of HCIA Common Stock, a
signed copy of which opinion has been delivered to Acquiror.
(p) OWNERSHIP OF ACQUIROR EQUITY INTERESTS. To the best knowledge of
HCIA, as of August 11, 1999 or at any time within twelve months prior to
August 11, 1999 neither HCIA nor, to its knowledge without independent
investigation, any of its affiliates, (i) beneficially owns (as defined in
Rule 13d-3 under the Exchange Act) or owned, directly or indirectly, or
(ii) is or was party to any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of, in each case, equity
interests of Acquiror.
(q) INTELLECTUAL PROPERTY.
(i) HCIA or its subsidiaries own or have a valid right to use all of
the trademarks, copyrights, service marks, trade names, Internet domain
names, designs, slogans, and general intangibles of like nature, together
with all applications, registrations and goodwill related to the
foregoing (collectively, "Trademarks"); patents; Software (as
11
defined below); confidential information, know-how, proprietary
processes, formulae, algorithms, models, methodologies and other trade
secrets (collectively, "Trade Secrets") used in or necessary for the
conduct of HCIA's and each of its subsidiary's business as currently
conducted, except where the failure to possess such right would not have
a material adverse effect on HCIA's and its subsidiaries' business as
currently conducted considered as a whole (all such intellectual property
being referred to herein as the "Intellectual Property"). For purposes of
this Section 3.2(q), "Software" means any and all (a) computer programs,
including any and all software implementations of algorithms, models and
methodologies, whether in source code or object code, (b) databases and
compilations, including any and all data and collections of data, whether
machine readable or otherwise, (c) descriptions, flowcharts and other
work product used to design, plan, organize and develop any of the
foregoing, (d) the technology supporting any Internet site(s) operated by
or on behalf of HCIA or any of its subsidiaries and (e) all
documentation, including user manuals and training materials, relating to
any of the foregoing.
(ii) HCIA and its subsidiaries own or have a valid right to use all
items of Intellectual Property set forth in the HCIA Disclosure Schedule
and own or have the right to use all items of Intellectual Property
necessary to provide, produce, sell and license the services and products
currently provided, produced, sold and licensed by HCIA and its
subsidiaries and to conduct the business of HCIA and its subsidiaries as
presently conducted or as currently proposed to be conducted. The
Intellectual Property owned by HCIA or any subsidiary is free and clear
of all Liens.
(iii) The Intellectual Property owned by HCIA or any of its
subsidiaries and, to HCIA's best knowledge, any Intellectual Property
used by HCIA, is valid and subsisting, in full force and effect, and has
not been rescinded, canceled, expired, or abandoned. There is no pending
or, to HCIA's best knowledge, threatened opposition, interference or
cancellation proceeding before any court or registration authority in any
jurisdiction against any registrations in respect of the Intellectual
Property owned by HCIA or any of its subsidiaries, or, to HCIA's best
knowledge, against any Intellectual Property licensed to HCIA or any of
its subsidiaries.
(iv) To the best knowledge of HCIA or any of its subsidiaries, the
conduct of the business of HCIA and its subsidiaries as currently
conducted does not infringe upon (either directly or indirectly such as
through contributory infringement or inducement to infringe) any patent,
copyright, trademark, service ▇▇▇▇, trade secret or other intellectual
property rights owned or controlled by any third party. There are no
claims or suits pending or, to the best knowledge of HCIA, threatened,
and neither HCIA nor any of its subsidiaries has received any notice of a
third-party claim or suit, (a) alleging that its activities or the
conduct of its business infringes upon, violates, or constitutes the
unauthorized use of the intellectual property rights of any third party
or (b) challenging the ownership, use, validity or enforceability of any
Intellectual Property.
(v) There are no settlements, forbearances to ▇▇▇, consents,
judgments, or orders or similar obligations which in any respect (a)
restrict the right of HCIA or its subsidiaries to use any Intellectual
Property, or (b) restrict the business of HCIA or its subsidiaries in
order to accommodate a third party's intellectual property rights.
(vi) All of HCIA's and its subsidiaries' patents, trademarks and
copyrights issued by, registered with or filed with the United States
Patent and Trademark Office or Register of Copyrights or the
corresponding offices or governmental agencies of other countries have
been so duly registered, filed in or issued, as the case may be, have
been properly maintained and renewed in accordance with all applicable
provisions of law and administrative regulations, and HCIA and its
subsidiaries, as the case may be, are the record owners thereof. There
have been no acts or omissions by HCIA or its subsidiaries, the result of
which would be to compromise the rights of HCIA or its subsidiaries to
apply for or enforce appropriate legal protection of such Intellectual
Property.
(vii) HCIA and each of its subsidiaries have adopted reasonable
measures in accordance with normal industry practice to protect the
confidentiality of Trade Secrets and other confidential Intellectual
Property, including (a) requiring all of its employees, officers, agents,
consultants, directors and independent contractors having access thereto
to execute written nondisclosure agreements and (b) requiring all
licensees to maintain the confidentiality of its Trade Secrets. To the
best knowledge of HCIA or its subsidiaries, no Trade Secret has been
knowingly disclosed or authorized to be disclosed to any third party
other than pursuant to a nondisclosure agreement or other appropriate
instrument that adequately protects HCIA and the applicable subsidiary's
proprietary interests in and to such Trade Secrets. To the best knowledge
of HCIA, no party to any nondisclosure agreement or nondisclosure
obligation relating to its Trade Secrets is in breach or default thereof.
No former employees, officers, agents, consultants, directors or
independent contractors of HCIA or any of its subsidiaries have asserted
any claim, or have
12
any, valid claim or valid right to any of HCIA's or any of its
subsidiaries' Intellectual Property used in or necessary for the conduct
of HCIA's or its subsidiaries' business as now conducted or as currently
proposed to be conducted. To HCIA's best knowledge, no employee, officer,
agent, independent contractor, consultant or director of HCIA or any of
its subsidiaries is a party to or otherwise bound by any agreement with
any other person (including, any former employer) which conflicts with
any obligation or commitment of such employee to HCIA or any of its
subsidiaries under any agreement to which he or she is a party.
(viii) To the best knowledge of HCIA, no third party is
misappropriating, infringing, diluting, or violating any Intellectual
Property owned by HCIA or any of its subsidiaries.
(ix) The consummation of the transactions contemplated hereby shall
not result in the loss or impairment of HCIA's or of any subsidiary's
right to own or use any of the Intellectual Property, and will not
require the consent of any governmental authority.
(x) The computer systems of HCIA and its subsidiaries (including all
Software, hardware, workstations and related components, automated
devices, embedded chips and other date sensitive equipment) are Year 2000
Compliant or will be Year 2000 Compliant by December 31, 1999. "Year 2000
Compliant" means that the computer systems: (i) are capable of
recognizing, processing, managing, representing, interpreting and
manipulating correctly date-related data for dates earlier and later than
January 1, 2000, including calculating, comparing, sorting, storing,
tagging and sequencing, without resulting in or causing logical or
mathematical errors or inconsistencies in any user-interface
functionalities or otherwise, including data input and retrieval, data
storage, data fields, calculations, reports, processing or any other
input or output; (ii) have the ability to provide date recognition for
any data element without limitation (including date-related data
represented without a century designation, date-related data whose year
is represented by only two digits and date fields assigned special
values); (iii) have the ability to function automatically into and beyond
the year 2000 without human intervention and without any change in
operations associated with the advent of the year 2000; (iv) have the
ability to interpret data, dates and time correctly into and beyond the
year 2000; (v) have the ability not to produce noncompliance in existing
information, nor otherwise corrupt such data into and beyond the year
2000; (vi) have the ability to process correctly after January 1, 2000
data containing dates before that date; and (vii) have the ability to
recognize all "leap years," including February 29, 2000.
(r) CERTAIN CONTRACTS. The HCIA Disclosure Schedule sets forth a complete
and correct list as of August 11, 1999 of the following types of agreements
to which HCIA or any subsidiary thereof is a party to or bound by: (i) any
non-competition agreement or any other agreement or obligation which
purports to limit in any material respect the manner in which, or the
localities in which, all or any material portion of the business of HCIA
and its subsidiaries (including, for purposes of this Section 3.2(r),
Acquiror and its subsidiaries, assuming the Merger has taken place), taken
as a whole, is or would be conducted; (ii) exclusive supply or purchase
contracts or any exclusive requirements contracts; (iii) agreements filed
as an exhibit to the HCIA SEC Documents and each agreement that would have
been required to be filed as an exhibit to the HCIA SEC Documents had such
agreement been entered into as of the date of filing of any such HCIA SEC
Document; (iv) employment, severance, termination, consulting (other than
those for annual compensation of $50,000 or less) and retirement
agreements; (v) loan agreements, indentures, letters of credit, mortgages,
notes and other debt instruments evidencing indebtedness in excess of
$50,000; (vi) agreements that require aggregate future payments to or by
HCIA or any subsidiary thereof of more than $100,000 per annum (other than
purchase orders and other transactions entered into in the ordinary course
of business consistent with past practice with a term not exceeding one
year); (vii) agreements containing any "change of control" provisions
which, if triggered, would involve payments by HCIA or any subsidiary in
excess of $50,000 or other material rights or obligations; (viii) material
agreements with any key employee, director, officer, or person known to
HCIA to be a direct or indirect stockholder of HCIA; (ix) joint venture,
partnership and similar agreements involving a sharing of profits; (x)
acquisition or divestiture agreements relating to (A) the sale of assets or
stock of HCIA or any subsidiary or (B) the purchase of assets or stock of
any other person, specifying any earn-out or other payments required to be
made after the date hereof; (xi) brokerage, finder's or financial advisory
agreements; (xii) guarantees of indebtedness for borrowed money of any
person; or (xiii) contracts or other agreements which would prohibit or
delay the consummation of the Merger or any of the transactions
contemplated by this Agreement, other than solely as a result of the merger
of HCIA with and into the LLC, rather than the merger of the Merger Sub
with and into HCIA (all contracts of the type described in the foregoing
clauses being collectively referred to herein as "Material Contracts").
HCIA has delivered to Acquiror or made available to Acquiror for review,
prior to the execution of this Agreement, complete and correct copies of
all Material Contracts. Each Material Contract constitutes the legal, valid
and binding obligation of HCIA enforceable against HCIA
13
in accordance with its terms (or, to the extent a HCIA subsidiary is a
party, such subsidiary) and is in full force and effect, and HCIA and each
HCIA subsidiary have in all respects performed all obligations required to
be performed by them to date under each Material Contract, except where
such noncompliance, individually or in the aggregate, would not have a
material adverse effect on HCIA or any of its subsidiaries. Except for such
violations or defaults that may arise solely as a result of the merger of
HCIA with and into the LLC, rather than the merger of the Merger Sub with
and into HCIA, neither HCIA nor any HCIA subsidiary knows of, or has
received notice of, any violation or default under (nor, to the best
knowledge of HCIA, does there exist any condition which with the passage of
time or the giving of notice or both would result in such a violation or
default under) any Material Contract.
(s) HCIA RIGHTS AGREEMENT. HCIA has taken all action (including, if
required, redeeming all of the outstanding preferred stock purchase rights
issued pursuant to the HCIA Rights Agreement or amending or terminating the
HCIA Rights Agreement) so that the entering into of this Agreement and the
consummation of the transactions contemplated hereby do not and will not
result in the grant of any rights to any person under the HCIA Rights
Agreement or enable or require the HCIA Rights to be exercised, distributed
or triggered.
(t) ENVIRONMENTAL LIABILITY. Except as set forth in the HCIA Disclosure
Schedule and except for matters which, individually or in the aggregate,
would not have or be reasonably likely to have a material adverse effect on
HCIA or any of its subsidiaries, (i) HCIA and each subsidiary is in
compliance with all applicable Environmental Laws (as defined below); (ii)
all permits and other governmental authorizations currently held by HCIA
and each subsidiary pursuant to the Environmental Laws are in full force
and effect, HCIA and each subsidiary is in compliance with all of the terms
of such permits and authorizations, and no other permits or authorizations
are required by HCIA or any subsidiary for the conduct of their respective
businesses; and (iii) the management, handling, storage, transportation,
treatment, and disposal by HCIA and each subsidiary of any Hazardous
Materials (as defined below) has been in compliance with all applicable
Environmental Laws. Neither HCIA nor any subsidiary has received any
written communication that alleges that HCIA or any subsidiary is not in
compliance in all material respects with all applicable Environmental Laws.
Except as set forth in the HCIA Disclosure Schedule, there are no legal,
administrative, arbitral or other proceedings, claims, actions, causes of
action, private environmental investigations or remediation activities or
governmental investigations of any nature pending or, to the best knowledge
of HCIA, threatened against HCIA or any of its subsidiaries seeking to
impose, or that could reasonably be expected to result in the imposition,
on HCIA or any of its subsidiaries, of any liability or obligation arising
under common law or under any local, state or federal environmental
statute, regulation or ordinance, including, without limitation, the
Comprehensive Environmental Response Compensation and Liability Act of
1980, as amended. To the best knowledge of HCIA, there is no reasonable
basis for any such proceeding, claim, action or governmental investigation
that would impose any liability or obligation or any of its subsidiaries on
HCIA. As used in this Agreement, these terms shall have the following
meanings:
(i) "Environmental Claim" means any and all administrative, regulatory
or judicial actions, suits, demands, demand letters, directives, claims,
Liens, investigations, proceedings or notices of noncompliance or
violation (written or oral) by any person or governmental authority
alleging potential liability against HCIA or any of its subsidiaries
arising out of, based on or resulting from the presence, or release or
threatened release into the environment, of any Hazardous Materials at
any location owned or leased by HCIA or any subsidiary thereof or other
circumstances forming the basis of any violation or alleged violation of
any Environmental Law.
(ii) "Environmental Laws" means all applicable foreign, federal, state
and local laws (including the common law), rules, requirements and
regulations relating to pollution, the environment (including, without
limitation, ambient air, surface water, ground water, land surface or
subsurface strata) or protection of human health as it relates to the
environment including, without limitation, laws and regulations relating
to releases of Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials or relating to management of
asbestos in buildings.
(iii) "Hazardous Materials" means wastes, substances or materials
(whether solids, liquids or gases) that are deemed hazardous, toxic,
pollutants or contaminants, including, without limitation, substances
defined as "hazardous substances," "toxic substances," "radioactive
materials," or other similar designations in, or otherwise subject to
regulation under, any Environmental Laws.
(u) INSURANCE. HCIA and each of its subsidiaries have policies of
insurance of the type and in amounts customarily carried by persons
conducting businesses or owning assets similar to those of HCIA and its
subsidiaries. There is no material claim pending under any of such policies
as to which coverage has been questioned, denied or disputed by the
underwriters of such policies, except questioned, denied or disputed claims
the failure to provide coverage for which
14
would not, individually or in the aggregate, have a material adverse effect
on HCIA. All premiums due and payable under all such policies have been
paid and HCIA and its subsidiaries are otherwise in compliance in all
material respects with the terms of such policies. HCIA has no knowledge of
any threatened termination of, or material premium increase with respect
to, any of such policies.
(v) TRANSACTIONS WITH AFFILIATES. Except as disclosed in the HCIA
Disclosure Schedule, since December 31, 1998, there have been no
transactions, agreements, arrangements or understandings between HCIA and
its affiliates that would be required to be disclosed under Item 404 of
Regulation S-K under the Securities Act.
(w) EMPLOYMENT MATTERS. Except as set forth in the HCIA Disclosure
Schedule, to the best knowledge of HCIA, no vice president or key group of
employees has any plans to terminate their employment with HCIA or any of
its subsidiaries as a result of the transactions contemplated hereby or
otherwise. HCIA and each subsidiary is in compliance with all laws relating
to the employment or the workplace, including, without limitation,
provisions relating to wages, hours, collective bargaining, safety and
health, work authorization, equal employment opportunity, immigration and
the withholding of income taxes, unemployment compensation, worker's
compensation, employee privacy and right to know and social security
contributions, except where noncompliance would not, individually or in the
aggregate, have or be reasonably likely to have a material adverse effect
on HCIA or any of its subsidiaries.
(x) TITLE AND CONDITION OF PROPERTIES. Except as set forth in the HCIA
Disclosure Schedule, HCIA and its subsidiaries own good and marketable
title, free and clear of all Liens, to all of their real and personal
property and assets shown on the December 31, 1998 audited consolidated
financial statements of HCIA and its consolidated subsidiaries, except for
(i) assets which have been disposed of to nonaffiliated third parties since
December 31, 1998 in the ordinary course of business, (ii) Liens reflected
in such financial statements or in the notes thereto, (iii) Liens or
imperfections of title which are not, individually or in the aggregate,
material in character, amount or extent and which do not materially detract
from the value or materially interfere with the present or presently
contemplated use of the assets subject thereto or affected thereby, and
(iv) Liens for current taxes not yet due and payable. All of the machinery,
equipment and other tangible personal property and assets owned or used by
HCIA and its subsidiaries are in good condition and repair, except for
ordinary wear and tear not caused by neglect, and are useable in the
ordinary course of business. The personal property and assets of HCIA and
its subsidiaries which are shown in the December 31, 1998 audited
consolidated financial statements of HCIA and its consolidated subsidiaries
or which were acquired after December 31, 1998, and the Intellectual
Property owned or used by HCIA and its subsidiaries collectively include
all assets necessary to provide, produce, sell and license the services and
products currently provided, produced, sold and licensed by HCIA and its
subsidiaries and to conduct the business of HCIA and its subsidiaries as
presently conducted or as currently contemplated to be conducted.
(y) NET OPERATING LOSS CARRYFORWARDS. To the best knowledge of HCIA,
after consulting with its outside tax accountants, the net operating loss
carryforwards of HCIA and its subsidiaries as of August 11, 1999 are in
excess of $107,000,000 and constitute valid net carryforwards which have
been properly and accurately recorded on the consolidated financial
statements of HCIA in accordance with GAAP applied on a consistent basis.
(z) FULL DISCLOSURE. None of the representations or warranties made by
HCIA herein or in any schedule hereto, including the HCIA Disclosure
Schedule, or any certificate furnished by HCIA pursuant to this Agreement,
contains or will contain at the Effective Time any untrue statement of a
material fact, or omits or will omit at the Effective Time, to state any
material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which made, not
misleading.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1 CONDUCT OF BUSINESS.
(a) CONDUCT OF BUSINESS BY HCIA. Except as set forth in the HCIA
Disclosure Schedule, as otherwise expressly contemplated by this Agreement
or as consented to by Acquiror in writing, during the period from August
11, 1999 to the Effective Time, HCIA has carried on and shall continue to
carry on, and its subsidiaries have carried on and HCIA shall continue to
cause them to carry on, their respective businesses in the ordinary course
consistent with past practice and in compliance in all material respects
with all applicable laws and regulations and, to the extent consistent
15
therewith, use commercially reasonable best efforts to preserve intact
their current business organizations, use commercially reasonable best
efforts to keep available the services of their current officers and other
key employees and preserve their relationships with those persons having
business dealings with them so that their goodwill and ongoing businesses
shall be unimpaired at the Effective Time. Without limiting the generality
of the foregoing (but subject to the above exceptions), during the period
from August 11, 1999 to the Effective Time, HCIA has not and shall not, and
has not permitted and shall not permit any of its subsidiaries to:
(i) (x) declare, set aside or pay any dividends on, make any other
distributions payable in cash, stock, or property in respect of, or enter
into any agreement with respect to the voting of, any of its capital
stock, (y) split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, except for
issuances of HCIA Common Stock upon the exercise of HCIA Employee Stock
Options outstanding as of August 11, 1999 in accordance with their
present terms (including cashless exercises) or (z) purchase, redeem or
otherwise acquire any shares of capital stock of HCIA or any of its
subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities (except, in the
case of clause (z), for the deemed acceptance of shares upon cashless
exercises of HCIA Employee Stock Options, or in connection with
withholding obligations relating thereto);
(ii) issue, deliver, sell, pledge or otherwise encumber or subject to
any Lien any shares of its capital stock, any other voting securities or
any securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities
(other than the issuance of shares of HCIA Common Stock upon the exercise
of HCIA Employee Stock Options outstanding as of August 11, 1999 in
accordance with their present terms);
(iii) except as contemplated hereby, amend its articles of
incorporation, bylaws or other comparable organizational documents;
(iv) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other
manner, any business or any person, or, except for transactions in the
ordinary course of business consistent with past practice pursuant to
contracts or agreements in force as of August 11, 1999 make any
investment either by purchase of stock or securities, contributions to
capital, property transfers, or purchase of any property or assets of any
other individual, corporation or other entity other than a subsidiary of
HCIA provided however, that in no event shall any such investments exceed
$50,000 in any single case or $150,000 in the aggregate.
(v) sell, lease, license, mortgage or otherwise encumber or subject to
any Lien or otherwise dispose of any of its properties or assets
(including securitizations), other than in the ordinary course of
business consistent with past practice, including, without limitation, in
connection with consolidation of acquired businesses or as would not have
a material adverse effect on HCIA or any of its subsidiaries;
(vi) take any action that would cause the representations and
warranties set forth in Section 3.2(g) to be no longer true and correct
or that would impair or delay the ability of HCIA to consummate the
Merger in accordance with the terms hereof;
(vii) other than in the ordinary course of business, make any loans or
advances to any person (other than wholly owned subsidiaries of HCIA),
incur any indebtedness for borrowed money or issue any debt securities or
assume, guarantee or endorse, or otherwise as an accommodation become
responsible for the obligations of any person for borrowed money, other
than pursuant to a credit facility in effect as of the date hereof
(including any replacement facilities), in the ordinary course of
business consistent with past practice;
(viii) settle any claim, action or proceeding involving money damages,
except in the ordinary course of business consistent with past practice;
(ix) other than in the ordinary course of business, enter into or
terminate any material contract or agreement (including, without
limitation, any of the Material Contracts), or make any change in any of
its material leases or contracts (including, without limitation, any of
the Material Contracts), other than amendments or renewals of contracts
and leases without material adverse changes of terms or waive, release or
assign any claims with respect thereto;
(x) except for increases in accordance with normal past practice,
increase in any manner the compensation or fringe benefits of any of its
officers, directors or key employees, or materially increase the
foregoing in respect of
16
any other employees; enter into any commitment to pay any pension, stay
bonus, retirement, termination or severance benefit to any such officers,
employees, or directors, or make any material commitment to pay any of
the foregoing to any employees; adopt or commit itself to any new
benefit, compensation or stock option plan or arrangement; or amend,
supplement, or accelerate the timing of payments or vesting under, or
otherwise materially amend or supplement any existing benefit, stock
option, profit sharing, insurance or compensation plan or arrangement
(other than as may be required by applicable law);
(xi) change any of the accounting methods used by HCIA or any of its
subsidiaries unless required by generally accepted accounting principles;
(xii) permit any material insurance policy naming it as a beneficiary
or a loss payable payee to be canceled or terminated without notice to
the Acquiror;
(xiii) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice, of claims,
liabilities or obligations reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the notes
thereto) of HCIA and its consolidated subsidiaries;
(xiv) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of HCIA or any of its subsidiaries (other than the
Merger); or
(xv) authorize, or commit or agree to take, any of the foregoing
actions or recommend, propose or announce an intention to do any of the
foregoing
(b) OTHER ACTIONS. Except as required by law, from August 11, 1999 to the
Effective Time, Acquiror and HCIA have not and shall not, and have not
permitted and shall not permit any of their respective subsidiaries to,
voluntarily take any action that would, or that could reasonably be
expected to, result in (i) any representation or warranty made by it
contained in this Agreement that is qualified as to materiality becoming
untrue or inaccurate in any respect or any such representation or warranty
that is not so qualified becoming untrue or inaccurate in any material
respect, (ii) the failure by it to comply in any material respect with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement or (iii) any of the
conditions to the Merger set forth in Article VI not being satisfied.
(c) ADVICE OF CHANGES. From August 11, 1999 to the Effective Time,
Acquiror and HCIA have promptly advised, and shall promptly advise, the
other party orally and in writing to the extent it has knowledge of (i) any
representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or
any such representation or warranty that is not so qualified becoming
untrue or inaccurate in any material respect, (ii) the failure by it to
comply in any material respect with or satisfy in any respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement and (iii) any change or event having, or which, insofar as can
reasonably be foreseen, could reasonably be expected to have a material
adverse effect on such party or on the truth of such party's
representations and warranties or the ability of the conditions set forth
in Article VI to be satisfied; provided, however, that no such notification
shall affect the representations, warranties, covenants or agreements of
the parties (or remedies with respect thereto) or the conditions to the
obligations of the parties under this Agreement.
SECTION 4.2 NO SOLICITATION BY HCIA.
(a) Neither HCIA nor any of its subsidiaries shall (and HCIA shall not
permit its officers, directors, employees, representatives and agents,
including, but not limited to, its investment bankers, attorneys and
accountants) directly or indirectly, encourage, solicit, participate in or
initiate discussions or negotiations with, or provide any information to,
any corporation, partnership, person or other entity or group (other than
the Acquiror, the LLC or any of their representatives) concerning any
proposal or offer to acquire 10% or more of the assets of HCIA or any of
its subsidiaries or any capital stock of HCIA or any of its subsidiaries,
whether by merger, tender offer, exchange offer, sale of assets or similar
transaction involving HCIA or any subsidiary, or any division or operating
or principal business unit of HCIA (an "Acquisition Proposal"), except that
nothing contained in this Section 4.2 or any other provision hereof shall
prohibit HCIA or HCIA's Board of Directors from (i) taking and disclosing
to HCIA's stockholders a position with respect to a tender or exchange
offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under
the Exchange Act, or (ii) making such disclosure to HCIA's stockholders as,
in the good faith judgment of the Board, after receiving written advice
from legal counsel to HCIA, is required under applicable law, provided that
HCIA may not, except as permitted by Section 4.2(b), withdraw or modify, or
propose to withdraw or modify, its position with respect to the Merger
17
or approve or recommend, or propose to approve or recommend, any
Acquisition Proposal, or enter into any agreement with respect to any
Acquisition Proposal. HCIA and its representatives shall immediately cease
any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing. Notwithstanding
the foregoing, (a) HCIA may furnish information concerning its business,
properties or assets to any corporation, partnership, person or other
entity or group pursuant to appropriate confidentiality agreements if in
the opinion of the Board of Directors, after receipt of written advice from
legal counsel to HCIA, the failure to provide such information would result
in a significant possibility that the Board of Directors would breach or
violate its fiduciary duties to HCIA's stockholders under applicable law,
and (b) HCIA may negotiate and participate in discussions and negotiations
with such entity or group concerning an Acquisition Proposal if (x) such
entity or group has on an unsolicited basis submitted a bona fide written
proposal to the Board of Directors of HCIA relating to any such transaction
which the Board of Directors determines in good faith, after consultation
with its financial advisors, represents a superior transaction to the
Merger and is reasonably likely to be consummated, taking into account all
legal, financial and regulatory aspects of the proposal and (y) in the
opinion of the Board of Directors of HCIA, after receipt of written advice
from legal counsel to HCIA, the failure to engage in such discussions or
negotiations would result in a significant possibility that the Board of
Directors would breach or violate its fiduciary duties to HCIA's
stockholders under applicable law (an Acquisition Proposal which satisfies
clauses (x) and (y) being referred to herein as a "Superior Proposal").
HCIA shall immediately notify the Acquiror in writing of the existence of
any proposal or inquiry received by HCIA and the identity of the party
making such proposal or inquiry which it may receive in respect of any such
transaction and thereafter shall keep the Acquiror fully informed on a
current basis of any changes in the status and content of any such
proposals.
(b) Except as set forth herein, neither the Board of Directors of HCIA
nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to the Acquiror or the LLC, the
approval or recommendation by the Board of Directors or any such committee
of this Agreement or the Merger, (ii) approve or recommend, or propose to
approve or recommend, any Acquisition Proposal or (iii) enter into any
agreement with respect to any Acquisition Proposal. Notwithstanding the
foregoing, prior to the Closing Date, the Board of Directors of HCIA may
(subject to the terms of this and the following sentence) withdraw or
modify its approval or recommendation of this Agreement or the Merger,
approve or recommend a Superior Proposal, or enter into an Agreement with
respect to a Superior Proposal, in each case at any time after the tenth
business day following the Acquiror's receipt of written notice from HCIA
advising the Acquiror that the Board of Directors has received a Superior
Proposal, specifying the material terms and conditions of such Superior
Proposal and identifying the person making such Superior Proposal;
PROVIDED, HOWEVER, that HCIA shall not enter into an agreement with respect
to a Superior Proposal unless HCIA shall have furnished the Acquiror with
written notice not later than ten business days in advance of any date that
it intends to enter into such agreement and shall have caused its financial
and legal advisors to negotiate in good faith with the Acquiror during such
ten business day period to make such adjustments in the terms and
conditions of this Agreement as would enable HCIA to proceed with the
transactions contemplated hereby on such adjusted terms.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 ACCESS TO INFORMATION; CONFIDENTIALITY. Subject to the
Non-Disclosure Agreement, dated April 27, 1999, entered into by HCIA and the
Acquiror (the "Non-Disclosure Agreement") and subject to applicable law, HCIA
shall, and shall cause its respective subsidiaries to, afford to Acquiror and
its officers, employees, accountants, counsel, financing sources, financial
advisors and other representatives, reasonable access during normal business
hours during the period prior to the Effective Time to all their respective
properties, books, contracts, commitments, personnel and records (provided that
such access shall not materially interfere with the business or operations of
HCIA) and, during such period, HCIA shall, and shall cause each of its
subsidiaries to, furnish promptly to Acquiror (a) a copy of each report,
schedule, registration statement and other document filed by it during such
period pursuant to the requirements of federal or state securities laws and (b)
all other information concerning its business, properties and personnel as
Acquiror and its representatives may reasonably request. No review pursuant to
this Section 5.1 shall affect any representation or warranty given by HCIA
hereunder. Acquiror will hold, and will cause its officers, employees,
accountants, counsel, financial advisors and other representatives and
affiliates to hold, any nonpublic information in accordance with the terms of
the Non-Disclosure Agreement.
SECTION 5.2 BEST EFFORTS.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use its best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with
18
the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable,
the Merger and the other transactions contemplated by this Agreement,
including (i) the obtaining of all necessary actions or nonactions,
waivers, consents and approvals from Governmental Entities and the making
of all necessary registrations and filings and the taking of all steps as
may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity, (ii) at the request of
Acquiror, the obtaining of all necessary consents, approvals or waivers,
and any necessary or appropriate financing arrangements, from third parties
(it being understood and agreed that the failure to obtain any consent,
approval or waiver after using reasonable efforts to attempt to obtain such
consent, approval or waiver shall not be deemed a breach of this Agreement;
provided, however, that the obligation of Acquiror to effect the Merger is
subject to satisfaction or waiver of the condition to obtain the consents
referred to in Section 6.3(f)), (iii) the defending of any lawsuits or
other legal proceedings, whether judicial or administrative, challenging
this Agreement or the consummation of the transactions contemplated by this
Agreement, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or
reversed, and (iv) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by, and to fully
carry out the purposes of, this Agreement. Notwithstanding anything to the
contrary in this Agreement, neither HCIA nor Acquiror shall be required to
hold separate (including by trust or otherwise) or divest any of their
respective businesses or assets, or enter into any consent decree or other
agreement that would materially restrict either HCIA or Acquiror in the
conduct of its business as heretofore conducted.
(b) HCIA and the Acquiror shall respond as promptly as practicable to all
inquiries and requests received from any State Attorney General or other
Governmental Entity in connection with antitrust matters.
(c) In connection with and without limiting the foregoing, Acquiror and
HCIA shall (i) take all action necessary to ensure that no state takeover
statute or similar statute or regulation is or becomes applicable to this
Agreement or any of the transactions contemplated hereby and (ii) if any
state takeover statute or similar statute or regulation becomes applicable
to such agreements or transactions, take all action necessary to ensure
that such transactions may be consummated as promptly as practicable on the
terms contemplated by this Agreement and otherwise to minimize the effect
of such statute or regulation on the Merger and the other transactions
contemplated by this Agreement.
SECTION 5.3 INDEMNIFICATION, EXCULPATION AND INSURANCE.
(a) For three years after the Effective Time, Acquiror agrees to maintain
in effect in accordance with their terms all rights to indemnification and
exculpation from liabilities for acts or omissions occurring at or prior to
the Effective Time existing as of August 11, 1999 in favor of the current
or former directors or officers of HCIA and its subsidiaries as provided in
their respective certificates or articles of incorporation or bylaws (or
comparable organizational documents) and any indemnification agreements of
HCIA.
(b) In the event that Acquiror or any of its successors or assigns (i)
consolidates with or merges into any other person and is not the continuing
or surviving corporation or entity of such consolidation or merger or (ii)
transfers or conveys all or substantially all of its properties and assets
to any person, then, and in each such case, proper provision will be made
so that the successors and assigns of Acquiror assume the obligations set
forth in this Section 5.3.
(c) Acquiror shall provide to HCIA's current directors and officers, for
a period of at least two years after the Effective Time, liability
insurance covering acts or omissions occurring prior to the Effective Time
with respect to those persons who are currently covered by HCIA's
directors' and officers' liability insurance policy on terms with respect
to such coverage and amount no less favorable in any material respect than
those of such policy in effect on August 11, 1999.
(d) The provisions of this Section 5.3 (i) are intended to be for the
benefit of, and will be enforceable by, each indemnified party, his or her
heirs and his or her representatives and (ii) are in addition to, and not
in substitution for, any other rights to indemnification or contribution
that any such person may have by contract or otherwise.
SECTION 5.4 FEES AND EXPENSES. Except as set forth in this Section 5.4,
Section 7.2 and Section 8.11, all fees and expenses incurred in connection with
the Merger, this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such fees or expenses, whether or not the Merger is
consummated. Acquiror and HCIA shall each bear and pay fifty percent (50%) of
the costs, fees and expenses incurred in connection with (i) the filing,
printing and mailing of the Proxy Statement and (ii) the filings of the
premerger notification and report forms under the HSR Act (including filing
fees).
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SECTION 5.5 PUBLIC ANNOUNCEMENTS. HCIA and Acquiror will consult with each
other before issuing, and provide each other with the opportunity to review,
comment upon and concur with, and use commercially reasonable best efforts to
agree on, any press release or other public statements with respect to the
transactions contemplated by this Agreement, including the Merger, and shall
not issue any such press release or make any such public statement prior to
such consultation, except as either party may determine is required by
applicable law, court process or by obligations pursuant to any listing
agreement with any national securities exchange or stock market.
SECTION 5.6 CONVEYANCE TAXES. HCIA and Acquiror 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 or any similar taxes which become payable in
connection with the transactions contemplated by this Agreement that are
required or permitted to be filed on or before the Effective Time.
SECTION 5.7 EMPLOYEE BENEFITS. Acquiror shall be responsible for
perpetuating the group health plan continuation coverages pursuant to Section
4980B of the Code and Sections 601 through 609 of ERISA ("COBRA") for all
employees of HCIA and their eligible dependents, including such individuals who
experienced a qualifying event under the COBRA rules prior to the Effective
Time.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) STOCKHOLDER APPROVAL. The HCIA Stockholder Approval shall have been
obtained.
(b) GOVERNMENTAL, REGULATORY AND OTHER APPROVALS. (i) Other than the
filing of the Certificates of Merger provided for under Section 1.3 and
filings pursuant to the HSR Act, all consents, approvals and actions of,
filings with and notices to any Governmental Entity required of Acquiror,
HCIA or any of their subsidiaries to consummate the Merger and the other
transactions contemplated hereby (the "Requisite Regulatory Approvals")
shall have been obtained and (ii) except as would not have a material
adverse effect on any of Acquiror, HCIA or the Surviving LLC, the consents
and approvals set forth in Sections 3.1(b) and Section 3.2(d) hereof shall
have been obtained or shall no longer be required.
(c) NO INJUNCTIONS OR RESTRAINTS. No judgment, order, decree, statute,
law, ordinance, rule or regulation, entered, enacted, promulgated, enforced
or issued by any court or other Governmental Entity of competent
jurisdiction or other legal restraint or prohibition (collectively,
"Restraints") shall be in effect (i) declaring this Agreement to be
unenforceable in any material respect or preventing the consummation of the
Merger, or (ii) which otherwise is reasonably likely to have a material
adverse effect on Acquiror or HCIA, as applicable; provided, however, that
each of the parties shall have used the best efforts required by Section
5.2(a) to prevent the entry of any such Restraints and to appeal as
promptly as possible any such Restraints that may be entered. There shall
not be any threatened or pending suit, action or proceeding by any
Governmental Entity against the LLC, the Acquiror, HCIA or any subsidiary
of HCIA (A) seeking to prohibit or impose any material limitations on the
Acquiror's or the LLC's ownership or operation (or that of any of their
respective subsidiaries or affiliates) of all or a material portion of
their or HCIA's businesses or assets, or to compel HCIA or the LLC or their
respective subsidiaries and affiliates to dispose of or hold separate any
material portion of the business or assets of HCIA or the Acquiror and
their respective subsidiaries, (B) seeking to restrain or prohibit the
consummation of the Merger or the performance of any of the other
transactions contemplated by this Agreement or the Voting Agreement, or
seeking to obtain from HCIA, the Acquiror or the LLC any damages that are
material in relation to HCIA and its subsidiaries taken together as a
whole, (C) seeking to impose material limitations on the ability of the
LLC, or render the LLC unable, to accept for payment, pay for or purchase
some or all of the shares of HCIA Common Stock pursuant to the Merger or
(D) which otherwise would prohibit the consummation of the Merger.
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF HCIA. The obligation of HCIA to
effect the Merger is further subject to satisfaction or waiver of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Acquiror set forth herein shall be true and correct in all respects, both
when made and at and as of the Closing Date, as if made at and as of such
time (except
20
to the extent expressly made as of an earlier date, in which case as of
such date), except where the failure of such representations and warranties
to be so true and correct (without giving effect to any limitation as to
"materiality" or "material adverse effect" set forth therein) does not
have, and is not likely to have, individually or in the aggregate, a
material adverse effect on the Acquiror.
(b) PERFORMANCE OF OBLIGATIONS OF ACQUIROR. Acquiror shall have performed
in all material respects all obligations required to be performed by it
under this Agreement at or prior to the Closing Date.
(c) OPINION. HCIA shall have received an opinion of Proskauer Rose LLP,
counsel to the Acquiror and the LLC, or from the in-house general counsel
of such entities, substantially in the form of Exhibit 6.2(c).
(d) CERTIFICATE. The Acquiror shall have delivered a certificate, dated
as of the Closing, to HCIA executed on its behalf by its Managing Member to
the effect that the conditions set forth in Sections 6.2(a) and (b) have
been satisfied by the Acquiror.
SECTION 6.3 CONDITIONS TO OBLIGATIONS OF ACQUIROR. The obligation of
Acquiror to effect the Merger is further subject to satisfaction or waiver of
the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
HCIA set forth herein shall be true and correct in all respects both when
made and at and as of November 19, 1999 , as if made at and as of such time
(except to the extent expressly made as of an earlier date, in which case
as of such date), except where the failure of such representations and
warranties to be so true and correct (without giving effect to any
limitation as to "materiality," or "material adverse effect" set forth
therein) does not have, and is not likely to have, individually or in the
aggregate, a material adverse effect on HCIA and any of its subsidiaries
taken as a whole.
(b) PERFORMANCE OF OBLIGATIONS OF HCIA. HCIA shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date.
(c) HCIA RIGHTS AGREEMENT. The HCIA Rights issued pursuant to the HCIA
Rights Agreement shall have been terminated or shall not have become
nonredeemable, exercisable, distributed or triggered pursuant to the terms
of such agreement.
(d) OPINION. The Acquiror shall have received an opinion of ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., counsel to HCIA and its subsidiaries,
substantially in the form of Exhibit 6.3(d); and
(e) MATERIAL ADVERSE CHANGE. From August 11, 1999 through November 19,
1999, there shall not have occurred any changes, events or occurrences that
would or would reasonably be expected to result, individually or in the
aggregate, in a material adverse effect on HCIA and its subsidiaries taken
as a whole (other than any material adverse changes, events or
circumstances resulting solely from the failure to obtain any consent,
approval or waiver referred to in Section 5.2 (a)(ii), if HCIA shall have
complied with all its obligations therein).
(f) CONSENTS. All consents required under the December 6, 1995 Informix
Software, Inc. contract to keep such contract in full force and effect
following the consummation of the Merger shall have been obtained without
any terms or conditions that the Acquiror determines in its sole discretion
to be unreasonably burdensome to the Acquiror or the LLC or the operations
of HCIA on a going forward basis, and shall be in effect as of the
Effective Time.
(g) CERTIFICATE. HCIA shall have delivered a certificate, dated as of the
Closing, to the Acquiror executed on its behalf by its President to the
effect that the conditions set forth in Sections 6.3(a), (b), (c) and (e)
have been satisfied by HCIA.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, and except in the case of Sections 7.1(e) or
7.1(g) whether before or after the HCIA Stockholder Approval:
(a) by mutual written consent of HCIA and the Acquiror;
(b) by either HCIA or the Acquiror:
21
(i) if the Merger shall not have been consummated by December 31,
1999; provided however, that the right to terminate this Agreement
pursuant to this Section 7.1(b)(i) shall not be available to any party
whose failure to perform any of its obligations under this Agreement
results in the failure of the Merger to be consummated by such time;
(ii) if the HCIA Stockholder Approval shall not have been obtained at
an HCIA Stockholders' Meeting duly convened therefor or at any
adjournment or postponement thereof;
(iii) if any Restraint having any of the effects set forth in Section
6.1(d) shall be in effect and shall have become final and nonappealable,
or if any Governmental Entity that must grant a Requisite Regulatory
Approval has denied approval of the Merger and such denial has become
final and nonappealable; provided, that the party seeking to terminate
this Agreement pursuant to this Section 7.1(b)(iii) shall have used the
best efforts required by Section 5.2(a) to prevent the entry of and to
remove such Restraint or to obtain such Requisite Regulatory Approval, as
the case may be;
(c) by HCIA (provided that HCIA is not then in breach of any
representation, warranty, covenant or other agreement contained herein), if
Acquiror shall have breached or failed to perform any of its
representations, warranties, covenants or other agreements contained in
this Agreement, which breach or failure to perform (A) would give rise to
the failure of a condition set forth in Section 6.2(a) or (b), and (B) is
incapable of being cured by Acquiror or is not cured within 30 days of
written notice thereof from HCIA;
(d) by the Acquiror (provided that Acquiror is not then in breach of any
representation, warranty, covenant or other agreement contained herein), if
HCIA shall have breached or failed to perform any of its representations,
warranties, covenants or other agreements contained in this Agreement,
which breach or failure to perform (A) would give rise to the failure of a
condition set forth in Section 6.3(a) or (b), and (B) is incapable of being
cured by HCIA or is not cured within 30 days of written notice thereof from
the Acquiror;
(e) by the Acquiror, at any time prior to the HCIA Stockholders' Meeting,
if the HCIA Board of Directors shall have (A) failed to include in the
Proxy Statement sent to the stockholders of HCIA its recommendation without
modification or qualification that such stockholders approve this Agreement
and the transactions contemplated hereby, or (B) subsequently withdrawn
such recommendation or (C) modified or qualified such recommendation in a
manner adverse to the interests of Acquiror;
(f) by the Acquiror if the Board of Directors of HCIA shall have failed
to take any of the actions contemplated by Section 1.6 as a result of the
exercise of its rights under Section 1.6(e); or
(g) by HCIA if it enters into a definitive agreement in connection with a
Superior Proposal in accordance with Section 4.2(b).
SECTION 7.2 EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement as provided in Section
7.1 hereof, and subject to the provisions of Section 8.1 hereof, this
Agreement shall forthwith become void and there shall be no liability on
the part of any of the parties, except (i) as set forth in this Section 7.2
and in Sections 3.1(d), 3.2(n), 5.3 and 5.4 hereof, and (ii) nothing herein
shall relieve any party from liability for fraud, or any willful breach
hereof.
(b) If this Agreement is terminated (i) by Acquiror pursuant to Section
7.1(e) hereof, (ii) by Acquiror pursuant to Section 7.1(d) hereof,
including, without limitation, as a result of HCIA's breach of Sections 4.2
or 1.6 hereof which, in the case of Section 1.6 only, is not cured within
30 days after notice thereof to HCIA, (iii) by Acquiror pursuant to Section
7.1(f) hereof, or (iv) by HCIA pursuant to Section 7.1(g) hereof, and, (1)
prior to the termination of this Agreement, an Acquisition Proposal at a
price and on terms at least as favorable to the stockholders of HCIA as the
Merger shall have been made, and within one year of such termination HCIA
consummates such Acquisition Proposal or (2) within 18 months of such
termination HCIA enters into an agreement for a different Acquisition
Proposal (whether or not with a party that had previously made an
Acquisition Proposal to HCIA), in either case at a price and on terms at
least as favorable to the stockholders of HCIA as the Merger, then HCIA
shall pay to the Acquiror (concurrently with such termination, in the case
of a termination pursuant to Section 7.1(g) hereof), and not later than the
consummation of such Acquisition Proposal in any other event) a fee (the
"Termination Fee") in an amount equal to 3 1/2% of the aggregate Merger
Consideration payable to all of the stockholders of HCIA pursuant to the
terms hereof plus an amount up to $1,000,000 to reimburse the Acquiror for
all of its costs, fees and expenses (including, without limitation,
22
all legal, investment banking and accounting costs, fees and expenses) in
connection with the Merger and this Agreement (the "Expense Reimbursement
Payment").
(c) If the Agreement shall terminate for any reason, other than as
provided in Sections 7.1(a), 7.1(c) or 7.2(b) hereof, then HCIA shall pay
to the Acquiror up to $1,000,000 to reimburse the Acquiror for all of its
costs, fees and expenses (including, without limitation, all legal,
investment banking and accounting costs, fees and expenses) incurred in
connection with this Agreement, such payment to be made no later than one
business day following the date of delivery of the notice of termination to
the other party.
(d) HCIA and Acquiror agree that the agreements contained in Section
7.2(b) and Section 7.2(c) above (i) shall be the sole and exclusive
remedies of Acquiror against HCIA for termination of the Agreement and
Acquiror's remedies against HCIA shall be limited to the sums stipulated in
Section 7.2(b) and Section 7.2(c) regardless of the circumstances giving
rise to such termination and (ii) are an integral part of the transactions
contemplated by this Agreement and constitute liquidated damages and not a
penalty. If HCIA fails to promptly pay any payments due to the Acquiror
under Sections 7.2(b) or 7.2(c), it shall pay all of the costs, fees and
expenses (including all legal costs, fees and expenses) in connection with
any action, including the filing of any lawsuit or other legal action,
taken to collect payment.
SECTION 7.3 AMENDMENT. Subject to compliance with applicable law, this
Agreement may be amended by the parties at any time before or after the HCIA
Stockholder Approval; provided, however, that after any such approval, there
may not be, without further approval of the stockholders of HCIA, any amendment
of this Agreement that changes the amount or the form of the consideration to
be delivered to the holders of HCIA Common Stock hereunder, or which by law
otherwise expressly requires the further approval of such stockholders. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto and duly approved by each of the parties'
hereto.
SECTION 7.4 EXTENSION; WAIVER. At any time prior to the Effective Time, a
party may, subject to the proviso of Section 7.3 (and for this purpose treating
any waiver referred to below as an amendment), (a) extend the time for the
performance of any of the obligations or other acts of the other parties, (b)
waive any inaccuracies in the representations and warranties of the other
parties contained in this Agreement or in any document delivered pursuant to
this Agreement or (c) waive compliance by the other party with any of the
agreements or conditions contained in this Agreement. Any agreement on the part
of a party to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party. Any extension or
waiver given in compliance with this Section 7.4 or failure to insist on strict
compliance with an obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
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ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 8.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
SECTION 8.2 NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed) or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to HCIA, to: HCIA Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Senior Vice President and
General Counsel
with a copy to: ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Preston L.L.P.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: D. ▇▇▇▇▇ ▇▇▇▇▇, Esq.
and to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
(b) if to Acquiror, the LLC or the Merger Sub to:
c/o VS&A Communications Partners III, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
Senior Managing Member
with a copy to: VS&A Communications Partners III, L.P.
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▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.,
General Counsel
and to: Proskauer Rose LLP
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Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
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SECTION 8.3 DEFINITIONS. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person, where "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a person, whether through the
ownership of voting securities, by contract, as trustee or executor, or
otherwise;
(b) "best knowledge" of any person which is not an individual means the
knowledge of such person's directors and executive officers after due
inquiry with respect thereto;
(c) "material adverse effect" when used in connection with Acquiror or
HCIA means any change or effect that is materially adverse to the financial
condition, results of operations, business, properties, assets or
liabilities of such party and its subsidiaries taken as a whole.
(d) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity; and
(e) a "subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) which is owned
directly or indirectly by such first person.
SECTION 8.4 INTERPRETATION. When a reference is made in this Agreement to
an Article, Section or Exhibit, such reference shall be to an Article or
Section of, or an Exhibit to, this Agreement unless otherwise indicated.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation." The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. All terms defined in this
Agreement shall have the defined meanings used herein when used in any
certificate or other document made or delivered pursuant hereto unless
otherwise defined therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such term. Any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and assigns.
SECTION 8.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.
SECTION 8.6 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement
(including the documents, exhibits, disclosure schedules and the other
documents and instruments referred to herein) and the Non-Disclosure Agreement
(a) constitute the entire agreement among the parties hereto, and supersede all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter of this Agreement and (b) except for the
provisions of Section 5.3 are not intended to confer upon any person other than
the parties any rights or remedies.
SECTION 8.7 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Maryland, regardless of
the laws that might otherwise govern under applicable principles of conflict of
laws thereof.
SECTION 8.8 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties hereto without the
prior written consent of the other parties, except that HCIA may assign, in its
sole discretion, any or all of its rights, interests and obligations hereunder
to the Acquiror, the LLC or to any indirect or direct wholly owned subsidiary
or parent of the LLC. Any assignment in violation of the preceding sentence
shall be void. Subject to the preceding two sentences, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
SECTION 8.9 HEADINGS, ETC. The headings and table of contents contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 8.10 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
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in full force and effect, insofar as the foregoing can be accomplished without
materially affecting the economic benefits anticipated by the parties to this
Agreement. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall promptly
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by
applicable law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the fullest extent possible.
SECTION 8.11 TRANSFER AND SIMILAR TAXES. Notwithstanding any other
provision of this Agreement to the contrary, each of the stockholders of HCIA
shall be solely responsible for the payment of any sales, use, privilege,
transfer, documentary, gains, stamp, duties, recording and similar taxes and
fees (including any penalties, interest and additions to such fees) incurred in
connection with the conversion of shares of HCIA Common Stock pursuant to this
Agreement and for the accurate filing of all necessary tax returns and other
documentation with respect to any transfer tax.
IN WITNESS WHEREOF, HCIA, Acquiror, LLC and Merger Sub have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
HCIA INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
CHAIRMAN OF THE BOARD OF DIRECTORS AND
CHIEF EXECUTIVE OFFICER
VS&A COMMUNICATIONS PARTNERS III, L.P.
By: VS&A Equities III, L.L.C., its
General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
SENIOR MANAGING MEMBER
VS&HCIA, L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
MANAGING MEMBER
VS&HCIA, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
PRESIDENT
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