Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
by and among
CYBER DIALOGUE INC.
AIM ACQUISITION I INC.
APPLIED INFORMATION MANAGEMENT MARKETING, INC.
and
YANKELOVICH HOLDINGS INC.
relating to the merger of
APPLIED INFORMATION MANAGEMENT MARKETING, INC.
with and into
AIM ACQUISITION I INC.
Dated as of
February 3, 2000
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TABLE OF CONTENTS
ARTICLE I
THE MERGER
SECTION 1.1 The Merger........................................................2
SECTION 1.2 Closing...........................................................2
SECTION 1.3 Effective Time....................................................2
SECTION 1.4 Effects of the Merger.............................................3
SECTION 1.5 Certificate of Incorporation and
By-laws of the Surviving Corporation................3
SECTION 1.6 Directors and Officers of the
Surviving Corporation...............................3
SECTION 1.7 Supplementary Action..............................................3
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.1 Effect on the Stock of the Constituent Corporations...............4
SECTION 2.2 Exchange of Certificates.........................................10
SECTION 2.3 Stock Options....................................................12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
AIM AND YHI
SECTION 3.1 Organization.....................................................13
SECTION 3.2 Capitalization...................................................14
SECTION 3.3 Authority........................................................14
SECTION 3.4 Consents and Approvals; No Violations............................15
SECTION 3.5 Financial Statements; Undisclosed
Liabilities........................................16
SECTION 3.6 Absence of Certain Changes or Events.............................16
SECTION 3.7 No Default .....................................................18
SECTION 3.8 Litigation.......................................................18
SECTION 3.9 Compliance with Applicable Law...................................18
SECTION 3.10 Contracts........................................................19
SECTION 3.11 Intellectual Property............................................22
SECTION 3.12 Year 2000........................................................25
SECTION 3.13 Taxes............................................................25
SECTION 3.14 Employee Benefit Plans; Labor Relations..........................27
SECTION 3.15 Accounts Receivable..............................................29
SECTION 3.16 Environmental Matters............................................30
SECTION 3.17 Bank Accounts....................................................31
SECTION 3.18 Real Property; Leases; Equipment, Etc............................31
SECTION 3.19 Insurance........................................................33
SECTION 3.20 Absence of Questionable Payments.................................33
SECTION 3.21 Powers of Attorney; Guarantees...................................34
SECTION 3.22 Disclosure.......................................................34
SECTION 3.23 Securities Laws Matters..........................................34
SECTION 3.24 Loans to YHI.....................................................35
SECTION 3.25 Warranty Claims..................................................35
SECTION 3.26 Tax-Free Reorganization..........................................35
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CDI
SECTION 4.1 Organization; Subsidiaries.......................................35
SECTION 4.2 Capitalization...................................................37
SECTION 4.3 Authority........................................................37
SECTION 4.4 Consents and Approvals; No Violations............................38
SECTION 4.5 Financial Statements; Undisclosed
Liabilities......................................................38
SECTION 4.6 Material Adverse Change..........................................39
SECTION 4.7 No Default ......................................................39
SECTION 4.8 Litigation.......................................................39
SECTION 4.9 Taxes............................................................40
SECTION 4.10 Compliance with Applicable Law...................................40
SECTION 4.11 Merger Sub.......................................................41
SECTION 4.12 CDI Common Stock.................................................41
SECTION 4.13 Disclosure.......................................................42
SECTION 4.14 Tax-Free Reorganization..........................................42
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ARTICLE V
COVENANTS
SECTION 5.1 Conduct of Business Pending the Merger...........................42
SECTION 5.2 AIM Covenants....................................................42
SECTION 5.3 CDI Covenants....................................................45
SECTION 5.4 401(k) Plan Transfer.............................................45
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Shareholder Approval.............................................46
SECTION 6.2 Access to Information............................................46
SECTION 6.3 Notification of Certain Matters..................................46
SECTION 6.4 Supplemental Disclosure..........................................46
SECTION 6.5 Best Efforts.....................................................47
SECTION 6.6 Certain Employment Agreements....................................47
SECTION 6.7 Merger Sub Board.................................................47
SECTION 6.8 Shareholder Loans ...............................................47
SECTION 6.9 AIM Benefit Plans................................................47
SECTION 6.10 AIM Shareholder Buy/Sell Agreement...............................48
SECTION 6.11 Tax-Free Reorganization..........................................48
SECTION 6.12 Qualification as a Foreign Corporation...........................48
ARTICLE VII
CONDITIONS
SECTION 7.1 Conditions to Each Party's Obligation
To Effect the Merger.............................................48
SECTION 7.2 Conditions of Obligations of AIM.................................49
SECTION 7.3 Conditions of Obligations of CDI.................................50
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ARTICLE VIII
TERMINATION
SECTION 8.1 Termination......................................................52
SECTION 8.2 Effect of Termination............................................53
ARTICLE IX
SECURITIES LAW MATTERS
SECTION 9.1 Disposition of Shares............................................53
SECTION 9.2 Legend...........................................................53
ARTICLE X
SURVIVAL AND INDEMNIFICATION
SECTION 10.1 Survival Periods. .............................................54
SECTION 10.2 Indemnification of CDI..........................................54
SECTION 10.3 Indemnification of YHI..........................................56
SECTION 10.4 Indemnification Procedures......................................57
SECTION 10.5 Insurance.......................................................59
SECTION 10.6 Sole Remedies...................................................59
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Expenses........................................................59
SECTION 11.2 Brokers or Finders..............................................59
SECTION 11.3 Amendment.......................................................59
SECTION 11.4 Extension; Waiver...............................................60
SECTION 11.5 Notices.........................................................60
SECTION 11.6 Descriptive Headings............................................61
SECTION 11.7 Counterparts....................................................61
SECTION 11.8 Entire Agreement; No Third Party
Beneficiaries...................................................61
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SECTION 11.9 Governing Law; Arbitration......................................62
SECTION 11.10 Publicity.......................................................62
SECTION 11.11 Assignment......................................................62
SECTION 11.12 Specific Performance............................................63
Exhibit A AIM Board Resolutions Approving Merger
Exhibit B YHI Board Resolutions Approving Merger
Exhibit C YHI Sole Stockholder Resolutions Approving Merger
Exhibit D Merger Sub Board Resolutions Approving
Merger
Exhibit E CDI Board Resolutions Approving Merger
Exhibit F CDI Sole Stockholder Resolutions Approving Merger
Exhibit G Form of Employment Agreement by and between AIM and
Xxxxx Xxxxxxxx
Exhibit H Form of Nonsolicitation Agreement by and between AIM, CDI
and YHI
Exhibit I Lock-up Agreement by and between YHI and XX Xxxxx
Exhibit J Services Agreement by and between Applied Information
Management Marketing, Inc., Cyber Dialogue Inc. and
Yankelovich Holdings Inc.
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as
of February 3, 2000, by and among Cyber Dialogue Inc., a Delaware corporation
("CDI"), AIM Acquisition I Inc., a Delaware corporation and wholly-owned
subsidiary of CDI ("Merger Sub"), Yankelovich Holdings Inc., a Delaware
corporation ("YHI") and Applied Information Management Marketing, Inc., a
Delaware corporation and wholly-owned subsidiary of YHI ("AIM").
WHEREAS, each of CDI, Merger Sub, YHI and AIM desires to
enter into a transaction whereby AIM will merge with and into Merger Sub (the
"Merger"), with Merger Sub being the surviving corporation, upon the terms and
subject to the conditions set forth in this Agreement, whereby issued and
outstanding shares of common stock, par value $.01 per share, of AIM ("AIM
Common Stock") will be converted into the right to receive the Merger
Consideration (as defined in Section 2.1);
WHEREAS, the respective Boards of Directors of CDI, Merger
Sub, YHI and AIM have each determined that the Merger and the other transactions
contemplated hereby are consistent with, and in furtherance of, their
respective business strategies and goals and are advisable and in the best
interests of their respective stockholders;
WHEREAS, CDI, as the sole stockholder of Merger Sub, and YHI,
as the sole stockholder of AIM, have each approved and adopted the Agreement;
WHEREAS, the parties desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger; and
WHEREAS, for federal income tax purposes, it is intended that
the Merger will qualify as a reorganization under the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and the
rules and regulations under the Code, and that this Agreement is intended to
be, and hereby is adopted as, a plan of reorganization within the meaning of
Section 368 of the Code.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, 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 Delaware General
Corporation Law (the "DGCL"), AIM shall be merged with and into Merger Sub at
the Effective Time (as defined in Section 1.3). Following the Effective Time,
Merger Sub shall be the surviving corporation (sometimes referred to herein as
the "Surviving Corporation").
SECTION 1.2 CLOSING. The closing of the Merger (the "Closing") will
take place at 10:00 a.m. 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 VII, at the offices of Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP, Four Times Square, New York, New York, unless
another time, date or place is agreed to by the parties hereto. At the Closing,
there shall be delivered to CDI and AIM certificates and other documents and
instruments required to be delivered under Articles VI and VII hereof.
SECTION 1.3 EFFECTIVE TIME. Subject to the provisions of this
Agreement, as soon as practicable on the Closing Date, a certificate of merger
(the "Certificate of Merger") shall be properly executed and duly filed with the
Secretary of State of the State of Delaware as provided in the DGCL. The Merger
shall become effective upon the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware (the "Effective Time").
SECTION 1.4 EFFECTS OF THE MERGER. At the Effective Time (a) the
separate existence of AIM shall cease and AIM shall be merged with and into
Merger Sub (AIM and Merger Sub are sometimes referred to herein as the
"Constituent Corporations") and (b) the Merger shall have the effects set forth
in Section 259 of the DGCL.
SECTION 1.5 CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE SURVIVING
CORPORATION. The Certificate of Incorporation, as amended to effect a name
change of Merger Sub to Applied Information Management Marketing, Inc.
immediately upon the Effective Time, shall, as a result of the Merger, be the
Certificate of Incorporation of the Surviving Corporation; and the By-laws of
Merger Sub shall, as a result of the Merger, be the By-laws of the Surviving
Corporation.
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SECTION 1.6 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors of the Surviving Corporation shall be the directors of Merger Sub in
office immediately prior to the Effective Time, and the officers of the
Surviving Corporation shall be the officers of Merger Sub in office immediately
prior to the Effective Time, in each case, until their successors shall have
been duly elected or appointed or qualified or until their earlier death,
resignation or removal in accordance with the Certificate of Incorporation and
By-laws of the Surviving Corporation.
SECTION 1.7 SUPPLEMENTARY ACTION. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any further
assignments or assurances are necessary or desirable to vest or to perfect or
confirm of record in the Surviving Corporation the title to any property or
rights of either of the Constituent Corporations, or otherwise to carry out the
provisions of this Agreement, the officers and directors of the Surviving
Corporation are hereby authorized and empowered on behalf of the respective
Constituent Corporations, in the name of and on behalf of the appropriate
Constituent Corporation, to execute and deliver any and all things necessary or
proper to vest or to perfect or confirm title to such property or rights in the
Surviving Corporation, and otherwise to carry out the purposes and provisions of
this Agreement.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.1 EFFECT ON THE STOCK OF THE CONSTITUENT CORPORATIONS. As of
the Effective Time, by virtue of the Merger and without any action on the part
of the holders of any shares of stock of the Constituent Corporations:
(a) CANCELLATION OF TREASURY SHARES. Each share of AIM Common
Stock held in the treasury of AIM shall automatically be cancelled and retired
and shall cease to exist, and no consideration shall be delivered in exchange
therefor.
(b) CONVERSION OF AIM COMMON STOCK. Each share of AIM Common
Stock issued and outstanding immediately prior to the Effective Time, other than
shares to be cancelled in accordance with Section 2.1(a), shall automatically be
converted into and become the right to receive three thousand dollars ($3,000)
and 881.676 fully paid and nonassessable shares of common stock, par value $.01
per share (the "CDI Common Stock"), of CDI (the "Merger Consideration") (for an
aggregate Merger Consideration of three million dollars ($3,000,000) and 881,676
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shares of CDI Common Stock. As of the Effective Time, all such shares of AIM
Common Stock shall no longer be outstanding and shall automatically be cancelled
and retired and shall cease to exist, and each holder of a certificate
representing any such AIM Common Stock shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration upon
surrender of such certificate. In no event shall interest be paid or accrued on
the Merger Consideration.
SECTION 2.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE PROCEDURES. At the Effective Time, the Surviving
Corporation shall issue to, and each holder of certificates which immediately
prior to the Effective Time represented outstanding AIM Common Stock (the
"Certificates") shall receive, upon surrender to the Surviving Corporation of
one or more Certificates for cancellation, certificates representing the number
of shares of CDI Common Stock and the amount of cash which such holder of
Certificates has the right to receive as Merger Consideration pursuant to
Section 2.1.
(b) TRANSFER TAXES. If any certificates for any shares of CDI
Common Stock are to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of such
exchange that the person requesting such exchange shall pay to the Surviving
Corporation any transfer or other taxes required by reason of the issuance of
certificates for such shares of CDI Common Stock in a name other than that of
the registered holder of the Certificate surrendered, or shall establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Notwithstanding the foregoing, neither the Surviving Corporation nor
any party hereto shall be liable to a holder of Certificates for any shares of
CDI Common Stock or dividends thereon delivered to a public official pursuant to
applicable escheat laws.
(c) CLOSING TRANSFER BOOKS. From and after the Effective Time,
there shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the shares of AIM Common Stock that were
outstanding immediately prior to the Effective Time.
SECTION 2.3 STOCK OPTIONS. At the Effective Time, each then-outstanding
option granted by YHI to employees of AIM to purchase shares of YHI common
stock, whether or not then exercisable or fully vested ("YHI OPTION"), shall be
cancelled by YHI. At such time as the YHI Options are cancelled, CDI shall grant
to each employee of AIM that had previously been granted a YHI Option which has
been cancelled in accordance with this Section an option ("SUBSTITUTE OPTION")
to
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acquire the number of shares of CDI common stock, rounded down to the nearest
whole share, equal to the number of shares of YHI common stock subject to such
YHI Option multiplied by the Exchange Ratio (as defined below), at an exercise
price per share of CDI common stock, rounded up to the nearest whole cent, equal
to the exercise price for each share of YHI common stock subject to such YHI
Option divided by the Exchange Ratio; PROVIDED, HOWEVER, that in the case of any
YHI Option to which Section 421 of the Code applies by reason of its
qualification as an incentive stock option under Section 422 of the Code, the
exchange formula shall be adjusted if necessary to comply with Section 424(a) of
the Code. Each Substitute Option shall be subject to the same terms and
conditions (including, without limitation, expiration date, vesting and
exercise provisions) as were applicable to the YHI Option immediately prior to
the Effective Time. For purposes of this Section 2.3. the "Exchange Ratio" shall
be the fair market value of the YHI common stock as of the Effective Time,
divided by $6.27.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AIM
AND YHI
AIM and YHI jointly and severally represent and warrant to
each of CDI and Merger Sub as follows:
SECTION 3.1 ORGANIZATION. AIM is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and corporate authority to own, lease and operate
its properties and to carry on its business as now being conducted. Except as
set forth in Section 3.1 of the disclosure schedule to be delivered to CDI
prior to the date of this Agreement (the "AIM Disclosure Schedule"), AIM is duly
qualified or licensed to do business and in good standing in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary, except
where the failure to be so qualified or licensed and in good standing would not
have a material adverse effect on AIM. AIM has heretofore delivered to CDI
accurate and complete copies of its Certificate of Incorporation and By-laws as
in effect as of the date of this Agreement. Section 3.1 of the AIM Disclosure
Schedule sets forth a complete and accurate list of all jurisdictions in which
AIM is qualified or licensed to do business. AIM has no subsidiaries and, except
as set forth in Section 3.1 of the AIM Disclosure Schedule, no equity interest
or other investment, direct or indirect, in any corporation, partnership, joint
venture or other entity.
SECTION 3.2 CAPITALIZATION.
(a) The authorized capital stock of AIM consists of 1,000
shares of AIM Common Stock, of which, immediately prior to Closing, 1,000 shares
will be issued and outstanding and no shares will be held in treasury. Except
as set forth in Section 3.2 of the AIM Disclosure Schedule, all the outstanding
shares of AIM Common Stock are duly authorized, validly issued, fully paid and
non-assessable and free of any preemptive rights in respect thereto. Except as
set forth above and in Section 3.2 of the AIM Disclosure Schedule, there are no
outstanding options, warrants, calls, subscriptions, contracts, voting trusts,
proxies or other rights or other agreements or commitments obligating AIM to
issue or sell or cause to be issued or sold any shares of capital stock of, or
other equity interests in, AIM or securities convertible into or exchangeable
for such shares or equity interests.
(b) YHI is, and on the Closing Date shall be, the sole record
and beneficial owner and holder of all of the shares of AIM Common Stock issued
and outstanding, and upon surrender at the Closing, the AIM Common Stock held by
YHI will be free and clear of all encumbrances of any nature whatsoever.
SECTION 3.3 AUTHORITY. Each of YHI and AIM has the requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by the Boards of Directors of AIM and YHI and approved by YHI as the
sole stockholder of AIM, and no other corporate proceedings on the part of AIM
or YHI are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. The resolutions of the Boards of Directors of
AIM and YHI and the resolutions of YHI as the sole stockholder of AIM reflecting
such approval are attached hereto as Exhibits A, B and C, respectively. This
Agreement has been duly and validly executed and delivered by AIM and YHI and
constitutes a valid and binding obligation of each of AIM and YHI enforceable
against each of them in accordance with its terms, except as enforcement may be
limited by general principles of equity, whether applied in a court of law or a
court of equity, and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally.
SECTION 3.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Except as set forth
in Section 3.4 of the AIM Disclosure Schedule, and except for filings and
approvals
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which may be required under the DGCL, neither the execution or delivery of this
Agreement by AIM and YHI nor the consummation by AIM and YHI of the transac
tions contemplated hereby nor compliance by AIM with any of the provisions
hereof will (i) conflict with or result in any breach of any provision of the
Certificate of In corporation or By-laws of AIM or YHI, (ii) require any filing
with, or authorization, consent or approval of any government, executive
official thereof, governmental or regulatory authority, agency or commission,
including courts of competent jurisdiction, domestic or foreign
(a "Governmental Entity"); (iii) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or
acceleration or result in the creation of any mortgage, pledge, charge,
security interest, claim or encum brance of any kind (collectively a "Lien"))
or require any authorization, consent or approval under, any material note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which AIM or YHI is a party or by which either of
their assets may be bound or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to AIM or YHI or any of their
respective assets.
SECTION 3.5 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
(a) Section 3.5(a) of the AIM Disclosure Schedule contains the
unaudited balance sheets of AIM as of December 31, 1998 as of October 31, 1999
and the related statements of income for such fiscal year and ten-month period,
respectively. The balance sheets fairly present, and the December 31, 1999
balance sheet will fairly present, in all material respects, the financial
position of AIM as of their respective dates, and the statements of income
fairly present, and the December 31, 1999 statements of income and cash flows
will fairly present, in all material respects, the results of operations and
cash flows, respectively, of AIM for the periods therein set forth, in each case
in accordance with GAAP consistently applied during the periods involved
(subject to normal year-end adjustments in the case of the ten-month period
ended October 31, 1999 and subject to certain adjustments such as those required
pursuant to SEC Staff Accounting Bulletin No. 55 concerning push-down
accounting). The audited financial statements for the years ended December 31,
1998 and 1999, and the opinion of Ernst & Young LLP, AIM's certified
independent accountant, will be provided to CDI no later than February 14, 2000.
(b) Except as set forth in Section 3.5(b) of the AIM
Disclosure Schedule, AIM does not have any liabilities or obligations of any
material nature (whether absolute, accrued, contingent, or otherwise and whether
due or to become due) that were not fully reflected or reserved against in the
balance sheet as of
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October 31, 1999, and will not for the year ended December 31, 1999, except for
liabilities and obligations which were incurred in the ordinary course of
business consistent with past practice since the date thereof.
(c) As of the Effective Time, the revenue backlog is an amount
not less than $2.2 million; and Section 3.5(c) of the AIM Disclosure Schedule
sets forth a complete list of all contracts comprising this backlog.
SECTION 3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in Section 3.6 of the AIM Disclosure Schedule, since October 31, 1999, AIM has
conducted its business only in the ordinary course, and there has not been any:
(a) material adverse change in the business, assets,
prospects, results of operations or financial condition ("Material Adverse
Change") of AIM;
(b) change in AIM's authorized or issued capital stock; grant
of any stock option or right to purchase shares of capital stock of AIM;
issuance of any security convertible into such capital stock; grant of any
registration rights by AIM; purchase, redemption, retirement, or other
acquisition by AIM of any shares of any such capital stock; or declaration or
payment of any dividend or other distribution or payment in respect of shares of
capital stock;
(c) amendment to the Certificate of Incorporation or By-laws
of AIM;
(d) payment by AIM of any bonuses or compensation other than
regular salary or bonus payments to employees, or increase in the salaries, or
payment on any debt of AIM, to any shareholder, director, officer, or employee,
or entry into any employment, severance, or similar contract with any director,
officer, or employee;
(e) adoption of, or increase in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings, insurance,
pension, retirement, or other employee benefit plan for or with any employees of
AIM;
(f) damage to or destruction or loss of any asset or property
of AIM, whether or not covered by insurance, in excess of $25,000;
(g) termination of, receipt of notice, or actions or omissions
which would give rise to a right of termination of any license, maintenance,
distributorship,
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dealer, sales representative, joint venture, credit, or similar agreement that
would be reasonably likely to result in a Material Adverse Change of AIM;
(h) termination of or receipt of notice of termination of any
AIM Contract (as defined in Section 3.10) or transaction involving a total
remaining commitment by AIM of at least $10,000;
(i) loan or advance by AIM to any person other than sales to
customers on credit in the ordinary course of business, or discharge or
satisfaction of any material liability except in the ordinary course of
business;
(j) sale, lease, or other disposition of any material asset or
property of AIM;
(k) mortgage, pledge, or imposition of any Lien or other
encumbrance on any asset or property of AIM;
(l) cancellation or waiver of any claims or rights, except in
the ordinary course of business, with a value to AIM in excess of $10,000;
(m) change in the tax or financial accounting methods used by
AIM or change of any election for federal income tax purposes; or
(n) agreement, whether oral or written, by AIM to do any of
the foregoing.
SECTION 3.7 NO DEFAULT. Except as set forth in Section 3.7 of the AIM
Disclosure Schedule, AIM is not in default or violation (and no event has
occurred that with or without notice or lapse of time or both would constitute a
default or violation) of any term, condition or provision of (i) its Certificate
of Incorporation or By-laws, (ii) any material note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
AIM is a party or by which its assets may be bound or (iii) any order, writ,
injunction, decree, statute, rule or regulation applicable to AIM or any of its
assets.
SECTION 3.8 LITIGATION. Except as set forth in Section 3.8 of the AIM
Disclosure Schedule, AIM is not a party to any, and there are no pending or, to
the knowledge of AIM and YHI, threatened legal, administrative, arbitration or
other proceedings, claims, actions, suits or governmental investigations of any
nature involving, affecting or relating to AIM, or challenging the validity or
propriety of the
8
transactions contemplated in this Agreement; and there is not known to AIM any
reasonable basis for any such proceedings, claim, action or governmental
investiga tion. AIM is not a party to any order, judgment or decree which will,
or might reasonably be expected to, affect its business, operations, properties,
assets, financial condition, prospects or results of operations or its ability
to acquire any property or conduct business in any area in which it presently
does business.
SECTION 3.9 COMPLIANCE WITH APPLICABLE LAW. Except as set forth in
Section 3.9 of the AIM Disclosure Schedule, AIM has all permits, licenses,
franchises and other governmental authorizations necessary and material to
conduct its business as presently conducted. The business of AIM is presently
being conducted so as to comply in all material respects with all federal, state
and local governmental laws, rules, regulations, orders, writs, injunctions and
decrees applicable to AIM and AIM has not received notice of violation of, and
does not know of any violations of any of the above. To the knowledge of AIM and
YHI, no suspension or cancellation of any material license, franchise, permit or
authorization is threatened.
SECTION 3.10 CONTRACTS.
(a) Sections 3.10(a)(i) through (xii) of the AIM Disclosure
Schedule contain a complete and accurate list of each contract, lease,
agreement, promise or undertaking (written or oral, express or implied),
currently in effect to which AIM is a party and which is described in (i)
through (xii) below, respectively (collectively, the "AIM Contracts"):
(i) each AIM Contract that involves performance of services
or delivery of goods or materials by AIM or to AIM in an amount or value in
excess of $25,000 (unless otherwise listed in Section 3.10(a)(ii) through (xii)
of the AIM Disclosure Schedule);
(ii) each AIM Contract with directors, officers, employees,
former employees, agents or consultants, with respect to salaries, bonuses,
commissions, percentage compensation, pensions, deferred compensation or
retirement payments;
(iii) each agreement or arrangement for the sale of any AIM
stock, assets, or rights or for the grant of any preferential rights to purchase
any AIM stock, assets, or rights or which requires the consent of any third
party to the transfer and assignment of any of AIM stock, assets, or rights;
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(iv) each AIM Contract relating to the borrowing of money in
excess of $10,000 by AIM, or the creation of an encumbrance on the assets of AIM
valued at over $10,000;
(v) each AIM Contract for capital expenditures, for other
expenditures not in the ordinary course of business involving expenditures of
AIM, in each case, in excess of $10,000, or providing for an express undertaking
by AIM to be responsible for consequential damages;
(vi) each license agreement (regardless of whether AIM is
licensor or licensee) other than license agreements relating to off-the-shelf
computer software purchased by AIM for less than $5,000 per unit, maintenance or
support agreement, trial agreement, distribution, consulting, development or
escrow agreement, or other AIM Contract with respect to the use, development,
marketing and distribution of Intellectual Property (as defined in Section 3.11)
including agreements with former employees, consultants and contractors
regarding the development, appropriation or the non-disclosure of any
Intellectual Property and any written settlement or consent relating to any
Intellectual Property (unless otherwise listed in Sections 3.11 of the AIM
Disclosure Schedule);
(vii) each AIM Contract with employees, officers and directors
(unless otherwise listed in Section 3.10(a)(ii) or (viii) of the AIM Disclosure
Schedule), relating to wages, hours, and other conditions of employment;
(viii) each AIM Contract to which, to AIM's and YHI's
knowledge, any employee, consultant, or contractor of AIM is bound that in any
manner purports to (A) restrict such employee's, consultant's, or contractor's
freedom to engage in any line of business or activity or to compete with any
other person, or (B) assign to any other person such employee's, consultant's,
or contractor's rights to any copyright, software, invention, improvement, or
discovery (unless otherwise listed in Section 3.10(a)(vi) or (vii) of the AIM
Disclosure Schedule);
(ix) each joint venture, partnership, and other AIM
Contract involving a sharing of profits, losses, costs, or liabilities by AIM
with any other person (unless otherwise listed in Section 3.10(a)(x) of the AIM
Disclosure Schedule);
(x) each AIM Contract providing for payments to or by any
person based on sales, purchases, or profits, including distribution, reseller
and sales representative agreements, other than direct payments for goods by
end users of AIM's products;
10
(xi) each written warranty, guaranty, and/or other similar
undertak ing with respect to contractual performance extended by AIM, other than
in the ordinary course of business;
(xii) each AIM Contract, agreement, arrangement or commitment
not elsewhere specifically disclosed pursuant to this Agreement, involving the
payment or receipt by AIM of more than $25,000 or which is otherwise material to
the business, operation or financial condition of AIM.
(b) Each of the AIM Contracts is in full force and effect and
enforce able in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance and similar debtor-creditor law and general
principles of equity. Except as set forth in Section 3.10(b) of the AIM
Disclosure Schedule, there exists no event of default or occurrence, condition
or act on the part of AIM or, to the knowledge of AIM and YHI, on the part of
the other parties to the AIM Contracts which constitutes or would constitute
(with or without notice or lapse of time or both) a breach of or default under
any of the AIM Contracts, or cause or permit acceleration of any obligation of
AIM, which individually or in the aggregate would have a material adverse effect
on AIM. To the knowledge of AIM and YHI, there are no renegotiations of,
attempts to renegotiate, or outstanding rights to renegotiate any material
amounts paid or payable to AIM under current or completed AIM Contracts with any
person having the contractual or statutory right to demand or require such
renegotiation and no such person has made written demand for such renegotiation.
(c) Except as set forth in Section 3.10(c) of the AIM
Disclosure Schedule, no consent of any other party to the AIM Contracts is
required in order for the AIM Contracts to remain in full force and effect
following the Merger.
(d) Except as set forth in Section 3.10(d) of the AIM
Disclosure Schedule, AIM is not a party to any agreement which materially limits
the freedom of AIM to compete in any line of business in which it currently
operates or with any person.
SECTION 3.11 INTELLECTUAL PROPERTY.
(a) AIM owns or has the valid right to use all patents and
patent applications, trademarks, service marks, and trademark or service xxxx
registrations
11
and applications, trade names, logos, designs, Internet domain names, slogans
and general intangibles of like nature, together with all goodwill related to
the foregoing, copyrights, copyright registrations, renewals and applications,
Software (as defined below), and to the knowledge of AIM and YHI, technology,
Trade Secrets (as defined in Section 3.11(e)) and other confidential
information, knowhow, property, proprietary processes, formulae, algorithms,
models and methodologies, licenses, agree ments and all other proprietary rights
(collectively, the "Intellectual Property"), used in the business of AIM as
currently conducted or as presently contemplated to be conducted. Section
3.11(a) of the AIM Disclosure Schedule sets forth, for the Intellectual Property
owned by AIM, a complete and accurate list of all U.S. and foreign (i) patents
and patent applications, (ii) trademark or service xxxx registrations and
applications, (iii) copyright registrations and applications, (iv) material
unregis tered copyrights other than in Software (which are covered by Section
3.11(i) below), service marks, trademarks, trade names, and slogans, and (v)
Internet domain names, indicating for each the applicable jurisdiction,
registration number (or application number) and date issued (or date filed).
(b) The Intellectual Property owned by AIM is free and clear
of all Liens except as specifically identified in Section 3.11(b) of the AIM
Disclosure Schedule. AIM is listed in the records of the appropriate United
States, state or foreign agency as the sole owner of record for each application
and registration listed in Section 3.11(a) of the AIM Disclosure Schedule.
(c) The registrations listed in Section 3.11(a) of the AIM
Disclosure Schedule are valid and subsisting, in full force and effect, and have
not been cancelled, expired, or abandoned. There is no pending or, to the best
of AIM's and YHI's knowledge, threatened opposition, interference or
cancellation proceeding before any court or registration authority in any
jurisdiction against the registrations listed in Section 3.11(a) of the AIM
Disclosure Schedule or, to the best of AIM's and YHI's knowledge, against any
Intellectual Property licensed to AIM pursuant to the License Agreements (as
defined below).
(d) Section 3.11(d) of the AIM Disclosure Schedule sets forth
a complete and accurate list of all material agreements pertaining to the use of
or granting any right to use or practice any rights under any Intellectual
Property, whether AIM is the licensee or licensor thereunder, and any written
settlements or consents relating to any Intellectual Property (collectively, the
"License Agree ments"), indicating for each the title, the parties, date
executed, and the Intellectual Property covered thereby. Except as set forth in
Section 3.11(d) of the AIM Disclosure Schedule, there are no settlements,
consents, judgments, or orders or other
12
agreements to which AIM or YHI is a party or AIM or YHI otherwise has knowledge
which restrict AIM's rights to use any Intellectual Property, or permit third
parties to use any Intellectual Property which would otherwise infringe AIM's
Intellectual Property.
(e) AIM takes reasonable measures to protect the
confidentiality of its material trade secrets, know-how or other confidential
information (together, "Trade Secrets") including requiring employees and
independent contractors having access thereto to execute written non-disclosure
agreements. To AIM's and YHI's knowledge, no Trade Secret material to the
business of AIM as currently operated or planned to be operated has been
disclosed or authorized to be disclosed to any third party, including any
employee, agent, contractor or other entity, other than pursuant to a
non-disclosure agreement or other confidential obligation that adequately
protects AIM's proprietary interests in and to such Trade Secrets. To AIM's and
YHI's knowledge, no party to any non-disclosure agreement relating to AIM's
Trade Secrets is in breach thereof.
(f) To AIM's and YHI's knowledge, the conduct of AIM's
business as currently conducted or planned to be conducted does not infringe
upon any Intellectual Property owned or controlled by any third party. There
are no claims or suits pending or, to AIM's and YHI's knowledge, threatened, and
AIM has not received any notice of a third party claim or suit (i) alleging that
AIM's activities or the conduct of its businesses infringes upon or constitutes
the unauthorized use of the Intellectual Property rights of any third party, or
(ii) challenging the ownership, use, validity or enforceability of any
Intellectual Property.
(g) To AIM's and YHI's knowledge, no third party is
misappropriating, infringing, diluting, or violating any Intellectual Property
owned by or licensed to or by AIM and, except as set forth in Section 3.11(g) of
the AIM Disclosure Sched ule, no such claims are pending against a third party
by AIM.
(h) The consummation of the Merger and the transactions contem
plated hereby will not result in the loss or impairment of AIM's right to own or
use any of the Intellectual Property nor require the consent of any Governmental
Entity or, except with respect to off-the-shelf Software purchased by AIM for
less than $5,000 per unit, third party in respect of any such Intellectual
Property.
(i) "Software" means any and all (i) computer programs,
including any and all software implementations of algorithms, models and
methodologies, whether in source code or object code, (ii) databases and
compilations, including any
13
and all data and collections of data, whether machine readable or otherwise,
(iii) descriptions, flow-charts and other work product used to design, plan,
organize and develop any of the foregoing, (iv) domain names and the technology
supporting and content contained on the respective Internet site(s), and (v) all
documentation, including user manuals and training materials, relating to any
of the foregoing. Section 3.11(i) of the AIM Disclosure Schedule lists all
material computer programs and databases other than off-the-shelf applications
programs which are owned, licensed, leased or otherwise used by AIM in
connection with the operation of its businesses as currently conducted,
including any Software currently or previously, or contemplated to be, licensed,
sublicensed or sold by AIM, and identifies which is owned, licensed, leased, or
otherwise used, as the case may be.
(j) Each item of Software listed in Section 3.11(i) of the AIM
Disclosure Schedule is either (i) owned by AIM, (ii) currently in the public
domain or other wise available to AIM without the license, lease or consent of
any third party, or (iii) used under rights granted to AIM pursuant to a written
agreement, license or lease from a third party, which written agreement, license
or lease is set forth in Section 3.11(i) of the AIM Disclosure Schedule. To
AIM's and YHI's knowledge, AIM's use of the Software set forth in Section
3.11(i) of the AIM Disclosure Schedule in connection with the operation of its
business does not violate the rights of any third party. With respect to the
Software set forth in Section 3.11(i) of the AIM Disclosure Schedule which AIM
purports to own, such Software was either developed by (i) employees of AIM
within the scope of their employment; or (ii) independent contractors who have
assigned their rights to AIM pursuant to written agreements.
SECTION 3.12 YEAR 2000. All Date Data and Date-Sensitive Systems, as of
the date hereof, are, and as of the Closing Date, will be, Year 2000 Compliant,
except for off-the-shelf Software purchased by AIM whose failure to be Year 2000
Compli ant would not be reasonably likely to result in a Material Adverse Change
of AIM. "Date Data" means any data of any type that includes date information or
which is otherwise derived from, dependent on or related to date information.
"Date-Sensitive System" means any Software, microcode or hardware system or
component, including any electronic or electronically controlled system or
component, that processes any Date Data and that is installed, in development or
on order by AIM for its internal use, or which AIM sells, leases, licenses,
assigns or otherwise provides, or the provision or operation of which AIM
provides the benefit, to its customers, vendors, suppliers, affiliates or any
other third party. "Year 2000 Compliant" means (a) with respect to Date Data,
that such data is in proper format and accurate for all dates in the twentieth
and twenty-first centuries, and (b) with respect to Date-Sensitive Systems,
that each such system accurately processes all Date Data, including for the
14
twentieth and twenty-first centuries, without loss of any functionality,
including but not limited to calculating, comparing, sequencing, storing and
displaying such Date Data (including all leap year considerations), when used as
a stand-alone system or in combination with other software or hardware. In
addition, AIM has not received written notice from any supplier of critical
information technology systems or material current product offerings of any
material Year 2000-related problem that affects AIM and would cause AIM to not
be Year 2000 compliant
SECTION 3.13 TAXES.
(a) Except as provided in Section 3.13(a) of the AIM
Disclosure Schedule, AIM (i) has, within the time and in the manner prescribed
by law, filed, or there has been filed on its behalf (and until the Closing
will, within the time and in the manner prescribed by law, file, or will be
filed on its behalf) all Tax Returns with respect to Taxes of AIM, including any
consolidated, combined or unitary tax return of an affiliated group of which AIM
is now or ever was a member, and all such Tax Returns are complete and accurate
in all respects, (ii) has paid all Taxes that are required to be paid or that
AIM is obligated to withhold from amounts owing to any employee, creditor or
third party, except with respect to matters contested in good faith and as to
which adequate reserves have been provided, and (iii) has provided adequate
accruals, except as in the aggregate would not have a material adverse effect on
AIM, in its financial statements for the payment of all Taxes (including
deferred income taxes).
(b) Except as provided in Section 3.13(b) of the AIM
Disclosure Schedule, (i) there are not pending or threatened in writing any
audits, examinations, investigations, or other proceedings in respect of Taxes
or Tax Return of AIM or any affiliated group of which AIM is now or ever was a
member, (ii) there are no encumbrances for Taxes upon the assets or properties
of AIM except for statutory liens for Taxes not yet due, (iii) no power of
attorney has been granted by or with respect to AIM with respect to any matter
relating to Taxes, (iv) all Tax deficiencies which have been claimed, proposed
or asserted against AIM have been fully paid or finally settled, and no issue
has been raised in any examination by any Tax authority, which, by application
of similar principles, could reasonably be expected to result in the proposal or
assertion of a Tax deficiency for another year not so examined, (v) neither AIM
nor any affiliated, consolidated, combined or unitary group of which AIM is now
or ever was a member, has waived any statute of limitations or agreed to any
extension of time within which to file any Tax Return, which such statute of
limita tions has not expired or such Tax Return has not since been timely filed
and (vi) AIM has made available to CDI true and correct copies of the federal
income Tax Return
15
and any state, local or foreign Tax Return for any jurisdiction that represents
five percent or more of the aggregate taxable income of AIM as filed by AIM for
each of the taxable years ended December 31, 1998, 1997, 1996 and 1995, together
with true and correct copies of any audit reports, letter rulings, technical
advice memoranda, closing agreements or other similar documents with respect to
Taxes of AIM for such periods.
(c) Other than with respect to the affiliated group of which
YHI is the common parent, AIM has not been a member of any affiliate group of
corporations (as defined in Section 1504 of the Code) and is not a party to,
bound by, or otherwise obligated under any Tax sharing agreement, Tax
indemnification agreement or similar contract or arrangement.
(d) For purposes of this Agreement, (i) the term "Tax" or
"Taxes" includes all taxes, charges, fees, levies or other assessments imposed
by any federal, state, local, or foreign taxing authority, including, without
limitation, income, gross receipts, premium, recapture, credit, excise,
property, sales, use, occupation, service, service use, leasing, leasing use,
value added, transfer, payroll, employment, with holdings, estimated, license,
stamp, franchise or similar taxes (including any interest earned thereon or
penalties or additions attributable thereto) and (ii) "Tax Return" shall mean
any report, return, documents, declaration or other information or filing
required to be supplied to any taxing authority or jurisdiction with respect to
Taxes including, without limitation, any supporting schedules or attachments and
any amendments thereto.
SECTION 3.14 EMPLOYEE BENEFIT PLANS; LABOR RELATIONS.
(a) Section 3.14(a) of the AIM Disclosure Schedule contains a
true and complete list of each employee benefit plan, program, agreement or
arrangement, each stock-based or equity-based incentive plan or arrangement,
each severance or material perquisite policy or program, in any case, whether
written or oral, covering employees, former employees or directors of AIM, or
providing benefits to such persons in respect of services provided to AIM
(collectively, the "AIM Benefit Plans"). Section 3.14(a) of the AIM Disclosure
Schedule indicates which of the AIM Benefit Plans is an "employee benefit plan"
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), and which of the AIM Benefit Plans is subject
to Section 302 or Title IV of ERISA. AIM has no formal plan or commitment,
whether legally binding or not, to create any additional employee benefit plan
or modify or change any existing AIM Benefit Plan that would affect any employee
or former employee of AIM. No AIM Benefit Plan
16
provides medical, surgical, hospitalization, death or similar benefits (whether
or not insured) for employees or former employees of AIM for periods extending
beyond their retirement or other termination or service, other than (i) coverage
mandated by applicable law, (ii) death benefits under any "pension plan" (as
that term is defined in ERISA) or (iii) benefits the full cost of which is borne
by the current or former employee (or his or her beneficiary).
(b) With respect to each AIM Benefit Plan, AIM has heretofore
delivered to CDI true and complete copies of such AIM Benefit Plan and any amend
ments thereto (or if the AIM Benefit Plan is not a written plan, a description
thereof), and, if applicable, (i) any related trust or other funding vehicle,
(ii) any reports (including but not limited to Forms 5500 for the two most
recently completed plan years) or summaries required under ERISA and any
material amendments thereto and (iii) the most recent determination letter
received from the Internal Revenue Service with respect to each AIM Benefit Plan
intended to qualify under section 401 of the Code.
(c) Each AIM Benefit Plan has been operated and administered
in all material respects in accordance with its terms and applicable law,
including but not limited to ERISA and the Code. Each AIM Benefit Plan intended
to be "qualified" within the meaning of section 401(a) of the Code is so
qualified and the trusts maintained thereunder are exempt from taxation under
section 501(a) of the Code and no consideration exists that would reasonably be
expected to adversely affect such qualification. No AIM Benefit Plan is, nor has
any AIM Benefit Plan been, during the last 6 years, subject to Section 302 or
Title IV of ERISA. There are no pending or, to the knowledge of AIM and YHI,
threatened or anticipated claims by or on behalf of any AIM Benefit Plan, by any
employee or beneficiary covered under any such Plan, or otherwise involving any
such Plan (other than routine claims for benefits). With respect to the AIM
Benefit Plans individually and in the aggregate, no event has occurred, and, to
the knowledge of AIM and YHI, there exists no condition or set of circumstances
that could subject AIM to any liability arising under the Code or any other
applicable law, or under the terms of any AIM Benefit Plan or any indemnity
agreement to which AIM is a party.
(d) Except as set forth in Section 3.14(d) of the AIM
Disclosure Schedule, the consummation or announcement of any transaction
contemplated by this Agreement will not (either alone or in combination with
another event) (i) entitle any current or former employee, officer or director
of AIM to severance pay, unemployment compensation or any other payment, except
as expressly provided in this Agreement or (ii) accelerate the time of payment
or vesting, or increase the amount of
17
compensation due any such employee, officer or director. No amounts payable
under the AIM Benefit Plans will fail to be deductible for federal income tax
purposes by virtue of section 280G of the Code.
(e) Except as set forth in Section 3.14(e) of the AIM
Disclosure Schedule, (i) AIM is not a party to or bound by any collective
bargaining or similar agreement with any labor organization, or work rules or
practices agreed to with any labor organization or employee association
applicable to employees of AIM; and (ii) none of the employees of AIM are
represented by any labor organization and neither AIM nor YHI have any knowledge
of any current union organizing activities among the employees of AIM, nor does
any question concerning representation exist concerning such employees.
(f) Except as set forth in Section 3.14(f) of the AIM
Disclosure Schedule, (i) there are no employment contracts or severance
agreements with any employees of AIM; (ii) there are no written personnel
policies, rules or procedures applicable to employees of AIM; (iii) AIM is, and
has at all times been, in material compliance with all applicable laws
respecting employment and employment prac tices, terms and conditions of
employment, wages, hours of work and occupational safety and health, and is not
engaged in any unfair labor practices as defined in the National Labor Relations
Act or other applicable law, ordinance or regulation; (iv) to the knowledge of
AIM and YHI, no charges with respect to or relating to AIM are pending before
the Equal Employment Opportunity Commission or any other agency responsible for
the prevention of unlawful employment practices; (v) to the knowledge of AIM and
YHI, no federal, state, local or foreign agency responsible for the enforcement
of labor or employment laws intends to conduct an investigation with respect to
or relating to AIM and no such investigation is in progress; and (vi) to the
knowledge of AIM and YHI, there are no complaints, controversies, lawsuits or
other proceedings pending or threatened that allege or involve breach of any
express or implied contract of employment, violation of any law or regulation
governing employment, discriminatory hiring or termination of employees or
tortious conduct in connection with the employment relationship.
(g) Since the enactment of Worker Adjustment and Retraining
Notification Act of 1988 (the "WARN Act"), AIM has not effectuated (i) a "plant
closing" (as defined in the WARN Act) affecting any site of employment or one or
more facilities or operating units within any site of employment or facility of
AIM, or (ii) a "mass layoff" (as defined in the WARN Act) affecting any site of
employment or facility of AIM; nor has AIM been affected by any transaction or
engaged in layoffs or employment terminations sufficient in number to trigger
application of any similar
18
state or local law. Except as set forth in Section 3.14(g) of the AIM Disclosure
Schedule, none of the employees of AIM has suffered an"employment loss" (as
defined in the WARN Act) in the past five years.
(h) Section 3.14(h) of the AIM Disclosure Schedule contains a
complete and accurate list of the following information for each employee of
AIM, including each employee on leave of absence: name; job title; current
compensation paid or payable and any change in compensation since December 31,
1998; vacation accrued; and service credited for purposes of vesting and
eligibility to participate under any AIM Benefit Plan. To AIM's and YHI's
knowledge, no current officer or director of AIM is a party to, or is otherwise
bound by, any agreement or arrange ment, including any confidentiality,
non-competition, or proprietary rights agreement, between such employee or
officer or director and any other person ("Proprietary Rights Agreement") that
in any way materially adversely affected, affects, or will materially adversely
affect (i) the performance of his duties as an employee or officer or director
of AIM, or (ii) the ability of AIM to conduct its business, including any
Proprietary Rights Agreement with AIM by any such employee or director.
SECTION 3.15 ACCOUNTS RECEIVABLE. All accounts receivable of AIM that
are reflected on the October 31, 1999 and will be reflected on the December 31,
1999 balance sheets or on the accounting records of AIM as of the Closing Date
(collectively, the "Accounts Receivable") represent or will represent valid
obligations arising from sales actually made or services actually performed in
the ordinary course of business. Except as set forth in Section 3.15 of the AIM
Disclosure Schedules, unless paid prior to the Closing Date, the Accounts
Receivable are or will be as of the Closing Date current and collectible net of
the respective reserves shown on the October 31, 1999 or to be shown on the
December 31, 1999 balance sheets or on the accounting records of AIM as of the
Closing Date, which reserves are computed in accordance with GAAP. To the
knowledge of AIM and YHI, there is no contest, claim, or right of set-off
relating to the amount or validity of such Accounts Receiv able. Section 3.15 of
the AIM Disclosure Schedule contains a complete and accurate list of all
Accounts Receivable as of October 31, 1999 and December 31, 1999, which list
sets forth the aging of such Accounts Receivable.
SECTION 3.16 ENVIRONMENTAL MATTERS.
(a) Except as disclosed in Section 3.16(a) of the AIM
Disclosure Schedule, to AIM's and YHI's knowledge, there are no Hazardous
Substances on, in, or under any property or buildings currently or formerly
owned, leased or operated by AIM (the "AIM Facilities") the presence of which
could reasonably be expected to
19
result in a material adverse effect, individually or in the aggregate, on the
business, operations, assets, or financial condition of AIM.
(b) Except as disclosed in Section 3.16(b) of the AIM
Disclosure Schedule, (i) AIM is in full compliance with all Environmental Laws,
(ii) AIM has obtained all material permits required under any Environmental Law,
and (iii) neither YHI nor AIM has received, or has knowledge of, any notice of
any suit, litigation, arbitration, hearing, investigation or other action
(whether civil, criminal, administrative or investigative) brought by or before
any Governmental Entity or arbitrator ("Proceeding") relating to (A) any alleged
noncompliance with any requirement of any Environmental Law or (B) the presence
or alleged presence of Hazardous Substances in, under, or upon the AIM
Facilities or upon the properties of any sites to which any of AIM's waste has
been transported, whether for disposal or for any other purpose, and whether
against AIM or any other person that could reasonably be expected to result in a
material adverse effect, individually or in the aggregate, on the business,
operations, assets, properties or financial condition of AIM and neither YHI nor
AIM has knowledge of any basis for any such notice or action.
(c) Except as disclosed in Section 3.16(c) of the AIM
Disclosure Schedule, except for noncompliances or liabilities that could not
reasonably be expected to result in a material adverse effect on the business,
operations, properties, assets or financial condition of AIM, individually or in
the aggregate, to AIM's and YHI's knowledge, there have not been and there are
not any past or present events, conditions, circumstances, activities,
practices, incidents, or actions that could reasonably be expected to interfere
with or prevent continued compliance with any requirement of any Environmental
Law or that may give rise to any legal liability or otherwise form the basis of
any Proceeding against or involving AIM based on any condition or any violation
or alleged violation of any requirement of any Environmental Law.
(d) For purposes of this Agreement (i) "Hazardous Substances"
means any wastes, substances, or materials (whether solids, liquids or gases)
that are defined or regulated as hazardous or toxic under any Environmental Law,
including without limitation, substances defined as "hazardous wastes,"
"hazardous substances," "toxic substances," "radioactive materials," or other
similar designations in any Environmental Laws. "Hazardous Substances"
includes, without limitation, polychlorinated biphenyls (PCBs), asbestos,
lead-based paints and petroleum and petroleum products; and (ii) "Environmental
Laws" means the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA"), as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("XXXX"), 42 U.S.C. ss. 9601 ET SEQ.;
20
the Toxic Substances Control Act ("TSCA"), 15 U.S.C. ss. 2601 ET SEQ.; the
Hazardous Materials Transportation Act, 49 U.S.C. ss. 1802 ET SEQ.; the
Resources Conservation and Recovery Act ("RCRA"), 42 U.S.C. ss. 9601 ET SEQ.;
the Clean Water Act ("CWA"), 33 U.S.C. ss. 1251 ET SEQ.; the Safe Drinking Water
Act, 42 U.S.C. ss. 300f ET SEQ.; the Clean Air Act ("CAA"), 42 U.S.C. ss. 7401
ET SEQ.; or any other applicable federal, state, or local laws, regulations,
ordinances, decrees, rules, judgments, orders or directives now or hereinafter
in effect relating to the protection of human health, safety or the environment,
or otherwise relating to Hazardous Substances generation, production, use,
storage, treatment, transportation or disposal.
SECTION 3.17 BANK ACCOUNTS. Section 3.17 of the AIM Disclosure Sched
ule contains a complete and accurate list of each bank at which AIM has an
account or safe deposit box, the number of each such account or box, and the
names of all persons authorized to draw on such accounts or to have access to
such boxes.
SECTION 3.18 REAL PROPERTY; LEASES; EQUIPMENT, ETC.
(a) AIM owns no real property. Section 3.18(a) of the AIM
Disclosure Schedule sets forth a complete and accurate listing of each lease
and sublease pursuant to which AIM leases or sublets real property
(collectively, the "Real Property Leases") and AIM has heretofore delivered to
CDI a complete and accurate copy of each Real Property Lease. Each Real Property
Lease is valid and in full force and effect and enforceable in accordance with
its terms and has not been further supplemented, amended or modified. AIM has
not received any notice of, and there exists no material default or event,
occurrence, condition or act, including without limitation, the execution and
delivery of this Agreement and the consummation of the Merger, which constitutes
or would constitute (with or without notice or lapse of time or both) a material
default in any respect under any of the Real Property Leases. AIM has not
received any notice of any event of default or any event, occurrence, condition
or act, including without limitation, the execution and delivery of the
Agreement and the consummation of the Merger, which constitutes or would
constitute (with or without notice or lapse of time or both) a default in any
respect under any of the Real Property Leases. To the knowledge of AIM and YHI
with respect to real property covered by any leasehold interests in real
property, the present use thereof complies, in all material respects, with all
restrictive covenants, deeds and other restrictions and all zoning laws,
ordinances and regulations of governmental or other authorities having
jurisdiction thereof, and such premises are not presently affected, nor to the
knowledge of AIM and YHI threatened, by any condemnation or eminent domain
proceeding.
21
(b) Except as described in Section 3.18(b) of the AIM
Disclosure Schedule, all equipment and tangible personal property used by AIM
are either owned, free and clear of all Liens and encumbrances other than as
reflected in the balance sheet of AIM as of October 31, 1999, and will be
reflected in the balance sheet of AIM as of December 31, 1999, or are (i) used
under capital leases reflected on such balance sheet or (ii) used under
operating leases. Such Liens and encumbrances, individually and in the
aggregate, are not material in amount, do not detract from the value of, or
impair the use of, in the business of AIM, the properties subject thereto, and
have arisen only in the ordinary course of business consistent with past
practice. Section 3.18(b) of the AIM Disclosure Schedule lists all Liens and
encumbrances of any nature covering AIM's assets.
(c) Section 3.18(c) of the AIM Disclosure Schedule sets forth
a complete and accurate list of all capital leases and operating leases
pursuant to which AIM leases property. To the knowledge of AIM and YHI, all such
leases are valid and in full force and effect and enforceable in accordance with
their terms and have not been further supplemented, amended or modified. AIM has
not received any notice of, and there exists no event of material default, or
event, occurrence, condition or act, including, without limitation, the
execution and delivery of this Agreement and the consum mation of the Merger, on
the part of AIM, or to the knowledge of AIM and YHI, on the part of any other
party, which constitutes or would constitute (with or without notice or lapse of
time or both) a material default in any respect under any such lease. All of the
equipment and tangible personal property valued at an original cost of $5,000 or
more owned or leased by AIM is in good operating condition and repair, subject
to normal wear and tear, and to the knowledge of AIM and YHI, none of such
assets are in need of maintenance or repairs except for ordinary, routine
maintenance.
(d) Except as set forth in Section 3.18(d) of the AIM
Disclosure Schedule, none of the officers, directors, shareholders or employees
of AIM has any interest in any property, real or personal, tangible or
intangible, that is used in the business of AIM, including without limitation
any Intellectual Property.
SECTION 3.19 INSURANCE. Section 3.19 of the AIM Disclosure Schedule
sets forth a complete and correct list of all insurance policies (including
premiums, policy limits, deductibles, type of coverage and similar information)
providing coverage in favor of AIM or any of its properties. Each such policy is
in full force and effect, all premiums with respect thereto covering all periods
up to and including the Closing Date will have been paid, no notice of
termination, cancellation or reservation of rights has been received with
respect to any such policy, there is no default with respect to any provision
contained in any such policy, and there has not been any failure
22
to give any notice or present any claim under any such policy in a timely
fashion or in the manner or detail required by any such policy. All of such
policies have been issued by reputable insurance companies actively engaged in
the insurance business. The coverage provided by such policies is, in AIM's and
YHI's judgment, reasonable in scope and amount, in light of the risks attendant
to the business and activities of AIM.
SECTION 3.20 ABSENCE OF QUESTIONABLE PAYMENTS. AIM has not, nor has any
director, officer, or to the knowledge of AIM and YHI, any agent, employee,
consultant or other person associated with, or acting on behalf of, AIM, (a)
used any AIM corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity, or (b) made any direct
or indirect unlawful payments to government officials from any AIM corporate
funds, or established or maintained any unlawful or unrecorded accounts with
funds received from AIM.
SECTION 3.21 POWERS OF ATTORNEY; GUARANTEES. Except as set forth in
Section 3.21 of the AIM Disclosure Schedule, AIM does not have any power of
attor ney outstanding, nor any obligation or liability, either actual, accruing
or contingent, as guarantor, surety, co-signer, endorser, co-maker or indemnitor
(in the case of indemnitor, other than in the ordinary course of business) in
respect of the obligation of any person, corporation, partnership, joint
venture, association, organization or other entity.
SECTION 3.22 DISCLOSURE. No representation or warranty by AIM and YHI
in this agreement and no statement contained in any document, schedule or
certificate furnished or to be furnished by AIM or YHI to CDI or any of its
representatives pursuant to the provisions of this Agreement or in connection
with the transactions contemplated hereby, contains as of the date hereof or
will contain as of the Effective Time (after giving effect to the updating
procedures set forth in Section 6.4) any untrue statement of material fact or
omits or will omit to state any material fact necessary in order to make the
statements herein or therein, in light of the circumstances under which they
were made, not misleading.
SECTION 3.23 SECURITIES LAWS MATTERS.
(a) YHI is an "accredited investor" as such term is defined in
Regulation D under the Securities Act.
(b) YHI is acquiring the shares of CDI Common Stock in the
Merger for its own account and for investment purposes and, except as previously
disclosed,
23
not with a view toward, or for sale in connection with, any distribution
thereof, nor with any present intention of distributing or selling such shares
of CDI Common Stock. YHI agrees that the shares of CDI Common Stock may not be
sold, transferred, offered for sale, pledged, hypothecated or otherwise
disposed of without registration under the Securities Act of 1933, as amended
(the "Securities Act"), and any applicable state securities laws, except
pursuant to an exemption from such registration under the Securities Act and
such state securities laws.
(c) YHI confirms that it has such knowledge and experience in
financial and business matters that YHI is capable of evaluating the merits and
risks of an investment in the CDI Common Stock and of making an informed
investment decision and understands that (i) this investment is suitable only
for an investor which is able to bear the economic consequences of losing its
entire investment; (ii) the purchase of the CDI Common Stock to be purchased by
YHI hereunder is a speculative investment which involves a high degree of risk
of loss of the entire investment; and (iii) there are substantial restrictions
on the transferability of, and there may be no public market for the CDI Common
Stock, and accordingly, it may not be possible for YHI to liquidate YHI's
investment in case of emergency.
(d) YHI has conducted its own independent review and analysis
of the business, operations, assets, liabilities, financial condition and
prospects of CDI and acknowledges that it has been provided access to the
personnel, properties, premises and records of CDI for such purpose. In entering
into this Agreement, YHI has relied solely upon its own investigation and
analysis and the representations and warranties contained herein.
SECTION 3.24 LOANS TO YHI. Except as set forth in Section 3.24 of the
AIM Disclosure Schedule, there are no contracts or agreements (oral or written)
relating to the lending or borrowing of any money between AIM and YHI.
SECTION 3.25 WARRANTY CLAIMS. Except as set forth in Section 3.25 of
the AIM Disclosure Schedule, there are no pending or, to the knowledge of AIM
and YHI, threatened material claims relating to written warranties, guaranties
or similar undertakings with respect to contractual performance by AIM.
SECTION 3.26 TAX-FREE REORGANIZATION. Neither AIM nor YHI has taken or
agreed to take any action that is reasonably likely to prevent the Merger from
qualifying as a reorganization under the provisions of Section 368(a) of the
Code.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CDI
CDI represents and warrants to AIM and YHI as follows:
SECTION 4.1 ORGANIZATION; SUBSIDIARIES.
(a) Except as set forth in Section 4.1 of the disclosure
schedule to be delivered to AIM prior to the date of this Agreement (the "CDI
Disclosure Schedule"), each of CDI and Merger Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
Except as set forth in Section 4.1 of the CDI Disclosure Schedule, each of CDI
and Merger Sub is duly qualified or licensed to do business and in good standing
in each jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing would not have a material adverse effect on CDI. CDI has
heretofore delivered to AIM accurate and complete copies of the Certificate of
Incorporation and By-laws, as in effect as of the date of this Agreement, of CDI
and Merger Sub. Section 4.1 of the CDI Disclosure Schedule sets forth a complete
and accurate list of all jurisdictions in which CDI or Merger Sub is qualified
or licensed to do business.
(b) Section 4.1(b) of the CDI Disclosure Schedule sets forth
the name, jurisdiction of incorporation and capitalization of each subsidiary of
CDI (each a "CDI Subsidiary"). Each CDI Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Except as disclosed in Section 4.1(b) of the
CDI Disclosure Schedule, CDI does not own, directly or indirectly, any capital
stock or other equity securities of any corporation or have any direct or
indirect equity or ownership interest (financial or otherwise) in any business.
Except as disclosed in Section 4.1(b) of the CDI Disclosure Schedule, all of the
outstanding shares of capital stock of each of the CDI Subsidiaries have been
validly issued and are fully paid and nonassessable and are owned by either CDI
or another CDI Subsidiary free and clear of all Liens or other encumbrances.
There are not as of the date of this Agreement, and at the Effective Time there
will not be, any outstanding subscriptions, options, warrants, calls, rights,
convertible securities or
25
other agreements or commitments of any character relating to the issued or
unissued capital stock or other securities of any of the CDI Subsidiaries, or
otherwise obligating CDI or any CDI Subsidiary to issue, transfer or sell any
such securities. Except as set forth above or in Section 4.1(b) of the CDI
Disclosure Schedule, there are no persons or entities (other than CDI
Subsidiaries) in which CDI or any CDI Subsidiary has any voting rights or equity
interests.
SECTION 4.2 CAPITALIZATION. The authorized capital stock of CDI
consists of (i) 40,000,000 shares of CDI Common Stock, of which, as of the date
hereof, 19,150,400 shares are issued and outstanding and no shares are held in
treasury. Section 4.2 of the CDI Disclosure Schedule sets forth, as of the date
hereof, a true and complete list of each holder of CDI Common Stock and the
amounts held and of the amounts of all outstanding options and warrants
exercisable for shares of CDI's Common Stock. All of the outstanding shares of
CDI Common Stock are, and all shares which may be issued pursuant to the
outstanding options and warrants will be, duly authorized, validly issued, fully
paid and non-assessable and free of any preemptive rights in respect thereto.
Except as set forth above and in Section 4.2 of the CDI Disclosure Schedule,
there are no outstanding options, warrants, calls, subscriptions, contracts,
voting trusts, proxies or other rights or other agreements or commit ments
obligating CDI to issue or sell or cause to be issued or sold any shares of capi
tal stock of, or other equity interests in, CDI or securities convertible into
or ex changeable for such shares or equity interests.
SECTION 4.3 AUTHORITY. Each of CDI and Merger Sub has the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of CDI
and Merger Sub and no other corporate proceedings on the part of CDI or Merger
Sub are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. Forms of the resolutions of the Boards of Directors of
Merger Sub and CDI and the resolutions of CDI as the sole stockholder of Merger
Sub reflecting such approval are attached hereto as Exhibits D, E and F,
respectively. This Agreement has been duly executed and delivered by each of CDI
and Merger Sub and constitutes a valid and binding obligation of each of CDI and
Merger Sub enforceable against each of them in accordance with its terms, except
as enforcement may be limited by general principles of equity, whether applied
in a court of law or a court of equity, and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally.
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SECTION 4.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Except as set forth
in Section 4.4 of CDI Disclosure Schedule, and except for filings and approvals
which may be required under the DGCL, neither the execution or delivery of this
Agreement by CDI and Merger Sub nor the consummation by CDI or Merger Sub of the
trans actions contemplated hereby nor compliance by CDI and Merger Sub with any
of the provisions hereof will (i) conflict with or result in any breach of any
provision of the Certificate of Incorporation or By-laws of CDI or any CDI
Subsidiary, (ii) require any filing with, or authorization, consent or approval
of, any Governmental Entity, (iii) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any right of termination, amendment, cancellation or acceleration or
result in the creation of any Lien) or require any authorization, consent or
approval under, any material note, bond, mortgage, indenture, lease, license,
con tract, agreement or other instrument or obligation to which CDI or any CDI
Subsidiary is a party or by which any of their respective assets may be bound
or (iv) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to CDI, any CDI Subsidiary or any of their respective assets.
SECTION 4.5 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
(a) Section 4.5(a) of the CDI Disclosure Schedule contains the
audited balance sheet of CDI as of December 31, 1998 and the unaudited balance
sheet of CDI as of December 31, 1999, and the related statements of income for
such fiscal years then ended. The balance sheets fairly present, in all material
respects, the xxxxx cial position of CDI as of their respective dates, and the
statements of income fairly present, in all material respects, the results of
operations, of CDI for the periods there in set forth, in each case in
accordance with GAAP consistently applied during the periods involved. The
financial statements for the year ended December 31, 1999 will be audited by
Ernst & Young, CDI's certified independent accountant, and provided, along with
Ernst & Young's opinion thereon, to YHI and AIM no later than February 14, 2000.
(b) Except as set forth in Section 4.5(b) of the CDI
Disclosure Schedule, CDI does not have any liabilities or obligations of any
material nature (whether absolute, accrued, contingent, or otherwise and whether
due or to become due) which were not fully reflected or reserved against in the
December 31, 1999 balance sheet, except for liabilities and obligations which
were incurred in the ordinary course of business consistent with past practice
since the date thereof.
27
SECTION 4.6 MATERIAL ADVERSE CHANGE. Except as disclosed in Section
4.6 of the CDI Disclosure Schedule, since December 31, 1999, there has not been
any Material Adverse Change of CDI or any CDI Subsidiary.
SECTION 4.7 NO DEFAULT. Except as set forth in Section 4.7 of the CDI
Disclosure Schedule, neither CDI nor any CDI Subsidiary is in default or
violation (and no event has occurred that with or without notice or lapse of
time or both would constitute a default or violation) of any term, condition or
provision of (i) its Certificate of Incorporation or By-laws, (ii) any material
note, bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which it is a party or by which its assets maybe
bound or (iii) any order, writ, injunction, decree, statute, rule or regulation
applicable to it or any of its assets.
SECTION 4.8 LITIGATION. Except as set forth in Section 4.8 of the CDI
Disclosure Schedule, neither CDI nor an CDI Subsidiary is a party to any, and
there are no pending or, to the knowledge of CDI, threatened legal,
administrative, arbitration or other proceedings, claims, actions, suits or
governmental investigations of any nature involving, affecting or relating to
CDI or any CDI Subsidiary, or challenging the validity or propriety of the
transactions contemplated in this Agreement; and there is not known to CDI any
reasonable basis for any such proceedings, claim, action or governmental
investigation. Neither CDI nor any CDI Subsidiary is a party to any order,
judgment or decree which will, or might reasonably be expected to, affect its
business, operations, properties, assets, financial condition, prospects or
results of operations or its ability to acquire any property or conduct business
in any area in which it presently does business.
SECTION 4.9 TAXES. Except for returns not yet due or the due dates of
which have been appropriately extended, CDI has filed all federal, foreign,
state and local Tax Returns which are required to be filed, and has paid, or
made provision for the payment of, all Taxes shown as due on such Tax Returns
for all periods ending on or before the date of Closing, except such Taxes, if
any, as are being contested in good faith and as to which adequate reserves have
been provided. To the knowledge of CDI, no audit of any federal, state or local
Tax Return of CDI is in progress or pending, and no waiver of any statute of
limitations has been given and is in effect with respect to the assessment of
any Taxes for such periods. CDI is not a party to, bound by, or otherwise
obligated under any Tax sharing agreement, Tax indemnification agreement or
similar contract or arrangement.
SECTION 4.10 COMPLIANCE WITH APPLICABLE LAW. CDI and each CDI
Subsidiary has all permits, licenses, franchises and other governmental
authorizations
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necessary and material to conduct its business as presently conducted. The
business of CDI and each CDI Subsidiary is presently being conducted so as to
comply in all material respects with all federal, state and local governmental
laws, rules, regulations, orders, writs, injunctions, and decrees applicable to
it and neither CDI nor any CDI Subsidiary has received notice of violation of,
or knows of any violations of any of the above. To the knowledge of CDI, no
suspension or cancellation of any material license, franchise, permit or
authorization of CDI or any CDI Subsidiary is threatened.
SECTION 4.11 MERGER SUB. Merger Sub has not conducted any operations or
incurred any liabilities or obligations other than arising under or in
connection with its formation and the transactions contemplated hereby.
SECTION 4.12 CDI COMMON STOCK. All of the CDI Common Stock to be issued
in connection with the Merger will, at the time of such issuance, be validly
issued, fully paid and nonassessable and free of preemptive rights and, except
as provided for in this Agreement, free of any adverse Liens or encumbrances
other than Liens resulting from YHI's own agreements. Assuming that the
representations contained in Section 3.23 are true and correct, the issuance of
the shares of CDI Common Stock in the Merger will not violate Section 5 of the
Securities Act.
SECTION 4.13 DISCLOSURE. No representation or warranty by CDI in this
Agreement and no statement contained in any document, schedule or certificate
furnished or to be furnished by CDI to AIM, YHI or any of their respective
represen tatives pursuant to the provisions hereof or in connection with the
transactions contemplated hereby, contains as of the date hereof or will contain
as of the Effective Time (after giving effect to the updating procedures set
forth in Section 6.4) any untrue statement of material fact or omits or will
omit to state any material fact necessary in order to make the statements herein
or therein, in light of the circum stances under which they were made, not
misleading.
SECTION 4.14 TAX-FREE REORGANIZATION. Neither CDI nor Merger Sub has
taken or agreed to take any action that is reasonably likely to prevent the
Merger from qualifying as a reorganization under the provisions of Section
368(a) of the Code.
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ARTICLE V
COVENANTS
SECTION 5.1 CONDUCT OF BUSINESS PENDING THE MERGER. From the date
hereof until the Effective Time, CDI and AIM shall carry on their respective
busi nesses in the usual and ordinary course in substantially the same manner as
heretofore conducted and use all reasonable efforts to preserve intact their
present business organizations, and to keep available the services of their
present officers and employ ees and to preserve their relationships with persons
having business dealings with them.
SECTION 5.2 AIM COVENANTS.
(a) From the date hereof until the Effective Time, except as
expressly contemplated or permitted by this Agreement or to the extent CDI shall
otherwise consent in writing, which consent shall not be unreasonably withheld,
AIM shall not:
(i) acquire or agree to acquire by merging or consolidating
with, or by purchasing all or a substantial equity interest in or all or a
substantial portion of the assets of, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets other than assets acquired in
the ordinary course of business which are immaterial in nature or amount;
(ii) other than in the ordinary course of business consistent
with past practice, sell, assign, lease, or otherwise dispose of, or agree to
sell, assign, lease or otherwise dispose of, all or any part of its assets or
enter into any agreement to do the same;
(iii) except as set forth in Section 5.2(a)(iii) of the AIM
Disclosure Schedule, make any capital expenditures or commitments for capital
expenditures other than in the ordinary course of business and consistent with
past practice and in an amount not in excess of $10,000 in respect of any
individual project or $25,000 in the aggregate;
(iv) terminate, adopt, amend or enter into, except as may be
required by applicable law or regulation, any bonus, profit sharing, severance,
termination, compensation, stock option, pension, retirement, deferred
compensation, employment or other employee benefit plan, agreement, trust, fund,
plan or arrangement for the
30
benefit or welfare of its employees or pay any benefit not required by any
existing plan or arrangement;
(v) make any Tax elections or settle or compromise any Tax
liability or, except as required by law or applicable accounting standards,
change any account ing policies or procedures;
(vi) enter into any new agreement which is or may be deemed
to be material or amend or modify any AIM Contract;
(vii) (A) declare, set aside or pay any dividends on or make
other distributions in respect of any of its capital stock, (B) 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 or (C) directly or indi rectly repurchase, redeem or otherwise
acquire, any shares of its capital stock;
(viii) issue or sell, or authorize or propose the issuance or
sale of, any shares of its capital stock of any class or any securities
convertible into or exchange able for, or any rights, warrants, calls,
subscriptions or options to acquire, any such shares, or convertible or
exchangeable securities;
(ix) amend its Certificate of Incorporation or By-laws;
(x) incur any indebtedness for money borrowed or issue any
debt securities; assume, guarantee, or otherwise become liable or responsible
for the obli gations of any other person; or make any loans or capital
contributions to, or invest ments in, any other person;
(xi) pay, discharge, settle or satisfy or agree to pay,
discharge, settle or satisfy, any claims, liabilities or obligations other than
when due in accordance with their respective terms and other than claims,
liabilities, and obligations with re spect to itself in an amount not in excess
of $10,000 individually or $25,000 in the aggregate;
(xii) hire or retain any new employees, consultants or
contractors, or increase the compensation of current employees, consultants or
contractors;
(xiii) enter into any real property lease or any lease of
personal property or extend or modify any existing lease of real or personal
property;
31
(xiv) take any action that is intended or would result in
any of its representations and warranties set forth in this Agreement being or
becoming untrue in any material respect, or in any of the conditions to the
Merger set forth in Article VII not being satisfied, or in a violation of any
provision of this Agreement except, in every case, as may be required by
applicable law;
(xv) change its methods of accounting in effect at December
31, 1999;
(xvi) transfer or license to any person or entity or
otherwise extend, amend or modify any rights to the Intellectual Property, other
than in the ordinary course of business consistent with past practices; or
(xvii) agree to do any of the foregoing.
(b) AIM and YHI agree that each of them will immediately cease
any existing discussions or negotiations with any third parties conducted prior
to the date hereof with respect to any Acquisition Proposal (as defined below).
AIM and YHI further agree that they will not, directly or indirectly, through
any officer, director, employee, representative or agent or any of its
subsidiaries, (i) solicit, initiate, or encourage any inquiries or proposals
that constitute, or would lead to, a proposal or offer for a merger,
consolidation, business combination, sale of substantial assets, sale of shares
of capital stock of AIM or similar transactions involving AIM, AIM's securities
or any of its subsidiaries, other than a transaction with CDI and/or its
affiliates (any of the foregoing inquiries or proposals being referred to herein
as an "Acquisition Proposal"), (ii) engage in negotiations or discussions
concerning, or provide any non-public information to any person or entity
relating to, any Acquisi tion Proposal, or (iii) agree to, approve or recommend
any Acquisition Proposal. AIM agrees to notify CDI immediately after receipt by
AIM of any Acquisition Proposal. Such notice shall be made orally and shall
indicate the identity of the offeror and the terms and conditions of such
proposal, inquiry or contract.
SECTION 5.3 CDI COVENANTS. From the date hereof until the Effective
Time, except as expressly contemplated or permitted by this Agreement or to the
extent AIM in its discretion shall otherwise consent in writing, CDI shall not
take or agree to take any action that is intended or would result in any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect, or in any of the conditions to the Merger set
forth in Article VII not being satisfied, or in a violation of any provision of
this Agreement, except, in every case, as may be required by applicable law.
32
SECTION 5.4 401(K) PLAN TRANSFER. As soon as practicable, and in any
event within ninety (90) days, after and effective as of the Effective Time, CDI
shall designate a defined contribution pension plan (or plans) and trust (or
trusts) intended to qualify under Section 401(a) and Section 501(a) of the Code
(such plan or plans referred to as "CDI'S SAVINGS PLAN"). As soon as practicable
following receipt by YHI of either (A) a copy of a favorable determination
letter issued by the Internal Revenue Service with respect to CDI's Savings Plan
which takes into account recent plan amendments required under the Code or (B)
an opinion, satisfactory to YHI's counsel, of CDI's counsel to the effect that
the terms of CDI's Savings Plan and its related trust qualify under Section
401(a) and Section 501(a) of the Code, YHI and CDI shall cause the accounts
under the Yankelovich Partners Inc. 401(k) Plan ("YHI'S SAVINGS PLAN"), and the
value of assets attributable to such accounts, of the employees of AIM who will
continue their employment with the Surviving Corporation upon the Effective Time
and who are participants in YHI's Savings Plan as of the Effective Time to be
transferred to CDI's Savings Plan in a "transfer of assets or liabilities" in
accordance with Section 414(l) of the Code and Section 208 of ERISA and the
respective rules and regulations promulgated thereunder. The assets to be
transferred will be in the form of cash or other property, as YHI and CDI shall
mutually agree prior to such transfer. Prior to such transfer, CDI will provide
YHI with such documents and other information as YHI shall reasonably request to
assure itself that CDI's Savings Plan and the trust established pursuant thereto
(i) permit the transfer by YHI of voluntary participant after-tax contributions
and (ii) contain participant loan provisions and procedures necessary to effect
the orderly transfer of participant loan balances associated with the transfer
of assets. Prior to the transfer, YHI and CDI will notify the Internal Revenue
Service of the transfer by timely filing Forms 5310-A, to the extent such
filings are required, and YHI will provide CDI with copies of such personnel and
other records of YHI pertaining to the employees of AIM who are participants in
YHI's Savings Plan as of the Effective Time and such records of any agent or
representative of YHI pertaining to such employees and such records of any agent
or representative of YHI, in each case pertaining to YHI's Savings Plan and as
CDI may reasonably request in order to administer and manage the accounts and
assets transferred to CDI's Savings Plan. Upon such transfer, CDI's Savings Plan
shall assume all liabilities and obligations whatsoever with respect to all
amounts transferred from YHI's Savings Plan to CDI's Savings Plan in respect of
such employees and each of YHI and its affiliates and YHI's Savings Plan shall
be relieved of all such liabilities and obligations. CDI and YHI shall cooperate
in the filing of documents required by the transfer of assets and liabilities
described therein.
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ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 ACCESS TO INFORMATION. Upon reasonable notice, each of CDI
and AIM shall give to each other and its respective authorized representatives
access, during normal business hours, to all its respective properties, books,
and records and furnish promptly to the other all information concerning its
business, properties and personnel as the other party hereto may reasonably
request. Unless otherwise required by law, each of CDI and AIM will hold any
such information which is nonpublic in strict confidence until such time as such
information otherwise becomes publicly available through no wrongful act on its
part, and in the event of termination of this Agreement for any reason CDI and
AIM shall each promptly return to the other party all nonpublic documents
obtained from the other party, and any copies made of such documents.
SECTION 6.2 NOTIFICATION OF CERTAIN MATTERS. Each of the parties
agrees to promptly notify the other of (a) events causing any representation or
warranty contained herein to be untrue; (b) any notice or other communication
from any third party alleging that the consent of such third party is or may be
required in connection with the transactions contemplated by this Agreement; and
(c) any event, change or effect constituting a Material Adverse Change on such
party or having a material adverse effect on its ability to consummate the
transactions contemplated hereby in a timely manner.
SECTION 6.3 BEST EFFORTS. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its best efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement.
SECTION 6.4 SUPPLEMENTAL DISCLOSURE. Each of the parties hereto shall
promptly supplement or amend its Disclosure Schedule with respect to any
material matter hereafter arising or discovered which, if existing or known at
the date hereof, would have been required to be disclosed in its Disclosure
Schedule; PROVIDED, HOWEVER, that any such supplemental or amended disclosure
by one party shall not be deemed to have been disclosed as of the date hereof
unless so agreed to in writing by the other party in its sole discretion.
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SECTION 6.5 TAX-FREE REORGANIZATION. This Agreement is intended to
constitute a "plan of reorganization" within the meaning of Section 1.368-2(g)
of the income tax regulations promulgated under the Code. No party to this
Agreement shall take any action or allow or cause any action to be taken by any
of its affiliates or fail to take any action or fail to allow or cause any
action to be taken, that would be reasonably likely to prevent the Merger from
qualifying as a reorganization under the provisions of Section 368(a) of the
Code.
ARTICLE VII
CONDITIONS
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Closing Date of the following
conditions:
(a) APPROVALS. Other than the filing of the Certificate of
Merger provided for by Section 1.3, all authorizations, consents, orders or
approvals of, or declarations or filings with, any Governmental Entity the
failure of which to obtain would have a material adverse effect on the Surviving
Corporation or which would prohibit the Merger shall have been filed, occurred
or been obtained.
(b) NO RESTRAINTS. There shall have been no order or
preliminary or permanent injunction entered in any action or proceeding before
any Governmental Entity or other action taken, nor statute, rule, regulation,
judgment or order enacted, amended, issued or deemed applicable to AIM, CDI or
Merger Sub or this Agreement by any Governmental Entity and which shall remain
in effect or any suit, claim, action or proceeding pending before any
Governmental Entity, which, if adversely decided, would have the effect of (i)
making illegal, materially delaying or otherwise directly or indirectly
restraining or prohibiting the Merger or the consummation of the transactions
contemplated by this Agreement; (ii) prohibiting or materially limiting the
ownership or operation by CDI or the Surviving Corporation of all or any
material portion of the business or assets of AIM, CDI or Merger Sub or
compelling CDI or the Surviving Corporation to dispose of or hold separate all
or any material portion of the business or assets of AIM, CDI or Merger Sub as a
result of the Merger or (iii) imposing material limitations on the ability of
the holders of CDI Common Stock after the Merger to exercise full rights of
ownership of any CDI Common Stock.
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SECTION 7.2 CONDITIONS OF OBLIGATIONS OF AIM. The obligations of AIM
to effect the Merger shall be subject to the satisfaction of the following
conditions unless waived by AIM:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of CDI set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, except as otherwise
contemplated by this Agreement, and AIM shall have received a certificate signed
on behalf of CDI by the chief executive officer of CDI to such effect.
(b) PERFORMANCE OF OBLIGATIONS. CDI 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, and AIM shall have received a
certificate signed on behalf of CDI by the chief executive officer of CDI to
such effect.
(c) SECRETARY'S CERTIFICATE. AIM shall have received from each
of the Secretaries of CDI and Merger Sub a good standing certificate and
certified charter documents, dated as of a date reasonably close to the Closing
Date.
SECTION 7.3 CONDITIONS OF OBLIGATIONS OF CDI. The obligation of CDI to
cause Merger Sub to effect the Merger is subject to the satisfaction of the
following conditions unless waived by CDI:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of AIM and YHI set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and (except to the
extent such representations speak as of an earlier date) as of the Closing Date
as though made on and as of the Closing Date, except as otherwise contemplated
by this Agreement, and CDI shall have received certificates signed on behalf of
AIM and YHI by their respective chief executive officers to such effect.
(b) PERFORMANCE OF OBLIGATIONS. AIM and YHI shall have
performed in all material respects all obligations required to be performed by
them under this Agreement at or prior to the Closing Date, and CDI shall have
received a certificate signed on behalf of AIM and YHI by their respective chief
executive officers to such effect.
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(c) APPROPRIATE CONSENTS. AIM shall have obtained all
consents, approvals and waivers of all persons and entities which CDI in its
sole and absolute discretion deems to be appropriate in connection with the
Merger, including, but not limited to, the consent of Roche Diagnostics
Corporation ("Roche") to the assignment of the contract by and between Roche and
Yankelovich Partners Inc. (the "Roche Contract") to AIM and furthermore, the
consent of Roche to the assignment of the Roche Contract to the Surviving
Corporation upon the Closing.
(d) EMPLOYMENT AGREEMENT. AIM and Xxxxx Xxxxxxxx shall have
entered into an employment agreement effective as of the Effective Time, which
upon its execution terminates the prior employment agreement between AIM and Xx.
Xxxxxxxx, and is in substantially the form attached hereto as Exhibit G.
(e) NONSOLICITATION AGREEMENT. AIM, CDI and YHI shall have
entered into a nonsolicitation agreement effective as of the Effective Time in
substantially the form attached hereto as Exhibit H.
(f) SECRETARY'S CERTIFICATE. CDI shall have received from each
of the Secretaries of AIM and YHI a good standing certificate and certified
charter documents, dated as of a date reasonably close to the Closing Date.
(g) STOCKHOLDERS AGREEMENT AND REGISTRATION RIGHTS AGREEMENT.
YHI shall have entered into the stockholders agreement and registration rights
agreement, in each case, as has been entered into by the other holders of CDI
Common Stock, and forms of which have been provided to YHI.
(h) SECURITIES ACT OPINION. YHI shall have provided to CDI an
opinion of its counsel, the opinion and counsel being reasonably satisfactory to
CDI, concerning the applicable exemption under the Securities Act for any
previously disclosed and pre-determined distributions of the CDI Common Stock to
be received in the Merger Consideration.
(i) LOCK-UP AGREEMENT. YHI shall have entered into the lock-up
agreement with XX Xxxxx, as has been entered into by other affiliates of CDI
holding CDI Common Stock, substantially in the form attached hereto as Exhibit
I, restricting YHI's ability to sell its CDI Common Stock for a specified period
of time, if any, after CDI has an effective registration statement with the SEC
for an initial public offering.
(j) XXXXXXXX AFFIDAVIT. Mr. Xxxxx Xxxxxxxx shall have signed
an affidavit asserting that (i) he is an "accredited investor" as such term is
defined under
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Regulation D of the Securities Act; (ii) he is aware and understands that the
CDI Common Stock that he is receiving will be unregistered and "restricted" as
such term is defined under Rule 144 of the Securities Act and (iii) he is aware
and understands that the shares of CDI Common Stock that he is receiving may not
be sold except pursuant to an effective registration statement under the
Securities Act or an applicable exemption.
(k) SERVICES AGREEMENT. YHI shall have entered into a services
agreement, effective as of the Effective Time in substantially the form at
attached hereto as Exhibit J.
ARTICLE VIII
TERMINATION
SECTION 8.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time:
(a) by mutual written consent of AIM and CDI;
(b) by either AIM or CDI if (i) there shall have been a
material breach of any representation, warranty, covenant or agreement set forth
in this Agreement, on the part of CDI, in the case of a termination by AIM or on
the part of AIM or YHI in the case of a termination by CDI, which breach shall
not have been cured, in the case of a representation or warranty, prior to the
Closing or, in the case of a covenant or agreement, within 5 business days
following receipt by the breaching party of notice of such breach, or (ii) any
permanent injunction or other order of a court or other competent authority
preventing the consummation of the Merger shall have become final and
non-appealable; or
(c) by either AIM or CDI if the Merger shall not have been
consummated on or before February 15, 2000; PROVIDED, HOWEVER, that the right
to terminate this Agreement pursuant to this Section 8.1(c) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Merger to
have occurred on or before the aforesaid date.
SECTION 8.2 EFFECT OF TERMINATION. In the event of a termination of
this Agreement by either CDI or AIM as provided in Section 8.1, this Agreement
shall forthwith become void and there shall be no liability or obligation on the
part of AIM
38
or CDI or their respective officers or directors, except for the second sentence
of Section 6.1 and Section 11.1, which shall survive such termination. Nothing
contained in this Section 8.2 shall relieve any party hereto from any liability
for any breach of this Agreement.
ARTICLE IX
SECURITIES LAW MATTERS
YHI agrees as follows with respect to the sale or other
disposition of the shares of CDI Common Stock by YHI after the Closing:
SECTION 9.1 DISPOSITION OF SHARES. YHI represents and warrants that,
except as YHI has previously disclosed to CDI, the shares of CDI Common Stock
are being acquired and will be acquired for its own account and will not be sold
or otherwise disposed of except pursuant to the terms of the stockholders
agreement referred to in Section 7.3(g) and (a) an exemption or exclusion from
the registration requirements under the Securities Act which does not require
the filing by CDI with the Securities and Exchange Commission ("SEC") of any
registration statement, offering circular or other document, in which case YHI
shall first supply to CDI an opinion of counsel (which opinion and counsel shall
be reasonably satisfactory to CDI) that such exemption or exclusion is
available, or (b) a registration statement filed by CDI with the SEC under the
Securities Act (which YHI acknowledges CDI has no obligation to file).
SECTION 9.2 LEGEND. The certificates for the shares of CDI Common
Stock received in the Merger shall bear a legend as provided for in the
stockholders agreement referred to in Section 7.3(g).
ARTICLE X
SURVIVAL AND INDEMNIFICATION
SECTION 10.1 SURVIVAL PERIODS. All representations and warranties of
the parties contained in this Agreement shall survive the Effective Time until
the two year anniversary of the Closing Date, except that the representations
and warranties in Section 3.13 shall survive until all applicable statutes of
limitation with respect to matters set forth therein have elapsed (each such
period to be referred to herein as the
39
"Survival Period"). Notwithstanding the foregoing, all representations and
warranties shall continue in effect in the event a claim for breach thereof has
been made prior to the expiration of the applicable Survival Period and shall
survive until such claim is resolved.
SECTION 10.2 INDEMNIFICATION OF CDI.
(a) Subject to the terms and conditions set forth herein, from
and after the Closing Date, YHI agrees to defend, indemnify and hold harmless
CDI, the Surviving Corporation and their respective successors and assigns
(individually, a "CDI Indemnitee," and collectively, the "CDI Indemnitees"),
from and against all liability, demands, claims, actions, assessments, losses,
damages, costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) (collectively, "CDI Damages") asserted against or
incurred by any CDI Indemnitee as a result of or arising out of or otherwise
relating to (i) any breach of a representation or warranty of AIM or YHI
contained in or made pursuant to this Agreement when made or at and as of the
Closing Date as though such representation or warranty was made at and as of the
Closing Date, (ii) any failure by AIM or YHI to perform or otherwise fulfill or
comply with any undertaking, agreement or obligation to be performed, fulfilled
or complied with by AIM or YHI under this Agreement prior to the Closing Date or
(iii) any performance or nonperformance by the CDI Indemnitee or otherwise
relating to any contract listed in Section 3.10 of the AIM Disclosure Schedule.
(b) YHI's obligation to indemnify the CDI Indemnitees pursuant
to Section 10.2(a) is subject to the following limitations:
(i) No indemnification shall be made by YHI unless and until
the aggregate amount of CDI Damages exceeds $100,000, in which event
indemnification shall be made by YHI for that amount of CDI Damages that exceeds
$100,000. Notwithstanding the foregoing, YHI shall indemnify the CDI Indemnitees
for the full amount of CDI Damages relating to that certain contract by and
between AIM and Vail (the "Vail Contract") and the full amount of CDI Damages
relating to Mr. Xxxxxxx Xxxxxxx'x claim concerning his termination from
employment at AIM (the "Xxxxxxx Matter");
(ii) In no event shall YHI's aggregate obligation to indemnify
the CDI Indemnitees exceed the sum of $3,000,000; except that any CDI Damages
resulting from the Vail Contract and Xxxxxxx matter shall not be included in any
calculations of the $3,000,000 limit discussed in this Section; and
40
(iii) The amount of any CDI Damages shall be reduced by any
amount received by a CDI Indemnitee with respect thereto under any insurance
coverage or from any other party alleged to be responsible therefor. The CDI
Indemnitees shall use reasonable efforts to collect any amounts available under
such insurance coverage and from such other party alleged to have
responsibility. If a CDI Indemnitee receives an amount under insurance coverage
or from such other party with respect to CDI Damages at any time subsequent to
any indemnification provided by YHI pursuant to this Section 10.2, then such CDI
Indemnitee shall promptly reimburse YHI for any payment made or expense incurred
by YHI in connection with providing such indemnification up to such amount
received by the CDI Indemnitee.
SECTION 10.3 INDEMNIFICATION OF YHI.
(a) Subject to the terms and conditions set forth herein, from
and after the Closing Date, CDI agrees to defend, indemnify and hold harmless
YHI (the "AIM Indemnitee"), from and against all liability, demands, claims,
actions, assessments, losses, damages, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) (collectively, "AIM
Damages") asserted against or incurred by the AIM Indemnitee as a result of or
arising out of or otherwise relating to (i) any breach of a representation or
warranty of CDI contained in or made pursuant to this Agreement when made or at
and as of the Closing Date as though such representation or warranty was made
at and as of the Closing Date or (ii) any failure to perform or otherwise
fulfill any undertaking, agreement or obligation to be performed, fulfilled or
complied with by CDI under this Agreement prior to the Closing Date.
(b) CDI's obligation to indemnify the AIM Indemnitee pursuant
to Section 10.3(a) is subject to the following limitations:
(i) No indemnification shall be made by CDI unless and until
the aggregate amount of AIM Damages exceeds $100,000, in which event
indemnification shall be made by CDI for that amount of AIM Damages that
exceeds $100,000;
(ii) In no event shall CDI's aggregate obligation to indemnify
the AIM Indemnitee exceed the sum of $3,000,000; and
(iii) The amount of any AIM Damages shall be reduced by any
amount received by the AIM Indemnitee with respect thereto under any insurance
coverage or from any other party alleged to be responsible therefor. The AIM
Indemnitee shall use reasonable efforts to collect any amounts available under
such
41
insurance coverage and from such other party alleged to have responsibility. If
the AIM Indemnitee receives an amount under insurance coverage or from such
other party with respect to AIM Damages at any time subsequent to any
indemnification provided by CDI pursuant to this Section 10.3, then such AIM
Indemnitee shall promptly reimburse CDI for any payment made or expense incurred
by CDI in connection with providing such indemnification up to such amount
received by the AIM Indemnitee.
SECTION 10.4 INDEMNIFICATION PROCEDURES. The party or parties being
indemnified, CDI Indemnitee and AIM Indemnitee, are referred to herein as the
"Indemnified Party" and the indemnifying party is referred to herein as the
"Indemnifying Party."
(a) The Indemnified Party shall use commercially reasonable
efforts to minimize any Losses in respect of which indemnity may be sought
hereunder, PROVIDED, HOWEVER, that this sentence shall not be construed to
release the Indemnifying Party from liability for the breach of any
representation, warranty, covenant or agreement contained in this Agreement or
to waive the rights of an Indemnified Party to indemnification for the breach of
any representation, warranty, covenant or agreement contained in this Agreement.
The Indemnified Party shall give written notice (the "Indemnification Notice")
to the Indemnifying Party within ten (10) days after discovery by the
Indemnified Party of any matters giving rise to a claim for indemnification or
reimbursement under this Agreement; PROVIDED, HOWEVER, that if no prejudice
results from a failure to deliver prompt notice of a claim, no penalty shall be
exacted therefor and the Indemnified Party shall continue to be entitled to
indemnification. Notwithstanding the preceding sentence, any such
Indemnification Notice must be given before the end of the Survival Period.
(b) In case any such action, proceeding or claim is brought
against an Indemnified Party, the Indemnifying Party shall be entitled to
participate in and, unless in the reasonable judgment of the Indemnified Party a
conflict of interest between it and the Indemnifying Party may exist in respect
of such action, proceeding or claim, to assume the defense thereof, with counsel
reasonably satisfactory to the Indemnified Party, and after notice from the
Indemnifying Party to the Indemnified Party of its election so to assume the
defense thereof, the Indemnifying Party shall not be liable to such Indemnified
Party for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation. In the event that the Indemnifying Party advises the Indemnified
Party that the Indemnifying Party will contest a claim for indemnification
hereunder, or fails, within thirty (30) days of receipt of any Indemnification
Notice to
42
notify, in writing, the Indemnified Party of its election to defend, settle or
compromise, at its sole cost and expense, any action or claim (or discontinues
its defense at any time after it commences such defense), then the Indemnified
Party may, at its option, defend, settle or otherwise compromise or pay such
action or claim. In any event, unless and until the Indemnifying Party elects in
writing to assume and does so assume the defense of any such claim or action,
the Indemnified Party's costs and expenses arising out of the defense,
settlement or compromise of any such action or claim shall be Losses subject to
indemnification hereunder.
(c) The Indemnified Party shall cooperate fully with the
Indemnifying Party in connection with any negotiation or defense of any such
action or claim by the Indemnifying Party and shall furnish to the Indemnifying
Party all information reasonably available to the Indemnified Party which
relates to such action or claim. The Indemnifying Party shall keep the
Indemnified Party fully appraised at all times as to the status of the defense
or any settlement negotiations with respect thereto. If the Indemnifying Party
elects to defend any such action or claim, then the Indemnified Party shall be
entitled to participate in such defense with counsel of its choice at its sole
cost and expense. If the Indemnifying Party does not assume the defense, the
Indemnified Party shall keep the Indemnifying Party appraised at all times as to
the status of the defense; PROVIDED, HOWEVER, that the failure to keep the
Indemnifying Party so informed shall not affect the obligations of the
Indemnifying Party hereunder. Payment of indemnification amounts hereunder
shall be made to the person or entity specified by the Indemnified Party.
Anything in this Article X to the contrary notwithstanding, the Indemnifying
Party shall not, without the Indemnified Party's prior written consent, settle
or compromise any claim or consent to entry of any judgment in respect thereof
which imposes any future obligation on the Indemnified Party or which does not
include, as an unconditional term thereof, the giving by the claimant or the
plaintiff to the Indemnified Party, a release from all liability in respect of
such claim.
SECTION 10.5 INSURANCE. The Indemnifying Party shall be subrogated to
the rights of the Indemnified Party in respect of any insurance relating to
damages to the extent of any indemnification payments made hereunder.
SECTION 10.6 SOLE REMEDIES. The indemnification provided for in this
Article X shall be the sole remedy against an Indemnifying Party with respect to
the matters covered by this Article X; PROVIDED, HOWEVER, that nothing in this
agreement shall preclude any remedy available at law or in equity for fraud or
similar acts.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1 EXPENSES. Whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense.
SECTION 11.2 BROKERS OR FINDERS. Each of AIM, YHI and CDI represents
that no agent, broker, investment banker, financial advisor or other firm or
person is or will be entitled to any broker's or finder's fee or any other
commission or similar fee in connection with any of the transactions
contemplated by this Agreement.
SECTION 11.3 AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors
and, if required by law, their respective stockholders, at any time. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
SECTION 11.4 EXTENSION; WAIVER. At any time prior to the Effective
Time, either party hereto, may (a) extend the time for the performance of any of
the obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party.
SECTION 11.5 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed), sent by overnight courier or mailed by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
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if to AIM or YHI, to:
Yankelovich Holdings Inc.
000 Xxxxxxx 0 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attn: Xx. Xxxx X. Xxxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxxx & Samor, P.C.
0000 Xxxx Xxxx
X.X. Xxx 000
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xx. Xx Xxxxx
Fax: (000) 000-0000
and
if to CDI, to:
Cyber Dialogue Inc.
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxx
Fax: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0000 Xxx Xxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
SECTION 11.6 DESCRIPTIVE HEADINGS. The descriptive headings contained
in this Agreement are inserted for convenience only and shall not affect in any
way the meaning or interpretation of this Agreement.
45
SECTION 11.7 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, and all of which
shall constitute a single agreement.
SECTION 11.8 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the Merger; and (b) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
SECTION 11.9 GOVERNING LAW; ARBITRATION.
(a) This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law.
(b) Except as specifically provided for elsewhere in this
Agreement, all claims and controversies arising out of or in connection with
this Agreement shall be subject to binding arbitration by a single arbitrator in
accordance with the commercial arbitration rules of the American Arbitration
Association ("AAA") or the existing Rules of Practice and Procedures of the
Judicial Arbitration and Mediation Services, Inc. ("JAMS"). Any arbitration
shall occur in Connecticut and any judgment on the award rendered in such
arbitration shall be entered in any Connecticut state or federal court having
jurisdiction. The party filing the arbitration shall have the right to select
either AAA or JAMS. The prevailing party in any arbitration proceeding hereunder
as determined by the arbitrator or in any legal proceedings or actions arising
from or in connection with this Agreement shall be entitled to recover
reasonable attorneys' fees, costs and expenses and the losing party shall be
responsible for payment of the arbitrator's fee(s). Nothing herein shall
prohibit a party from seeking equitable relief in a court of law to maintain the
status quo while an arbitration is pending hereunder. The parties agree that the
arbitrator shall not have the power to award punitive damages.
SECTION 11.10 PUBLICITY. CDI and YHI shall consult with each other
prior to issuing any press release or making any other public announcement with
respect to the transactions contemplated by this Agreement and shall not issue
any such press release or make any such public announcement prior to such
consultation, except as may be required by applicable law or by applicable rules
of any securities exchange.
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SECTION 11.11 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that CDI shall be entitled without the
consent of AIM or YHI to assign the rights of Merger Sub to consummate the
Merger to any other wholly-owned subsidiary. This Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and permitted assigns.
SECTION 11.12 SPECIFIC PERFORMANCE. The parties recognize and agree
that if for any reason any of the provisions of this Agreement are not performed
in accordance with their specific terms or otherwise breached, immediate and
irreparable harm or injury would be caused for which money damages would not be
an adequate remedy. Accordingly, each party agrees that, in addition to any
other available remedies, the other party shall be entitled to specific
performance of the terms hereof, in addition to any other remedy at law or
equity. In the event that any action should be brought in equity to enforce the
provisions of this Agreement, no party will allege, and each party hereby waives
the defense, that there is an adequate remedy at law.
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IN WITNESS WHEREOF, CDI, Merger Sub, YHI and AIM have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
CYBER DIALOGUE INC.
By: /s/ Xxxxxx Xxxx
-------------------------------
Name: Xxxxxx Xxxx
Title: Chief Operating Officer
AIM ACQUISITION I INC.
By: /s/ Xxxxxx Xxxx
-------------------------------
Name: Xxxxxx Xxxx
Title: Treasurer
YANKELOVICH HOLDINGS INC.
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
Title: President
APPLIED INFORMATION MANAGEMENT
MARKETING, INC.
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
Title: Treasurer
48
