EXHIBIT 10.15
Execution Copy
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AGREEMENT AND PLAN OF REORGANIZATION
Among
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.,
and
CBC ACQUISITION CORPORATION
on the one hand,
and
XXXX REAL ESTATE SERVICES,
THE XXXX SHAREHOLDERS
and
XXXXXX X. XXXX
on the other hand
TABLE OF CONTENTS
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Page
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ARTICLE 1 DEFINITIONS..................................................... 2
1.1 Certain Definitions............................................... 2
1.2 Other Definitions................................................. 4
ARTICLE 2 THE MERGER...................................................... 5
2.1 Effective Time of the Merger...................................... 5
2.2 Effects of the Merger............................................. 6
2.3 Effect on Capital Stock........................................... 6
(a) Capital Stock of Acquisition Corporation.................... 6
(b) Cancellation of Xxxx-Owned and CBC-Owned Stock.............. 6
(c) Conversion of Xxxx Common................................... 6
(d) Adjustment of Exchange Ratio................................ 7
(e) Dissenters' Rights of Stockholders of
Xxxx........................................................ 7
(f) Fractional Shares........................................... 8
2.4 Exchange of Certificates.......................................... 8
2.5 Board of Directors; Officers...................................... 9
2.6 No Further Ownership Rights in Xxxx Common........................ 9
2.7 Tax Treatment..................................................... 9
2.8 Employee Stock Options............................................ 9
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF XXXX.......................... 10
3.1 Organization...................................................... 10
3.2 Capital Structure................................................. 10
3.3 Obligations With Respect to Capital Stock......................... 12
3.4 Equity Investments................................................ 12
3.5 Authority......................................................... 12
3.6 Financial Statements.............................................. 14
3.7 Business Changes.................................................. 15
3.8 Properties........................................................ 17
3.9 Real Property..................................................... 17
3.10 Accounts Receivable.............................................. 18
3.11 Taxes............................................................ 19
3.12 Compensation..................................................... 19
3.13 Compliance with Law.............................................. 20
3.14 Litigation....................................................... 20
3.15 Contracts........................................................ 20
3.16 No Default....................................................... 21
3.17 Proprietary Rights............................................... 22
3.18 Insurance........................................................ 22
3.19 Brokers or Finders............................................... 23
3.20 Certain Advances................................................. 23
3.21 Related Parties.................................................. 23
3.22 Underlying Documents............................................. 24
3.23 Employees and Union Activities................................... 24
3.24 Employee Benefit Plans........................................... 24
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3.25 Misstatements.................................................... 27
3.26 Full Disclosure.................................................. 28
3.27 Customers........................................................ 28
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF
XXXX SHAREHOLDERS................................................ 28
4.1 Title to Shares................................................... 28
4.2 Undisclosed Liabilities........................................... 29
4.3 Misstatements..................................................... 29
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF
CBC AND ACQUISITION CORPORATION.................................. 30
5.1 Organization...................................................... 30
5.2 Acquisition Corporation Capital Structure......................... 30
5.3 Authority......................................................... 30
5.4 Capital Structure................................................. 32
5.5 Financial Statements.............................................. 33
5.6 SEC Documents..................................................... 33
5.7 Information Supplied.............................................. 34
5.8 Absence of Certain Changes or Events.............................. 34
5.9 Shares of Common Stock............................................ 34
5.10 Brokers or Finders............................................... 34
5.11 Compliance with Law.............................................. 34
5.12 Litigation....................................................... 34
5.13 Properties....................................................... 35
5.14 Taxes............................................................ 35
ARTICLE 6 COVENANTS RELATING TO CONDUCT OF BUSINESS........................ 36
6.1 Ordinary Course................................................... 36
6.2 Dividends; Changes in Equity...................................... 37
6.3 Issuance of Securities............................................ 37
6.4 Governing Documents............................................... 38
6.5 No Solicitations.................................................. 38
6.6 No Acquisitions or Investments.................................... 38
6.7 No Dispositions................................................... 39
6.8 Indebtedness...................................................... 39
6.9 Other Actions..................................................... 39
6.10 Advice of Changes................................................ 39
6.11 Accounting Methods............................................... 39
6.12 Tax-Free Reorganization Treatment................................ 40
6.13 Compensation; Benefit Plans...................................... 40
6.14 Liability Limitations............................................ 41
6.15 Certain Payments................................................. 42
ARTICLE 7 ADDITIONAL AGREEMENTS OF XXXX SHAREHOLDERS....................... 42
7.1 No Solicitations.................................................. 42
7.2 No Transfer....................................................... 43
7.3 Agreement to Vote Shares.......................................... 43
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ARTICLE 8 AGREEMENTS OF CBC................................................ 43
8.1 Ordinary Course................................................... 43
8.2 Dividends; Changes in Stock....................................... 43
8.3 Governing Documents............................................... 44
8.4 No Acquisitions................................................... 44
8.5 No Dispositions................................................... 44
8.6 Other Actions..................................................... 44
8.7 Accounting Methods................................................ 44
8.8 Indemnification of Directors and Officers......................... 45
8.9 Tax Treatment..................................................... 47
8.10 Listing on NASDAQ................................................ 47
8.11 Advice of Changes................................................ 47
ARTICLE 9 ADDITIONAL AGREEMENTS RELATING TO
THE FORM S-4 AND THE PROXY STATEMENT............................. 47
ARTICLE 10 ADDITIONAL AGREEMENTS............................................ 48
10.1 Access to Information............................................ 48
10.2 Legal Conditions to the Merger................................... 48
10.3 Xxxx Stockholders' Approval...................................... 49
10.4 CBC Stockholders' Approval....................................... 49
10.5 Dissenting Shares................................................ 49
10.6 Communications................................................... 49
10.7 Delivery of Stock Certificates................................... 50
10.8 Update to Disclosures............................................ 50
10.9 Good Faith....................................................... 50
10.10 State Statutes.................................................. 50
10.11 Affiliates...................................................... 50
10.12 Xxxx Options.................................................... 51
(a) Substitute CBC Options...................................... 51
(b) Documentation............................................... 52
(c) Reallocation of Warrants.................................... 52
10.13 Composition of CBC Board........................................ 53
10.14 Agreements of Xxxxxx X. Xxxx.................................... 53
10.15 Tax Treatment................................................... 53
10.16 Reservation of Shares........................................... 53
10.17 K/B Opportunity Funds........................................... 54
ARTICLE 11 CONDITIONS PRECEDENT............................................. 55
11.1 Conditions to Each Party's Obligations to
Effect the Merger................................................ 55
(a) Stockholder Approval........................................ 55
(b) Government Approvals........................................ 56
(c) Third-Party Approvals....................................... 56
(d) Form S-4.................................................... 56
(e) Statutes.................................................... 56
11.2 Conditions to Obligations of CBC and
Acquisition Corporation.......................................... 56
(a) Representations and Warranties.............................. 57
(b) Performance of Obligations of Xxxx.......................... 57
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(c) Opinion of Xxxx'x Counsel................................... 57
(d) Dissenting Shares........................................... 57
(e) No Material Adverse Change.................................. 57
(f) Noncompetition Agreement.................................... 57
(g) License Agreement........................................... 58
(h) Voting Agreement............................................ 58
(i) Legal Action................................................ 58
(j) CC&F........................................................ 58
(k) Restrictions on Business.................................... 58
(l) Termination of Agreements................................... 59
(m) No Liens.................................................... 59
(n) Credit Agreement............................................ 59
(o) Change in Receivables....................................... 59
(p) Change in Payables.......................................... 60
(q) RW Stock Ownership.......................................... 60
(r) General Release............................................. 60
11.3 Conditions to Obligations of Xxxx................................ 60
(a) Representations and Warranties.............................. 60
(b) Performance of Obligations of CBC and Acquisition
Corporation................................................. 61
(c) Opinion of CBC's Counsel.................................... 61
(d) No Material Adverse Change.................................. 61
(e) Legal Action................................................ 61
(f) Registration Rights Agreement............................... 61
(g) Tax Opinion................................................. 61
(h) Listing on NASDAQ........................................... 61
(i) Substitute CBC Options...................................... 61
(j) Warrant Agreement........................................... 62
ARTICLE 12 CLOSING.......................................................... 62
12.1 Closing Date..................................................... 62
12.2 Filing Date...................................................... 62
ARTICLE 13 INDEMNIFICATION.................................................. 62
13.1 Survival......................................................... 62
13.2 Indemnification by the Xxxx Shareholders......................... 63
13.3 Indemnification by CBC........................................... 65
13.4 Notice and Defense of Third-Party Claims......................... 65
13.5 Exclusivity...................................................... 66
ARTICLE 14 PAYMENT OF EXPENSES.............................................. 66
ARTICLE 15 TERMINATION, AMENDMENT AND WAIVER................................ 67
15.1 Termination...................................................... 67
15.2 Effect of Termination............................................ 69
15.3 Amendment........................................................ 70
15.4 Extension; Waiver................................................ 70
ARTICLE 16 GENERAL.......................................................... 70
16.1 Notices.......................................................... 70
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16.2 Headings........................................................ 71
16.3 Counterparts.................................................... 71
16.4 Binding Nature.................................................. 71
16.5 Merger of Documents............................................. 71
16.6 Incorporation of Schedules...................................... 71
16.7 Good Faith...................................................... 72
16.8 Dispute Resolution.............................................. 72
16.9 Attorneys' Fees................................................. 73
16.10 Applicable Law................................................. 73
16.11 Severability................................................... 73
16.12 No Third Party Beneficiary..................................... 73
16.13 Best Efforts; Further Assurances............................... 73
Exhibit A Certificate of Merger
Exhibit B Warrant Agreement
Exhibit C Voting Agreement and Irrevocable Proxy
Exhibit D Affiliates Agreement
Exhibit E DMK Noncompetition Agreement
Exhibit F Assignment of License Agreement
Exhibit G General Release
Exhibit H Registration Rights Agreement
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AGREEMENT AND PLAN OF REORGANIZATION
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THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made and
entered into as of the 14th day of May, 1997, by and among CB COMMERCIAL REAL
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ESTATE SERVICES GROUP, INC., a Delaware corporation ("CBC"), CBC ACQUISITION
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CORPORATION, a Delaware corporation and wholly-owned subsidiary
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of CBC ("Acquisition Corporation"), XXXX REAL ESTATE SERVICES, a Delaware
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corporation ("Xxxx") and FS Equity Partners III, L.P. and FS Equity Partners
International, L.P. (collectively, "FS"), AP KMS Partners, L.P., and AP KMS II,
LLC (collectively "Apollo"), The Xxxx Holding Company ("KHC"), Xxxxxxx X. Xxxxx
("WSR") and Xxxxxxx Xxxxx ("RW") (collectively the "Xxxx Shareholders"), and
Xxxxxx X. Xxxx ("DMK") (for purposes of Sections 7.3, 10.14, 11.2(f) and
11.2(g)).
R E C I T A L S:
A. Subject to the provisions of this Agreement, immediately following the
CBC Stockholders' Meeting, Xxxx shall execute a Certificate of Merger (the
"Certificate of Merger") in substantially the form attached hereto as Exhibit A,
which provides for the merger (the "Merger") of Acquisition Corporation into
Xxxx at the time provided for in Article II thereof (the "Merger Date").
Following the Merger in accordance with the terms of this Agreement, Xxxx shall
be a wholly-owned subsidiary of CBC. Pursuant to the Stock Exchange Ratio set
forth in Section 2.3(c) of this Agreement, shares of Common Stock, $.01 par
value, of Xxxx issued and outstanding as of the Effective Date ("Xxxx Common")
will be converted into shares of Common Stock, $.01 par value, of CBC ("CBC
Common").
B. The respective Boards of Directors of Xxxx and CBC have approved the
Merger.
C. The parties hereto intend that the Merger constitute a reorganization
under Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code.
D. The parties hereto desire to enter into this Agreement for the purpose
of setting forth certain representations, warranties and covenants made by each
to the other as an inducement to the execution and delivery of this Agreement
and the conditions precedent to the consummation of the Merger.
NOW, THEREFORE, in consideration of the premises and of the mutual
provisions, agreements and covenants herein contained, CBC, Acquisition
Corporation, Xxxx, the Xxxx Shareholders and DMK hereby agree as follows:
ARTICLE 1
DEFINITIONS
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1.1 Certain Definitions. The terms defined in this Section 1.1 shall, for
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all purposes of this Agreement, have the meanings herein specified, unless the
context expressly or by necessary implication otherwise requires:
(a) "CBC Stockholders' Meeting" shall mean the meeting of the holders
of CBC Common called and convened for the purpose of their consideration of and
voting upon the trans actions contemplated by this Agreement, and any
adjournments thereof.
(b) "Dissenting Shares" means shares of Xxxx Common which shall be
owned by stockholders who shall duly perfect and pursue their appraisal rights
with respect to such shares in accordance with Section 262 of the Delaware
General Corporation Law.
(c) "Dissenting Stockholders" means those stock holders of Xxxx who
are holders of and are entitled to Dissenting Shares.
(d) "Employee Benefit Plan" means (a) any Employee Pension Benefit
Plan; (b) any Employee Welfare Benefit Plan; (c) any bonus, deferred
compensation, incentive, restricted equity, equity purchase, equity option,
equity appreciation right, phantom equity, debenture, supplemental pension,
profit-sharing, royalty pool, commission, cafeteria or similar plan or
arrangement; (d) any plan, program, agreement, policy, commitment or other
arrangement relating to severance or termination pay, whether or not published
or generally known; (e) any plan, program, agreement, policy, commitment or
other arrangement relating to the provision of any benefit described in Section
3(1) of ERISA to former employees or directors or to their survivors or (f) any
other plan, program, agreement, pro cedure, policy, commitment, understanding or
other arrangement relating to employee benefits, executive compensation, fringe
benefits, severance pay, collective bargaining, terms of employment or services
as an independent contractor, whether foreign or domestic.
(e) "Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
(f) "Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
(g) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
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(h) "ERISA Affiliate" means any entity that, together with Xxxx, is
treated as a single employer under section 414(b), 414(c), 414(m) or 414(o) of
the Code.
(i) "Fiduciary" has the meaning set forth in ERISA Section 3(21).
(j) "50% JV" shall mean, for any entity, any corporation, partnership
or other entity of which 50% of the securities or other ownership interests
having by their terms ordinary voting power to elect the board of directors or
appoint or elect other persons performing similar functions of such corporation,
partnership or other entity (irrespective of whether or not at the time
securities or other ownership interests of any other class or classes of such
corporation, partnership or other entity shall have or might have voting power
by reason of the happening of any contingency) is at the time owned or
controlled directly or indirectly by such entity or by one or more Subsidiaries
of such entity or by such entity and one or more Subsidiaries of such entity.
(k) "Form S-4" shall mean the registration statement of CBC on Form
S-4 to be filed with and declared effective by the SEC in connection with the
issuance of the CBC Common and Warrants pursuant to the Merger.
(l) "Xxxx Stockholders' Meeting" shall mean the meeting of the
holders of Xxxx Common called and convened for the purpose of their
consideration of and voting upon the transactions contemplated by this
Agreement, and any adjournments thereof.
(m) "Material Adverse Effect" shall mean a material adverse effect on
the financial condition, results of operations, properties or business of Xxxx
and Subs or CBC and its Subsidiaries, as the case may be, taken as a whole.
(n) "Multiemployer Plan" has the meaning set forth in ERISA Section
3(37).
(o) "PBGC" means the Pension Benefit Guaranty Corporation.
(p) "Proxy Statement" shall mean the proxy material delivered to the
holders of CBC Common between the date hereof and the CBC Stockholders' Meeting,
which shall describe the transactions contemplated by this Agreement, and which
shall solicit the approval of the holders of CBC Common of such transactions,
and any amendments or supplements thereto, all as required by applicable law.
(q) "SEC" shall mean the Securities and Exchange Commission.
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(r) "Subsidiary" shall mean, for any entity, any corporation,
partnership or other entity of which a majority of the securities or other
ownership interests having by their terms ordinary voting power to elect the
board of directors or appoint or elect other persons performing similar
functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other
class or classes of such corporation, partnership or other entity shall have or
might have voting power by reason of the happening of any contingency) is at the
time owned or controlled directly or indirectly by such entity or by one or more
Subsidiaries of such entity or by such entity and one or more Subsidiaries of
such entity.
1.2 Other Definitions. In addition to the terms defined in Section 1.1,
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certain other terms are defined elsewhere in this Agreement, and, whenever such
terms are used in this Agreement, they shall have their respective defined
meanings, unless the context expressly or by necessary implication other wise
requires.
Defined Terms Sections
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Acquisition Corporation Common 5.2
Acquisition Transaction 6.5
Affiliate 10.11
Bank Indebtedness 6.14
CBC Balance Sheet 5.5
CBC Balance Sheet Date 5.5
CBC Common Recitals
CBC Companies 5.1
CBC Financial Statements 5.5
CBC Minimum Amount 13.2(b)
CBC Options 5.4(a)
CBC SEC Documents 5.6
CBC's Indemnified Persons 13.2(a)
Certificate 2.4
Closing 12.1
Closing Date 12.1
Code 2.7
Consents 3.5
Effective Time 2.1
Environmental Regulation 3.9(c)
Environmental Litigation 3.9(c)
Exchange Act 3.5
Filing Fees Article 14
GAAP 3.6
Golden Parachute Payment 3.24(j)
Governmental Entity 3.5
Group 5.1
Hazardous Substances 3.9(b)
HSR Act 3.5
Indemnified Agents 8.8(a)
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Indemnified Liabilities 8.8(a)
Indemnified Person 13.4
Indemnifying Party 8.8(a)
Indemnifying Person 13.4
Xxxx Affiliate Agreements 10.11
Xxxx Balance Sheet 3.6
Xxxx Balance Sheet Date 3.6
Xxxx Common Recitals
Xxxx Financial Statements 3.6
Xxxx Options 2.8
Xxxx Plans 3.24(a)
License Agreement 11.2(h)
Liens 3.8
LJM 5.1
Losses 13.2(a)
Material Subsidiaries 5.4(b)
NASDAQ 2.3(f)
Non-Competition Agreements 11.2(f)
Options 3.2(c)
Permits 3.13
Preferred Stock 3.2(a)
Proceeding 8.8(a)
Proprietary Rights 3.17
Recipient 3.24(j)
Rule 145 10.11
Selling Shareholder Article 4
Shareholders' Indemnified Persons 13.3
Stock Exchange Ratio 2.3(c)
Subs 3.1
Surviving Corporation 2.2
Taxes 3.11
Third Party 15.1(h)(i)
Unindemnified Liabilities 8.8(a)
WM 5.1
ARTICLE 2
THE MERGER
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2.1 Effective Time of the Merger. Subject to the provisions of this
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Agreement, including the satisfaction or waiver of the conditions set forth in
Article 11 hereof, a Certificate of Merger shall be duly prepared, executed and
acknowledged by the Surviving Corporation (as defined in Section 2.2) and
thereafter delivered to the Secretary of State of the State of Delaware, for
filing, in accordance with the Delaware General Corporation Law on the Closing
Date (as defined in Article 12). The Merger shall become effective upon the
filing of the Certificate of Merger with the Delaware Secretary of State (the
"Effective Time").
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2.2 Effects of the Merger. At the Effective Time, (a) the separate
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existence of Acquisition Corporation shall cease and Acquisition Corporation
shall be merged with and into Xxxx, which shall be the surviving corporation
(the "Surviving Corporation"); (b) the Certificate of Incorporation of
Acquisition Corporation immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation; (c) the Bylaws of
Acquisition Corporation shall be the Bylaws of the Surviving Corporation; (d)
the directors of the Surviving Corporation shall be as set forth in Section 2.5
hereof; (e) the officers of the Surviving Corporation shall be as set forth in
Section 2.5 hereof; and (f) the Merger shall, from and after the Effective Time,
have all the effects provided by applicable law, including the Delaware General
Corporation Law.
2.3 Effect on Capital Stock. As of the Effective Time, by virtue of the
-----------------------
Merger and without any action on the part of the holder of any of the issued and
outstanding shares of Xxxx Common:
(a) Capital Stock of Acquisition Corporation. All issued and
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outstanding shares of capital stock of Acquisition Corporation shall continue to
be issued and shall be converted into 1,000 shares of Common Stock of the
Surviving Corporation. Each stock certificate of Acquisition Corporation
evidencing ownership of any such shares shall continue to evidence owner ship of
such shares of capital stock of the Surviving Corporation.
(b) Cancellation of Xxxx-Owned and CBC-Owned Stock. All shares of
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Xxxx Common, if any, that are owned directly or indirectly by Xxxx and by CBC or
any of its Subsidiaries shall be canceled, and no stock of CBC or other
consideration shall be delivered in exchange therefor.
(c) Conversion of Xxxx Common. Other than shares to be canceled
-------------------------
pursuant to Section 2.3(b), Dissenting Shares and fractional shares as provided
in Section 2.3(e) and (f), each share of Xxxx Common issued and outstanding
immediately prior to the Effective Time shall be converted, without any action
on the part of the holders thereof, into (i) 0.776175 shares of CBC Common
subject to adjustment as set forth in Section 2.3(d) (hereinafter the "Stock
Exchange Ratio") and (ii) a number of Warrants (the "Warrants") equal to (A)
600,000 divided by (B)(1) the number of shares of Xxxx Common outstanding
immediately prior to the Effective Time plus (2) the number of shares of Xxxx
Common into which Xxxx Options outstanding and held by individuals who are
directors, employees or consultants of Xxxx or Subs immediately prior to the
Effective Time are exercisable (the "Warrant Exchange Ratio"); each Warrant
shall be exercisable into one share of CBC Common at an exercise price of $30.00
per share of CBC Common. In addition, each Warrant shall have a term of 7 years
from the Closing Date, shall become
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exercisable on the third anniversary of the Closing Date, shall be subject to
the terms and conditions of the Warrant Agreement attached hereto as Exhibit B
and shall be in substantially the form of the Warrant Certificate attached as an
Exhibit thereto. Anything to the contrary contained herein notwithstanding, (i)
the number of shares of Xxxx Common (including Dissenting Shares and fractional
shares) and securities exercisable or convertible into Xxxx Common (including
without limitation Xxxx Options) issued and outstanding immediately prior to the
Effective Time shall not exceed 7,233,243, (ii) the number of shares of CBC
Common issued in exchange for Xxxx Common pursuant hereto shall not exceed
5,614,261 minus the Stock Exchange Ratio multiplied by the sum of the number of
Dissenting Shares plus the number of fractional shares and (iii) the number of
shares of CBC Common into which all Warrants issued pursuant hereto shall be
exercisable shall not exceed 600,000.
(d) Adjustment of Exchange Ratio. If, between the date of this
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Agreement and the Effective Time, the outstanding shares of CBC Common or Xxxx
Common shall have been changed into a different number of shares or a different
class by reason of any reclassification, recapitalization, split-up,
combination, exchange of shares or readjustment, the Stock Exchange Ratio shall
be correspondingly adjusted. In addition, for each $100,000 by which Bank
Indebtedness exceeds $47,375,000 or by which any subcategory of Bank
Indebtedness exceeds the applicable sublimit set forth in Section 6.14 (but
without duplication), the Stock Exchange Ratio shall be reduced by 0.0005883.
(e) Dissenters' Rights of Stockholders of Xxxx. Any Dissenting
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Shares shall not be converted into CBC Common and Dissenting Stockholders shall
not have the right to receive any Warrants. Dissenting Shares shall be
converted into the right to receive such consideration as may be determined
pursuant to Section 262 of the Delaware General Corporation Law, if the
Dissenting Stockholder holding such shares is entitled to dissenters' rights
under such section. Xxxx agrees that, except with the prior written consent of
CBC, or as required under the Delaware General Corporation Law, it will not
voluntarily make any payment with respect to, or settle or offer to settle, any
such demand for appraisal. Each Dissenting Stockholder who, pursuant to the
provisions of Section 262 of the Delaware General Corporation Law, and subject
to any agreements binding upon such Dissenting Stockholder, becomes entitled to
payment of the value of shares of Xxxx Common shall receive payment therefor
(but only after the value therefor shall have been agreed upon or finally
determined pursuant to such provisions). In the event of the legal obligation,
after the Effective Time, to deliver shares of CBC Common to any Dissenting
Stockholder who shall have failed to make an effective demand for appraisal or
shall have lost his status as a Dissenting Stockholder, CBC shall issue and
deliver, upon surrender by such Dissenting
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Stockholder of his certificate or certificates representing shares of Xxxx
Common, the shares of CBC Common, Warrants and payments in lieu of fractional
shares to which such Dissenting Stockholder is then entitled under this Section
2.3 and Section 262 of the Delaware General Corporation Law.
(f) Fractional Shares. No fractional shares of CBC Common shall be
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issued, but in lieu thereof each holder of shares of Xxxx Common who would
otherwise be entitled to receive a fraction of a share of CBC Common (after
aggregating all fractional shares of CBC Common to be received by such holder)
shall receive from CBC an amount of cash (rounded up to the nearest whole cent)
equal to the product of (i) the fraction of a share of CBC Common to which such
holder would otherwise be entitled, times (ii) the average closing sale price of
a share of CBC Common for the ten (10) most recent days on which CBC Common has
traded ending the trading day immediately prior to the Closing Date, as reported
on the Nasdaq National Market ("NASDAQ"). Each holder of Xxxx Common will be
issued one certificate representing all Warrants to which it is entitled rounded
down to the nearest whole number.
2.4 Exchange of Certificates. At the Closing, each holder of shares of
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Xxxx Common other than Dissenting Stockholders will surrender the certificate(s)
(a "Certificate") representing such shareholder's shares of Xxxx Common to CBC.
Upon surrender of a Certificate for cancellation to CBC, the holder of such
Certificate shall be entitled to receive in exchange therefor the number of
shares of CBC Common (represented by a certificate), payments in lieu of
fractional shares and Warrants to which the holder of Xxxx Common is entitled
pursuant to Section 2.3 and the Certificate of Merger and is represented by the
Certificate so surrendered. The Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Xxxx Common which is not
registered in the transfer records of Xxxx, the appropriate number of shares of
CBC Common may be delivered to a transferee if the Certificate representing the
right to receive such CBC Common is presented to CBC and accompanied by all
documents required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.4, each Certificate shall be deemed at any time
after the Effective Time to represent the right to receive upon such surrender
the number of shares of CBC Common as provided by this Section 2.4 and the
Delaware General Corporation Law. CBC shall follow the same procedure with
respect to lost, stolen or mutilated Xxxx certificates as it follows with
respect to lost, stolen or mutilated CBC certificates. Unless and until any
such certificates shall be so surrendered, any dividends paid or other
distributions made to holders of record of CBC Common after the Effective Time
shall be retained by CBC and paid over to such holder when such certificate is
surrendered in accordance with this Section 2.4(c).
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2.5 Board of Directors; Officers. Upon the Effective Time:
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(a) The directors of the Surviving Corporation shall be as named in
the Certificate of Merger and each shall remain a director from the Effective
Time until such director's successor shall have been elected and shall qualify,
or as otherwise provided in the By-laws of the Surviving Corporation.
(b) The officers of the Surviving Corporation shall be as named in
the Certificate of Merger and shall each hold office from the Effective Time
until such officer's successor shall have been elected and shall qualify, or as
otherwise provided in the By-laws of the Surviving Corporation.
(c) If at the Effective Time a vacancy shall exist in the Board of
Directors or in any of the offices of the Surviving Corporation, such vacancy
may thereafter be filled in the manner provided in the Bylaws of the Surviving
Corporation.
2.6 No Further Ownership Rights in Xxxx Common. All CBC Common delivered
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upon the surrender for exchange of shares of Xxxx Common in accordance with the
terms hereof shall be deemed to have been delivered in full satisfaction of all
rights pertaining to such shares of Xxxx Common. There shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Xxxx Common which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they shall be canceled
and exchanged as provided in this Article 2.
2.7 Tax Treatment. The parties intend that the Merger will be treated as
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a reorganization under Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal
Revenue Code of 1986, as amended (the "Code"), and that this Agreement be
treated as a Plan of Reorganization for such purpose.
2.8 Employee Stock Options. All options to purchase shares of Xxxx Common
----------------------
("Xxxx Options") outstanding as of the Effective Time under Xxxx option plans
shall be treated in accordance with Section 10.12.
-9-
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF XXXX
--------------------------------------
Xxxx represents and warrants to CBC and Acquisition Corporation as of the
date hereof and as of the Effective Time as follows:
3.1 Organization. Each of Xxxx, each of its Subsidiaries (each a "Sub"
------------
and collectively, the "Subs") each other corporation, partnership, limited
liability company, trust or other entity with respect to which it or one or more
of its Subsidiaries has a material investment or is subject to unlimited
liability as a general partner or otherwise (each an "Investment Entity" and
collectively the "Investment Entities") and each 50% JV is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization and is qualified to do business in each jurisdiction where it is
required to be so qualified except where the failure to be so qualified will not
have a Material Adverse Effect and has all requisite power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted, and possesses all regulatory and other licenses, permits,
authorizations, franchises, rights and privileges necessary for the conduct of
its business as conducted and as proposed to be conducted, except for such
licenses, permits, authorizations, franchises, rights and privileges where the
failure to obtain or possess same would not have a Material Adverse Effect.
3.2 Capital Structure. (a) The authorized capital stock of Xxxx consists
-----------------
of 8,000,000 shares of Common Stock, $.01 par value per share and 2,000,000
shares of Preferred Stock, $.01 par value per share ("Preferred Stock"). As of
the date hereof, there were and immediately preceding the Effective Time there
will be (i) no more than an aggregate of 7,233,243 shares of Xxxx Common issued
and outstanding and issuable upon the exercise of Xxxx Options; (ii) 590,000
shares of Xxxx Common reserved for issuance upon exercise of options under
Xxxx'x stock option plans and (iii) no shares of Preferred Stock outstanding.
(b) All of the outstanding Xxxx Common was issued in compliance with
applicable federal and state securities laws, and no further registration,
qualification or other compliance under such securities laws is required. All
of the outstanding shares of Xxxx Common are duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights created by
statute, Xxxx'x Certificate of Incorporation or Bylaws or any agreement to which
Xxxx is a party or is bound.
(c) Schedule 3.2(c) sets forth a complete list of all equity
---------------
securities of Xxxx outstanding on the date hereof, together with the holders
thereof, and, with respect to Xxxx
-10-
Options, the exercise price, vesting schedule (taking into account any
acceleration in contemplation of or triggered by the transactions contemplated
hereby) and termination date of each. As of the Effective Time, each holder of
Xxxx Common or Xxxx Options shall have no more than the aggregate number of Xxxx
Common and Xxxx Options as set forth on Schedule 3.2(c). As of the date hereof,
---------------
except as set forth on Schedule 3.2(c) and as of the Effective Time without
---------------
exception, each Xxxx Shareholder has and will have good and valid title to all
shares of Xxxx Common shown beside such Xxxx Shareholder's name on Schedule
--------
3.2(c), and no other shares free and clear of all Liens other than liens in
------
favor of Xxxx, in each case other than those certain options in favor of RW and
WSR to purchase 672,000 and 100,800 shares of Xxxx Common, respectively, held by
KHC. As of the date hereof, except as set forth on Schedule 3.2(c), and as of
---------------
the Effective Time without exception, each Xxxx Shareholder is not a party to or
holder of any option, warrant, call, right, commitment or agreement of any
character (collectively "Options") obligating Xxxx to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock of
Xxxx or obligating Xxxx to xxxxx, extend or enter into any such option, warrant,
call right, commitment or agreement. As of the date hereof, except as set forth
on Schedule 3.2(c), and as of the Effective Time without exception, each Xxxx
---------------
Shareholder has sole voting power with respect to such shares and is not a party
to any stockholder agreement, voting agreement, voting trust, proxy or other
agreement with respect to voting, restrictions on transfer, or otherwise
pertaining to such Xxxx Shareholder's Shares.
(d) Schedule 3.2(d) sets forth a complete and correct list of each
---------------
Sub, Investment Entity and 50% JV and Xxxx'x or a Sub's or Investment Entity's
interest therein. Except as disclosed in Schedule 3.2(d), all of the
---------------
outstanding shares of capital stock or partnership or other equity interests of
each material Sub, material Investment Entity and material 50% JV are duly
authorized, validly issued, fully paid and nonassessable and the interests
therein owned by Xxxx, a Sub or an Investment Entity, as shown on Schedule
--------
3.2(d) are owned, beneficially and of record, by Xxxx or such Sub or Investment
------
Entity, free and clear of any Liens. Except as disclosed in Schedule 3.2(d),
---------------
there are not (i) outstanding Options obligating Xxxx, any material Sub or any
material Investment Entity to issue or sell any shares of capital stock or
partnership or other equity interests of any material Sub or any material
Investment Entity or to grant, extend or enter into any such Option or (ii)
voting trusts, registration rights, proxies or other commitments,
understandings, restrictions or arrangements in favor of any person other than
Xxxx or a Sub wholly owned, directly or indirectly, by Xxxx with respect to the
voting of or the right to participate in dividends or other earnings on any
capital stock or partnership or other equity interests of Xxxx or any material
Sub.
-11-
(e) Except as disclosed in Schedule 3.2(e), there are no outstanding
---------------
contractual obligations of Xxxx, any Sub or any Investment Entity to repurchase,
redeem or otherwise acquire any shares of Xxxx Common or any capital stock or
partnership or other equity interests of any Sub or any Investment Entity or to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any Sub or any Investment Entity or any other
person.
3.3 Obligations With Respect to Capital Stock. Xxxx shall provide notice
-----------------------------------------
of the Merger to the holders of all Xxxx Options. Any Xxxx Option that remains
unexercised at the Effective Time shall be substituted by CBC in accordance with
the provisions of Section 10.12 hereof. Except as set forth in Schedule 3.2(c),
---------------
there are no equity securities of any class of Xxxx or Subs, or any security
exchangeable into or exercisable for such equity securities, issued, reserved
for issuance or outstanding. Except as set forth in Schedule 3.2(c), there are
---------------
no options, warrants, calls, rights, commitments or agreements of any character
to which Xxxx or Subs is a party or by which it is bound obligating Xxxx or Subs
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock of Xxxx or Subs or obligating Xxxx or Subs to grant,
extend or enter into any such option, warrant, call, right, commitment or
agreement.
3.4 Equity Investments. Except for Subs and Investment Entities listed on
------------------
Schedule 3.2(d) and investments aggregating less than $500,000 in invested or
---------------
committed dollars, Xxxx does not own any equity interest, directly or
indirectly, in any corporation, partnership, joint venture, firm or other entity
and neither Xxxx nor any of the Subs owns any equity interest directly or
indirectly, in any corporation, partnership, joint venture, firm or other
entity.
3.5 Authority.
---------
(a) Each of Xxxx and each of the Xxxx Shareholders and DMK has all
requisite individual, corporate or partnership, as applicable, power and
authority to enter into this Agreement and the Certificate of Merger and,
subject to satisfaction of the conditions set forth herein, to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Certificate of Merger and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action, corporate, partnership or otherwise, on the part of each of
Xxxx and each of the Xxxx Shareholders subject to approval by the stockholders
of Xxxx. This Agreement has been duly executed and delivered by each of Xxxx
and each of the Xxxx Shareholders and DMK and constitutes a valid and binding
obligation of Xxxx and each of the Xxxx Shareholders and DMK enforceable in
accordance with its terms, subject to the approval of the stockholders of Xxxx.
-12-
(b) Provided the conditions in Article 11 are satisfied, the execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under (i) any provision of the
charter documents or Bylaws of Xxxx or Subs or any Xxxx Shareholder or (ii) any
material agreement or instrument, permit, franchise, license, judgment or order,
applicable to Xxxx or Subs or any Xxxx Shareholder or their respective
properties or assets, other than any such conflicts, violations, defaults,
terminations, cancelations or accelerations which individually or in the
aggregate would not have a Material Adverse Effect. Schedule 3.5 contains a
------------
full and complete list of all necessary consents, waivers and approvals
(together with any other consents, waivers or approvals from third parties, the
"Consents") of third parties (other than Governmental Entities) applicable to
the operations of Xxxx and Subs that are required to be obtained by Xxxx and
Subs in connection with the execution and delivery of this Agreement or the
Certificate of Merger by Xxxx and the performance of Xxxx'x obligations
hereunder or thereunder, except for such Consents for which the failure to
obtain the same would not have a Material Adverse Effect. Prior to the Closing
Date, Xxxx or Subs, as applicable, will obtain all Consents the failure of which
to obtain would have a Material Adverse Effect, other than with respect to that
certain Amended and Restated Credit Agreement, dated as of January 9, 1997,
among Xxxx Management Services, Inc., the Lenders listed therein, Bankers Trust
Company, as agent for the Lenders, and The First National Bank of Boston and
BHF-Bank Aktiengesellschaft, as co-agents for the Lenders, as amended, with
respect to which Xxxx will obtain, prior to Closing, the Lenders' consent to an
extension of such Credit Agreement until sixty (60) days following the Effective
Time as set forth in Section 11.2(n). Notwithstanding the foregoing, Xxxx will
not obtain any consents under its or its Affiliates' property or facilities
management agreements, provided, however, that if any such property or
-------- -------
facilities management agreements are terminated pursuant to any "Change of
Control", "Assignment", or similar provision and such terminations, individually
or in the aggregate and subject to Section 6.1, have a Material Adverse Effect,
it shall constitute the failure of a condition to CBC's and Acquisition
Corporation's respective obligations to close. Subject to the immediately
following paragraph, no such Consents are required to be obtained by the Xxxx
Shareholders in connection with the execution and delivery of this Agreement or
the performance of their obligations hereunder.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any national (Federal or foreign), state or local
government, any political
-13-
subdivision thereof or any governmental, quasi-governmental, judicial, public or
statutory agency, commission, authority, instrumentality, body or entity (a
"Governmental Entity"), is required by or with respect to Xxxx or Subs or the
Xxxx Shareholders in connection with the execution and delivery of this
Agreement by Xxxx and the Xxxx Shareholders or the Certificate of Merger by Xxxx
or the consummation by Xxxx and the Xxxx Shareholders of the transactions
contemplated hereby or thereby, except for (i) the filing of a pre-merger
notification report under the Xxxx-Xxxxx-Xxxxxx Act ("HSR Act"), (ii) the filing
of a Form S-4 with the SEC, (iii) the filing of the Certificate of Merger with
the Delaware Secretary of State, and appropriate documents with the relevant
authorities of other states in which Xxxx is qualified to do business, (iv) the
filing of the Proxy Statement with the SEC in accordance with the Securities
Exchange Act of 1934 (the "Exchange Act"), (v) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable state securities laws and the laws of any foreign country, and (vi)
such other consents, approvals, orders, authorizations, registrations,
declarations and filings which if not obtained or made would not have a Material
Adverse Effect.
3.6 Financial Statements. Xxxx has furnished to CBC (i) its audited
--------------------
consolidated statement of operations, statement of stockholders' equity and
statement of cash flows for the fiscal year ended March 31, 1995 and 1996 and
for the nine months ended December 31, 1996, (ii) Xxxx'x unaudited consolidated
statement of operations, statement of stockholders' equity and statement of cash
flows for the three months ended March 31, 1996 and Xxxxx 00, 0000, (xxx) Xxxx'x
audited consolidated balance sheet as of March 31, 1995 and 1996 and December
31, 1996 and (iv) Xxxx'x unaudited consolidated balance sheet as of March 31,
1997. Xxxx shall furnish monthly unaudited consolidated financial statements to
CBC for each month after March 31, 1997, until the Closing Date, which monthly
financial statements shall contain substantially all the information currently
contained in what is commonly referred to as the "Green Book." The unaudited
consolidated balance sheet at March 31, 1997 is hereinafter referred to as the
"Xxxx Balance Sheet," and all such financial statements are herein after
referred to collectively as the "Xxxx Financial State ments." The Xxxx
Financial Statements have been and will be prepared in accordance with generally
accepted accounting prin ciples ("GAAP") applied on a consistent basis during
the periods involved, except as noted in the notes to the Xxxx Financial
Statements, and are and will be in accordance with Xxxx'x books and records, and
fairly present in all material respects the financial position of Xxxx and the
results of its operations as of the date and for the periods indicated thereon,
subject in the case of the unaudited portion of the Xxxx Financial Statements to
normal year-end audit adjustments which will not be material and the absence of
certain footnote disclosures. At
-14-
the date of the Xxxx Balance Sheet (the "Xxxx Balance Sheet Date") and as of the
Closing Date, Xxxx had and will have no liabilities or obligations, secured or
unsecured (whether accrued, absolute, contingent or otherwise) not recorded on
the Xxxx Balance Sheet or disclosed in the accompanying notes thereto, if any,
except for liabilities incurred in the ordinary course of business since the
date of said Balance Sheet which are usual and normal in amount and liabilities
incurred in connection with acquisitions permitted under Section 6.6. There are
no liabilities with respect to any Investment Entity or 50% JV which would have
a Material Adverse Effect. Except as set forth on Schedule 3.6, each Sub is
------------
treated as a consolidated subsidiary of Xxxx in the Xxxx financial statements
for all periods covered thereby.
3.7 Business Changes. Except as set forth on Schedule 3.7, since the Xxxx
---------------- ------------
Balance Sheet Date, except as otherwise contemplated by this Agreement, each of
Xxxx and Subs has conducted its business only in the ordinary course and,
without limiting the generality of the foregoing:
(a) Subject to Section 6.1, there have been no changes in the
financial condition, results of operations, business or properties of Xxxx,
Subs, Investment Entities or any 50% JV which, in the aggregate, have had or may
be reasonably expected to have a Material Adverse Effect, excluding any change
caused by the loss of the services of its present officers, employees, agents
and representatives.
(b) Neither Xxxx nor any of the Subs has issued, or authorized for
issuance, or entered into any commitment to issue, any equity security, bond,
note or other security of Xxxx or Subs, except for shares of Xxxx Common issued
upon the exercise of the outstanding Xxxx Options.
(c) Neither Xxxx nor any of the Subs has incurred additional material
debt for borrowed money, except for acquisitions permitted under Section 6.6(a)
and working capital loans under credit facilities existing as of the date hereof
in the ordinary course of business consistent with past practices.
(d) Neither Xxxx nor any of the Subs has incurred any obligation or
liability except in the ordinary course of business.
(e) Neither Xxxx nor any of the Subs has paid any material obligation
or material liability, or discharged, settled or satisfied any claim, lien or
encumbrance, except for current liabilities in the ordinary course of business.
(f) Neither Xxxx nor any of the Subs has declared or made any
dividend, payment or other distribution on or with respect to any share of
capital stock of Xxxx or such Subs.
-15-
(g) Neither Xxxx nor any of the Subs has purchased, redeemed or
otherwise acquired or committed itself to acquire, directly or indirectly, any
share or shares of capital stock of Xxxx or any of the Subs except for
repurchases of shares of Xxxx Common pursuant to a Xxxx Plan, which repurchases
are not material in the aggregate.
(h) Neither Xxxx nor any of the Subs has mortgaged, pledged, or
otherwise voluntarily or involuntarily encumbered any of its material assets or
properties, except for liens for current taxes which are not yet delinquent and
purchase-money liens arising out of the purchase or sale of products made in the
ordinary course of business and except for liens arising under credit facilities
existing as of the date hereof relating to working capital loans made in the
ordinary course of business consistent with past practice.
(i) Neither Xxxx nor any of the Subs has disposed of, or agreed to
dispose of, by sale, lease, license or otherwise, any capital stock of any of
the Subs or any other material asset or property, tangible or intangible,
except, in the case of such other material assets and property, in the ordinary
course of business, and in each case for a consideration believed to be at least
equal to the fair value of such material asset or property and in any event not
in excess of $50,000 for any single item or $200,000 in the aggregate.
(j) Neither Xxxx nor any of the Subs has purchased or agreed to
purchase or otherwise acquire any (i) general partnership interests in any
entity or (ii) material amount of securities of any corporation, partnership,
joint venture, firm or other entity; neither Xxxx nor any of the Subs has made
any material expenditure or commitment for the purchase, acquisition,
construction or improvement of a material capital asset, except in the ordinary
course of business and in any event not in excess of $250,000 for any single
item or $500,000 in the aggregate.
(k) Neither Xxxx nor any of the Subs has entered into any material
transaction or contract, or made any commitment to do the same, except in the
ordinary course of business.
(l) Neither Xxxx nor any of the Subs has sold, assigned, transferred
or conveyed, or committed itself to sell, assign, transfer or convey, any
material Proprietary Rights (as defined in Section 3.17).
(m) Neither Xxxx nor any of the Subs has adopted or amended any
bonus, incentive, profit-sharing, stock option, stock purchase, pension,
retirement, deferred-compensation, severance, life insurance, medical or other
benefit plan, agreement, trust, fund or arrangement for the benefit of employees
of any kind whatsoever, nor entered into or amended
-16-
any agreement relating to employment, services as an independent contractor or
consultant, or severance or termination pay, nor agreed to do any of the
foregoing other than to allow for the acceleration of the vesting schedules of
options outstanding as of the date hereof other than ordinary pay increases
consistent with past practices given to employees who are not officers or
directors and reasonable arrangements to retain employees agreed to in advance
by Xxxx and CBC.
(n) Neither Xxxx nor any of the Subs has made or agreed to make any
change in its directors, officers or key employees.
(o) Neither Xxxx nor any of the Subs has made or committed itself to
make any amendment or modification in its charter documents or Bylaws, except as
contemplated in this Agreement or the Certificate of Merger.
3.8 Properties. The Xxxx Balance Sheet reflects in all material respects
----------
all of the real and personal property used by Xxxx and Subs in their business or
otherwise held by Xxxx and Subs, except for (a) property acquired or disposed of
in the ordinary course of the business of Xxxx and Subs since the date of such
balance sheet, and (b) personal property or leasehold interests not required
under GAAP to be reflected thereon. Xxxx and Subs have good and marketable
title to all assets and properties reflected on the Xxxx Balance Sheet and
thereafter acquired, free and clear of any imperfection of title, lien, claim,
encumbrance, restriction, charge or equity of any nature whatsoever
(collectively, "Liens"), except for (i) the lien of current taxes not yet
delinquent (ii) Liens which, individually or in the aggregate, would not have a
Material Adverse Effect and (iii) Liens existing as of the date hereof under
credit facilities existing as of the date hereof. All of the fixed assets and
properties listed on the Xxxx Balance Sheet or thereafter acquired are in
satisfactory condition and repair for the requirements of the business as
presently conducted by Xxxx and Subs, except for imperfections that would not
have a Material Adverse Effect.
3.9 Real Property.
-------------
(a) Attached hereto as Schedule 3.9(a) is a full and complete list of
---------------
all real property owned and leased by Xxxx or Subs, which, in the case of leased
real property, is subject to annual rental payments in excess of $30,000 or
under option to purchase by Xxxx or Subs. All such property leased by Xxxx or
Subs is held under valid, subsisting and enforceable leases, except for
imperfections which would not have a Material Adverse Effect. Neither real
property owned or leased by Xxxx or any of its Subs nor the operations of Xxxx
or Subs thereon, violate any applicable building code, zoning requirement or
classification, or pollution control ordinance or statute relating to the
-17-
property or to such operations, and such non-violation is not dependent, in any
instance, on so-called non-conforming use exemptions, except for such violations
as would not have a Material Adverse Effect. No notice from any governmental or
public safety authority of any uncorrected condition, unpaid assessment charge
or fine relating to the facilities or the conduct of business thereon or notice
of any pending or contemplated condemnation or change in zoning which would have
a Material Adverse Effect on Xxxx or any of its Subs has been received by Xxxx
or any of its Subs.
(b) Except as disclosed on Schedule 3.9(b), there are no Hazardous
---------------
Substances in, under or about the air, soil, sediment, surface water or
groundwater on, under or around any properties at any time owned, leased or
occupied by Xxxx or any of its Subs which would have a Material Adverse Effect.
Neither Xxxx nor Subs have disposed of any Hazardous Substances on or about such
property which would have a Material Adverse Effect. Neither Xxxx nor any of
its Subs have disposed of any materials at any site being investigated or
remediated for contamination or possible contamination of the environment which
would have a Material Adverse Effect. "Hazardous Substances" shall mean any
substance regulated or prohibited by any law or designated by any governmental
agency to be hazardous, toxic, radioactive, regulated medical waste or otherwise
a danger to health or the environment.
(c) Xxxx and Subs have conducted their business in accordance with
all applicable laws, regulations, orders and other requirements of governmental
authorities relating to Hazardous Substances and the use, storage, treatment,
disposal, transport, generation, release and exposure of others to Hazardous
Substances (collectively, "Environmental Regulation"), except for such
noncompliance as would not have a Material Adverse Effect. Except as set forth
on Schedule 3.9(c), Xxxx has not received any notice of any investigation, claim
---------------
or proceeding against Xxxx or Subs relating to Hazardous Substances and Xxxx is
not aware of any fact or circumstance which could involve Xxxx or Subs in any
environmental litigation, proceeding, investigation or claim or impose any
environmental liability upon Xxxx or any of its Subs (collectively,
"Environmental Litigation") which if resolved adversely to Xxxx or any Sub would
have a Material Adverse Effect. Between the date hereof and Closing, there
shall not have occurred any failure by Xxxx or Subs to comply with applicable
Environmental Regulation and there shall not have occurred any Environmental
Litigation that, in each case, would have a Material Adverse Effect on Xxxx or
any of its Subs.
3.10 Accounts Receivable. All of the accounts receivable of Xxxx and Subs
-------------------
shown on the Xxxx Balance Sheet or arising between the Xxxx Balance Sheet Date
and the Effective Time arose or will arise in the ordinary course of their
respective
-18-
businesses. The values at which accounts receivable are carried reflect the
accounts receivable valuation policy of Xxxx which is consistent with past
practice and in accordance with GAAP applied on a consistent basis.
3.11 Taxes. Xxxx and Subs have duly filed with the appropriate United
-----
States, state, local and foreign governmental agencies all tax returns and
reports required to be filed (subject to permitted extensions applicable to such
filings), which returns are accurate and complete, and have paid or accrued in
full all taxes, duties, charges, withholding obliga tions and other governmental
liabilities (including, without limitation, net income, alternative or add-on
minimum tax, profits, premium, estimated, excise, sales, use, occupancy, gross
income, gross receipts, franchise, ad valorem, stamp, severance, capital levy,
production, transfer, withholding, license, employment and payroll, and property
taxes, environmental or windfall profits taxes and import duties) as well as any
interest, penalties, assessments or deficiencies, if any, due to, or claimed to
be due by, any governmental authority (All such items are collectively referred
to herein as "Taxes"). The Xxxx Balance Sheet fully accrues (and the balance
sheets subsequent to the date of the Xxxx Balance Sheet and provided to CBC
prior to the Closing Date will fully accrue) all current and deferred Taxes, as
required in accordance with GAAP. Except as set forth on Schedule 3.11, neither
-------------
Xxxx nor Subs is a party to any pending actions or proceedings, nor, to the
knowledge of Xxxx, are any such actions or proceedings threatened by any
governmental authority for the assessment or collection of Taxes except for such
actions or proceedings which, if resolved adversely, individually or in the
aggregate, would not have a Material Adverse Effect. Since March 31, 1996, no
liability for Taxes has been incurred other than in the ordinary course of
business. There are no liens for Taxes which are material, individually or in
the aggregate, except for liens for property taxes not yet delinquent. Except
as set forth on Schedule 3.11, neither Xxxx nor Subs is a party to any Tax
-------------
sharing, Tax allocation or Tax indemnity agreement and in the past five (5)
years has not been included on any consolidated combined or unitary return with
any entity other than Xxxx or Subs.
3.12 Compensation. Except as set forth on Schedule 3.12, since March 31,
------------ -------------
1997, neither Xxxx nor Subs has paid or committed itself to pay to or for the
benefit of any of its directors, officers, employees or stockholders any
compensation of any kind other than wages, salaries, commissions and benefits at
times and rates in effect on March 31, 1997, subject to wage increases in the
ordinary course of business of less than seven percent (7%) paid or payable to
employees other than Key Employees and directors. Schedule 3.12 contains a full
-------------
and complete list of all directors and all employees of Xxxx and Subs whose
total compensation (base salary, automobile allowances, moving allowances,
bonuses and commissions) paid by
-19-
Xxxx or Subs for the twelve-month period ended March 31, 1997 was $100,000 or
more or whose base compensation (excluding bonuses and commissions) is currently
$100,000 or more, together with a detailed statement setting forth their
respective salaries, bonuses, any incentive payments, perquisites, benefits and
other forms of compensation and any amounts payable as a result of a change in
control of Xxxx or Subs and to which they are entitled or would become entitled
after the Merger.
3.13 Compliance with Law. All licenses, franchises, permits, consents,
-------------------
certificates and other evidences of authority ("Permits") of Xxxx and Subs which
are necessary to the conduct of Xxxx and Subs' businesses are in full force and
effect, except for such Permits where the failure to obtain same or the failure
of same to be in full force and effect would not have a Material Adverse Effect,
and neither Xxxx nor Subs is in violation of any Permit in any respect that
would have a Material Adverse Effect. Except for possible violations which
would not have a Material Adverse Effect, the business of Xxxx and Subs has been
conducted in accordance with all applicable laws, regulations, orders and other
requirements of governmental authorities.
3.14 Litigation. Except as set forth on Schedule 3.14 and except for
---------- -------------
normal authorizations, permits and orders issued in the ordinary course of
business, there is no claim, dispute, action, proceeding, suit, appeal or
investigation, at law or in equity, pending against Xxxx or Subs, or involving
any of their respective assets or properties, before any court, agency,
governmental department or agency, commission, authority, arbitration panel or
other tribunal (other than those, if any, with respect to which service of
process or similar notice has not yet been made on Xxxx or Subs), and, to the
knowledge of Xxxx and Subs, none have been threatened which, in each case, would
have a Material Adverse Effect. There are no facts which, if known to
stockholders, customers, governmental authorities or other persons, would result
in any such claim, dispute, action, proceeding, suit or appeal or investigation
which would have a Material Adverse Effect. Except as set forth on Schedule
--------
3.14, neither Xxxx nor Subs is subject to any order, writ, injunction or decree
----
of any court, agency, authority, arbitration panel or other tribunal, nor is it
in default with respect to any notice, order, writ, injunction or decree.
3.15 Contracts. Schedule 3.15 contains a complete and accurate list in
--------- -------------
all material respects of each executory contract and agreement in the following
categories to which Xxxx or any Sub is a party, or by which it is bound in any
respect: (a) agreements for the purchase, sale, lease or other disposition of
equipment, goods, materials, research and development, supplies, studies or
capital assets, or for the performance of services, which agreements are in one
or more of the following categories: (i) outside the ordinary course of
-20-
business or (ii) involving payments by Xxxx in excess of $200,000 in any twelve-
month period; (b) contracts or agreements for the joint performance of work or
services, and all other joint venture agreements; (c) contracts with management,
employment contracts, consulting contracts, collective bargaining contracts,
termination and severance agreements; (d) notes, mortgages, deeds of trust, loan
agreements, security agreements, guarantees, debentures, indentures, credit
agreements and other evidences of indebtedness; (e) stock option, stock
purchase, warrant, repurchase or other contracts or agreements relating to any
share of capital stock of Xxxx or Subs; (f) contracts or agreements with agents,
brokers, solicitors, consignees, sale representatives or distributors involving
terms or commissions outside the ordinary course of business; (g) contracts or
agreements with any director, officer, employee, consultant or stockholder; (h)
material powers of attorney or similar authorizations granted by Xxxx or Subs to
third parties; (i) material licenses, sublicenses, royalty agreements and other
material contracts or agreements to which Xxxx or Subs is a party, or otherwise
subject, relating to Proprietary Rights; (j) investment management and advisory
contracts, (k) property management and facilities management contracts involving
payments to Xxxx or any Sub of over $200,000 per year and (l) other material
contracts.
Except as set forth on Schedule 3.15, neither Xxxx nor any of the Subs has
-------------
entered into any contract or agreement containing covenants limiting the right
of Xxxx or Subs to compete in any business or with any person. As used in this
Agreement, the terms "contract" and "agreement" include every contract,
agreement, commitment, understanding and promise, whether written or oral.
3.16 No Default.
----------
(a) Each of the contracts, agreements or other instruments set forth
in Schedule 3.15, each of the real property leases set forth in Schedule 3.9(a)
------------- ---------------
and each of the employment agreements or contracts of Xxxx or Subs is a legal,
binding and enforceable obligation of Xxxx or Subs, subject to the effect of
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
federal or state laws affecting the rights of creditors and the effect or
availability of rules of law governing specific performance, injunctive relief
or other equitable remedies (regardless of whether any such remedy is considered
in a proceeding at law or in equity), except for such contracts, agreements and
other instruments the failure of which, individually or in the aggregate, to be
legal, binding and enforceable would not have a Material Adverse Effect. No
party with whom Xxxx or Subs has an agreement or contract is in default
thereunder or has breached any terms or provisions thereof which default or
breach would reasonably be expected to have a Material Adverse Effect.
-21-
(b) Xxxx and Subs have performed, or are now performing, the
obligations of, and Xxxx and Subs are not in default (or would by the lapse of
time and/or the giving of notice be in default) in respect of, any contract,
agreement or commitment binding upon their respective assets or properties,
except for noncompliance or defaults as would not have a Material Adverse
Effect. Except for those matters which, individually or in the aggregate, do
not and will not have a Material Adverse Effect, (i) no third party has raised
any claim, dispute or controversy with respect to any of the contracts of Xxxx
and Subs, nor (ii) has Xxxx or Subs received notice or warning of alleged
nonperformance, delay in delivery or other noncompliance by Xxxx or Subs with
respect to their respective obligations under any of their respective contracts,
nor (iii) are there any facts which exist indicating that any of their contracts
may be totally or partially terminated or suspended by the other parties
thereto.
3.17 Proprietary Rights.
------------------
(a) (i) Each of Xxxx and Subs owns or possesses licenses or other
rights to use all computer software, software programs, patents, patent
applications, trademarks, trademark applications, trade secrets, service marks,
trade names, copy rights, inventions, customer lists, proprietary information,
or other rights with respect thereto (collectively referred to as "Proprietary
Rights"), used in the business of Xxxx and Subs, except for those Proprietary
Rights with respect to which the failure of Xxxx or Subs to own or license would
not have a Material Adverse Effect, and (ii) those Proprietary Rights owned or
licensed are sufficient to conduct the business of Xxxx and Subs as it has been
and is now being conducted.
(b) The operations of Xxxx or Subs do not conflict with or infringe,
and no one has asserted to Xxxx or Subs that such operations conflict with or
infringe, any Proprietary Rights of any third party. There are no claims,
disputes, actions, proceedings or suits pending against Xxxx or Subs with
respect to any Proprietary Rights (other than those with respect to which
service of process or similar notice may not yet have been made on Xxxx or
Subs), and, to the knowledge of Xxxx and Subs, none has been threatened against
Xxxx or Subs. There are no facts or alleged facts which would reasonably serve
as a basis for any claim that Xxxx or Subs does not have the right to use, free
of any rights or claims of others, all Proprietary Rights in the conduct of the
business of Xxxx and Subs as it has been and is now being conducted.
3.18 Insurance. As of the date of this Agreement, Schedule 3.18 contains
--------- -------------
a complete list of all material policies of insurance to which Xxxx or Subs is a
party or is a beneficiary or named insured and all material claims which have
been made to the insurers during the past five years. Xxxx and
-22-
Subs have in full force and effect, with all premiums due thereon paid, the
policies of insurance set forth therein, except where the failure so to do would
not have a Material Adverse Effect. Xxxx believes that the insurable properties
of Xxxx and Subs are insured in amounts and coverages and against risks and
losses which are adequate and usually insured against by persons holding or
operating similar properties in similar businesses. There were no claims in
excess of policy limits asserted under any of the material insurance policies of
Xxxx and Subs in respect of all motor vehicle, general liability, fidelity
bonds, professional liability, reinsurance and workers' compensation, and
medical claims for the period after December 31, 1996 to the date of this
Agreement. The insurers have no right to terminate or reduce such coverage
before the end of applicable policy periods and Xxxx and Subs have complied in
all material respects with their obligations under such policies. Xxxx will
promptly notify CBC of any changes in its insurance coverage occurring between
the date hereof and the Effective Time.
3.19 Brokers or Finders. Xxxx has not dealt with any broker or finder in
------------------
connection with the transactions contem plated by this Agreement. Xxxx has not
incurred, and shall not incur, directly or indirectly, any liability for any
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement or any transaction contem plated hereby.
3.20 Certain Advances. Except as set forth on Schedule 3.20, there are no
---------------- -------------
receivables of Xxxx or Subs owing from directors, officers, employees,
consultants or stockholders of Xxxx or Subs, or owing by any Affiliate of any
director or officer of Xxxx or Subs, other than advances in the ordinary course
of business to officers and employees for reimbursable business expenses which
are not in excess of $15,000 individually.
3.21 Related Parties. Except as set forth on Schedule 3.21, no officer or
--------------- -------------
director of Xxxx or Subs, or any Affiliate (as defined in Section 10.11 hereof)
of any such person, has, either directly or indirectly, (a) an interest in any
corporation, partnership, firm or other person or entity which furnishes or
sells services or products which are similar to those furnished or sold by Xxxx
or Subs, or (b) a beneficial interest in any contract or agreement to which Xxxx
or Subs is a party or by which Xxxx or Subs may be bound. For purposes of this
Section 3.21, there shall be disregarded any interest which arose solely from
the ownership of less than a five percent (5%) equity interest in a corporation
whose stock is regularly traded on any national securities exchange or in the
over-the-counter market.
-23-
3.22 Underlying Documents. Copies of any underlying documents listed or
--------------------
described as having been disclosed to CBC pursuant to this Agreement have been
furnished or made available to CBC. All such documents furnished to CBC are
true and correct copies, and there are no material amendments or modifi cations
thereto, that have not been disclosed to CBC. The minute books of Xxxx and Subs
contain complete and accurate records of all meetings and other corporate
actions taken by the directors and stockholders of Xxxx and Subs.
3.23 Employees and Union Activities. Xxxx and Subs have complied with all
------------------------------
applicable state and federal laws and regula tions related to employees and
employment practices, except where the failure to comply would not have a
Material Adverse Effect on Xxxx and Subs. As of the date hereof, Xxxx'x
employee relations and those of each of the Subs are good and there is no
pending or threatened labor dispute. As of the date hereof, no union
representation question exists respecting any employees; no collective
bargaining agreement is currently being negotiated by Xxxx or any of the Subs;
no demand has been made for recognition by a labor organization by or with
respect to any employees; no union organizing activities by or with respect to
any employees are taking place; and none of the employees is represented by any
labor union or organization. Xxxx with promptly notify CBC of any change in the
foregoing between the date hereof and the Closing Date.
3.24 Employee Benefit Plans.
----------------------
(a) Except as set forth in Schedule 3.24(a) (collectively, the "Xxxx
----------------
Plans"), neither Xxxx nor any ERISA Affiliate as of the Effective Time,
sponsors, maintains, is a party to, contributes to, or is obligated to
contribute to, (i) any Employee Benefit Plan within the meaning of Title I of
ERISA or (ii) any profit sharing, deferred compensation, bonus, stock purchase,
stock option, pension, retirement, severance, welfare, fringe benefit,
incentive, excess benefit (whether funded or unfunded) or cafeteria plan,
agreement or arrangement.
(b) Except as disclosed in Schedule 3.24(b), as of the Effective Time,
----------------
neither of Xxxx nor any ERISA Affiliate sponsors, is a party to, or is obligated
to contribute to, any Multiemployer Plan or any Employee Pension Benefit Plan
which is or was a defined benefit plan or which is subject to Code Section 412
or Title IV of ERISA. The value, determined on a termination basis using the
actuarial assumptions stated in the plan, of all accrued and ancillary benefits
(whether or not vested) under each defined benefit plan (other than
Multiemployer Plans) maintained by Xxxx or any of its ERISA Affiliates did not
exceed, as of the most recent valuation date, and will not exceed as of the
Effective Time, the then current fair market value of the assets of the plan.
-24-
(c) Except with respect to Multiemployer Plans, Xxxx has provided to
CBC or will provide or make available to CBC at least thirty days prior to the
Closing (i) complete and accurate copies of the currently effective plan
document of each Xxxx Plan; (ii) if no such written plan document exists, a
description of such Xxxx Plan; (iii) any agreements or contracts pursuant to
which custody, funding or administrative services are being provided to Xxxx
Plans; (iv) with respect to each Xxxx Plan that is intended to qualify under
section 401(a) of the Code, the most recent determination letter concerning the
plan's qualification under section 401(a) of the Code, as issued by the Internal
Revenue Service; and (v) the current summary plan description, summary of
material modifications, and the most recently filed Form 5500 pertaining to each
of the Xxxx Plans.
(d) Except with respect to Multiemployer Plans, with respect to each
Xxxx Plan, (i) the applicable reporting, disclosure and record retention
requirements set forth in Part 1 of Subtitle B of Title I of ERISA and any
filing requirements under the Code, including Section 6039D thereof, have been
met on a timely basis, and (ii) there has been no violation of Title I, Subtitle
B, Part 4 of ERISA (pertaining to fiduciary responsibility) nor any violation of
Code Section 4975(c), in each case except for such non-compliance which would
not have a Material Adverse Effect.
(e) Except with respect to Multiemployer Plans, each Xxxx Plan that is
intended to qualify under section 401(a) of the Code meets in all material
respects all requirements for qualification under section 401(a) of the Code and
the regulations thereunder, except to the extent that such requirements may be
satisfied by adopting prior to the Closing retroactive amendments under section
401(b) of the Code and the regulations thereunder. Each such Xxxx Plan has been
administered in all material respects in accordance with its terms and the
applicable provisions of ERISA and the Code and the regulations thereunder.
-25-
(f) Neither Xxxx nor any ERISA Affiliate has any liability to (i) any
Xxxx Plan or any plan, agreement or arrangement that would have been required to
be disclosed on Schedule 3.24(a) had Xxxx sponsored, contributed to, been a
----------------
party to, or been obligated to contribute to it as of the Effective Time or (ii)
the PBGC, to any Multiemployer Plan, to any trustee or to any plan participant
under Title IV of ERISA (other than liability for plan contributions which are
not overdue and for premiums under Section 4007 of ERISA), in each case except
for liabilities that would not have a Material Adverse Effect. If Xxxx and its
ERISA Affiliates withdrew or partially withdrew from all Multiemployer Plans to
which they have an obligation to contribute, based on the latest information
available with respect to such Multiemployer Plans, no withdrawal liability
would be imposed.
(g) All material amounts of contributions, premiums or other payments
due from Xxxx or any ERISA Affiliate to (or under) any Xxxx Plan have been fully
paid or adequately accrued on the books and the Xxxx Financial Statements. All
material amounts of such payments are fully deductible for federal income tax
purposes. No changes affecting any Xxxx Plan will occur before Closing that
will result in a material increase in the amount of contributions or liabilities
of Xxxx and its ERISA Affiliates with respect to any Xxxx Plan.
(h) Except with respect to Multiemployer Plans, each Xxxx Plan
complies in all material respects with all applicable requirements of (i) the
Age Discrimination in Employment Act of 1967, as amended, and the regulations
thereunder, (ii) Title VII of the Civil Rights Act of 1964, as amended, and the
regulations thereunder, (iii) the health care continuation provisions of COBRA,
(iv) the Americans with Disabilities Act, (v) the Family and Medical Leave Act
and (vi) any other applicable law.
(i) Except as set forth on Schedule 3.14, there is no pending or
-------------
threatened litigation, or other actions or claims, relating to any Xxxx Plan or
any plan, agreement or arrangement that would have been required to be disclosed
on Schedule 3.24(a) had Xxxx sponsored, contributed to, been a party to, or been
----------------
obligated to contribute to it as of the Effective Time (other than (i) such
litigation, actions or claims, relating to Multiemployer Plans where neither
Xxxx nor any of its ERISA Affiliates are parties and (ii) routine claims for
benefits and qualified domestic relations orders) against or involving (i) any
Xxxx Plan, or (ii) any Fiduciary of such plan (within the meaning of Section
3(21)(A) of ERISA) brought on behalf of any administrative agency (whether
local, state or federal), participant, beneficiary, or Fiduciary thereunder, nor
is there any reasonable basis for any such claim. There are no investigations,
proceedings, or lawsuits, either currently in progress or, to Xxxx'x knowledge,
to be instituted in the
-26-
future, relating to any Xxxx Plan, by any administrative agency (whether local,
state, or federal).
(j) Except as disclosed on Schedule 3.24(j), no payment made to any
----------------
employee, officer, director or independent contractor of Xxxx (the "Recipient")
pursuant to any employment contract, severance agreement or other arrangement
(the "Golden Parachute Payment") will be nondeductible by Xxxx because of the
application of sections 280G and 4999 of the Code to the Golden Parachute
Payment, nor will Xxxx be required to compensate any Recipient because of the
imposition of an excise tax (including any interest or penalties related
thereto) on the Recipient by reason of sections 280G and 4999 of the Code.
(k) Neither Xxxx nor any ERISA Affiliate has any unfunded liability
relating to retiree life and medical benefits for its respective current or
former employees and their dependents, other than any liability under COBRA or
state law conversion rights.
(l) There will be no liability of Xxxx under any insurance policy or
similar arrangement procured in connection with any Xxxx Plan in the nature of a
retroactive rate adjustment, loss sharing arrangement, or other similar
liability arising wholly or partially out of events occurring before the
Effective Time, in each case, except for such liabilities which would not have a
Material Adverse Effect. No Xxxx Plan has any interest in any annuity contract
or other investment or insurance contract issued by an insurance company that is
the subject of bankruptcy, conservatorship, rehabilitation, or similar
proceeding, except for such interests, other investment contracts or insurance
contracts which are not material to such Xxxx Plan.
(m) None of the persons performing services for Xxxx have been
improperly classified as independent contractors or as being exempt from the
payment of wages for overtime, except for such improper classifications which
would not have a Material Adverse Effect. No persons classified by Xxxx as
independent contractors or leased employees are wrongfully excluded from
participation in any Xxxx Plans or any plan, agreement or arrangement that would
have been required to be disclosed on Schedule 3.24(a) had Xxxx sponsored,
----------------
contributed to, been a party to, or been obligated to contribute to it as of the
Effective Time.
3.25 Misstatements. Neither Xxxx nor any Xxxx Shareholder has knowingly
-------------
furnished or shall knowingly furnish any information to CBC in writing pursuant
to this Agreement (including without limitation all information and financial
data pertaining to Xxxx and Subs contained in the Form S-4 and Proxy Statement)
or in the Schedules referred to in this Agreement, at any time prior to the
Effective Time, which contained or will
-27-
contain any untrue statement of a material fact or omitted or will omit any
material fact necessary to make any statement, in light of the circumstances
under which such statement is made, not misleading. For purposes of this
Section 3.25, the knowledge of Xxxx shall mean the actual knowledge of RW, WSR,
Xxxxxxx X. Xxxxxxx ("RGW"), Xxxx Xxxxxxx and Xxxxxxx X. Xxxxxxx ("RSA"), without
any duty to inquire.
3.26 Full Disclosure. Neither Xxxx nor any Xxxx Shareholder has furnished
---------------
and neither shall furnish any information for inclusion in the Form S-4, and the
Prospectus included therein which, at the date such information is supplied
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they are made, not misleading.
3.27 Customers. Schedule 3.27 contains a complete list of all customers
--------- -------------
or clients of Xxxx or any Sub who, as of the date of this Agreement, have
indicated that they are either materially dissatisfied with the services
provided by Xxxx or any Sub or they are materially dissatisfied with the
proposed Merger excluding in each case customers or clients who on an annualized
basis, account for revenues to Xxxx of $250,000 or less, provided, however, that
-------- -------
neither Xxxx nor any Sub shall have any duty to inquire with respect to such
matters.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
---------------------------------
XXXX SHAREHOLDERS
-----------------
Each of the Xxxx Shareholders represents and warrants to CBC and
Acquisition Corporation as of the date hereof and as of the Effective Time as
follows:
4.1 Title to Shares.
---------------
(a) As of the date hereof, except as set forth on Schedule 3.2(c),
---------------
and as of the Effective Time without exception, each Xxxx Shareholder has and
will have good and valid title to all shares of Xxxx Common shown beside such
Xxxx Shareholder's name on Schedule 3.2(c), and no other shares free and clear
---------------
of all Liens, in each case other than those certain options in favor of RW and
WSR to purchase 672,000 shares and 100,800 shares, respectively, of Xxxx Common
held by KHC. As of the date hereof, except as set forth on Schedule 3.2(c), and
---------------
as of the Effective Time without exception, except for Liens in favor of Xxxx,
each Xxxx Shareholder is not a party to or holder of any Option obligating Xxxx
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital
-28-
stock of Xxxx or obligating Xxxx to grant, extend or enter into any such Option.
As of the date hereof, except as set forth on Schedule 3.2(c), and as of the
---------------
Effective Time without exception, each Xxxx Shareholder has sole voting power
with respect to such shares and is not a party to any stockholder agreement,
voting agreement, voting trust, proxy or other agreement with respect to voting,
restrictions on transfer, or otherwise pertaining to such Xxxx Shareholder's
Shares.
(b) Each of the Xxxx Shareholders and DMK has all requisite
individual, corporate or partnership, as applicable, power and authority to
enter into this Agreement and, subject to satisfaction of the conditions set
forth herein, to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Certificate of Merger and
the consummation of the transactions contemplated hereby and thereby have been
duly authorized by all necessary action, corporate, partnership or otherwise, on
the part of each of the Xxxx Shareholders subject to approval by the
stockholders of Xxxx. This Agreement has been duly executed and delivered by
each of the Xxxx Shareholders and DMK and constitutes a valid and binding
obligation of each of the Xxxx Shareholders and DMK enforceable in accordance
with its terms, subject to the approval of the stockholders of Xxxx.
4.2 Undisclosed Liabilities. At the Xxxx Balance Sheet Date and as of the
-----------------------
Closing Date, Xxxx had and will have no liabilities or obligations, secured or
unsecured (whether accrued, absolute, contingent or otherwise) not recorded on
the Xxxx Balance Sheet or disclosed in the accompanying notes thereto (of a type
and amount required to be disclosed by GAAP on the face of the Xxxx Balance
Sheet or in such notes) except for liabilities incurred in the ordinary course
of business since the date of said Balance Sheet which are usual and normal in
amount and liabilities incurred in connection with acquisitions permitted under
Section 6.6.
4.3 Misstatements. No Xxxx Shareholder has knowingly furnished or shall
-------------
knowingly furnish any information to CBC in writing pursuant to this Agreement
(including without limitation all information and financial data pertaining to
Xxxx and Subs contained in the Form S-4 and Proxy Statement) or in the Schedules
referred to in this Agreement, at any time prior to the Effective Time, which
contained or will contain any untrue statement of a material fact or omitted or
will omit to state any material fact necessary to make any statement, in light
of the circumstances under which such statement is made, not misleading. For
purposes of this Section 4.3, "knowledge" means actual knowledge of a Xxxx
Shareholder, without any duty of inquiry.
-29-
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF
---------------------------------
CBC AND ACQUISITION CORPORATION
-------------------------------
Except as disclosed in the CBC SEC Documents filed prior to the execution
of this Agreement or as contemplated by this Agreement, CBC and Acquisition
Corporation represent and warrant to Xxxx and the Xxxx Shareholders as of the
date hereof and as of the Effective Time as follows:
5.1 Organization. Each of CBC, Acquisition Corporation, CB Commercial
------------
Real Estate Group, Inc. ("Group"), X.X. Xxxxxx & Company ("LJM") and Westmark
Realty Advisors, L.L.C. ("WM") (collectively, the "CBC Companies") is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. Group, LJM and WM are the only material
Subsidiaries of CBC. Each of the CBC Companies is duly qualified to do business
and is in good standing in its state of incorporation and in each of the other
jurisdictions in which it is required to be so qualified, except where the
failure to be so qualified would not have a Material Adverse Effect. Each of
the CBC Companies has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted, and
possesses all licenses, franchises, rights and privileges necessary to the
conduct of its respective business as conducted and as proposed to be conducted,
except for such licenses, permits, authorizations, franchises, rights and
privileges where the failure to obtain or possess same would not have a Material
Adverse Effect.
5.2 Acquisition Corporation Capital Structure. The authorized capital
-----------------------------------------
stock of Acquisition Corporation consists of 1,000 shares of Common Stock, $.01
par value ("Acquisition Corporation Common"). Upon the execution of this
Agreement, 1,000 shares of Acquisition Corporation Common were validly issued
and outstanding and were held by CBC of record and beneficially.
5.3 Authority.
---------
(a) CBC and Acquisition Corporation have all requisite corporate power
and authority to enter into this Agreement and, subject to satisfaction of the
conditions set forth herein, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of CBC and Acquisition Corporation,
subject to approval by the stockholders of CBC. This Agreement has been duly
executed and delivered by CBC and Acquisition Corporation and constitutes a
valid and binding obligation of CBC and
-30-
Acquisition Corporation, enforceable in accordance with its terms, subject to
approval of the Stockholders of CBC.
(b) Provided the conditions set forth in Article 11 are satisfied, the
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under (i) any provision of the
Certificate of Incorporation or Bylaws of CBC or Acquisition Corporation or (ii)
any material agreement or instrument, permit, judgment, order, statute, law,
ordinance, rule or regulation applicable to any CBC Company or their respective
properties or assets, other than any such conflicts, violations, defaults,
terminations, cancelations or accelerations which individually or in the
aggregate would not have a Material Adverse Effect. Schedule 5.3 contains a
------------
full and complete list of all necessary Consents of third parties (other than
Governmental Entities) applicable to the operations of the CBC Companies that
are required to be obtained by the CBC Companies in connection with the
execution and delivery of this Agreement or the Certificate of Merger by CBC and
Acquisition Corporations and the performance of their respective obligations
hereunder or thereunder, except for such Consents for which the failure to
obtain the same would not have a Material Adverse Effect. Prior to the Closing
Date, a CBC Company will obtain all such Consents.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to any CBC Company in connection with the execution and delivery of this
Agreement by CBC and Acquisition Corporation or the consummation by CBC and
Acquisition Corporation of the transactions contemplated hereby, except for (i)
the filing of a pre-merger notification report under the HSR Act, (ii) the
filing of the Form S-4 with the SEC, (iii) the filing of the Certificate of
Merger, and related certificates with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states in which CBC
or Acquisition Corporation is qualified to do business, (iv) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable state securities laws and the law of any
foreign country, (v) the filing of such reports under Section 13 of the Exchange
Act as may be required in connection with this Agreement and the transactions
contemplated hereby, (vi) the listing of the CBC Common on the Nasdaq National
Market; and (vii) such other consents, authorizations, filings, approvals and
registrations which if not obtained or made would not have a Material Adverse
Effect.
-31-
5.4 Capital Structure.
-----------------
(a) The authorized capital stock of CBC consists of 100,000,000 shares
of Common Stock, $.01 par value, and 8,000,000 shares of Preferred Stock, $.01
par value. At the close of business on May 5, 1997 (i) 13,345,649 shares of CBC
Common were issued and outstanding; (ii) 1,653,677 shares of CBC Common were
reserved for issuance upon exercise of options to purchase CBC Common ("CBC
Options") under the CBC 1990 Stock Option Plan, the CBC 1991 Service Providers
Stock Option Plan and the X.X. Xxxxxx Stock Option Acquisition Plan, under which
options to purchase 1,094,857 shares were outstanding in the aggregate; (iii)
517,069 shares of Common Stock were reserved for issuance under CBC's Deferred
Compensation Plan and CBC's Omnibus Stock and Incentive Plan, of which 611
shares have been issued to employees; (iv) 1,000,000 shares of CBC's Series A-1
Preferred Stock were outstanding; (v) 2,000,000 shares of CBC's Series A-2
Preferred Stock were outstanding; (vi) 1,000,000 shares of CBC's Series A-3
Preferred Stock were outstanding and; (vii) 3,120,000 shares of Common Stock are
reserved for issuance upon conversion of the Preferred Stock.
All of the outstanding shares of CBC Common and CBC Preferred are, and any
shares of CBC Common issuable upon exercise of any CBC Option or any Warrant or
conversion of any CBC Preferred, when issued pursuant to such exercise or
conversion, will be duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights created by statute, CBC's
Certificate of Incorporation or Bylaws or any agreement to which CBC is a party
or is bound.
(b) Except as disclosed in Schedule 5.4(b), all of the outstanding
---------------
shares of capital stock of each of LJM, WM and Group (the "Material
Subsidiaries") are duly authorized, validly issued, fully paid and nonassessable
and are owned, beneficially and of record, by CBC or Group, free and clear of
any Liens. Except as disclosed in Schedule 5.4(b), there are not (i)
---------------
outstanding Options obligating CBC or any Material Subsidiary to issue or sell
any shares of capital stock of any Material Subsidiary or to grant, extend or
enter into any such Option or (ii) voting trusts, registration rights, proxies
or other commitments, understandings, restrictions or arrangements in favor of
any person other than CBC a Subsidiary wholly owned, directly or indirectly, by
CBC with respect to the voting of or the right to participate in dividends or
other earnings on any capital stock of any Material Subsidiary.
(c) Except as disclosed in Schedule 5.4(c), there are no outstanding
---------------
contractual obligations of CBC or any Material Subsidiary to repurchase, redeem
or otherwise acquire any shares of CBC Common or any capital stock of any
Material Subsidiary or to provide funds to, or make any investment (in the form
of a
-32-
loan, capital contribution or otherwise) in, any Material Subsidiary.
5.5 Financial Statements. CBC has furnished or will furnish prior to the
--------------------
Closing to Xxxx (i) its audited consolidated statement of operations, statement
of stockholders' equity and statement of cash flows for the two fiscal years
ended December 31, 1996, (ii) CBC's audited consolidated balance sheet at
December 31, 1995 and 1996 and (iii) CBC's unaudited statement of operations,
statement of stockholders' equity and statement of cash flows for the three
months ended, and unaudited balance sheet as of, March 31, 1997. CBC will
promptly furnish to Xxxx those financial statements which it furnishes to its
Board of Directors between the date hereof and the Closing Date. The balance
sheet at December 31, 1996 is hereinafter referred to as the "CBC Balance
Sheet," and all such financial statements are hereinafter referred to
collectively as the "CBC Financial Statements." The CBC Financial Statements
have been and will be prepared in accordance with GAAP applied on a consistent
basis during the periods involved, except as noted in the notes to the CBC
Financial Statements, and are or will be in accordance with the books and
records of CBC, and fairly present the financial position of CBC and the results
of its operations as of the dates and for the periods indicated thereon, subject
in the case of the unaudited portion of the CBC Financial Statements to normal
year end audit adjustments and the absence of certain footnote disclosures. At
the date of the CBC Balance Sheet (the "CBC Balance Sheet Date") and as of the
Closing Date, CBC had no liabilities or obligations, secured or unsecured
(whether accrued, absolute, contingent or otherwise) not reflected on the CBC
Balance Sheet or the accompanying notes thereto (of a type and amount required
to be disclosed by GAAP) except for liabilities incurred in the ordinary course
of business since the date of said balance sheet which are usual and normal in
amount and liabilities incurred in connection with acquisitions permitted under
Section 8.4. Except as set forth on Schedule 5.5, each Subsidiary of CBC is
------------
treated as a consolidated subsidiary of CBC in the CBC Financial Statements for
all periods covered thereby.
5.6 SEC Documents. CBC will furnish, or make available to Xxxx, a true
-------------
and complete copy of CBC's Form 10-K for the year ended December 31, 1996 and
Form 10-Q for the nine (9) months ended September 30, 1996 and any other
statement, report, registration statement or definitive proxy statement filed by
CBC with the SEC from the date hereof to the Effective Date of the Merger (the
"CBC SEC Documents"). As of their respective filing dates, the CBC SEC
Documents will comply in all material respects with the requirements of the
Exchange Act or the Securities Act, and none of the CBC SEC Documents will
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the
-33-
circumstances under which they were made, not misleading, except to the extent
corrected by a subsequently filed CBC SEC Document.
5.7 Information Supplied. CBC has not furnished and shall not furnish any
--------------------
information for inclusion in the Form S-4, and the Prospectus included therein
which, at the date such informa tion is supplied contains or will contain any
untrue statement of a material fact or omits or will omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
5.8 Absence of Certain Changes or Events. Except as set forth on Schedule
------------------------------------ --------
5.8, since the Balance Sheet Date CBC and its Subsidiaries have not incurred any
---
material liability, except in the ordinary course of their business nor has
there been any change, in the business, assets, financial condition or results
of operations of CBC or any of its Subsidiaries which has had, or would have a
Material Adverse Effect on CBC.
5.9 Shares of Common Stock. The shares of CBC Common will, when issued
----------------------
and delivered to the stockholders of Xxxx in accordance with this Agreement, be
duly authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights created by statute, CBC's Certificate of Incorporation or
Bylaws or any agreement to which CBC is a party or is bound.
5.10 Brokers or Finders. CBC has not dealt with any broker or finder in
------------------
connection with the transactions contemplated by this Agreement. CBC has not
incurred, and shall not incur, directly or indirectly, any liability for any
brokerage or finders' fees or agents commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
5.11 Compliance with Law. All Permits of CBC and its Subsidiaries which
-------------------
are necessary to the conduct of CBC and its Subsidiaries' businesses are in full
force and effect, except for such Permits where the failure to obtain same or
the failure of same to be in full force and effect would not have a Material
Adverse Effect, and neither CBC nor its Subsidiaries is in violation of any
Permit in any respect that would have a Material Adverse Effect. Except for
possible violations which would not have a Material Adverse Effect on CBC and
its Subsidiaries, the business of CBC and its Subsidiaries has been conducted in
accordance with all applicable laws, regulations, orders and other requirements
of governmental authorities.
5.12 Litigation. Except for normal authorizations, Permits and orders
----------
issued in the ordinary course of business, there is no claim, dispute, action,
proceeding, suit, appeal or
-34-
investigation, at law or in equity, pending against CBC or its Subsidiaries, or
involving any of their respective assets or properties, before any court,
agency, governmental department or agency, commission, authority, arbitration
panel or other tribunal (other than those, if any, with respect to which service
of process or similar notice has not yet been made on CBC or its Subsidiaries),
and, to the knowledge of CBC and its Subsidiaries, none have been threatened,
which would have a Material Adverse Effect on CBC and its Subsidiaries. There
are no facts which, if known to stockholders, customers, governmental
authorities or other persons, would result in any such claim, dispute, action,
proceeding, suit or appeal or investigation which would have a Material Adverse
Effect on CBC and its Subsidiaries. Neither CBC nor its Subsidiaries is subject
to any order, writ, injunction or decree of any court, agency, authority,
arbitration panel or other tribunal, nor is it in default with respect to any
notice, order, writ, injunction or decree.
5.13 Properties. The CBC Balance Sheet reflects all of the real and
----------
personal Property used by CBC and its consolidated Subsidiaries in their
respective businesses or otherwise held by CBC and its Subsidiaries, except for
(a) property acquired or disposed of in the ordinary course of business of CBC
and its Subsidiaries since the date of the CBC Balance Sheet and (b) personal
property or leasehold interests not required under GAAP to be reflected thereon.
The CBC Companies have good and marketable title to all assets and properties
reflected on the CBC Balance Sheet and thereafter acquired, free and clear of
any Lien, except for (i) the lien of current taxes not yet delinquent (ii) Liens
which, individually or in the aggregate, would not have a Material Adverse
Effect and (iii) existing Liens under credit facilities existing as of the date
hereof. All of the fixed assets and properties listed on the CBC Balance Sheet
or thereafter acquired are in satisfactory condition and repair for the
requirements of the business as presently conducted by the CBC Companies.
5.14 Taxes. CBC and its Subsidiaries have duly filed with the appropriate
-----
United States, state, local and foreign governmental agencies all tax returns
and reports required to be filed (subject to permitted extensions applicable to
such filings), which returns are accurate and complete, and have paid or accrued
in full all Taxes. The CBC Balance Sheet fully accrues (and the balance sheets
subsequent to the date of the CBC Balance Sheet and provided to Xxxx prior to
the Closing Date will fully accrue) all current and deferred Taxes to the extent
required by GAAP. Neither CBC nor any of its Subsidiaries is a party to any
pending actions or proceedings, nor, to the knowledge of CBC, are any such
actions or proceedings threatened by any governmental authority for the
assessment or collection of Taxes except for such actions or proceedings which
if resolved adversely, individually or in the aggregate, would have
-35-
a Material Adverse Effect. Since March 31, 1996, no liability for Taxes has
been incurred other than in the ordinary course of business. There are no liens
for Taxes which are material individually or in the aggregate, except for liens
for property taxes not yet delinquent. Neither CBC nor any of its Subsidiaries
is a party to any Tax sharing, Tax allocation or Tax indemnity agreement and in
the past five (5) years has not been included on any consolidated combined or
unitary return with any entity other than CBC or Subsidiaries. As of December
31, 1996, CBC and its Subsidiaries had a net operating loss carryforward for
federal tax purposes approximately equal to $184.3 million and the consummation
of the transactions contemplated hereby will not limit the utilization of such
net operating loss carryforward under Section 382 of the Code.
5.15 No Default. CBC and its Subsidiaries have performed, or are now
----------
performing, the obligations of, and CBC and its Subsidiaries are not in default
(or would by the lapse of time and/or the giving of notice be in default) in
respect of, any contract, agreement or commitment binding upon their respective
assets or properties, except for noncompliance or defaults as would not have a
Material Adverse Effect. Except for those matters which, individually or in the
aggregate, do not and will not have a Material Adverse Effect, (i) no third
party has raised any claim, dispute or controversy with respect to any of the
contracts of CBC and its Subsidiaries, nor (ii) has CBC or its Subsidiaries
received notice or warning of alleged nonperformance, delay in delivery or other
noncompliance by CBC or its Subsidiaries with respect to their respective
obligations under any of their respective contracts, nor (iii) to the knowledge
of CBC and its Subsidiaries, are there any facts which exist indicating that any
of their contracts may be totally or partially terminated or suspended by the
other parties thereto.
ARTICLE 6
COVENANTS RELATING TO CONDUCT OF BUSINESS
-----------------------------------------
During the period from the date of this Agreement and continuing until the
Effective Time, Xxxx shall and shall cause Subs to (except as expressly
contemplated by this Agreement or to the extent that CBC shall otherwise give
its prior consent in writing) comply with the following:
6.1 Ordinary Course. Each of Xxxx and each of its Subs shall carry on
---------------
their business in the regular and ordinary course, including the payment of all
state and federal taxes, in substantially the same manner as heretofore
conducted and, to the extent consistent with such businesses, use all
commercially reasonable efforts consistent with past practice and policies to
preserve intact its present business organization, keep available the services
of its present officers, key employees,
-36-
agents and representatives and preserve its goodwill and relationships with
existing and potential customers, employees, independent contractors, clients,
suppliers, and others with whom business relationships exist to the end that its
goodwill and ongoing businesses shall be unimpaired at the Effective Time.
Neither Xxxx nor any Sub shall enter into any agreement which would prevent Xxxx
from consummating the transactions contemplated hereby. In determining whether
Xxxx has maintained relationships with existing customers or clients or whether
a loss of customers or clients has had a Material Adverse Effect under this
Agreement, a customer or client shall not be considered lost if (i) such
customer or client, upon termination of its relationship with Xxxx or a Xxxx
Affiliate, (A) contracts with CBC or a CBC Affiliate to substantially provide
the same services previously provided by Xxxx or a Xxxx Affiliate or (B) does
not contract with any third party to provide such services (and an Affiliate of
such customer or client shall not be deemed to be a third party) or (ii) such
customer or client terminates its relationship with Xxxx or a Xxxx Affiliate due
to the fact that it has sold the property with respect to which Xxxx or a Xxxx
Affiliate was rendering services to an unaffiliated third party or has converted
the property into or contributed the property to a real estate investment trust.
In addition, when determining whether Xxxx has maintained such relationships, or
whether a loss of customers or clients has had a Material Adverse Effect under
this Agreement, the addition of new customers or clients who have entered into a
binding agreement with Xxxx or a Xxxx Affiliate shall be taken into account to
offset any loss of customers or clients.
6.2 Dividends; Changes in Equity. Except as disclosed on Schedule 6.2,
---------------------------- ------------
Xxxx and its Subs and Investment Entities that are not wholly owned shall not
and shall not propose to (a) declare or pay any dividends on or make other
distributions in respect of any of their capital stock or partnership or other
equity interests, except for partnership and limited liability company
distributions in the ordinary course of business consistent with past practice,
(b) split, combine or reclassify any of its capital stock or partnership or
other equity interests or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of their
capital stock or partnership or other equity interests, or (c) repurchase or
otherwise acquire any shares of its capital stock or partnership or other equity
interests or rights to acquire any shares of their capital stock or partnership
or other equity interests except for repurchases of Xxxx Common under the Xxxx
Plans which in the aggregate are not material.
6.3 Issuance of Securities. Except as set forth on Schedule 6.3, Xxxx,
---------------------- ------------
Subs, Investment Entities and 50% JVs shall not issue, deliver or sell or
authorize or propose the issuance, delivery or sale of, or purchase or propose
the purchase of, any shares of its capital stock or partnership or other equity
-37-
interests of any class or securities convertible into, or rights, warrants or
options to acquire, any such shares or interests or other convertible
securities, other than the issuance of Xxxx Common upon the exercise of the Xxxx
Options in accordance with their present terms. Neither Xxxx nor its Board of
Directors shall take any action to change the exercise price or any other term
of presently outstanding Xxxx Options. Notwithstanding the foregoing, Xxxx may
accelerate the vesting schedules of Xxxx Options and restricted stock
outstanding on the date hereof and may terminate repurchase rights and rights of
first refusal given in connection therewith.
6.4 Governing Documents. Neither Xxxx nor Subs shall amend or agree to
-------------------
amend their charter documents or Bylaws.
6.5 No Solicitations. Except as set forth on Schedule 6.5, Xxxx and Subs
---------------- ------------
shall not, directly or indirectly, through any officer, director, employee or
agent (including any investment banker, financial advisor, attorney, accountant
or other representative or agent) or otherwise, (i) solicit, initiate or
encourage inquiries or the submission of proposals or offers from any Third
Party relating to any acquisition or purchase of all or substantially all of the
business, properties or assets of, or any equity interest in, Xxxx or any of the
Subs or any merger, consolidation, business combination or similar transaction,
other than pursuant to this Agreement involving Xxxx or any of the Subs (an
"Acquisition Transaction"), other than the sale by Xxxx Dove Global Disposition
Services, L.L.C., of certain assets to which it takes title in the ordinary
course of its auction business consistent with past practice or (ii) participate
in any discussions or negotiations regarding, or furnish to any other person any
confidential information with respect to, or otherwise cooperate in any way
with, or participate in, facilitate or agree to endorse or encourage, any effort
or attempt by any other person to do or seek any of the foregoing. Xxxx shall
(i) promptly advise CBC orally and in writing of any such offer and of any
inquiries or proposals of or contacts with third parties for any Acquisition
Transaction involving Xxxx or any of the Subs and (ii) immediately inform CBC of
the details of such offer, proposal, inquiry or contact and provide CBC copies
of any written material related thereto, and (iii) not accept (nor shall Xxxx'x
Board of Directors or any committee thereof recommend) any such proposal or
offer.
6.6 No Acquisitions or Investments.
------------------------------
(a) Except as set forth on Schedule 6.6, Xxxx and Subs shall not
------------
acquire or agree to acquire by merging or consolidating with, or by purchasing a
substantial portion of the assets or stock of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof.
-38-
(b) Except as set forth on Schedule 6.6, Xxxx and Subs shall not
------------
purchase or otherwise acquire (through a joint venture or otherwise) or agree to
purchase or otherwise acquire more than a five percent (5%) interest in the
assets, equity or business of any other corporation, partnership, trust, limited
liability company or other entity.
6.7 No Dispositions. Except as set forth on Schedule 6.7, Xxxx and Subs
--------------- ------------
shall not and shall not agree to sell, lease or otherwise dispose of any of its
assets that are material, individually or in the aggregate, to Xxxx and Subs,
taken as a whole, except in the ordinary course of business consistent with
prior practice (which includes the sale by Xxxx Dove Global Disposition
Services, L.L.C., of certain assets to which it takes title in the ordinary
course of its auction business consistent with past practice).
6.8 Indebtedness. Xxxx and Subs shall not and shall not agree to incur
------------
any indebtedness for borrowed money (other than in connection with acquisitions
permitted under Section 6.6 or under credit facilities existing as of the date
hereof relating to working capital loans made in the ordinary course of business
consistent with past practice and working capital advances made by Xxxx or a Sub
to a Sub, Investment Entity or 50% JV in the ordinary course of business,
consistent with past practice) or guarantee any such indebtedness or issue or
sell any debt securities of Xxxx or Subs or guarantee any debt securities of
others.
6.9 Other Actions. Xxxx and Subs shall not permit any of their officers,
-------------
directors, employees or agents to take any action that would, or reasonably
would be expected to, 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 set forth in Article 11 not being satisfied.
6.10 Advice of Changes. Xxxx and Subs shall confer on a regular basis
-----------------
with CBC, report on operational matters and promptly advise CBC orally and in
writing of any change or event having, or which, insofar as can reasonably be
foreseen, could have, a Material Adverse Effect or which would cause or
constitute a material breach of any of the representations, warranties or
covenants of Xxxx or Subs contained herein. Except where prohibited by
applicable statues and regulations, Xxxx and Subs shall promptly provide CBC (or
its counsel) with copies of all filings made by Xxxx and Subs with any state or
federal governmental entity in connection with this Agreement or the
transactions contemplated hereby.
6.11 Accounting Methods. Xxxx and Subs shall not change their methods of
------------------
accounting in effect at December 31, 1996, except as required by changes in GAAP
as concurred in by Xxxx'x
-39-
independent auditors and except to change their fiscal year to conform with that
of CBC.
6.12 Tax-Free Reorganization Treatment. Xxxx and Subs shall not take or
---------------------------------
cause to be taken any action, whether before or after the Effective Time, that
would disqualify the Merger as a reorganization under Sections 368(a)(1)(A) and
368(a)(2)(E) of the Code.
6.13 Compensation; Benefit Plans.
---------------------------
(a) Except as previously disclosed in writing to CBC prior to the
execution of this Agreement, Xxxx and Subs will not (i) adopt or amend in any
material respect any collective bargaining agreement with employees, (ii) enter
into, adopt, amend or terminate any benefit plan or any other employee benefit
plan or any agreement, arrangement, plan or policy between such party and one or
more of its directors or officers, in each case so as to materially increase
benefits thereunder, (iii) increase the compensation or fringe benefits of any
officer or employee who earned $100,000 or more in total compensation during the
twelve-month period ended March 31, 1997 ("Key Employee") or any director or
provide any other benefit not required by any plan or arrangement in effect as
of the date hereof (including, without limitation, the granting of stock
options, stock appreciation rights, restricted stock, restricted stock units or
performance units or shares) other than to accelerate the vesting schedule of
Xxxx options outstanding on the date hereof or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing, except (with
respect to employees who are not Key Employees or directors only) for normal
increases and benefit changes in the ordinary course of business consistent with
past practice or bonuses paid under policies consistent with past practice that,
in the aggregate, do not result in a material increase in benefits or
compensation expense to such party, (iv) create or amend any stock plan or grant
any equity based award pursuant to any stock plan or otherwise or (v) enter into
or renew any contract, agreement, commitment or arrangement providing for the
payment to any Key Employee or director of such party of compensation or
benefits contingent, or the terms of which are materially altered, upon the
occurrence of any of the transactions contemplated by this Agreement, except for
contracts, agreements, arrangements or commitments which create an at-will
employment relationship with an employee (other than a director) or which
provide for a severance payment to such an employee equal to or less than eight
months base salary for such employee, based on such employee's current average
monthly base salary.
(b) Schedule 6.13 contains a complete and correct list of all bonuses
-------------
or other compensation (not accrued on Xxxx'x March 31, 1997 balance sheet or
included in the "Bonus Basket"
-40-
(as defined below)) other than base salary (and standard benefits), brokerage
commissions and regular periodic payments (other than bonuses) to agents and
independent contractors in the ordinary course of business consistent with past
practice that may be paid to any officer, employee, agent, director or
independent contractor of Xxxx between the date hereof and the Effective Time
and the name of the individual designated to receive such bonus or other
compensation. Xxxx covenants and agrees that between the date hereof and the
Effective Time, it will not pay any bonus or other compensation (other than base
salary (and standard benefits), brokerage commissions and regular periodic
payments (other than bonuses) to agents and independent contractors in the
ordinary course of business consistent with past practice) to any of its
officers, directors, employees, agents or independent contractors other than
bonuses and other compensation set forth on Schedule 6.13, accrued on Xxxx'x
-------------
March 31, 1997 balance sheet or included in the Bonus Basket. In no event will
the aggregate amount of all such bonuses paid or payable between the date hereof
and the Effective Time exceed the sum of (i) the amount accrued on Xxxx'x March
31, 1997 balance sheet plus (ii) the aggregate amount shown on Schedule 6.13
-------------
plus (iii) the amount of the Bonus Basket. For purposes of this Section 6.13(b)
the "Bonus Basket" shall be an amount not to exceed $500,000 and shall be
accrued on Xxxx'x Xxxx 30, 1997 balance sheet together with any bonus amounts
accrued on Xxxx'x March 31, 1997 balance sheet which are not paid between March
31, 1997 and June 30, 1997.
6.14 Liability Limitations. (i) The aggregate amount of indebtedness
---------------------
owed by Xxxx, Subs, the Investment Entities and 50% JVs directly or indirectly
(including letters of credit), to Banks, savings and loans, thrifts and similar
institutions ("Bank Indebtedness") shall not exceed $47,375,000 as of the
Effective Time (exclusive of (A) indebtedness of Investment Entities or Subs
which serve as investment vehicles for clients of Xxxx or of Subs which
indebtedness is secured solely by the assets of such Investment Entity or Subs
and (B) indebtedness under those certain two revolving lines of credit by and
between Comerica Bank and Xxxx Dove Global Disposition Services LLC, not to
exceed $600,000 under that line of credit to be used for financing pre-auction
expenses and not to exceed $400,000 under that line of credit to be used for
issuing standby letters of credit) and the amounts owed for subcategories within
the $47,375,000 shall not exceed $2,375,000 with respect to a letter of credit
securing the payment of the balance of the purchase price with respect to the
acquisition of CBS, $3,750,000 with respect to financing the "Convenience Store
Project" (but with no obligation to undertake such project) and $41,250,000 for
all other subcategories, (ii) the aggregate amount loaned by Xxxx, Subs, each
Investment Entity and each 50% JV to employees, Affiliates and related persons
shall not exceed the amount so loaned on March 31, 1997 (excluding loans to
entities with respect to which Xxxx, a Sub, an Investment Entity or a 50% JV
-41-
has an investment management relationship for the purpose of purchasing real
property and working capital advances between wholly-owned Subs), and (iii) the
aggregate amount owed by Xxxx, Subs, Investment Entities and 50% JVs (other than
any amount which is reflected in Bank Indebtedness, which for purposes of this
clause (iii) shall include all amounts payable pursuant to the CC&F redemption
agreement referred to in Section 11.2(j)) with respect to the purchase of
businesses (whether structured as an asset purchase or a stock purchase) shall
not exceed the amount owed as of the date hereof (exclusive of earnouts and
profit participations). Notwithstanding anything to the contrary contained
herein, a breach of clause (i) this Section shall not give rise to any cause of
action for damages, but only a purchase price adjustment as set forth in Section
2.3(d), provided, however, that in the event that a breach of clause (i) of this
-------- -------
Section results in a Material Adverse Effect on Xxxx, CBC shall have the right
to terminate this Agreement.
6.15 Certain Payments. Xxxx and its Subs will make all salary, benefit,
----------------
bonus and minority interest payments on a timely basis consistent with past
practice and any delay in making any such payment which is not consistent with
past practice and which causes the amount shown on the consolidated balance
sheet of Xxxx and its Subs as of the last day of the month preceding the Closing
to increase by over $250,000 from what it would have been if past practice had
been observed shall be treated as an increase in Bank Indebtedness for purposes
of Sections 2.3(c) and (d).
ARTICLE 7
ADDITIONAL AGREEMENTS OF XXXX SHAREHOLDERS
------------------------------------------
During the period from the date of this Agreement and continuing until the
Effective Time, the Xxxx Shareholders agree to comply with the following:
7.1 No Solicitations. The Xxxx Shareholders shall not, directly or
----------------
indirectly, through any officer, director, employee or agent (including any
investment banker, financial advisor, attorney, accountant or other
representative or agent) or otherwise, (i) solicit, initiate or encourage
inquiries or the submission of proposals or offers from any Third Party relating
to any Acquisition Transaction or (ii) participate in any discussions or
negotiations regarding, or furnish to any other person any confidential
information with respect to, or otherwise cooperate in any way with, or
participate in, facilitate or agree to endorse or encourage, any effort or
attempt by any other person to do or seek any of the foregoing. The Xxxx
Shareholders shall (i) promptly advise CBC orally and in writing of any such
offer and of any inquiries or proposals of or contacts with third parties for
any Acquisition
-42-
Transaction involving Xxxx or any of the Subs and (ii) immediately inform CBC of
the details of such offer, proposal, inquiry or contact and provide CBC copies
of any written material related thereto, and (iii) not recommend or vote for
acceptance of any such proposal or offer.
7.2 No Transfer. No Xxxx Shareholder shall directly or indirectly,
-----------
transfer, sell, assign, pledge, hypothecate, encumber or grant any option with
respect to or other interest in, any shares of Xxxx Common to any person or
entity or enter into any agreement or agree so to do.
7.3 Agreement to Vote Shares. In consideration for the execution of this
------------------------
Agreement and the Certificate of Merger by CBC and Acquisition Corporation, each
Xxxx Shareholder agrees to enter into a Voting Agreement and Irrevocable Proxy
in favor of CBC in substantially the form of Exhibit C hereto (which Voting
Agreement and Irrevocable Proxy will grant CBC the right, among other things, to
vote all of each such Xxxx Shareholders' shares of Xxxx Common in favor of the
Merger) and to vote all shares of Xxxx Common held by such person entitled to
vote at the Xxxx Stockholder's Meeting (and at any adjournment thereof) in favor
of the Merger.
ARTICLE 8
AGREEMENTS OF CBC
-----------------
During the period from the date of this Agreement and continuing until the
Effective Time, CBC shall and shall cause its Subsidiaries to comply with the
following:
8.1 Ordinary Course. Each of CBC and each of its Subsidiaries shall carry
---------------
on their business in the usual, regular and ordinary course, including the
payment of all state and federal taxes, in substantially the same manner as
heretofore conducted and, to the extent consistent with such businesses, use all
commercially reasonable efforts consistent with past practice and policies to
preserve intact its present business organization, keep available the services
of its present officers, key employees, agents and representatives and preserve
its goodwill and relationships with existing and potential customers, employees,
independent contractors, clients, suppliers, and others with whom business
relationships exist to the end that its goodwill and ongoing businesses shall be
unimpaired at the Effective Time. Neither CBC nor any of its Subsidiaries shall
enter into any agreement which would prevent CBC from consummating the
transactions contemplated hereby.
8.2 Dividends; Changes in Stock. Each of CBC and its Subsidiaries that
---------------------------
are not wholly-owned shall not and shall not
-43-
purpose to (a) declare 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 their capital stock, or
(c) repurchase or otherwise acquire any shares of its capital stock or rights to
acquire any shares of their capital stock. Notwithstanding the foregoing,
nothing contained in this Agreement shall restrict (i) CBC from paying dividends
on its Preferred Stock or (ii) CBC or any of its Subsidiaries from purchasing
stock or other equity interest in a direct or indirect wholly-owned Subsidiary.
8.3 Governing Documents. CBC shall not amend or agree to amend its
-------------------
charter documents or Bylaws other than to change the authorized number of its
directors.
8.4 No Acquisitions. CBC and Subsidiaries shall not acquire or agree to
---------------
acquire by merging or consolidating with, or by purchasing a substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets which individually or in the
aggregate involve total consideration in excess of $12,500,000.
8.5 No Dispositions. CBC and its Subsidiaries shall not sell, issue,
---------------
lease or otherwise dispose of any portion of its capital stock or assets that is
material, individually or in the aggregate, to CBC and its Subsidiaries taken as
a whole, or enter into any agreement or agree so to do, except in the ordinary
course of business consistent with prior practice and upon the exercise of CBC
options or other securities convertible into CBC Common or enter into any
merger, exchange, consolidation or other agreement not permitted by Section 8.4,
or enter into any agreement which would prevent CBC from completing the
transactions contemplated herein.
8.6 Other Actions. CBC and its Subsidiaries shall not permit any of their
-------------
officers, directors, employees or agents to take any action that would, or
reasonably would be expected to, 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 set forth in Article 11 not being
satisfied.
8.7 Accounting Methods. CBC and its Subsidiaries shall not change their
------------------
methods of accounting in effect at December 31, 1996, except as required by
changes in GAAP as concurred in by CBC's independent auditors.
-44-
8.8 Indemnification of Directors and Officers.
-----------------------------------------
(a) CBC and Group shall indemnify and hold harmless, to the fullest
extent permitted by applicable law as it presently exists or may hereafter be
amended, any person who was or is made or is threatened to be made a party or is
otherwise involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "Proceeding") by reason of the fact that he,
or a person for whom he is the legal representative, is or was a director or
officer of Xxxx or any Sub prior to the Effective Time (an "Indemnified Agent"),
against all liability and loss suffered and expenses (including attorneys' fees)
reasonably incurred by such person. CBC shall not be required to indemnify and
hold harmless a person in connection with a Proceeding (or part thereof) (i)
initiated by such person unless the Proceeding (or part thereof initiated by
such person) was authorized by the Board of Directors or (ii) in which it is
determined that such Indemnified Agent had actual knowledge at or prior to the
Closing of any fact, event or circumstance which would have constituted a breach
of this Agreement.
(b) The right to indemnification conferred by this Article 8 shall be
presumed to have been relied upon by the Indemnitee and shall be enforceable as
a contract right. CBC may enter into contracts to provide individual
Indemnitees with specific rights of indemnification to the fullest extent
permitted by applicable law and may create trust funds, grant security
interests, obtain letters of credit or use other means to ensure the payment of
such amounts as may be necessary to effect the rights provided in this Article 8
or in any such contract.
(c) Except for any Proceeding described in the last sentence of
Section 8.8(a), upon making a request for indemnification, the Indemnitee shall
be presumed to be entitled to indemnification under this Section 8.8 and CBC
shall have the burden of proof to overcome that presumption in reaching any
contrary determination. Such indemnification shall include the right to receive
payment in advance of any reasonable expenses incurred by the Indemnitee in
connection with any Proceeding (other than a Proceeding described in the last
sentence of Section 8.8(a)) consistent with the provisions of applicable law.
(d) If any Proceeding shall be brought or asserted under this Section
8.8, the Indemnified Agent shall give prompt written notice of such action or
claim to the Indemnifying Party who shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Agent and
the payment of all expenses; except that any delay or failure to so notify the
Indemnifying Party shall relieve the Indemnifying Party of its obligations
hereunder only to the extent, if at
-45-
all, that it is prejudiced by reason of such delay or failure. The Indemnified
Agent shall have the right to employ separate counsel in any of the foregoing
Proceedings and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of the Indemnified Agent. In the event
that the Indemnifying Party, within ten days after notice of any such action or
claim, fails to assume the defense thereof, the Indemnified Agent shall have the
right to undertake the defense, compromise or settlement of such Proceeding for
the account of the Indemnifying Party and the Indemnifying Party shall use
reasonable efforts to assist in the defense of such matter, subject to the right
of the Indemnifying Party to assume, at its expense, the defense of such
Proceeding with counsel satisfactory to the Indemnified Agent at any time prior
to the settlement, compromise or final determination thereof, and provided that
CBC shall not be liable for any settlement of any claim effected without its
written consent, which shall not be unreasonably withheld. Anything in this
Section 8.8 to the contrary notwithstanding, the Indemnifying Party shall not,
without the Indemnified Agent's prior written consent, settle or compromise any
action or claim or consent to the entry of any judgment with respect to any
Proceeding for anything other than money damages paid by the Indemnifying Party.
The Indemnifying Party may, without the Indemnified Agent's prior written
consent, settle or compromise any such Proceeding or consent to entry of any
judgment with respect to any such action or claim that requires solely the
payment of money damages by the Indemnifying Party and that includes as an
unconditional term thereof the release by the claimant or the plaintiff of the
Indemnified Agent from all liability with respect to such Proceeding. The
Indemnified Agents as a group may retain only one law firm to represent them
with respect to each such matter, at CBC's and Group's expense, unless there is,
under applicable standards of conduct, a conflict on any significant issue
between any two or more Indemnified Agents or between an Indemnified Agent and
an Indemnifying Party which is a co-defendant in the proceeding and is
represented by the same counsel. Notwithstanding the foregoing, nothing in this
Section 8.8(b) shall be construed to require any Indemnifying Party to indemnify
any Indemnified Agent for any Unindemnified Liability.
(e) This Section 8.8 is intended for the benefit of the Indemnified
Agents (each of whom shall be entitled to enforce this Section 8.8 against CBC)
and shall be binding upon all successors and assigns to CBC. This Section 8.8
shall survive the Effective Time and continue in full force and effect for a
period of six years after the Effective Time; provided, that, in the event any
claim is asserted or made within such six year period, all rights to
indemnification in respect of any such claim shall continue until final
disposition of such claim.
-46-
(f) If this Section 8.8 is found to be unenforceable under applicable
law or materially limited by a contract to which CBC or Group is a party, CBC
and Group shall indemnify the Indemnified Agents in accordance with the terms of
their current indemnity agreements with Xxxx and the current Bylaws and
Certificate of Incorporation of Xxxx.
8.9 Tax Treatment. CBC and its Subsidiaries shall not take or cause to be
-------------
taken any action, whether before or after the Effective Time, that would
disqualify the Merger as a reorganization under Sections 368(a)(1)(A) and
368(a)(2)(E) of the Code. CBC and Acquisition Corporation agree to make such
reasonable representations as may be requested by Xxxx or the Xxxx Shareholders
in connection with the opinion to be delivered by counsel for Xxxx pursuant to
Section 11.3(g).
8.10 Listing on NASDAQ. CBC shall take all appropriate actions for
-----------------
listing the shares of CBC Common to be received in the Merger on NASDAQ.
8.11 Advice of Changes. CBC shall confer on a regular basis with Xxxx,
-----------------
report on operational matters and promptly advise Xxxx orally and in writing of
any change or event having, or which, insofar as can reasonably be foreseen,
could have, a Material Adverse Effect or which would cause or constitute a
material breach of any of the representations, warranties or covenants of CBC
contained herein. Except where prohibited by applicable statues and
regulations, CBC shall promptly provide Xxxx (or its counsel) with copies of all
filings made by CBC with any state or federal governmental entity in connection
with this Agreement or the transactions contemplated hereby.
ARTICLE 9
ADDITIONAL AGREEMENTS RELATING TO
---------------------------------
THE FORM S-4 AND THE PROXY STATEMENT
------------------------------------
As promptly as practicable after the date hereof, CBC, with the cooperation
of Xxxx, shall prepare and file the Form S-4 with the SEC, in which the Proxy
Statement will be included as part of a prospectus. CBC shall use its best
efforts to promptly respond to comments from the SEC and to file amendments to
the Form S-4 in order to have the Form S-4 declared effective under the
Securities Act as promptly as practicable after such filing. CBC shall also
take any action required to be taken under any applicable state securities or
blue sky laws in connection with the issuance of the CBC Common in the Merger.
Xxxx shall use its best efforts to furnish to CBC all information concerning
Xxxx and the holders of its outstanding securities as may be reasonably
requested in connection with any action contemplated by this Article 9. CBC
will promptly notify Xxxx and provide Xxxx with copies of any correspondence
between
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CBC and its representatives, on the one hand and the SEC, its staff or any state
securities administrators on the other.
ARTICLE 10
ADDITIONAL AGREEMENTS
---------------------
10.1 Access to Information. Xxxx shall afford to CBC and shall cause its
---------------------
independent accountants to afford to CBC, and its accountants, counsel and other
representatives, reasonable access during normal business hours during the
period prior to the Effective Time to all of Xxxx and Sub's properties, books,
contracts, commitments and records and to the independent accountants reasonable
access to the audit work papers and other records of Xxxx'x accountants. During
such period, Xxxx shall use reasonable efforts to furnish promptly to CBC (a) a
copy of each report, schedule and other document filed or received by Xxxx
during such period pursuant to the requirements of federal and state securities
laws and (b) all other information concerning the business, properties and
personnel of Xxxx and Subs as CBC may reasonably request. CBC will not use such
information for purposes other than this Agreement and will otherwise hold such
information in confidence (and CBC will cause its consultants and advisors also
to hold such information in confidence) pursuant to the terms of that certain
Confidentiality Agreement, dated as of March 21, 1997, by and among CBC, Xxxx,
XX, Apollo and Xxxxxx X. Xxxx until such time as such information otherwise
becomes publicly available, and in the event of termination of this Agreement
for any reason CBC shall promptly return, or cause to be returned, to the
disclosing party all documents obtained from Xxxx and Subs, and any copies made
of such documents, extracts and copies thereof. CBC shall provide to Xxxx and
its counsel, independent accountants and other representatives, access to such
information regarding CBC as, in CBC's sole opinion, would customarily be
provided to an underwriter in connection with a Registration Statement on Form
S-1 covering shares of CBC Common or attached as an exhibit thereto.
10.2 Legal Conditions to the Merger. Each party will take and will cause
------------------------------
its respective Subsidiaries to take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed on such party with
respect to the Merger (including furnishing all information required under the
HSR Act) and will promptly cooperate with and furnish information to the other
party in connection with any such requirements imposed upon such other party or
any Subsidiary of such other party in connection with the Merger. Each party
will take, and will cause its respective Subsidiaries to take, all reasonable
actions to obtain (and to cooperate with the other party and its Subsidiaries in
obtaining) any consent, authorization, order or approval of, or any exemption
by, any
-48-
governmental authority, or other third party, required to be obtained or made by
such party or its Subsidiaries (or by the other party or its Subsidiaries) in
connection with the Merger or the taking of any action contemplated thereby or
by this Agreement. For purposes of this Section 10.2 only, Xxxx will not be
considered a Subsidiary of FS.
10.3 Xxxx Stockholders' Approval. Xxxx agrees to submit this Agreement,
---------------------------
the Certificate of Merger and any related matters to its stockholders for
approval, all as provided by law and its Certificate of Incorporation and
Bylaws, at a meeting which will be held as soon as practicable after the date
hereof. The Board of Directors of Xxxx has unanimously recommended to the Xxxx
stockholders that such stockholders approve the transactions contemplated by
this Agreement and the Certificate of Merger.
10.4 CBC Stockholders' Approval. CBC agrees to submit this Agreement, the
--------------------------
Certificate of Merger and any related matters to its stockholders for approval,
by means of the Proxy Statement, all as provided by law and its Certificate of
Incorporation and Bylaws, at a meeting which will be held as soon as practicable
after the date hereof. The Board of Directors of CBC has unanimously
recommended to the CBC stockholders that such stockholders approve the
transactions contemplated by this Agreement and the Certificate of Merger.
10.5 Dissenting Shares. As promptly as practicable after the date of the
-----------------
Xxxx Stockholders' Meeting and prior to the Closing Date, Xxxx shall furnish CBC
with the name, address and number of Dissenting Shares owned by each Dissenting
Stockholder.
10.6 Communications. Between the date hereof and the Effective Time,
--------------
neither Xxxx nor CBC will (i) furnish any communication to its stockholders, any
analysts, the press or to the public generally if the subject matter thereof
relates to the other party or to the transactions contemplated by this Agreement
or the Certificate of Merger without the prior approval of the other party as to
the content thereof, which approval shall not be unreasonably withheld (unless
such disclosure is nonetheless required in the opinion of counsel), and (ii)
respond to all inquiries from stockholders, analysts, the press or the public
generally regarding the other parties hereto or transactions contemplated by
this Agreement or the Certificate of Merger with "No comment", subject, in each
case, to each party's compliance with applicable law. Notwithstanding the
foregoing, Xxxx and CBC may communicate with their respective customers and
clients on a "need-to-know" basis and provided that each such client or customer
agrees to keep the information conveyed confidential.
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10.7 Delivery of Stock Certificates. CBC will promptly issue and deliver
------------------------------
as and when required by the provisions of this Agreement, the certificates
representing the shares of CBC Common into which the shares of Xxxx Common
outstanding immedi ately prior to the Effective Time shall have been converted
as provided in this Agreement.
10.8 Update to Disclosures.
---------------------
(a) Without limiting any party's right to rely on the representations and
warranties as of the date of this Agreement, each party shall provide the others
with updates to the disclosures provided or made available to the other as to
material facts which arise between the date of this Agreement and the Closing
Date and which, if they had occurred and been known prior to the date of this
Agreement, would have been required to have been disclosed in order to make the
representations and warranties contained in Articles 3, 4 or 5, as applicable,
true and correct as of the date of this Agreement.
(b) Xxxx will advise CBC as soon as reasonably practicable if any
customers from whom it receives annualized revenue of more than $250,000
indicates that it is either materially dissatisfied with services being provided
by Xxxx or any Sub or the proposed Merger.
10.9 Good Faith. Each party shall act in good faith in an attempt to
----------
cause all the conditions precedent to its obligations under this Agreement to be
satisfied. Each party will act in good faith and take all reasonable action
within its capability necessary to render accurate as of the Effective Time its
representations and warranties contained in this Agreement.
10.10 State Statutes. If any state takeover law shall become applicable
--------------
to the transactions contemplated by this Agreement, CBC and its Board of
Directors or Xxxx and its Board of Directors, as the case may be, shall use
their reasonable best efforts to obtain such approvals and take such actions as
are necessary so that the transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effects of such state takeover law on
the transactions contemplated by this Agreement.
10.11 Affiliates. At least ten days prior to the date of the Xxxx
----------
Stockholders' Meeting, Xxxx shall deliver to CBC a list of names and addresses
of those persons who were, in Xxxx'x reasonable judgment, at the record date for
the Xxxx Stockholders' Meeting, "affiliates" of Xxxx within the meaning of Rule
145 (each such person, together with the persons identified below, an
"Affiliate") of the rules and regulations promulgated by the SEC under the
Securities Act ("Rule 145").
-50-
Xxxx shall provide CBC such information and documents as CBC shall reasonably
request for purposes of reviewing such list. There shall be added to such list
the names and addresses of any other person (within the meaning of Rule 145)
that CBC reasonably identifies (by written notice to Xxxx within three Business
Days after CBC's receipt of such list) as being a person who may be deemed to be
an Affiliate of Xxxx within the meaning of Rule 145; provided, however, that no
such person identified by CBC shall be added to the list of Affiliates of Xxxx
if CBC shall receive from Xxxx, on or before the Effective Time, an opinion of
counsel reasonably satisfactory to CBC to the effect that such person is not an
Affiliate. Xxxx shall use its best efforts to deliver or cause to be delivered
to CBC, prior to the Effective Time, from each of the Affiliates of Xxxx
identified in the foregoing list (as the same may be supplemen xxx as
aforesaid), agreements (collectively, the "Xxxx Affiliate Agreements")
substantially in the form attached to this Agreement as Exhibit D. CBC and
Acquisition Corporation shall be entitled to issue appropriate stop transfer
instructions to the transfer agent for CBC Common Stock, consistent with the
terms of such Affiliate Agreements, whether or not such Affiliate Agreements are
actually delivered to CBC.
10.12 Xxxx Options.
------------
(a) Substitute CBC Options. Subject to the provisions of this
----------------------
Section 10.12, at and as of the Effective Time, CBC will substitute a CBC Option
for each Xxxx Option outstanding under a Xxxx option plan held by an individual
who is a director, employee or consultant of Xxxx or Subs immediately prior to
the Effective Time. In addition, following the Effective Time, each such
individual entitled to receive a CBC Option will receive a number of Warrants
equal to the Warrant Exchange Ratio multiplied by the number of shares of Xxxx
Common into which such Xxxx Option is exercisable. Each and every CBC Option so
substituted by CBC under this Agreement will continue to have, and be subject
to, substantially the same terms and conditions set forth in the Xxxx option
plans and/or in the other documents governing such Xxxx Option immediately prior
to the Effective Time, except that (i) such CBC Option will be exercisable for
that number of whole shares of CBC Common equal to the product of the number of
shares of Xxxx Common that were purchasable under such Xxxx Option immediately
prior to the Effective Time multiplied by the Stock Exchange Ratio, rounded down
to the nearest whole number of shares of CBC Common, and (ii) the per share
exercise price for the shares of CBC Common issuable upon exercise of such CBC
Option will be equal to the quotient determined by dividing the exercise price
per share of Xxxx Common at which such Xxxx Option was exercisable immediately
prior to the Effective Time by the Stock Exchange Ratio, and rounding the
resulting exercise price up to the nearest whole cent. The parties shall use
their best efforts to provide that the transactions contemplated by this
-51-
Agreement will not terminate or accelerate any substituted CBC Option or any
right of exercise, vesting or repurchase thereunder with respect to shares
acquired upon exercise of such option other than Xxxx Options intentionally
accelerated by Xxxx in contemplation of the Merger. The right to receive a
substituted CBC Option issued pursuant to any documents governing such
substituted CBC Option may not be assigned or transferred in any manner except
by operation of law, by will or by the laws of descent. Any attempted
assignment in violation of this Section shall be void. As of the Effective
Time, CBC shall have reserved for issuance and continue to maintain shares of
CBC Common sufficient to issue the required shares of CBC Common pursuant to the
exercise of the substituted CBC Options after the Effective Time. CBC shall use
its reasonable best efforts to cause any CBC Options issued in substitution for
existing Xxxx Options and any Warrants issued in respect of such Xxxx Options
pursuant to this Section 10.12 to be covered by an effective Registration
Statement under the Securities Act of 1933, as amended (the "Securities Act") at
or before the Effective Time. CBC covenants and agrees that on or prior to the
Closing Date, CBC's Board of Directors (or a committee thereof composed solely
of two or more non-employee directors (as defined in Rule 16b-3(b)(3)(i) of the
Exchange Act)) shall have, in accordance with Rule 16b-3(d)(1) of the Exchange
Act, approved the grant of such substituted CBC Options, identified the
individuals receiving such CBC Options and identified which of such individuals
are or following the Merger will be directors or officers of CBC subject to
Section 16(b) of the Exchange Act.
(b) Documentation. At the Closing, CBC shall issue to each holder of
-------------
an outstanding Xxxx Option a document evidencing the substitution of a CBC
Option for such Xxxx Option pursuant to this Section, in a form mutually
satisfactory to the parties hereto.
(c) Reallocation of Warrants. Following the Effective Time and until
------------------------
the Warrants become exercisable, if any CBC Option substituted for a Xxxx Option
expires or is terminated without being exercised, all Warrants issued in respect
of such option shall be forfeited by the holder thereof. At such time as the
Warrants become exercisable, all Warrants forfeited pursuant to the immediately
preceding sentence shall be reallocated among those individuals who held shares
of Xxxx Common or Xxxx Options as of the date hereof (as set forth on Schedule
--------
3.2(c)) (each a "Reallocation Holder" and collectively, the "Reallocation
------
Holders") pro rata based on the aggregate number of shares of the CBC Common
issued and shares of CBC Common underlying CBC Options issued to each
Reallocation Holder pursuant hereto divided by the total number of shares of CBC
Common issued and shares of CBC Common underlying CBC Options issued to all
Reallocation Holders pursuant hereto.
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10.13 Composition of CBC Board. Following the Effective Time, so long as
------------------------
the Xxxx Shareholders who are signatories to this Agreement hold shares equal to
60% of the shares originally issued to them pursuant to this Agreement (as
adjusted to reflect stock splits, reverse stock splits, reclassifications,
recapitalizations and similar events) CBC will cause three individuals selected
by the Xxxx Shareholders (the "Majority Xxxx Shareholders") holding a majority
of the shares of CBC Common received in the Merger and then held by the Xxxx
Shareholders and reasonably satisfactory to the Corporate Governance Committee
of CBC's Board of Directors to be nominated for election to CBC's Board of
Directors. For so long as they are employed or engaged by CBC two of those
individuals will be RW and DMK. In addition to the three directors referred to
above, following the Effective Time and until the election of directors to CBC's
Board of Directors first following the Effective Time, CBC will cause one
individual selected by AP KMS II, LLC and reasonably satisfactory to the
Corporate Governance Committee of CBC's Board of Directors to be nominated to
CBC's Board of Directors. In the event that the Xxxx Shareholders no longer
hold shares equal to 60% of the shares originally issued to them pursuant to
this Agreement (as adjusted to reflect stock splits, reverse stock splits,
reclassifications, recapitalizations and similar events), so long as FS owns 60%
of the shares originally issued to FS pursuant to this Agreement (as adjusted to
reflect stock splits, reverse stock splits, reclassifications, recapitalizations
and similar events) CBC will cause one individual selected by FS and reasonably
satisfactory to CBC to be nominated for election to CBC's Board of Directors.
Upon their election to CBC's Board of Directors, CBC shall enter into an
indemnity agreement with the directors described above in the form which CBC's
current directors and CBC are parties to.
10.14 Agreements of Xxxxxx X. Xxxx. DMK hereby agrees (i) to the
----------------------------
assignment to CBC of the License Agreement and the Noncompetition Agreements and
(ii) to cause KHC to enter into the Voting Agreement and to otherwise comply
with the provisions of Section 7.3.
10.15 Tax Treatment. Each party hereto agrees to take such further
-------------
actions consistent with the terms of this Agreement and applicable law as may be
reasonably necessary to cause the Merger to be treated as a reorganization under
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code, including but not limited to
preparing appropriate returns, filings and reports consistent with the treatment
of the Merger as such a reorganization, provided, however, that CBC shall not be
-------- -------
required to take any action which, in the sole judgment of CBC, would incur or
result in it incurring a material economic cost.
10.16 Reservation of Shares. CBC will at all times reserve and keep
---------------------
available out of its authorized but unissued
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shares of CBC Common such number of shares as is issuable upon exercise of all
outstanding Warrants, CBC Options or other rights to subscribe for or purchase
CBC Common.
10.17 K/B Opportunity Funds. Xxxx will do the following with respect to
---------------------
K/B Opportunity Fund I, K/B Opportunity Fund II and K/B Opportunity Fund III
(individually a "K/B Fund" and collectively the "K/B Funds"):
(a) Prior to the Closing, Xxxx will cause the general partner of each
K/B Fund to advise each limited partner or other investor in such K/B Fund of
the impending merger between Xxxx and CBC and that the general partner intends
to engage Group as a listing broker where it is the best choice as listing
broker and where Group is not the listing broker to pay it an appropriate
commission only if and when it provides the buyer for any property sold by such
K/B Fund. After the Closing, the Xxxx Shareholders will use their reasonable
best efforts to cause each K/B Fund to engage Group as the exclusive listing
broker for the disposition of such fund's properties or, where that is not
feasible, to engage Group as the listing broker on a property by property basis.
(b) In the event at any time prior to January 1, 2003, a K/B Fund is
unable to pay Group a commission (whether as listing or procuring broker)
because one or more limited partners in a K/B Fund has objected to such payment,
and such K/B Fund is unable to resolve the objection within 60 days so that
Group may receive its commission if it is the listing or procuring broker, then
the Xxxx Shareholders will owe to Group the applicable commission with respect
to such property as determined from Schedule 10.17. In the event the
--------------
partnership agreement of any K/B Fund is amended in a legally binding manner to
permit Group to be paid commissions with respect to all of the properties of
such Fund this Section 10.17 shall not apply to such Fund. To the extent the
limited partners of and any other investors in any K/B Fund consent (in a
legally binding manner) to Group receiving commissions with respect to one or
more properties or waive (in a legally binding manner) any prohibition on Group
receiving commissions on one or more properties then this Section 10.17 shall
not apply to such properties.
(c) The Xxxx Shareholders shall have no obligation to pay a commission
with respect to any property transferred to a Real Estate Investment Trust as to
which a Xxxx Affiliate is an asset manager, a sub asset manager or a property
manager (an "Affiliated REIT") or to the extent Group has received commissions
with respect to the sale of properties by the K/B Funds (whether from the K/B
Funds, the Xxxx Shareholders or a third party) equal to half of the maximum
commission applicable to "Eligible Properties" as determined pursuant to
Schedule 10.17. The term Eligible Properties means the
--------------
-54-
properties listed on Schedule 10.17 other than (i) any such properties listed as
--------------
"Non-Included Properties," (ii) any properties transferred, prior to January 1,
2003, to an Affiliated REIT and (iii) any property sold prior to January 1, 2003
by such fund where throughout the period such property has been offered for
sale, Group has the right or a full and fair competitive opportunity to receive
a commission from its sale if Group were the listing or procuring broker. The
Xxxx Shareholders may pay the aggregate amount, if any, due to Group by the Xxxx
Shareholders pursuant to this Section 10.17 at any time, up to and including
December 31, 2002, at which date all amounts due hereunder must be paid. At
such time as the Xxxx Shareholders pay the amounts due hereunder, if any, in
addition to the amounts due calculated in accordance with Schedule 10.17, the
Xxxx Shareholders shall also pay interest on such amounts, at a rate of eight
percent (8%), compounded annually, from the date an obligation is incurred
hereunder until the date such payment is made. Any commissions collected by
Group with respect to the disposition of Eligible Properties in excess of the
amounts set forth on Schedule 10.17 with respect to a specified K/B Fund shall
be applied to reduce any amounts thereafter payable by the Xxxx Shareholders
with respect to the other K/B Funds.
(d) Notwithstanding anything else contained in this Agreement, the
provisions of this Section 10.17 shall survive the consummation of the Merger
and the Effective Time and shall continue until the earlier of (i) the Xxxx
Shareholders have satisfied all their obligations under Subsections (b) and (c)
hereof, (ii) Group has received commissions with respect to the sale of
properties by the K/B Funds (whether from the K/B Funds, the Xxxx Shareholders
or a third party) equal to half of the maximum commission applicable to
"Eligible Properties" as determined pursuant to Schedule 10.17 and Section
--------------
10.17(c) or (iii) all Eligible Properties have been transferred to an Affiliated
REIT.
ARTICLE 11
CONDITIONS PRECEDENT
--------------------
11.1 Conditions to Each Party's Obligations to Effect the Merger. The
-----------------------------------------------------------
respective obligations of each party to effect the Merger shall be subject to
the satisfaction on or prior to the Closing Date of the following conditions
unless waived by such party:
(a) Stockholder Approval. This Agreement shall have been approved
--------------------
and adopted by a majority vote of the holders of the outstanding shares of each
of CBC Common and Xxxx Common.
-55-
(b) Government Approvals. All authorizations, consents, orders or
--------------------
approvals of, or declarations or filings with, or expiration of waiting periods
imposed by, any governmental authority necessary for the consummation of the
transactions contemplated by this Agreement including, but not limited to,
termination of the waiting period under the HSR Act, such requirements under
applicable state securities laws, the NASD and the Nasdaq National Market shall
have been filed, occurred or been obtained, other than filings and approvals
relating to the Merger if failure to make such filings or obtain such approvals
would not have a Material Adverse Effect on CBC or Xxxx.
(c) Third-Party Approvals. Any and all consents or approvals
---------------------
required from third parties relating to contracts, agreements, Permits, leases
and other instruments, shall have been obtained (including without limitation
the consent of The Sumitomo Bank, Limited (the "Bank") under that certain Third
Amended and Restated Senior Secured Credit Agreement by and between CBC and the
Bank and the consent of Sumitomo (Dublin) Limited under that certain Senior
Subordinated Credit Agreement between CBC and Sumitomo (Dublin) Limited), except
for those consents or approvals with respect to which the failure to obtain
would not have a Material Adverse Effect.
(d) Form S-4. The Form S-4 shall have become effective under the
--------
Securities Act and shall not be the subject of any stop order or proceeding
seeking a stop order. None of the information supplied by CBC or Xxxx for
inclusion in the Form S-4, and the Proxy Statement included therein, at the date
such information shall have been supplied and at the time of the Stockholders'
Meetings, shall have contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(e) Statutes. No statute, rule or regulation shall have been enacted
--------
by the government of the United States or any state or agency thereof which
would (i) make the consummation of the Merger illegal, (ii) prohibit CBC's or
Surviving Corporation's ownership or operation of all or a material portion of
the business or assets of Xxxx and Subs, taken as a whole, or compel CBC or
Surviving Corporation to dispose of or hold separate all or a material portion
of the business or assets of Xxxx and Subs, taken as a whole, as a result of the
Merger, or (iii) render CBC, Xxxx or Acquisition Corporation unable to
consummate the Merger, except for any waiting period provisions.
11.2 Conditions to Obligations of CBC and Acquisition Corporation. The
------------------------------------------------------------
obligations of CBC and Acquisition Corporation to effect the Merger are subject
to the satisfaction on or prior
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to the Closing Date of the following conditions, unless waived by CBC and
Acquisition Corporation:
(a) Representations and Warranties. (i) The representations and
------------------------------
warranties of the Xxxx Shareholders and Xxxx set forth in this Agreement and the
Certificate of Merger which are qualified with respect to materiality or
Material Adverse Effect shall be true and correct in all respects and (ii) the
representations and warranties of the Xxxx Stockholders and Xxxx that are not so
qualified shall be true and correct in all respects, except for such failures to
be true and correct which would not have a Material Adverse Effect, individually
or in the aggregate, in both cases as of the date of this Agreement and as if
made at and as of the Closing Date (except with respect to representations and
warranties made as of another date, for which compliance shall be determined as
of such date), provided, however, that the representations and warranties
-------- -------
contained in Sections 3.2(a), (b) and (c), 3.25, 4.1 and 4.3 of this Agreement
shall be true and correct in all respects regardless of whether the failure of
such representations and warranties to be true and correct would have a Material
Adverse Effect. CBC shall have received certificates signed by each Xxxx
Shareholder and by the chief executive officer and the president of Xxxx
certifying as to all of the above.
(b) Performance of Obligations of Xxxx. Each Xxxx Shareholder, Xxxx
----------------------------------
and Subs shall have performed in all material respects all obligations required
to be performed by each under this Agreement and the Certificate of Merger prior
to the Closing Date, and CBC shall have received certificates signed by each
Xxxx shareholder and by the chief executive officer and the president of Xxxx to
such effect.
(c) Opinion of Xxxx'x Counsel. CBC shall have received an opinion
-------------------------
dated the Closing Date of Xxxxxxx & XxXxxxxx, counsel to Xxxx, in form and
substance reasonably satisfactory to CBC and its counsel.
(d) Dissenting Shares. The number of Dissenting Shares shall not
-----------------
exceed 100,000 shares of Xxxx Common.
(e) No Material Adverse Change. Since December 31, 1996 there shall
--------------------------
have been no changes in the financial condition results of operations, business
or properties of Xxxx, Subs, the Investment Entities or the 50% JVs which
changes, individually or in the aggregate, have had or may be reasonably
expected to have a Material Adverse Effect, excluding any change caused by the
loss of the services of its present officers, employees, agents and
representatives.
(f) Noncompetition Agreement. DMK shall have entered into a covenant
------------------------
not to compete with CBC similar to those certain Noncompetition and
Confidentiality Agreements (the
-57-
"Noncompetition Agreements), each dated as of April 1, 1996, by and among (i)
Xxxx, DMK and FS and (ii) Xxxx, DMK, and Apollo, and in substantially the form
of Exhibit E hereto.
(g) License Agreement. Xxxx, The Xxxx Company and DMK shall have
-----------------
executed and delivered to CBC an Assignment Agreement in substantially the form
of Exhibit F hereto assigning that certain Amended License Agreement (the
"License Agreement"), dated as of November 23, 1994, by and among Xxxx, The Xxxx
Company and DMK and all rights of Xxxx thereunder to CBC.
(h) Voting Agreement. The Xxxx Shareholders shall have entered into
----------------
a Voting Agreement and Irrevocable Proxy in substantially the form of Exhibit C
hereto and such Voting Agreement shall be in full force and effect and there
shall have been no material breach by any Xxxx Shareholder thereunder.
(i) Legal Action. No temporary restraining order, preliminary
------------
injunction or permanent injunction or other order preventing the consummation of
the Merger or materially limiting CBC's ability to own or operate Xxxx and Subs,
taken as a whole, shall have been issued by any federal or state court and
remain in effect, and no litigation or other proceeding instituted by any
Governmental Entity or by any of the stockholders of Xxxx seeking the issuance
of such an order or injunction, shall be pending which, in the good faith
judgment of CBC's Board of Directors has a reasonable probability of resulting
in such order or injunction. In the event any such order or injunction shall
have been issued, each party agrees to use its reasonable efforts to have any
such injunction lifted.
(j) CC&F. Xxxx/CC&F Management Services, a California General
----
Partnership shall have redeemed the interest of CC&F Asset Management Co., Inc.
therein on substantially the terms and conditions set forth in that certain
draft redemption agreement previously delivered to CBC by Xxxx pursuant to a
jointly signed memorandum and all provisions of the partnership agreement
governing such partnership (the "CC&F Partnership Agreement") which in any way,
directly or indirectly, restrict or could restrict Xxxx or CBC or any of their
respective Affiliates from engaging in any business in any geographic area at
any time, including without limitation rendering "Management Services" in the
"Project Territory" (as both such terms in quotes are defined in the CC&F
Partnership Agreement, as amended) shall be of no further force and effect and
there shall be no new provisions which could have any such effect.
(k) Restrictions on Business. Neither Xxxx nor any Sub, affiliate or
------------------------
entity in which Xxxx has a direct or indirect investment shall be a party to any
agreement (i) entered into after the date hereof or (ii) entered into before the
date hereof and not disclosed on Schedule 11.2(i) hereto, which would
----------------
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subject CBC or any Affiliate of CBC to any covenant not to compete or similar
agreement or provision which would materially affect CBC or any of its
Affiliates' respective businesses. Notwithstanding anything else contained
herein, neither Xxxx nor any Sub, Investment Entity, 50% JV or Affiliate of Xxxx
shall be a party to any agreement which would materially limit Group's ability
to provide sales or leasing brokerage services in the Cincinnati, Ohio area.
(l) Termination of Agreements. The Third Amended and Restated
-------------------------
Stockholders Agreement and all Registrations Rights Agreements set forth on
Schedule 3.3 and all other stockholders or shareholders, registrations rights
------------
and similar agreements relating to equity securities of Xxxx (other than
agreements entered into pursuant hereto) shall have been terminated.
(m) No Liens. All shares of Xxxx Common delivered or exchanged
--------
pursuant hereto shall be free and clear of all Liens other than Liens in favor
of Xxxx.
(n) Credit Agreement. Bankers Trust Company ("BT") and such other
----------------
lenders under that certain Amended and Restated Credit Agreement, dated as of
January 9, 1997, as amended, by and among BT, as agent, Xxxx and the other
parties thereto as are required to create an effective waiver shall have waived
any Event of Default which would be caused by the Merger for a period of 60 days
following the Effective Time and shall have agreed that no payments of principal
shall be due thereunder until such time and there shall be no other Event of
Default thereunder.
(o) Change in Receivables. The result achieved by dividing the trade
---------------------
accounts receivable of Xxxx and its Subs as of the last day of the month
preceding the Closing by revenues for the twelve months ending with such day
shall not be less than 97% of the Average Receivables Ratio. The term Average
Receivables Ratio shall be determined by adding together the results of the
following calculations and dividing by six:
Trade accounts receivable at 6/30/97 divided by revenues for the 12
months ended 6/30/97
Trade accounts receivable at 5/31/97 divided by revenues for the 12
months ended 5/31/97
Trade accounts receivable at 4/30/97 divided by revenues for the 12
months ended 4/30/97
Trade accounts receivable at 3/31/97 divided by revenues for the 12
months ended 3/31/97
Trade accounts receivable at 2/28/97 divided by revenues for the 12
months ended 2/28/97
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Trade accounts receivable at 1/31/97 divided by revenues for the 12
months ended 1/31/97
All calculations shall be made in accordance with GAAP in a manner
consistent with the normal practices of Xxxx.
(p) Change in Payables. The average period for which accounts
------------------
payable have been outstanding for the month preceding the Closing shall not
exceed by more than 3% the sum of the average period for which trade payables
have been outstanding on the last day of each month for the twelve-month period
ended June 30, 1997 divided by 12. All calculations shall be made in accordance
with GAAP in a manner consistent with the normal practices of Xxxx.
(q) RW Stock Ownership. RW must be the sole legal and beneficial
------------------
owner of a minimum of 5,000 shares of Xxxx Common immediately prior to the
Effective Time.
(r) General Release. The Xxxx Shareholders shall have signed a
---------------
General Release in substantially the form of Exhibit G hereto.
11.3 Conditions to Obligations of Xxxx. The obligations of Xxxx to effect
---------------------------------
the Merger are subject to the satisfaction on or prior to the Closing Date of
the following conditions unless waived by Xxxx:
(a) Representations and Warranties.
------------------------------
(i) The representations and warranties of CBC and Acquisition
Corporation set forth in this Agreement and the Certificate of Merger which
are qualified with respect to knowledge, materiality or Material Adverse
Effect shall be true and correct in all respects and
(ii) the representations and warranties of CBC and Acquisition
Corporation that are not so qualified shall be true and correct in all
respects, except for such failures to be true and correct which would not
have a Material Adverse Effect, individually or in the aggregate, in both
cases, as of the date of this Agreement and as if made at and as of the
Closing Date (except with respect to representations and warranties made as
of another date, for which compliance shall be determined as of such date),
provided, however, that the representations and warranties contained in
-------- -------
Section 5.3(a) and 5.9 must be true and correct in all respects regardless
of whether the failure of such representations and warranties to be true
and correct would have a Material Adverse Effect, Xxxx shall have received
a certificate signed by the chief executive officer of CBC to such effect.
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(b) Performance of Obligations of CBC and Acquisition Corporation.
-------------------------------------------------------------
CBC and Acquisition Corporation shall have performed in all material respects
all obligations required to be performed by them under this Agreement prior to
the Closing Date, and Xxxx shall have received a certificate signed by the chief
executive officer of CBC to such effect (attaching all resolutions specified in
Section 10.12).
(c) Opinion of CBC's Counsel. Xxxx shall have received an opinion
------------------------
dated the Closing Date of Pillsbury Madison & Sutro LLP, in form and substance
reasonably satisfactory to Xxxx and its counsel.
(d) No Material Adverse Change. Since December 31, 1996 there shall
--------------------------
have been no changes in the financial condition results of operations,
obligations business or properties of CBC or its Subsidiaries which, in the
aggregate, have had or may be reasonably expected to have a Material Adverse
Effect.
(e) Legal Action. No temporary restraining order, preliminary
------------
injunction or permanent injunction or other order preventing the consummation of
the Merger shall have been issued by any federal or state court and remain in
effect, and no litigation or other proceeding instituted by any Governmental
Entity or by any of the Xxxx stockholders seeking the issuance of such order or
injunction, shall be pending which, in the good faith judgment of Xxxx'x Board
of Directors has a reasonable probability of resulting in such order or
injunction. In the event any such order or injunction shall have been issued,
each party agrees to use its reasonable efforts to have any such injunction
lifted.
(f) Registration Rights Agreement. CBC shall have entered into a
-----------------------------
Registration Rights Agreement with the Xxxx Shareholders in substantially the
form of Exhibit H hereto.
(g) Tax Opinion. Xxxx and its stockholders shall have received a
-----------
written opinion of Xxxxxxx & XxXxxxxx, counsel for Xxxx, in form and substance
reasonably satisfactory to them to the effect that the Merger will constitute a
reorganization within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of
the Code and that no gain or loss will be recognized by Xxxx and its
stockholders as a result of the receipt of CBC Common and Warrants pursuant
hereto. Counsel shall, in rendering such opinion, be entitled to rely on
representations of CBC, Acquisition Corporation, Xxxx and the Xxxx Shareholders.
(h) Listing on NASDAQ. All appropriate actions shall have been taken
-----------------
for listing the shares of CBC Common to be received in the Merger on NASDAQ.
(i) Substitute CBC Options. CBC shall have taken all actions
----------------------
required to execute and deliver the CBC Option
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agreements pursuant to Section 10.12 which agreements shall be effective as of
the Effective Time and to otherwise comply with Section 10.12.
(j) Warrant Agreement. CBC shall have entered into a Warrant
-----------------
Agreement in substantially the form of Exhibit B hereto with the parties named
therein.
ARTICLE 12
CLOSING
-------
12.1 Closing Date. The Closing under this Agreement (the "Closing") shall
------------
be held as promptly as practicable, but not more than one (1) business day
following the later of (a) the approval of the Merger by the stockholders of CBC
at the CBC Stockholders Meeting, and (b) satisfaction of all other conditions
precedent to the Merger specified in this Agreement, unless duly waived by the
party entitled to satisfaction thereof. In any event, if the Closing has not
occurred on or before October 31, 1997, this Agreement may be terminated as
provided in Section 15.1(c). Such date on which the Closing is to be held is
herein referred to as the "Closing Date." The Closing shall be held at the
offices of Pillsbury Madison & Sutro, 000 X. Xxxxxxxx Xxxxxx, Xxx Xxxxxxx, XX
00000, at 10:00 A.M. on such date, or at such other time and place as the
parties may agree upon in writing.
12.2 Filing Date. Subject to the provisions of this Agreement, on the
-----------
Closing Date a fully executed and acknowledged copy of the Certificate of Merger
meeting the requirements of the Delaware General Corporation Law, shall be filed
with the Delaware Secretary of State, all in accordance with the provisions of
this Agreement.
ARTICLE 13
INDEMNIFICATION
---------------
13.1 Survival. The representations, warranties and covenants of Xxxx, the
--------
Xxxx Shareholders, CBC and Acquisition Corporation contained in this Agreement
shall terminate at the Effective Time with the exceptions of (i) the
representations and warranties of the Xxxx Shareholders made in Section 4.1
(Title and Authority) which shall be of unlimited duration, (ii) the
representations and warranties of the Xxxx Shareholders made in Section 4.2
(Undisclosed Liabilities) which shall survive for one year following the
Effective Time and (iii) the representations and warranties of the Xxxx
Shareholders contained in Section 4.3 (Misstatements) which shall survive for
one year following the Effective Time and (iv) the
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representations and warranties of CBC made in Sections 5.3(a) (Authority) and
5.9 (Issuance of Common Stock) which shall be of unlimited duration. Each of
the representations and warranties listed in the foregoing clauses (i), (ii),
(iii) and (iv), any updates to the Schedules relating thereto and the
Certificates delivered pursuant to Sections 11.2(a) and 11.3(a) to the extent
they relate thereto shall be deemed renewed by the appropriate party at the
Closing as if made at such time and shall survive the Closing and continue in
full force and effect thereafter, for the respective periods set forth in
Clauses (i), (ii), (iii) and (iv), even if the damaged party knew or had reason
to know of any misrepresentation or breach of warranty at the time of Closing,
unless such misrepresentation or breach is disclosed in an Exhibit or Schedule
hereto or any updates to the Schedules pursuant to Section 10.8 hereof.
13.2 Indemnification by the Xxxx Shareholders.
----------------------------------------
(a) Except as otherwise expressly provided in this Section 13.2, on
and after the Closing Date, the Xxxx Shareholders shall defend, indemnify and
hold harmless CBC and Acquisition Corporation, and each of their respective
Affiliates, officers, directors, employees, agents, successors and assigns
(collectively, "CBC's Indemnified Persons"), and shall reimburse CBC's
Indemnified Persons, for, from and against, each and every demand, claim, loss
(which shall include any diminution in value), liability, judgment, and damage
(and costs and expenses, including attorneys' fees, (collectively, "Losses")
imposed on or incurred by CBC's Indemnified Persons, directly or indirectly,
relating to, resulting from or arising out of any inaccuracy in any
representation or warranty (which survived the Closing pursuant to Section 13.1)
in any respect, whether or not CBC's Indemnified Persons relied thereon or had
knowledge thereof.
(b) The Xxxx Shareholders shall have no liability under Section
13.2(a) in the case of any inaccuracy contained in any representation or
warranty contained in Section 4.2 (Undisclosed Liabilities) or in Section 4.3
(Misstatements) unless and until the aggregate of all Losses relating thereto,
exceeds $2,000,000 (the "CBC Minimum Amount"), in which event the Xxxx
Shareholders shall be liable for all Losses, irrespective of the CBC Minimum
Amount.
(c) Notwithstanding any other provision of this Agreement, the CBC
Minimum Amount shall not apply to any Losses relating to any inaccuracy in any
representation or warranty contained in Section 4.1 (Title and Authority)
hereof, regardless of whether any Losses relating thereto may also constitute a
Loss arising from the breach of a representation or warranty contained in
Section 4.2 (Undisclosed Liabilities) or in Section 4.3 (Misstatements),
provided, however, that each Xxxx Shareholder shall only be liable with respect
-------- -------
to such Xxxx
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Shareholder's own representations under Section 4.1 (Title and Authority) and
shall have no liability with respect to any other Xxxx Shareholder's
representations under Section 4.1 (Title and Authority).
(d) With respect to the breach of any representation or warranty
contained in Section 4.2 (Undisclosed Liabilities) only, (i) the maximum
aggregate amount for which the Xxxx Shareholders shall be liable pursuant to
this Article 13 shall be $17,500,000 and (ii) no Xxxx Shareholder shall be
liable for any Losses in excess of such Xxxx Shareholder's pro rata share of all
Losses relating to such inaccuracy, which pro rata share shall be determined by
dividing the aggregate value of shares of CBC Common issued plus the value of
all CBC Options issued to such Xxxx Shareholder pursuant to this Agreement by
the total value of all shares of CBC Common issued plus the value of all CBC
Options issued to the Xxxx Shareholders pursuant hereto.
(e) A Xxxx Shareholder shall only have liability pursuant to Section
4.3 (Misstatements) if such Xxxx Shareholder knowingly furnished information
which breached Section 4.3 or had actual knowledge that Xxxx or a Xxxx
Shareholder furnished information which breached Section 4.3. In the case of a
breach of Section 4.3 (Misstatements), each Xxxx Shareholder with such knowledge
shall be jointly and severally liable for all losses relating thereto and, with
respect to a Xxxx Shareholder who is an individual, in addition to any other
liability hereunder, any CBC Options (other than those issued pursuant hereto)
held by such individual, whether vested or unvested, shall be terminated
immediately upon a finding by an arbitrator pursuant to Section 16.8 or by
another appropriate tribunal that such individual is liable pursuant hereto and
no such CBC Option may be exercised during any period during which a claim made
hereunder against such individual is being resolved.
(f) The maximum amount for which a Xxxx Shareholder shall be liable
for all breaches of Sections 4.2 and 4.3 shall not exceed the value of the
shares of CBC Common and the CBC Options received by such Xxxx Shareholder
pursuant hereto. Such shares of CBC Common shall be valued at the average
closing sales price of a share of CBC Common as reported on the NASDAQ for the
ten (10) trading days ending on the trading day immediately prior to the Closing
Date and the value of a CBC Option shall be the difference between the exercise
price per share of CBC Common under such CBC Option and such average closing
price multiplied by the number of shares of CBC Common underlying such CBC
Option.
(g) For purposes of determining pro rata share and the value received
in the Merger, the options of RW and WSR to purchase shares of Xxxx Common held
by KHC (described in Section 3.2(c)) shall be deemed to have been exercised
immediately prior to the Effective Time in a cashless exercise
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(such that shares of Xxxx Common representing the exercise price shall be deemed
to be held by KHC and shares of Xxxx Common representing the value of such
shares at the Effective Time minus the exercise price shall be deemed to be held
by RW and WSR, as applicable). The value of each share of Xxxx Common for
purposes of this section shall be the Stock Exchange Ratio multiplied by the
average closing sales price of a share of CBC Common as reported on the NASDAQ
for the ten (10) trading days ending on the trading day immediately prior to the
Closing Date.
(h) Any amounts payable by a Xxxx Shareholder to CBC pursuant to this
Article 13 may be paid in cash or in CBC Common received in the Merger or a
combination thereof. For purposes of this Section 13.2(g), such CBC Common
shall be valued at the average closing sales price of a share of CBC Common as
reported on the NASDAQ for the ten (10) trading days ending on the trading day
immediately prior to the date on which the claim for a Loss is finalized and
liquidated.
13.3 Indemnification by CBC. Except as otherwise expressly provided in
----------------------
this Section 13.3, on or after the Closing Date, CBC shall defend, indemnify and
hold harmless the Xxxx Shareholders and each of their respective Affiliates,
officers, directors, employees, agents, successors, heirs and assigns (the Xxxx
Shareholders and such other persons, collectively "Shareholders' Indemnified
Persons") and shall reimburse the Shareholders' Indemnified Persons for, from
and against all Losses imposed on or incurred by the Shareholders' Indemnified
Persons, directly or indirectly, relating to, resulting from or arising out of
any inaccuracy in any representation or warranty contained in Sections 5.3(a)
and 5.9 hereof in any respect, whether or not Shareholders' Indemnified Persons
relied thereon or had knowledge thereof.
13.4 Notice and Defense of Third-Party Claims. If any Proceeding shall be
----------------------------------------
brought or asserted under this Section 13.4 against an indemnified party or any
successor thereto (the "Indemnified Person") in respect of which indemnity may
be sought under this Article 13 from an indemnifying person or any successor
thereto (the "Indemnifying Person"), the Indemnified Person shall give prompt
written notice of such Proceeding to the Indemnifying Person who shall assume
the defense thereof, including the employment of counsel reasonably satisfactory
to the Indemnified Person and the payment of all expenses; except that any delay
or failure to so notify the Indemnifying Person shall relieve the Indemnifying
Person of its obligations hereunder only to the extent, if at all, that it is
prejudiced by reason of such delay or failure. The Indemnified Person shall
have the right to employ separate counsel in any of the foregoing Proceedings
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the Indemnified Person unless both the
Indemnified Person and the Indemnifying Person are named as parties and the
-65-
Indemnified Person shall in good faith determine that the representation by the
same counsel is inappropriate. In the event that the Indemnifying Person,
within ten days after notice of any such Proceeding, fails to assume the defense
thereof, the Indemnified Person shall have the right to undertake the defense,
compromise or settlement of such Proceeding for the account of the Indemnifying
Persons, subject to the right of the Indemnifying Person to assume, at its
expense, the defense of such Proceeding with counsel satisfactory to the
Indemnified Person at any time prior to the settlement, compromise or final
determination thereof. Anything in this Article 13 to the contrary
notwithstanding, the Indemnifying Person shall not, without the Indemnified
Person's prior written consent, settle or compromise any Proceeding or consent
to the entry of any judgment with respect to any Proceeding for anything other
than money damages paid by the Indemnifying Person. The Indemnifying Person
may, without the Indemnified Person's prior written consent, settle or
compromise any such Proceeding or consent to entry of any judgment with respect
to any such Proceeding that requires solely the payment of money damages by the
Indemnifying Person and that includes as an unconditional term thereof the
release by the claimant or the plaintiff of the Indemnified Person from all
liability with respect to such Proceeding.
13.5 Exclusivity. From and after the Closing Date, the rights and remedies
-----------
provided in this Article 13 shall be the exclusive rights and remedies,
contractual or otherwise, of the Indemnified Persons with respect to
inaccuracies in the representations and warranties contained in this Agreement.
ARTICLE 14
PAYMENT OF EXPENSES
-------------------
CBC shall pay the reasonable fees and expenses incurred incident to the
preparation and carrying out of the transactions herein contemplated (including
legal, accounting and investment banking services and travel) provided however
that the aggregate amount payable by CBC and Xxxx for all fees and expenses of
all legal counsel to Xxxx and the Xxxx Shareholders shall not exceed $500,000
and any amount payable in excess of such amount for fees and expenses of legal
counsel of Xxxx and the Xxxx Shareholders shall be payable by the Xxxx
Shareholders. CBC shall also pay all government filing fees including under the
HSR Act and with the SEC, any state securities commission, and the Department of
Corporations and the costs of printing, filing and mailing the Form S-4 and
Proxy Statement (collectively, the "Filing Fees"). Notwithstanding the
foregoing, Xxxx shall bear all the Filing Fees and all reasonable fees and
expenses (including without limitation, fees and expenses payable to counsel to
CBC, outside consultants, accountants and to all investment banking firms and
their respective counsel) actually
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incurred by CBC and Acquisition Corporation in the event that Xxxx'x
stockholders fail to approve the Merger by that date which is twenty (20) days
after the effective date of the Registration Statement on Form S-4 to be filed
in connection with the Merger or shareholders of Xxxx holding over 350,000
shares exercise dissenter's rights. Also notwithstanding the foregoing, if the
transactions contemplated hereby are not consummated by October 31, 1997, each
party hereto shall be responsible for its own fees and expenses and Xxxx and the
Xxxx Shareholders shall promptly reimburse CBC for any amounts advanced,
reimbursed or otherwise paid to them by CBC pursuant to this provision. Each
party shall promptly advance upon request or reimburse such party's portion of
these fees.
ARTICLE 15
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
15.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Effective Time, whether before or after approval of matters presented in
connection with the Merger by the stockholders of Xxxx and CBC:
(a) by mutual written consent of Xxxx and CBC;
(b) (i) by CBC if there has been a breach of any representation,
warranty, covenant or agreement of the Xxxx Shareholders or Xxxx contained in
this Agreement which has had or would reasonably be expected to have a Material
Adverse Effect;
(ii) by the Xxxx Shareholders or Xxxx if there has been a breach
of any representation, warranty, covenant or agreement of CBC or
Acquisition Corporation contained in this Agreement which has had or would
reasonably be expected to have a Material Adverse Effect;
(c) by either CBC or Xxxx if the Merger shall not have been
consummated before October 31, 1997 (which failure, in the case of termination
by CBC or Acquisition Corporation, was due to a failure of any of the conditions
to the obligations of CBC and Acquisition Corporation set forth in Section 11.2
hereof and, in the case of termination by Xxxx or the Xxxx Shareholders, was due
to a failure of any of the conditions to the obligations of Xxxx or the Xxxx
Shareholders set forth in Section 11.3 hereof);
(d) by either CBC or Xxxx if (i) there shall be a final nonappealable
order of a federal or state court in effect preventing consummation of the
Merger or (ii) there shall be any action taken, or any statute, rule, regulation
or order enacted, promulgated or issued or deemed applicable to the Merger by
any
-67-
governmental authority which would make consummation of the Merger illegal;
(e) by CBC if any required approval of the stockholders of Xxxx shall
not have been obtained by that date which is twenty (20) days after the
effective date of the Registration Statement on Form S-4 to be filed in
connection with the Merger or by Xxxx if any required approval of the
stockholders of CBC shall not have been obtained by October 31, 1997;
(f) by CBC or Xxxx if there shall be any action taken, or any
statute, rule, regulation or order enacted, promulgated or issued or deemed
applicable to the Merger by any governmental authority, which would (i) prohibit
CBC's, Xxxx'x or Sub's ownership or operation of all or a material portion of
the business or assets of Xxxx and Subs or CBC and its Subsidiaries, in each
case taken as a whole, or compel CBC and its Subsidiaries or Xxxx or Subs to
dispose of or hold separate all or a material portion of the business or assets
of Xxxx and Subs or CBC and its subsidiaries, in each case taken as a whole, as
a result of the Merger or (ii) render CBC or Xxxx unable to consummate the
Merger, except for any waiting period provisions;
(g) by CBC if over 100,000 shares of Xxxx Common are Dissenting
Shares;
(h) by CBC if any of the following Events occur:
(i) Xxxx or the Xxxx Shareholders advise CBC (or either is obligated
by Section 6.5 or Section 7.1, respectively, to advise CBC but has failed
to do so) that Xxxx or any Xxxx Shareholder has been advised in writing by
counsel that it is required to participate in negotiations, provide
information, or otherwise cooperate with any corporation, partnership,
person or other entity or group (as defined in Section 13(d) of the
Exchange Act) (other than Xxxx or an affiliate of Xxxx) (a "Third Party")
concerning an Acquisition Transaction and Xxxx intends to proceed with such
action or any Xxxx Shareholder intends to approve of, vote for or recommend
such action, or Xxxx (or its Subs), any Xxxx Shareholder or any of their
respective directors, officers or agents, directly or indirectly, solicits
or initiates any discussions in violation of Section 6.5 or 7.1;
(ii) Xxxx shall have adopted, approved or implemented or taken any
action in respect of or entered into an agreement with respect to, any plan
of liquidation or commenced or undertaken, any restructuring or
recapitalization plan which contemplates the disposition or distribution,
directly
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or indirectly, of any material amount of assets or securities of Xxxx to
some or all of its securityholders either by dividend, share purchase,
exchange offer, reclassification, merger, exchange or otherwise; or
(iii) Xxxx'x Board of Directors or any committee thereof shall have
withdrawn, or amended or modified in any manner adverse to CBC or
Acquisition Corporation, its approval or recommendation of this Agreement
or the Merger or taken any position incon sistent with such approval or
recommendation or shall have recommended another Acquisition Transaction or
resolved to do any of the foregoing.
(i) by CBC if any condition to CBC's obligation to complete the
Merger has not been satisfied or waived by CBC; and
(j) by Xxxx if any condition to Xxxx'x obligation to complete the
Merger has not been satisfied or waived by Xxxx.
(k) by Xxxx if CBC shall have failed to obtain the consent of the
Bank referred to in Section 11.1(c) under the Third Amended and Restated Senior
Secured Credit Agreement by June 2, 1997.
(l) by CBC pursuant to Section 6.14.
15.2 Effect of Termination.
---------------------
(a) In the event of termination of this Agreement by either Xxxx or
CBC as provided in Section 15.1, this Agreement and the Certificate of Merger
shall forthwith become void and there shall be no liability or obligation on the
part of CBC or Xxxx or their respective officers or directors except for (i) the
last sentence of Section 10.1 and (ii) the provisions of Article 13, Article 14
and this Section 15.2, and provided that nothing contained herein shall relieve
any party from the breach of any of its representations, warranties, covenants
or agreements set forth in this Agreement.
(b) In the event that CBC terminates this Agreement pursuant to
Section 15.1(h), then Xxxx, within one day of notice from CBC shall pay to CBC
in cash or immediately available funds (i) a termination fee of $5,000,000 and
(ii) an amount equal to all Filing Fees paid by CBC or Acquisition Corporation
and all fees and expenses actually incurred by CBC and Acquisition Corporation
in connection with this Agreement and the transactions contemplated hereby
(including without limitation, fees and expenses payable to counsel to CBC,
outside consultants, accountants and to all investment banking firms and their
respective counsel).
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15.3 Amendment. This Agreement may be amended by the parties hereto, at
---------
any time before or after approval of matters presented in connection with the
Merger by the stockholders of Xxxx, CBC and Acquisition Corporation but, after
any such stockholder approval, no amendment shall be made which by law requires
the further approval of stockholders without obtaining such further approval.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
15.4 Extension; Waiver. At any time prior to the Effec tive Time, any
-----------------
party hereto, by such corporate action as shall be appropriate, may, to the
extent legally allowed, (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid if set forth in an instrument in writing signed on behalf
of such party by a person duly authorized to so sign.
ARTICLE 16
GENERAL
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16.1 Notices. Any notice, request, instruction or other document to be
-------
given hereunder by any party to the other shall be in writing and delivered
personally or sent by certified mail, postage prepaid, by telecopy, or by
courier service, as follows:
If to CBC to:
CB Commercial Real Estate Services
Group, Inc.
000 X. Xxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Chief Executive Officer
General Counsel
with a copy to:
Pillsbury, Madison & Sutro LLP
000 X. Xxxxxxxx Xx., 00xx Xx.
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
J. Xxxxx Xxxxxxxxxx, Esq.
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If to Xxxx or the Xxxx Shareholders to:
Xxxx Real Estate Services
0000 Xxx Xxxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Chief Executive Officer
with a copy to each of:
Xxxxxxx & XxXxxxxx
000 X. Xxxxx Xxx., 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
O'Melveny & Xxxxx LLP
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
Battle Xxxxxx LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxxx, Esq.
or to such other persons as may be designated in writing by the parties, by a
notice given as aforesaid. Notice to any Xxxx Shareholder may be given at the
address for such shareholder set forth in the records of Xxxx.
16.2 Headings. The headings of the sections of this Agreement are
--------
inserted for convenience of reference only and are not intended to affect the
meaning or interpretation of this Agreement.
16.3 Counterparts. This Agreement may be executed in counterparts, and
------------
when so executed each counterpart shall be deemed to be an original, and said
counterparts together shall constitute one and the same instrument.
16.4 Binding Nature. This Agreement shall be binding upon and inure to
--------------
the benefit of the parties hereto. No party may assign or transfer any rights
under this Agreement.
16.5 Merger of Documents. This Agreement and all agreements and documents
-------------------
contemplated hereby constitute one agreement and are interdependent upon each
other in all respects.
16.6 Incorporation of Schedules. All Exhibits and Schedules attached
--------------------------
hereto are by this reference incorporated herein and made a part hereof for all
purposes as if fully set forth herein.
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16.7 Good Faith. Each of the parties hereto agrees that it shall act in
----------
good faith in an attempt to cause all the conditions precedent to their
respective obligations to be satisfied.
16.8 Dispute Resolution. Any dispute arising out of or relating to this
------------------
Agreement (or any Exhibit or Schedule hereto or any other or certificate
delivered pursuant to this Agreement or the transactions contemplated hereby or
thereby or the breach, termination or validity hereof or thereof, including any
dispute based in whole or in part on tort or other non-contractual principles of
law, shall be resolved in the following manner:
(a) Any party may give written notice to the other parties of any
dispute which has arisen. Any other party may give notice within five (5)
business days of receipt of the first notice of any additional dispute(s), all
to the end that the parties may be reasonably aware of the matters in dispute.
(b) The parties to such dispute shall use all reasonable efforts to
resolve the dispute through direct discussions within 30 days of the first
written notice that there is such a dispute.
If no amicable settlement is reached as a result of the procedure in
subparagraph (b) hereof, the matter shall be fully and finally resolved by
arbitration conducted expeditiously by a single arbitrator in accordance with
the Rules for Non-Administered Arbitration of Business Disputes promulgated by
the CPR Institute for Dispute Resolution (formerly Center for Public Resources).
No arbitrator may serve who, during the three-year period immediately preceding
the date the arbitration notice is filed, has had a material personal or
financial relationship with any participant to the dispute or any Affiliate of
any such participant. The place of arbitration shall be located in California,
or (ii) any other location mutually agreed upon by the Parties. The arbitration
shall be governed by the United States Arbitration Act, 9 U.S.C. (S)(S) 1-16 and
judgment upon the award of the arbitrator may be entered by any court having
jurisdiction thereof. The arbitrator is not empowered to act as amiable
compositeur or to award damages in excess of compensatory damages, and each
Party hereto hereby waives any claim it may otherwise have to money damages in
excess of direct compensatory damages. This Section 16.9 shall not apply to
actions seeking enforcement of this Agreement to arbitrate or to enforce Exhibit
E (DMK Noncompetition Agreement) and Exhibit C (Voting Agreement and the
Irrevocable Proxy) or any other noncompetition or nonsolicitation agreement
entered into in connection herewith or with respect to any request for
provisional or interim relief brought prior to the appointment of an arbitrator,
provided that an arbitration notice has been promptly filed prior to such action
being brought.
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(c) The dispute resolution proceedings contemplated by this provision
shall be as confidential and private as permitted by law. To that end, the
parties shall not disclose the existence, content or results of any claims
hereunder or proceedings conducted in accordance with this provision, and
materials submitted in connection with such proceedings shall not be admissible
in any other proceeding; provided, however, that this confidentiality provision
-------- -------
shall not prevent a petition to vacate or enforce an arbitral award, and shall
not bar disclosures required by law. The parties agree that any decision or
award resulting from proceedings in accordance with this dispute resolution
provision shall have no preclusive effect in any other matter involving third
parties.
16.9 Attorneys' Fees. If an arbitration or other legal proceeding is
---------------
brought to enforce or interpret the provisions of this Agreement or any other
agreement or instrument provided for herein or as to the rights or obligations
of any party to this Agreement or such other agreement or instrument, the
prevailing party in such action shall be entitled to recover as an element of
such party's costs of suit, and not as damages, a reasonable attorney's fee to
be fixed by the court or the arbitrator. The prevailing party shall be the
party who is entitled to recover its costs of suit as ordered by the arbitrator,
the court or by applicable law or court rules. A party not entitled to recover
its costs shall not recover attorney's fees.
16.10 Applicable Law. This Agreement shall be governed by, construed and
--------------
enforced in accordance with the laws of the State of Delaware as applied to
contracts entered into solely between residents of, and to be performed entirely
in, such state.
16.11 Severability. If for any reason whatsoever, any one or more of the
------------
provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid as applied to any particular case or in all cases, such
circumstances shall not have the effect of rendering such provision invalid in
any other case or of rendering any of the other provisions of this Agreement
inoperative, unenforceable or invalid.
16.12 No Third Party Beneficiary. Except as expressly set forth herein,
--------------------------
no provision of this Agreement, including the Exhibits and Schedules hereto, is
intended or should be construed to create any third party beneficiaries or to
give any rights, including rights of subrogation, to any person other than the
parties to this Agreement.
16.13 Best Efforts; Further Assurances. Subject to the terms and
--------------------------------
conditions of this Agreement, each party shall 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 consistent with applicable laws and regulations
to
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consummate the transactions contemplated by this Agreement as promptly as
possible. The parties hereto shall do and perform or cause to be done and
performed all such further actions and things and shall execute and deliver all
such other agreements, certificates, instruments or documents as any other party
hereby may reasonably request in order to carry out the intent and purposes of
this Agreement and the consummation of the transactions contemplated hereby.
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IN WITNESS WHEREOF, CBC, Acquisition Corporation, each of the Xxxx
Shareholders, Xxxx and DMK (for the purpose of Sections 7.3, 10.14, 11.2(f) and
11.2(g)) have caused this Agreement to be signed either individually or by their
respective officers thereunto duly authorized, as the case may be, all as of the
date first above written.
CB COMMERCIAL REAL ESTATE SERVICES
GROUP, INC. a Delaware corporation
By ___________________________
Title ________________________
ACQUISITION CORPORATION, a Delaware
corporation
By ___________________________
Title ________________________
XXXX REAL ESTATE SERVICES,
a Delaware corporation
By ___________________________
Title ________________________
FS EQUITY PARTNERS III, L.P.
By: FS Capital Partners, L.P.
Its: General Partner
By: FS Holdings, Inc.
Its: General Partner
By:_________________________
Name:
Title:
FS EQUITY PARTNERS INTERNATIONAL,
L.P.
By: FS&Co. International, L.P.
Its: General Partner
By: FS International Holdings
Limited
Its: General Partner
By:________________________
Name:
Title:
AP KMS PARTNERS, L.P.
By: APGP KMS Partners, L.P.
Its: General Partner
By: AP KMS Acquisition
Corporation
Its: General Partner
By:________________________
Name:
Title:
AP KMS II, LLC
By: Apollo Real Estate
Investment Fund II, L.P.
Its: Member
By: Apollo Real Estate
Advisors II, L.P.
Its: General Partner
By: Apollo Real Estate Capital
Advisors II, Inc.
Its: General Partner
By:___________________________
Name:
Title:
XXXXXXX XXXXX
______________________________
Xxxxxxx Xxxxx, an individual
THE XXXX HOLDING COMPANY
By:_____________________________
Name:
Title:
XXXXXX X. XXXX
________________________________
Xxxxxx X. Xxxx, an individual
XXXXXXX X. XXXXX, XX.
_________________________________
Xxxxxxx X. Xxxxx, Xx., an
individual
