AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXXXX COMMUNICATIONS, INC.,
XXXXXX XX ACQUISITION, INC.,
AND
CLINICAL COMMUNICATIONS GROUP INC.
DATED AS OF AUGUST 26, 1998
TABLE OF CONTENTS
PAGE NUMBER
ARTICLE 1
DEFINITIONS.............................. 1
1.1 Definitions................................................... 1
1.2 Terms Defined Elsewhere in the Agreement...................... 6
ARTICLE 2
MERGER; EFFECTIVE TIME; CLOSING.................... 7
2.1 Merger........................................................ 7
2.2 Effective Time................................................ 8
2.3 The Closing................................................... 8
ARTICLE 3
CERTIFICATE OF INCORPORATION; BY-LAWS;
DIRECTORS AND OFFICERS OF SURVIVING CORPORATION............ 8
3.1 Certificate of Incorporation.................................. 8
3.2 By-Laws....................................................... 8
3.3 Directors and Officers........................................ 8
ARTICLE 4
SHARE CONSIDERATION; PAYMENT OF SHARE CONSIDERATION.......... 9
4.1 Share Consideration; Conversion or Cancellation of CCG Shares. 9
4.2 Payment of Share Consideration................................ 10
4.3 Fractional Xxxxxx Common Shares............................... 10
4.4 Transfer of CCG Shares........................................ 11
4.5 Restricted Shares............................................. 11
4.6 Escrow........................................................ 11
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF ACQUISITION AND XXXXXX....................... 11
5.1 Organization of Acquisition and Xxxxxx........................ 11
5.2 Capital Stock................................................. 11
5.3 Authorization for Common Stock................................ 12
5.4 Authorization of Transaction.................................. 12
5.5 Noncontravention.............................................. 12
5.6 Brokers' Fees................................................. 12
i
PAGE NUMBER
5.7 Xxxxxx SEC Reports............................................ 13
5.8 Pooling of Interests.......................................... 13
ARTICLE 6
REPRESENTATIONS AND WARRANTIES CONCERNING CCG............. 13
6.1 Organization, Qualification, and Corporate Power.............. 13
6.2 Capitalization................................................ 14
6.3 Authorization of Transaction.................................. 14
6.4 Noncontravention.............................................. 14
6.5 Title to Assets............................................... 15
6.6 Subsidiaries.................................................. 15
6.7 Financial Statements.......................................... 15
6.8 Events Subsequent to Most Recent Fiscal Year End.............. 16
6.9 Undisclosed Liabilities....................................... 18
6.10 Legal Compliance.............................................. 18
6.11 Taxes......................................................... 18
6.12 Real Property................................................. 22
6.13 Intellectual Property......................................... 23
6.14 Tangible Assets............................................... 23
6.15 Contracts..................................................... 24
6.16 Notes and Accounts Receivable................................. 25
6.17 Powers of Attorney............................................ 25
6.18 Insurance..................................................... 25
6.19 Litigation.................................................... 25
6.20 Employees..................................................... 26
6.21 Employee Benefits............................................. 26
6.22 Guaranties.................................................... 28
6.23 Environment, Health, and Safety............................... 28
6.24 Customers..................................................... 28
6.25 Relationships with Customers and Suppliers.................... 29
6.26 Employee and Stockholder Indebtedness......................... 29
6.27 Product Liability............................................. 29
6.28 Bank Accounts................................................. 29
6.29 Related Party Agreements...................................... 29
6.30 Change in Control............................................. 29
6.31 Board Recommendation.......................................... 30
6.32 Brokers Fees.................................................. 30
6.33 Accreditation................................................. 30
6.34 CCG Affiliates................................................ 30
ii
PAGE NUMBER
6.35 Licenses and Permits.......................................... 30
6.36 Consents...................................................... 31
6.37 JHB Enterprises............................................... 31
6.38 Disclosure.................................................... 31
ARTICLE 7
PRE-CLOSING COVENANTS......................... 32
7.1 General....................................................... 32
7.2 Notices and Consents.......................................... 32
7.3 Maintenance of Business; Prohibited Acts...................... 32
7.4 Access........................................................ 34
7.5 Notice of Developments........................................ 34
7.6 Reorganization................................................ 34
7.7 Exclusivity................................................... 34
7.8 Investment Representation Letter.............................. 35
7.9 Antitrust Matters............................................. 35
ARTICLE 8
CONDITIONS TO OBLIGATION TO CLOSE................... 35
8.1 Conditions to Each Party's Obligation......................... 35
8.2 Conditions to Obligations of Acquisition and Xxxxxx........... 36
8.3 Conditions to Obligations of CCG.............................. 38
8.4 Frustration of the Closing Conditions. ...................... 39
ARTICLE 9
TERMINATION.............................. 39
9.1 Termination by Mutual Consent................................. 39
9.2 Termination by Either Xxxxxx or CCG........................... 39
9.3 Effect of Termination and Abandonment......................... 40
ARTICLE 10
TAX MATTERS.............................. 40
10.1 Tax Periods Ending on or Before the Closing Date.............. 40
10.2 Straddle Periods.............................................. 41
10.3 Cooperation on Tax Matters.................................... 41
10.4 Reorganization................................................ 41
iii
PAGE NUMBER
ARTICLE 11
INDEMNIFICATION............................ 42
11.1 Indemnification of Xxxxxx..................................... 42
11.2 Indemnity Obligations of Xxxxxx............................... 42
11.3 Notification of Claims........................................ 43
11.4 Survival...................................................... 44
11.5 Limitations................................................... 45
11.6 Escrow........................................................ 45
11.7 Xxxxxx Payment of CCG Indemnity Claims........................ 46
ARTICLE 12
STOCKHOLDER REPRESENTATIVES................................................ 46
12.1 Authorization of Stockholder Representatives.................. 46
ARTICLE 13
MISCELLANEOUS............................. 50
13.1 Press Releases and Public Announcements....................... 50
13.2 No Third Party Beneficiaries.................................. 50
13.3 Entire Agreement.............................................. 50
13.4 Succession and Assignment..................................... 50
13.5 Counterparts.................................................. 50
13.6 Headings...................................................... 50
13.7 Notices....................................................... 51
13.8 GOVERNING LAW................................................. 52
13.9 Amendments and Waivers........................................ 52
13.10 Severability.................................................. 53
13.11 Expenses...................................................... 53
13.12 Construction.................................................. 53
13.13 Incorporation of Exhibits and Schedules...................... 53
13.14 Specific Performance.......................................... 53
13.15 Submission to Jurisdiction; Mediation......................... 54
SCHEDULES AND EXHIBITS:
Schedule A -- List of Stockholders
Schedule B -- List of Management Stockholders
Schedule C -- Certificate of Incorporation of CCG
Exhibit A -- Agreement and Consent (Xxxxx Xxxxxxxxxx)
iv
Exhibit B -- Agreement and Consent (Accredited Investors)
Exhibit C -- Escrow Agreement
Exhibit D -- Investment Representation Letter
Exhibit E -- Form of Registration Rights Agreement
Exhibit F -- Form of Shelf Registration Rights Agreement
Exhibit G -- Form of Winthrop, Xxxxxxx Xxxxxx & Xxxxxxx Opinion
Exhibit H -- Form of Weil, Gotshal & Xxxxxx Opinion
Disclosure
Schedule -- Exceptions to Representations and Warranties of CCG
v
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made as of August
26, 1998, by and among Xxxxxx Communications Inc., a Delaware corporation
("Xxxxxx"), Xxxxxx XX Acquisition, Inc., a Delaware corporation and wholly-owned
subsidiary of Xxxxxx ("Acquisition"), and Clinical Communications Group Inc., a
Delaware corporation ("CCG"). Xxxxxx, Acquisition and CCG are referred to
collectively herein as the "Parties" and each individually as a "Party."
RECITALS:
WHEREAS, the Parties hereto desire to consummate a merger (the "Merger")
whereby Acquisition will be merged with and into CCG and CCG will be the
surviving corporation in the Merger, upon the terms and subject to the
conditions of this Agreement and in accordance with the Delaware General
Corporation Law (the "Delaware GCL");
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization under Sections 368(a)(1)(A) and 368(a)(2)(E)
of the Internal Revenue Code of 1986, as amended (the "Code"), pursuant to which
the issued and outstanding CCG Shares shall be converted into the right to
receive Xxxxxx Common Shares; and
WHEREAS, concurrently with the execution hereof and as a condition to
Xxxxxx'x and Acquisition's willingness to enter into this Agreement, Xxxxx X.
Xxxxxxxxxx and the Trust (as hereinafter defined) are entering into an Agreement
and Consent, a copy of which is attached hereto as Exhibit A (the "Agreement and
Consent (Xxxxx Xxxxxxxxxx)"), and certain of the Stockholders (as hereinafter
defined) (including CCG Affiliates (as hereinafter defined)) are entering into
an Agreement and Consent, a copy of which is attached hereto as Exhibit B (the
"Agreement and Consent (Accredited Investors)").
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and covenants herein contained, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms shall have
the respective meanings set forth below:
"Acquisition" has the meaning set forth in the preamble hereto.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Section 1504 of the Code, or any consolidated, combined, unitary or similar
group defined under a similar provision of state, local or foreign law.
"Agreement" has the meaning set forth in the preamble hereto.
"Agreement and Consent" means any of the Agreement and Consent (Xxxxx
Xxxxxxxxxx) or the Agreement and Consent (Accredited Investors).
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms the basis for any specified
consequence.
"CCG" has the meaning set forth in the preamble hereto.
"CCG Common Stock" means the common stock, par value $0.01 per share, of
CCG.
"CCG Preferred Stock" means the preferred stock, par value $0.01 per
share, of CCG.
"CCG Shares" means, collectively, the shares of CCG Common Stock and CCG
Preferred Stock.
"Claim" means a Xxxxxx Indemnity Claim or a CCG Indemnity Claim, as the
case may be.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the businesses
and affairs of CCG, CCG's Subsidiaries or Xxxxxx that is not already generally
available to the public.
"Delaware GCL" has the meaning set forth in the preamble hereto.
"Disclosure Schedule" has the meaning set forth in the first paragraph of
Article 6 below.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
tax-qualified
2
defined contribution retirement plan or arrangement which is an Employee Pension
Benefit Plan, (c) tax-qualified defined benefit retirement plan or arrangement
which is an Employee Pension Benefit Plan (including any Multiemployer Plan), or
(d) Employee Welfare Benefit Plan or material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA ss.
3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA ss.
3(1).
"Environmental, Health and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof) concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including laws relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes
into ambient air, surface water, ground water, or lands or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes, in any case, as in effect as of the
date hereof or the Closing Date, as applicable.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" shall mean Crestar Bank.
"Escrow Agreement" shall mean the escrow agreement among Xxxxxx, the
Stockholder Representatives and the Escrow Agent in the form of Exhibit C
hereto.
"Extremely Hazardous Substance" has the meaning set forth in ss. 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"Fiduciary" has the meaning set forth in ERISA ss. 3(21).
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Governmental Authority" means any court or tribunal or administrative,
governmental or regulatory body, agency or authority, whether domestic or
foreign.
3
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations and renewals in connection therewith, (d) all mask works and all
applications, registrations and renewals in connection therewith, (e) all trade
secrets and Confidential Information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Knowledge" of CCG means matters actually known by any of Xxxxx X.
Xxxxxxxxxx, Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxxxxxx or Xxxx Xxxxx, in each
case, after due inquiry.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Management Stockholders" means those Persons listed on Schedule B hereto
and any Affiliates thereof.
"Material Adverse Effect" means, as to any Party, any effect, occurrence
or change that has or is reasonably likely to have, individually or in the
aggregate, a material adverse effect on the business, results of operations or
financial condition of such Party and its Subsidiaries, taken as a whole, or is
reasonably likely to materially hinder or impair the consummation of the
transactions contemplated hereby.
"Merger" has the meaning set forth in the recitals hereto.
"Multiemployer Plan" has the meaning set forth in ERISA ss. 3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
4
"Party" or "Parties" has the meaning set forth in the preamble hereto.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency or political
subdivision thereof).
"Prohibited Transaction" has the meaning set forth in ERISA ss. 406 and
Code ss. 4975.
"Reportable Event" has the meaning set forth in ERISA ss. 4043.
"Restricted Shares" means any unvested CCG Shares at the Effective Time
subject to the Restricted Share Agreements.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than (a) mechanic's, materialmen's, and
similar liens, (b) liens for Taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Xxxxxx" has the meaning set forth in the preamble hereto.
"Stockholders" means those Persons listed on Schedule A hereto.
"Subsidiary" means any corporation or other Person with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the common stock
or other ownership interests or has the power to vote or direct the voting of
sufficient securities or interests to elect a majority of the directors or a
individuals serving a similar function.
"Tax" or "Taxes" shall mean all taxes, charges, fees, imposts, levies or
other similar assessments by any Governmental Authority, including all net
income, gross receipts, capital, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance,
5
stamp, occupation, property and estimated taxes, customs duties, fees,
assessments and charges of any kind whatsoever, together with any interest and
any penalties, fines, additions to tax or additional amounts imposed by any
Governmental Authority in respect of the foregoing and shall include any
transferee or successor liability in respect of Taxes (whether by contract or
otherwise) and any liability in respect of any Tax as a result of being a member
of any Affiliated Group, including any consolidated, combined, unitary or
similar group.
"Tax Return" means any return (including any consolidated, combined or
unitary return in which CCG or a Subsidiary of CCG, as the case may be, is, or
was, included or includable), declaration, report, claim for refund, separate
election or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
1.2 Terms Defined Elsewhere in the Agreement. For purposes of this
Agreement, the following terms have the meanings set forth in the sections
indicated:
Term Section
---- -------
Affiliate Obligations.................. 6.26
Authorizations......................... 6.1
Average Closing Price.................. 4.1
Base Price............................. 4.1
Certificate of Merger.................. 2.2
Closing................................ 2.3
Closing Date........................... 2.3
Common Exchange Ratio.................. 4.1
CCG Indemnified Parties................ 11.2
CCG Affiliates......................... 6.35
CCG Indemnity Claim ................... 11.2
CCG Common Xxxxxx Common Shares........ 4.1
CCG Preferred Xxxxxx Common Shares..... 4.1
CCG Share Certificates................. 4.1
Deemed Escrow Value.................... 11.6
DOJ.................................... 7.9
Effective Time......................... 2.2
Escrow Deposit......................... 11.6
Escrow Shares.......................... 4.6
Excess Transaction Expenses............ 13.11
Exchange Agent......................... 4.2
Financial Statements .................. 6.7
6
Term Section
---- -------
FTC.................................... 7.9
Investment Representation Letter....... 7.8
Licenses and Permits................... 6.35
Losses................................. 11.1
Most Recent Fiscal Year End............ 6.7
Percentage Interests................... 12.1
Preferred Exchange Ratio............... 4.1
Preferred Redemption Value............. 4.1
Registration Rights Agreement.......... 8.1
Restricted Share Agreements............ 10.1
Share Consideration.................... 4.1
Shelf Registration Rights Agreement.... 8.1
Xxxxxx Common Shares................... 5.2
Xxxxxx SEC Reports..................... 5.7
Xxxxxx Indemnity Claim................. 11.1
Xxxxxx Indemnified Parties............. 11.1
Stockholder Representatives............ 12.1
Straddle Period........................ 10.3
Surviving Corporation ................. 2.1
Tax Returns............................ 4.10
Third-Party Claim...................... 11.3
Weighted Average Preferred Exchange Ratio 4.1
ARTICLE 2
MERGER; EFFECTIVE TIME; CLOSING
2.1 Merger. Subject to the terms and conditions of this Agreement and the
Delaware GCL, at the Effective Time, Acquisition and CCG shall consummate the
Merger in which (i) Acquisition shall be merged with and into CCG and the
separate corporate existence of Acquisition shall thereupon cease, (ii) CCG
shall be the successor or surviving corporation in the Merger and shall continue
to be governed by the laws of the State of Delaware and (iii) the separate
corporate existence of CCG with all its rights, privileges, immunities, powers
and franchises shall continue unaffected by the Merger. The corporation
surviving the Merger is sometimes hereinafter referred to as the "Surviving
Corporation." The Merger shall have the effects set forth in the Delaware GCL.
7
2.2 Effective Time. On the Closing Date, subject to the terms and
conditions of this Agreement, Acquisition and CCG shall (i) cause to be executed
a Certificate of Merger in the form required by the Delaware GCL (the
"Certificate of Merger"), and (ii) cause the Certificate of Merger to be filed
with the Delaware Secretary of State as provided in the Delaware GCL. The Merger
shall become effective at such time as the Certificate of Merger has been duly
filed with the Delaware Secretary of State or such other time as is agreed upon
by the Stockholder Representatives and Xxxxxx and specified in the Certificate
of Merger.
Such time is hereinafter referred to as the "Effective Time."
2.3 The Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Article
9, the closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Winthrop, Stimson, Xxxxxx &
Xxxxxxx in Stamford, Connecticut, commencing at 11:00 a.m. local time on August
31, 1998 or such other place or time or on such other date as Xxxxxx and the
Stockholder Representatives may agree or as may be necessary to permit the
fulfillment or waiver of the conditions set forth in Article 8 (the "Closing
Date").
ARTICLE 3
CERTIFICATE OF INCORPORATION; BY-LAWS;
DIRECTORS AND OFFICERS OF SURVIVING CORPORATION
3.1 Certificate of Incorporation. The certificate of incorporation of CCG,
as in effect immediately prior to the Effective Time, a copy of which is
attached hereto as Schedule C, shall be the certificate of incorporation of the
Surviving Corporation until thereafter amended as provided therein and under the
Delaware GCL.
3.2 By-Laws. The by-laws of CCG, as in effect immediately prior to the
Effective Time, shall be the by-laws of the Surviving Corporation.
3.3 Directors and Officers. The directors and officers of Acquisition
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation from and after the Effective Time until their
successors have been duly elected, appointed or qualified or until the earlier
of their death, resignation or removal in accordance with the certificate of
incorporation and by-laws of the Surviving Corporation.
8
ARTICLE 4
SHARE CONSIDERATION; PAYMENT OF SHARE CONSIDERATION
4.1 Share Consideration; Conversion or Cancellation of CCG Shares. (a) At
the Effective Time, by virtue of the Merger and without any action by the
Parties or on the part of any holders of CCG Shares or the holder of any shares
of capital stock of Acquisition, (A) each issued and outstanding share (other
than any Restricted Shares subject to Section 4.5) of CCG Common Stock shall be
converted into the right to receive the number of shares of Xxxxxx Common Shares
equal to the Common Exchange Ratio (the aggregate number of Xxxxxx Common Shares
to be received by the holders of CCG Common Stock (including any Xxxxxx Common
Shares issued pursuant to Section 4.5) being the "CCG Common Xxxxxx Common
Shares"), (B) each issued and outstanding share of CCG Preferred Stock shall be
converted into the right to receive the number of shares of Xxxxxx Common Shares
equal to the applicable Preferred Exchange Ratio (the aggregate number of Xxxxxx
Common Shares to be received by the holders of CCG Preferred Stock being the
"CCG Preferred Xxxxxx Common Shares" and the aggregate number of CCG Common
Xxxxxx Common Shares and CCG Preferred Xxxxxx Common Shares being the "Share
Consideration"), (C) all of the outstanding CCG Shares shall cease to be
outstanding, and shall be cancelled and retired and shall cease to exist, and
each holder of certificates representing such CCG Shares (the "CCG Share
Certificates"), shall cease to have any rights with respect thereto, except the
right to receive Xxxxxx Common Shares therefor upon the surrender of such
certificates in accordance with this Section 4.1 and Section 4.2 and cash in
lieu of fractional Xxxxxx Common Shares as set forth in Section 4.3, and (D)
each outstanding share of common stock, $.01 par value, of Acquisition shall be
converted into one share of common stock of the Surviving Corporation, as such
shares of common stock are constituted immediately following the Effective Time.
(b) The "Common Exchange Ratio" shall, subject to adjustment as provided
below, equal the quotient (rounded to five decimal places) of (a) (x) the sum of
(i) 2,100,000, (ii) 31,948.575 multiplied by the Common Exchange Ratio and (iii)
133,954.8 multiplied by the Preferred Exchange Ratio (based on an assumed
Preferred Redemption Value equal to $100) less (y) the number of CCG Preferred
Xxxxxx Common Shares, divided by (b) 143,199.9; provided, however, that if the
average of the closing prices per share of Xxxxxx Common Shares as reported on
the New York Stock Exchange, Inc. Composite Tape during the three consecutive
trading days ending on (and including) the trading day immediately prior to the
Closing Date (the "Average Closing Price") is less than $43.20 (the "Base
Price"), subject to Section 9.2, the Common Exchange Ratio shall be deemed to
equal (x) the Common Exchange Ratio (computed as described above without giving
effect to this proviso at an assumed Average Closing Price equal to the Base
Price) multiplied by (y) (a) the Base Price divided by (b) the Average Closing
Price.
9
(c) The "Preferred Exchange Ratio" with respect to any CCG Preferred Stock
shall equal the quotient (rounded to five decimal places) of (a) the applicable
Preferred Redemption Value divided by (b) the Average Closing Price, and the
"Weighted Average Preferred Exchange Ratio" shall be equal to the quotient
(rounded to five decimal places) of (a) 104.585 divided by (b) the Average
Closing Price. The "Preferred Redemption Value" shall be equal to $100 per CCG
Preferred Share plus accrued and unpaid dividends through the Closing Date. For
greater certainty, the conversion of each share of CCG Preferred Stock at the
Effective Time shall be based upon the respective Preferred Redemption Value of
such share of CCG Preferred Stock and the Preferred Exchange Ratio calculated
based on such Preferred Redemption Value.
4.2 Payment of Share Consideration. (a) Prior to the Closing, the Parties
will prepare a schedule setting forth the number of Xxxxxx Common Shares to be
issued to each holder of CCG Shares in connection with the Merger. At the
Closing, Xxxxxx shall give irrevocable instructions to American Stock Transfer
and Trust Company (the "Exchange Agent"), subject to surrender to Xxxxxx of CCG
Share Certificates for cancellation, to issue a certificate representing that
number of whole Xxxxxx Common Shares represented by such CCG Share Certificate
determined pursuant to 4.1 and, if applicable, a check representing the cash
consideration to which such holder may be entitled pursuant to Section 4.3 on
account of a fractional share of Xxxxxx Common Shares. Until surrendered as
contemplated by this Section 4.2, each CCG Share Certificate shall be deemed at
any time after the Effective Time to represent only the right to receive upon
such surrender the certificate representing Xxxxxx Common Shares and cash in
lieu of any fractional Xxxxxx Common Shares as contemplated by this Article 4.
Upon surrender to Xxxxxx of CCG Share Certificates by holders of CCG Shares for
cancellation, together with any other required documents, each such holder shall
receive the Xxxxxx Common Shares issuable in the Merger, less the Xxxxxx Common
Shares to be placed in escrow as provided in Sections 4.6 and 11.7.
(b) All Xxxxxx Common Shares issued upon the surrender for exchange
of CCG Shares in accordance with the terms hereof (including any cash paid
pursuant to Section 4.3) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such CCG Shares, and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of CCG Shares which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, CCG Share Certificates are
presented to the Surviving Corporation for any reason, they shall be canceled
and exchanged as provided in this Article 4.
4.3 Fractional Xxxxxx Common Shares. No certificates representing
fractional Xxxxxx Common Shares shall be issued upon surrender of any CCG Share
Certificates. In lieu of any fractional Xxxxxx Common Shares, there shall be
paid to the holder of CCG Shares who otherwise would be entitled to receive a
fractional Xxxxxx Common Share an
10
amount of cash (without interest) determined by multiplying such fraction by the
Merger Share Price.
4.4 Transfer of CCG Shares. Except with Xxxxxx'x prior written consent, no
transfers of CCG Shares shall be made on the share transfer books of CCG after
the date of this Agreement.
4.5 Restricted Shares. In settlement and satisfaction in full of the
rights of holders of Restricted Shares under the Stock Purchase, Vesting and
Repurchase Agreements and Stock Purchase Agreements identified in Section 4.5 to
the Disclosure Schedule (the "Restricted Share Agreements"), Xxxxxx shall,
immediately prior to the Effective Time, exchange each Restricted Share for the
number of shares of Xxxxxx Common Shares equal to the Common Exchange Ratio
provided that the Common Exchange Ratio with respect to any Restricted Shares
shall be deemed to equal the Common Exchange Ratio for CCG Common Stock as
computed pursuant to Section 4.1 multiplied by the appropriate discount as set
forth on Section 4.5 of the Disclosure Schedule.
4.6 Escrow. As of the Effective Time, Xxxxxx shall deposit (or cause to be
deposited) with the Escrow Agent, certificates representing five percent (5%) of
the Share Consideration issuable to the Management Stockholders pursuant to
Sections 4.1 and 4.5 (the "Escrow Shares"), which Escrow Shares shall be held by
the Escrow Agent and disbursed solely in accordance with the terms of the Escrow
Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF ACQUISITION AND XXXXXX
Acquisition and Xxxxxx jointly and severally represent and warrant to CCG
that the statements contained in this Article 5 are correct and complete as of
the date hereof.
5.1 Organization of Acquisition and Xxxxxx. Each of Acquisition and Xxxxxx
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Delaware.
5.2 Capital Stock. The authorized capital stock of Xxxxxx consists of
120,000,000 shares of common stock, $.001 par value (the "Xxxxxx Common
Shares"), of which 62,209,677 shares are outstanding as of August 25, 1998, and
5,000,000 shares of preferred stock, of which no shares are outstanding as of
the date hereof. Since August __, 1998, as of the date hereof, Xxxxxx has not
issued any additional shares of capital stock except pursuant to the exercise of
options outstanding on such date to purchase Xxxxxx Common Shares. All
11
outstanding Xxxxxx Common Shares are, and all Xxxxxx Common Shares issuable
under stock option plans of Xxxxxx will be when issued in accordance with the
terms thereof, duly authorized, validly issued, fully paid and nonassessable.
5.3 Authorization for Common Stock. The Share Consideration will, when
issued, be duly authorized, validly issued, fully paid and nonassessable, and no
stockholder of Xxxxxx will have any preemptive right or similar rights of
subscription or purchase in respect thereof. The Share Consideration will,
subject to the accuracy of the Stockholders' representations contained in the
applicable Agreement and Consent or Investment Representation Letter, be exempt
from registration under the Securities Act and will be registered or exempt from
registration under all applicable state securities laws.
5.4 Authorization of Transaction. Each of Acquisition and Xxxxxx has full
power and authority (including full corporate power and authority) to execute
and deliver this Agreement and to perform its respective obligations hereunder.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all requisite
corporate action on the part of Xxxxxx and Acquisition. This Agreement
constitutes the valid and legally binding obligation of each of Acquisition and
Xxxxxx, enforceable in accordance with its terms and conditions except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and to general
principles of equity. Neither Acquisition nor Xxxxxx need give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or Governmental Authority in order to consummate the transactions
contemplated by this Agreement, except in connection with the filing of the
Certificate of Merger with the Delaware Secretary of State.
5.5 Noncontravention. Neither the execution and the delivery of this
Agreement nor the consummation of the transactions contemplated hereby, will (i)
violate any law, constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which either Acquisition or Xxxxxx is subject
or any provision of its certificate of incorporation or by-laws or (ii) result
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license, instrument, or
other arrangement to which either Acquisition or Xxxxxx is a party or by which
it is bound or to which any of its assets is subject.
5.6 Brokers' Fees. Neither Acquisition nor Xxxxxx has any Liability or
obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement.
12
5.7 Xxxxxx SEC Reports. The Xxxxxx SEC Reports did not contain when filed
any untrue statement of a material fact or omit to state a material fact
required to be stated or incorporated by reference therein or necessary in order
to make the statements and information therein, in light of the circumstances
under which they were made, not misleading. Except as disclosed in any of (i)
Xxxxxx'x Annual Reports on Form 10-K (the "10-Ks"); (ii) Xxxxxx'x Quarterly
Reports on Form 10-Q (the "10-Qs"); (iii) Xxxxxx'x Current Reports on Form 8-K
(the "8-Ks"); (iv) Xxxxxx'x annual reports to stockholders (the "Annual Reports"
and together with the 10-Ks, 10-Qs and the 8-Ks, in each case as filed with the
SEC since September 24, 1996, the "Xxxxxx SEC Reports"); and (v) all other
publicly available documents of Xxxxxx filed by Xxxxxx with the SEC pursuant to
the provisions of federal securities laws, there has not been a Material Adverse
Effect with respect to Xxxxxx.
5.8 Pooling of Interests. Xxxxxx intends to account for the Merger as a
pooling of interests.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES CONCERNING CCG
CCG represents and warrants to Acquisition and Xxxxxx that the statements
contained in this Article 6 are correct and complete as of the date hereof,
except as set forth in the disclosure schedule delivered by CCG to Acquisition
and Xxxxxx on the date hereof (the "Disclosure Schedule"). The Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Article 6.
6.1 Organization, Qualification, and Corporate Power. Each of CCG and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the State of its incorporation. Each of CCG and its
Subsidiaries is duly authorized to conduct business and is in good standing
under the laws of each jurisdiction where such qualification is required, except
where the failure to so qualify would not have a Material Adverse Effect with
respect to CCG, and each such jurisdiction is listed in Section 6.1(a) of the
Disclosure Schedule. Each of CCG and its Subsidiaries has full corporate power
and authority and all licenses, permits, and authorizations (collectively, the
"Authorizations") necessary to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it, except for such
Authorizations with respect to which the failure of CCG to have such
Authorizations would not have a Material Adverse Effect with respect to CCG.
Section 6.1(b) of the Disclosure Schedule lists the directors and officers of
CCG and each of its Subsidiaries. CCG has delivered to Xxxxxx correct and
complete copies of the certificate of incorporation and by-laws of CCG and each
of its Subsidiaries (as amended to date). The minute books (containing the
records of meetings of the stockholders, the board of directors, and any
committees of the board of directors), the stock certificate books, and the
13
stock record books of CCG in the forms in which they have been provided to
Xxxxxx are correct and complete. Neither CCG nor any of its Subsidiaries is in
default under or in violation of any provision of its certificate of
incorporation or by-laws.
6.2 Capitalization. As of the date hereof, the entire authorized capital
stock of CCG consists of (i) 150,000 shares of CCG Common Stock, of which
109,827 are issued and outstanding and (ii) 750,000 shares of CCG Preferred
Stock, of which 483,980 shares are designated "Series A Preferred Stock" and
339,163.29 shares of Series A Preferred Stock are issued and outstanding. All of
the issued CCG Shares have been duly authorized, are validly issued, fully paid,
and nonassessable, and all of the issued and outstanding CCG Shares are held of
record by the Stockholders as set forth in Section 6.2 of the Disclosure
Schedule. Except as set forth in Section 6.2 of the Disclosure Schedule, there
are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments that could require CCG to issue, sell, or otherwise cause to become
outstanding any of its capital stock. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation, or similar rights
created by CCG or as to which CCG is a party. To the Knowledge of CCG, there are
no voting trusts, proxies, or other agreements or understandings with respect to
the voting of CCG Shares.
6.3 Authorization of Transaction. CCG has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all requisite corporate action on the part of CCG.
This Agreement constitutes the valid and legally binding obligation of CCG,
enforceable in accordance with its terms and conditions except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and to general
principles of equity. CCG is not required to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
Governmental Authority in order to consummate the transactions contemplated by
this Agreement, except in connection with the filing of the Certificate of
Merger with the Delaware Secretary of State.
6.4 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate (a) any law, constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge or other restriction of any government
or Governmental Authority to which CCG or any of its Subsidiaries is subject or
(b) any provision of the certificate of incorporation or by-laws of CCG or any
of its Subsidiaries or (ii) result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which CCG or any
of its Subsidiaries is a party or by which it is bound or to
14
which any of its assets is subject (or result in the imposition of any Security
Interest upon any of its assets), except in the case of clauses (i)(a) and (ii),
for such violations, breaches, defaults or acceleration rights that would not
have a Material Adverse Effect with respect to CCG.
6.5 Title to Assets. Each of CCG and its Subsidiaries has good and
marketable title to, or a valid leasehold interest in, the properties and assets
used by it or shown on the balance sheet for the Most Recent Fiscal Year End or
acquired after the date thereof, and except as set forth in Section 6.5 to the
Disclosure Schedule, free and clear of all Security Interests, except for
properties and assets disposed of in the Ordinary Course of Business since the
date of such balance sheet.
6.6 Subsidiaries. (a) Section 6.6 of the Disclosure Schedule sets forth,
as of the date hereof, a true and complete list of all of CCG's Subsidiaries,
including the jurisdiction of incorporation or organization of each Subsidiary
and the percentage of each Subsidiary's outstanding capital stock or other
ownership interest owned by CCG or another Subsidiary of CCG or by any other
Person.
(b) All of the outstanding shares of capital stock of each Subsidiary have
been validly issued and are fully paid and nonassessable and are owned
beneficially and of record by CCG free and clear of all Encumbrances. CCG will
not at the Closing, directly or indirectly, own any capital stock of or other
equity interests in any corporation, partnership or other Person other than the
Subsidiaries listed in Section 6.6 of the Disclosure Schedule, and neither CCG
nor any of its Subsidiaries is a member of or participant in a partnership,
joint venture or similar Person.
6.7 Financial Statements. CCG has delivered (collectively, the "Financial
Statements") to Xxxxxx (i) its unaudited consolidated balance sheets and
statements of income, changes in stockholders' equity and cash flows as of and
for the fiscal year ended December 31, 1996, and (ii) its unaudited consolidated
balance sheets and statements of income, changes in stockholders' equity and
cash flows as of and for the fiscal year ended December 31, 1997 (the "Most
Recent Fiscal Year End"). The Financial Statements (including the notes thereto)
have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby (subject in the case of the unaudited
consolidated statements to normal recurring year-end adjustments), present
fairly the consolidated financial condition of CCG and its Subsidiaries as of
such dates and the consolidated results of operations of CCG and its
Subsidiaries for such periods, and are consistent in all material respects with
the books and records of CCG and its Subsidiaries (which books and records are
correct and complete in all material respects).
15
6.8 Events Subsequent to Most Recent Fiscal Year End. Except as set forth
in Section 6.8 of the Disclosure Schedule, since the Most Recent Fiscal Year
End, CCG has conducted its business in the Ordinary Course of Business and there
has not occurred a Material Adverse Effect as to CCG or any of its Subsidiaries.
Without limiting the generality of the foregoing, since that date:
(a) Neither CCG nor any of its Subsidiaries has sold, leased, transferred,
or assigned any of its assets, tangible or intangible, other than in the
Ordinary Course of Business;
(b) Neither CCG nor any of its Subsidiaries has entered into any
agreement, contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) either involving more than $150,000 or outside
the Ordinary Course of Business;
(c) no party (including CCG or any of its Subsidiaries) has accelerated,
terminated, modified, or canceled any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) to which CCG or
any of its Subsidiaries is a party or by which it is bound, other than in the
Ordinary Course of Business;
(d) Neither CCG nor any of its Subsidiaries has imposed any Security
Interest upon any of its assets, tangible or intangible;
(e) Neither CCG nor any of its Subsidiaries has made any capital
expenditure (or series of related capital expenditures) either involving more
than $100,000 or outside the Ordinary Course of Business;
(f) Neither CCG nor any of its Subsidiaries has made any capital
investment in, any loan to, or any acquisition of the securities or assets of,
any other Person (or series of related capital investments, loans, and
acquisitions);
(g) Neither CCG nor any of its Subsidiaries has issued any note, bond or
other debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease obligation;
(h) Neither CCG nor any of its Subsidiaries has delayed or postponed the
payment of accounts payable and other Liabilities outside the Ordinary Course of
Business;
(i) Neither CCG nor any of its Subsidiaries has canceled, compromised,
waived or released any right or claim (or series of related rights and claims)
outside the Ordinary Course of Business;
16
(j) Neither CCG nor any of its Subsidiaries has granted any license or
sublicense of any rights under or with respect to any Intellectual Property
outside the Ordinary Course of Business;
(k) There has been no change made or authorized in the certificate of
incorporation or by-laws of CCG of any of its Subsidiaries;
(l) Neither CCG nor any of its Subsidiaries has issued, sold, or otherwise
disposed of any of its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange, or exercise)
any of its capital stock;
(m) Neither CCG nor any of its Subsidiaries has declared, set aside or
paid any dividend or made any distribution with respect to its capital stock
(whether in cash or in kind) or redeemed, purchased or otherwise acquired any of
its capital stock;
(n) Neither CCG nor any of its Subsidiaries has experienced any damage,
destruction or loss (whether or not covered by insurance) to its property in
excess of $25,000;
(o) Neither CCG nor any of its Subsidiaries has made any loan to, or
entered into any other transaction with, any of its directors, officers or
employees outside the Ordinary Course of Business;
(p) Neither CCG nor any of its Subsidiaries has entered into any
employment contract pursuant to which the base compensation exceeds $100,000 or
collective bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement;
(q) Neither CCG nor any of its Subsidiaries has granted any increase in
the compensation of any of its directors, officers, or employees;
(r) Neither CCG nor any of its Subsidiaries has adopted or terminated or
in any material respect amended or modified any bonus, profit-sharing,
incentive, severance, or other plan, contract, or commitment for the benefit of
any of its directors, officers, and employees (or taken any such action with
respect to any other Employee Benefit Plan);
(s) Neither CCG nor any of its Subsidiaries has made any other change in
employment terms for any of its directors, officers or employees outside the
Ordinary Course of Business or in the terms of its agreements with any
independent contractors;
(t) Neither CCG nor any of its Subsidiaries has made or pledged to make
any charitable or other capital contribution outside the Ordinary Course of
Business;
17
(u) Neither CCG nor any of its Subsidiaries has made any material change
in the Tax or accounting principles, methods, practices or procedures followed
by CCG in connection with the business of CCG; and
(v) Neither CCG nor any of its Subsidiaries is under any legal obligation,
whether written or oral, to do any of the foregoing.
6.9 Undisclosed Liabilities. Neither CCG nor any of its Subsidiaries has
any Liability that would be required to be reflected or reserved against in a
consolidated balance sheet of CCG prepared in accordance with GAAP (applied in a
manner consistent with the manner CCG management applied such principles in
preparing the Financial Statements), except for (i) Liabilities set forth in the
balance sheet included in the Financial Statements (including any notes
thereto), (ii) Liabilities which have arisen after the Most Recent Fiscal Year
End in the Ordinary Course of Business (none of which results from, arises out
of, relates to, is in the nature of, or was caused by any breach of contract,
breach of warranty, tort, infringement or violation of law), (iii) any Liability
specifically identified in the Disclosure Schedule or in this Agreement, and
(iv) any Liability of CCG incurred specifically in connection with the
transactions contemplated by this Agreement.
6.10 Legal Compliance. Each of CCG and its Subsidiaries has complied with
all applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof), except for such
non-compliance as would not have a Material Adverse Effect with respect to CCG.
6.11 Taxes.
(a) Except as set forth in Section 6.11(a) of the Disclosure Schedule, (i)
all federal, state, local and foreign Tax Returns required to be filed by, or on
behalf of, CCG and each of its Subsidiaries have been filed on a timely basis
with the appropriate governmental authorities in all jurisdictions in which such
Tax Returns are required to be filed (after giving effect to any valid
extensions of time in which to make such filings), and all such Tax Returns were
true, correct and complete; (ii) all Taxes due and payable in respect of such
Tax Returns (whether or not shown on such returns) have been fully and timely
paid or are adequately provided for in the Financial Statements; and (iii) all
Taxes not yet due and payable for all periods covered by the Financial
Statements have been adequately provided for in such statements.
(b) Except as set forth in Section 6.11(b) of the Disclosure Schedule,
Clinical Communications, Inc. and Greenwich Press, Inc. each made valid
elections as of August 1, 1991, and January 1, 1994, respectively to be treated
as an "S" corporation within the
18
meaning of Section 1361 of the Code and any analogous state and local law
requirements for federal state and local purposes. Such election was in full
force and effect for all taxable periods ending on or prior to July 31, 1997.
(c) Each of CCG and its Subsidiaries has duly and timely withheld and paid
over to the appropriate taxing authorities all Taxes and other amounts required
to be so withheld and paid over for all periods under all applicable laws in
connection with amounts paid or owing to any employee, independent contractor,
subcontractor, lender, stockholder or other third party or other personnel
supplied by any third party.
(d) Section 6.11(d) of the Disclosure Schedule lists all federal, state,
local, and foreign Tax Returns filed by, or on behalf of, CCG and each of its
Subsidiaries for the prior six completed fiscal years and for the period from
January 1, 1998 through July 31, 1998, indicates those Tax Returns that have
been audited and the results of such audits, and indicates those Tax Returns
that currently are the subject of audit (including any jurisdictions for which
only a written notice of audit has been received) or as to which there are other
pending administrative or court proceedings with respect to any Taxes for which
such company may be liable, including any known criminal proceedings. CCG has
made available to Acquisition and Xxxxxx complete copies of all Tax Returns of
CCG and each of its Subsidiaries for Taxes measured on or by income or gross
receipts, examination reports, and statements of deficiencies assessed against
or agreed to by CCG or any of its Subsidiaries. All positions taken on such U.S.
federal income Tax Returns that could give rise to a substantial understatement
of federal income Tax within the meaning of Section 6662 of the Code have been
disclosed in such Tax Returns in accordance with Section 6662. All material
elections in effect as of the date hereof with respect to Taxes affecting CCG or
any of its Subsidiaries (other than the "S" election and the termination of such
election) are set forth in Section 6.11(d) of the Disclosure Schedule.
(e) Except as set forth in Section 6.11(e) of the Disclosure Schedule, (i)
CCG has not received notice (written or oral) of any assessment or intent to
make any assessment by any Governmental Authority regarding Taxes for any period
for which Tax Returns have been filed; (ii) there are no pending requests for
rulings from any Governmental Authority with respect to Taxes of CCG or any of
its Subsidiaries; (iii) no claim has ever been made by a Governmental Authority
in a jurisdiction where CCG or any of its Subsidiaries does not file Tax Returns
that CCG or any of its Subsidiaries is or may be subject to taxation by that
jurisdiction or is obliged to act as withholding agent under the laws of that
jurisdiction; (iv) there is no dispute or claim concerning any Tax Liability of
CCG or any of its Subsidiaries claimed or raised by any Governmental Authority
during any presently pending audit or proceeding; and (v) no waiver or extension
of any statute of limitations has been given or requested with respect to CCG or
any of its Subsidiaries in connection with any Tax Returns of CCG or any of its
Subsidiaries.
19
(f) There are no Security Interests on any of the assets of CCG or any of
its Subsidiaries that arose in connection with any failure (or alleged failure)
to pay any Tax.
(g) Except as set forth in Section 6.11(g) of the Disclosure Schedule,
neither CCG nor any of its Subsidiaries is a party to or bound by any agreement
providing for the allocation, sharing or indemnification of Taxes, and there are
no powers of attorney currently in force with respect to any matter related to
Taxes of CCG or any of its Subsidiaries.
(h) CCG and each of its Subsidiaries are members of an Affiliated Group
for federal income tax purposes and have in effect a valid election to file
consolidated federal income tax returns, commencing with the taxable period
beginning August 1, 1997 and ended December 31, 1997. Except as set forth in
Section 6.11(h) of the Disclosure Schedule, (i) neither CCG nor any of its
Subsidiaries has been a member of any Affiliated Group other than that of which
CCG is currently the common parent, and (ii) neither CCG nor any of its
Subsidiaries has any liability under Treasury Regulation ss. 1.1502-6 (or any
similar provision of state, local or foreign law) for the Taxes of any Person
other than any Tax Liability of a Person who is currently a member of the
Affiliated Group of which CCG is currently the common parent.
(i) Except as set forth in Section 6.11(i) of the Disclosure Schedule, the
performance of the transactions contemplated by this Agreement will not (either
alone or upon the occurrence of any additional or subsequent event) result in
any payment that would constitute an "excess parachute payment" within the
meaning of Section 280G of the Code.
(j) Neither CCG nor any of its Subsidiaries has, or has ever had, a
permanent establishment (within the meaning of any applicable tax treaty) in any
foreign country or has engaged in a trade or business in any foreign country.
(k) No portion of the cost of any of the assets of CCG or any of its
Subsidiaries was financed directly or indirectly from the proceeds of any
tax-exempt state or local government obligation described in Section 103(a) of
the Code.
(l) Except as set forth in Section 6.11(l) of the Disclosure Schedule,
neither CCG nor any of its Subsidiaries is a party to any joint venture,
partnership or other arrangement or contract that could be treated as a
partnership for federal income tax purposes.
(m) Neither CCG nor any of its Subsidiaries is currently or has been
within the last 5 years a "United States real property holding corporation"
within the meaning of Section 897(c) of the Code.
20
(n) Except as set forth in Section 6.11(n) of the Disclosure Schedule,
neither CCG nor any of its Subsidiaries nor any other Person on behalf of CCG or
any of its Subsidiaries: (i) has filed a consent pursuant to Section 341(f) of
the Code or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as such term is defined in Section
341(f)(4) of the Code) owned by CCG or any of its Subsidiaries; (ii) has
executed or entered into a closing agreement pursuant to Section 7121 of the
Code or any predecessor provision thereof or any similar provision of state,
local or foreign law or any other agreement relating to Taxes with any
Governmental Authority; or (iii) has agreed to or is required to make any
adjustments pursuant to Section 481(a) of the Code or any similar provision of
state, local or foreign law by reason of a change in accounting method initiated
by CCG or any of its Subsidiaries. The IRS has not proposed any such adjustment
or change in accounting method, and neither CCG nor any of its Subsidiaries has
any application pending with any Governmental Authority requesting permission
for any changes in accounting methods that relate to the business or operations
of CCG or any of its Subsidiaries.
(o) Except as set forth in Section 6.11(o) of the Disclosure Schedule,
none of the assets of CCG or any of its Subsidiaries is (i) property required to
be treated as being owned by another Person pursuant to the provisions of
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect
immediately prior to the enactment of the Tax Reform Act of 1986, and (ii)
"tax-exempt use property" within the meaning of Section 168(h)(l) of the Code.
(p) Section 6.11(p) of the Disclosure Schedule sets forth the amount, and
nature, of any deferred gain or loss allocable to CCG or any of its Subsidiaries
arising out of any "intercompany transaction" within the meaning of Treasury
Regulation ss. 1.1502-13 (or any predecessor thereof).
(q) Prior to or in connection with the Merger, there shall not be acquired
or redeemed by CCG or any Subsidiary of CCG an amount of CCG Shares that,
together with the transactions contemplated by this Agreement, could prevent
Xxxxxx from acquiring, in exchange solely for Xxxxxx Common Shares, an amount of
CCG Shares constituting "control" of CCG within the meaning of Section 368(c) of
the Code. For purposes of this computation, any CCG Shares that could be
acquired by any Person pursuant to any warrant, option, convertible security or
any other type of right shall be treated as outstanding shares that are to be
acquired by Xxxxxx for cash.
(r) Immediately after the Merger, and without taking into account any act
that Xxxxxx causes CCG or any of its Subsidiaries to take or fail to take after
the Merger (other than as contemplated by this Agreement), CCG will hold at
least 90% of the fair market value of its net assets, and at least 70% of the
fair market value of its gross assets, held immediately prior to the Merger. For
purposes of this representation, any amounts paid by CCG to
21
shareholders in connection with or pursuant to the Merger, any amounts used by
CCG to pay its transaction expenses and those of its shareholders, and all
redemptions and distributions (except for regular, normal dividends) made by CCG
are treated as assets of CCG immediately prior to the Merger.
(s) CCG is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
6.12 Real Property. Section 6.12(a) of the Disclosure Schedule lists and
describes briefly all real property owned, leased or subleased to CCG or its
Subsidiaries. CCG has made available to Acquisition and Xxxxxx correct and
complete copies of the leases and subleases listed in Section 6.12(b) of the
Disclosure Schedule (as amended to date). With respect to each lease and
sublease listed in Section 6.12(b) of the Disclosure Schedule:
(a) such lease or sublease is in full force and effect, and is legal,
valid, binding and enforceable against CCG, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and to general principles of equity;
(b) no consent is required with respect to such lease or sublease as a
result of this Agreement, and the actions contemplated by this Agreement will
not result in the change of any terms of any lease or sublease or otherwise
affect the ongoing validity of any lease or sublease;
(c) neither CCG nor any of its Subsidiaries, nor has CCG or any of its
Subsidiaries received notice that any other party to the lease or sublease, is
in breach or default, and no event has occurred which, with notice or lapse of
time, would constitute a breach or default by, or permit termination,
modification, or acceleration thereunder;
(d) neither CCG nor any of its Subsidiaries, nor to the Knowledge of CCG,
any other party to such lease or sublease, has repudiated any provision thereof;
(e) there are no disputes, or forbearance programs or, to the Knowledge of
CCG, oral agreements in effect as to such lease or sublease; and
(f) Neither CCG nor any of its Subsidiaries has assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold.
22
6.13 Intellectual Property.
(a) Each of CCG and its Subsidiaries owns or has the right to use pursuant
to license, sublicense, agreement or permission all Intellectual Property used
in the operation of the business of CCG or its Subsidiaries as presently
conducted, except where the failure to own or have such right would have a
Material Adverse Effect with respect to CCG. Each item of Intellectual Property
owned or used by CCG and its Subsidiaries immediately prior to the Closing
hereunder will be owned or available for use by the Surviving Corporation on
identical terms and conditions immediately subsequent to the Closing hereunder.
Each of CCG and its Subsidiaries has taken all necessary action to maintain and
protect Intellectual Property that it owns, except where the failure to take
such action would not have a Material Adverse Effect with respect to CCG.
(b) Neither CCG nor any of its Subsidiaries has infringed upon or
misappropriated any Intellectual Property rights of third parties, and none of
CCG or the directors and officers (and employees with responsibility for
Intellectual Property matters) of CCG or any of its Subsidiaries has ever
received any written charge, complaint, claim, demand, or notice alleging any
such infringement or misappropriation (including any claim that CCG or any of
its Subsidiaries must license or refrain from using any Intellectual Property
rights of any third party). To the Knowledge of CCG, no third party has
infringed upon or misappropriated any Intellectual Property rights of CCG or any
of its Subsidiaries.
(c) Except as set forth in section 6.13(c) of the Disclosure Schedule,
neither CCG nor any of its Subsidiaries has any patent or registration which has
been issued with respect to any of the Intellectual Property owned by CCG or any
of its Subsidiaries.
(d) Section 6.13(d) of the Disclosure Schedule identifies each item of
material Intellectual Property that any third party owns and that CCG or any of
its Subsidiaries uses pursuant to license, sublicense, agreement, or permission,
excluding mass produced software. CCG has delivered to Acquisition and Xxxxxx
correct and complete copies of all such licenses, sublicenses, agreements, and
permissions (as amended to date).
6.14 Tangible Assets. Each of CCG and its Subsidiaries owns or leases all
material buildings, machinery, equipment, and other tangible assets used in the
conduct of its business as presently conducted. Such tangible assets are in the
aggregate, free from all patent material defects, have been maintained in
accordance with normal industry practice in all material respects, are in good
operating condition and repair (subject to normal wear and tear), and are
suitable for the purposes for which they presently are used. The tangible assets
owned or leased by CCG and its Subsidiaries are sufficient to conduct the
business of CCG and its Subsidiaries as it is currently being conducted in all
material respects.
23
6.15 Contracts. Section 6.15 of the Disclosure Schedule lists the
following contracts and other agreements to which CCG or any of its Subsidiaries
is a party:
(a) any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments in excess
of $50,000 per annum;
(b) any agreement pursuant to which CCG or any of its Subsidiaries has
created or has an equity interest in a partnership or joint venture;
(c) any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any indebtedness for borrowed money,
or any capitalized lease obligation or under which a Security Interest has been
imposed on any of its assets, tangible or intangible, except for indebtedness in
connection with trade payables incurred in the Ordinary Course of Business;
(d) any agreement pursuant to which CCG or a Subsidiary has agreed to keep
information confidential or has agreed not to compete in certain businesses,
except for confidentiality provisions included in contracts entered into in the
Ordinary Course of Business.
(e) any agreement with any Stockholders or any Affiliate of any of the
Stockholders;
(f) any profit sharing, stock option, stock purchase, stock appreciation,
deferred compensation, severance, or other material plan or arrangement for the
benefit of its current or former directors, officers, and employees;
(g) any agreement for the employment of any individual on a full-time,
part-time, consulting, or other basis providing annual compensation in excess of
$100,000 or providing severance benefits;
(h) any agreement under which it has borrowed, advanced or loaned any
amount to any of its directors, officers and employees outside the Ordinary
Course of Business; or
(j) any agreements with employees or consultants for the provision of any
material goods or services other than on arms-length terms and in the Ordinary
Course of Business.
CCG has made available to Xxxxxx a correct and complete copy of each written
agreement listed in Section 6.15 of the Disclosure Schedule (as amended to date)
and has delivered a written summary setting forth the terms and conditions of
each oral agreement referred to in Section 6.15 of the Disclosure Schedule. With
respect to each such agreement: (A) the
24
agreement is and in full force and effect, and is legal, valid, binding and
enforceable against CCG or its Subsidiaries (as applicable), except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and to general
principles of equity; (B) neither CCG or its Subsidiaries, as the case may be,
or, to the Knowledge of CCG, any other party thereto, is in breach or default,
and no event has occurred which with notice or lapse of time would constitute a
breach or default by, or permit termination, modification, or acceleration,
under the agreement, except for such event that will not have a Material Adverse
Effect with respect to CCG; and (C) CCG has not, and to the Knowledge of CCG, no
other party has, repudiated any provision of the agreement.
6.16 Notes and Accounts Receivable. All notes and accounts receivable of
CCG and each of its Subsidiaries are reflected properly on the books and records
of CCG in accordance with GAAP consistently applied. The reserve for bad debts
set forth on the face of the balance sheet for the Most Recent Fiscal Year End
(rather than in any notes thereto) has been established and maintained in
accordance with GAAP consistently applied with historical reserves (if any).
6.17 Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of CCG or any of its Subsidiaries.
6.18 Insurance. Section 6.18 of the Disclosure Schedule identifies each
insurance policy (including policies providing property, casualty, liability,
and workers' compensation coverage and bond and surety arrangements) currently
in effect to which CCG or any of its Subsidiaries is a party, a named insured,
or otherwise the beneficiary of coverage. With respect to each such insurance
policy: (A) the policy is in full force and effect; (B) the policy will continue
to be legal, valid, binding, enforceable and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby; (C) neither CCG nor any of its Subsidiaries nor, to the Knowledge of
CCG, any other party to the policy is in breach or default (including with
respect to the payment of premiums or the giving of notices), and no event has
occurred which, with notice or the lapse of time, would constitute such a breach
or default by, or permit termination, modification, or acceleration, under the
policy, except for such event that would not have a Material Adverse Effect with
respect to CCG; and (D) CCG has not, and to the Knowledge of CCG, no other party
to the policy has repudiated any provision thereof. Section 6.18 of the
Disclosure Schedule describes any self-insurance arrangements of CCG or any of
its Subsidiaries.
6.19 Litigation. Section 6.19 of the Disclosure Schedule sets forth each
instance in which CCG or any of its Subsidiaries (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a
party or has received written notice that it is threatened to be made a party to
any action, suit, proceeding, hearing, or investigation ("Legal
25
Proceeding") of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator. Except as set forth in Section 6.19 of the Disclosure Schedule,
there are no Legal Proceedings against or affecting CCG or any of its
Subsidiaries or their respective properties or assets pending or, to the
knowledge of CCG, threatened against CCG or any of its Subsidiaries.
6.20 Employees. No employee of CCG or any of its Subsidiaries listed on
Section 6.20B of the Disclosure Schedule has expressly indicated an intent to
any of Xxxxx X. Xxxxxxxxxx, Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxxxxxx or Xxxx
Xxxxx to terminate employment with CCG or its Subsidiary, as applicable,
independently of or as a result of the transactions contemplated hereby and, to
the Knowledge of CCG, no such employee intends to terminate employment with CCG
or its Subsidiary, as applicable, prior to or within three months following the
consummation of the transactions contemplated hereby. Neither CCG nor any of its
Subsidiaries has violated in any material respect any law with respect to any
unfair labor practices. CCG has no Knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of CCG or any of its Subsidiaries. Section 6.20A of the
Disclosure Schedule sets forth the names of all employees of CCG and as
Subsidiaries as of a date no earlier than three days prior to the date hereof.
6.21 Employee Benefits.
(a) Section 6.21(a) of the Disclosure Schedule lists each Employee Benefit
Plan that CCG or any of its Subsidiaries maintains or to which CCG or any of its
Subsidiaries contributes.
(b) Each such Employee Benefit Plan (and each related trust, insurance
contract, or fund) complies in form and in operation in all material respects
with the applicable requirements of ERISA, the Code, and other applicable laws.
(c) All required reports and descriptions (including Form 5500 Annual
Reports, Summary Annual Reports, and Summary Plan Descriptions) have been filed
or distributed appropriately with respect to each such Employee Benefit Plan.
The requirements of Part 6 of Subtitle B of Title 1 of ERISA and of Code ss.
4980B have been met with respect to each group health plan (as defined in
Section 607(1) of ERISA and Section 4980B(g)(2) of the Code).
(d) All contributions (including all employer contributions and employee
salary reduction contributions) which are due have been paid to each such
Employee Benefit Plan which is an Employee Pension Benefit Plan and all
contributions for any period ending on or before the Closing Date which are not
yet due have been paid to each such Employee Pension
26
Benefit Plan or accrued in accordance with the past custom and practice of CCG
and its Subsidiaries. All premiums or other payments for all periods ending on
or before the Closing Date have been paid with respect to each such Employee
Benefit Plan which is an Employee Welfare Benefit Plan.
(e) Each such Employee Benefit Plan which is an Employee Pension Benefit
Plan meets the requirements of a "qualified plan" under Code ss. 401(a) and (i)
in the case of any "standardized form plan" (as defined in Rev. Rul. 89-9) which
is a defined contribution plan, a favorable opinion letter has been issued and
(ii) in the case of all other qualified plans, a favorable determination letter
has been received by the plan within the last two years from the Internal
Revenue Service.
(f) Neither CCG nor any of its Subsidiaries has ever maintained or been
required to contribute to any Employee Pension Benefit Plan, subject to Title IV
of ERISA.
(g) CCG has made available to Xxxxxx correct and complete copies of the
plan documents and summary plan descriptions, and, where applicable, the most
recent determination letter received from the Internal Revenue Service, the most
recent Form 5500 Annual Report, and all related trust agreements, insurance
contracts, and other funding agreements which implement each such Employee
Benefit Plan.
(h) With respect to each Employee Benefit Plan that CCG or any of its
Subsidiaries maintains or ever has maintained or to which it contributes, ever
has contributed, or ever has been required to contribute:
(i) There have been no Prohibited Transactions with respect to any
such Employee Benefit Plan. No Fiduciary has any Liability for breach of
fiduciary duty or any other failure to act or comply in connection with the
administration or investment of the assets of any such Employee Benefit Plan. No
action, suit, proceeding, hearing, or investigation with respect to the
administration or the investment of the assets of any such Employee Benefit Plan
(other than routine claims for benefits) is pending or threatened; and
(ii) Neither CCG nor any of its Subsidiaries has incurred, any
Liability to the PBGC (other than PBGC premium payments) or otherwise under
Title IV of ERISA (including any withdrawal Liability) or under the Code with
respect to any such Employee Benefit Plan which is an Employee Pension Benefit
Plan.
(i) Neither CCG nor any of its Subsidiaries contributes to, or has ever
contributed to or has ever been required to contribute to any Multiemployer Plan
nor has any Liability (including withdrawal Liability) under any Multiemployer
Plan.
27
(j) Neither CCG nor any of its Subsidiaries maintains or contributes to,
or has ever maintained or contributed to, or has ever been required to
contribute to, any Employee Welfare Benefit Plan providing medical, health or
life insurance or other welfare-type benefits for current or future retired or
terminated employees, their spouses, or their dependents (other than in
accordance with Code ss. 4980B).
6.22 Guaranties. Neither CCG nor any of its Subsidiaries is a guarantor or
otherwise is liable for any Liability or obligation (including indebtedness) of
any other Person.
6.23 Environment, Health, and Safety. Except to the extent that no
Material Adverse Effect with respect to CCG would result therefrom:
(a) Each of CCG and its Subsidiaries has complied with all Environmental,
Health, and Safety Laws, and no action, suit, proceeding, hearing, investigation
or written charge, complaint, claim, demand, or notice has been filed or
commenced against it alleging any failure so to comply. Without limiting the
generality of the preceding sentence, each of CCG and its Subsidiaries has
obtained and been in compliance with all of the terms and conditions of all
permits, licenses, and other authorizations which are required under, and has
complied with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and timetables which are
contained in, all Environmental, Health, and Safety Laws.
(b) Neither CCG nor any of its Subsidiaries has handled or disposed of any
hazardous substance, arranged for the disposal of any hazardous substance,
exposed any employee or other individual to any hazardous substance or
condition, or owned or operated any property or facility in any manner that
could result in any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against CCG or any of its
Subsidiaries giving rise to any Liability for damage to any site, location, or
body of water (surface or subsurface), for any illness of or personal injury to
any employee or other individual, or for any reason under any Environmental,
Health, and Safety Law.
(c) All properties and equipment owned by CCG and used in the business of
CCG and its Subsidiaries are free of asbestos, PCB's, dioxins, dibenzofurans,
and Extremely Hazardous Substances.
6.24 Customers. The names and addresses of all customers of CCG and each
of its Subsidiaries past and present are listed in Section 6.24 of the
Disclosure Schedule. Section 6.24 of the Disclosure Schedule sets forth all
customers who as of June 30, 1998 hereof have account balances that are in
excess of 90 days from invoice date. Section 6.24 of the Disclosure Schedule
sets forth a list of the customers, project numbers and approximate
28
expected revenues for which CCG has received orders from January 1, 1998 through
July 31, 1998. Such list is complete and accurate in all material respects and
represents bona fide orders from CCG or any of its Subsidiaries for goods and
services.
6.25 Relationships with Customers and Suppliers. CCG has not received any
written notice from any of the following that such person has or intends to
terminate or materially reduce its business with CCG or any of its Subsidiaries:
(i) any current customer of CCG or any of its Subsidiaries which
accounted for over 1% of total consolidated net sales of CCG for its most
recently completed fiscal year; or
(ii) any current supplier to CCG or any of its Subsidiaries of items
essential to the conduct of the business, which items cannot be replaced at
comparable cost and the loss of which could reasonably be expected to have an
adverse effect on CCG or any of its Subsidiaries.
6.26 Employee and Stockholder Indebtedness. Section 6.26 of the Disclosure
Schedule sets forth, as of June 30, 1998, all indebtedness to CCG and its
Subsidiaries of the Stockholders or the officers, directors or employees of CCG
and its Subsidiaries, excluding normal travel and other business expense
advances (collectively, "Affiliate Obligations").
6.27 Product Liability. Except to the extent covered by insurance, neither
CCG nor any of its Subsidiaries has any Liability (and there is no Basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand against CCG giving rise to any Liability) arising out
of any injury to individuals or property as a result of the ownership,
possession or use of any product manufactured, sold, leased delivered, promoted,
advertised or marketed by CCG or any of its Subsidiaries.
6.28 Bank Accounts. Section 6.28 of the Disclosure Schedule sets forth all
bank accounts and marketable securities (both debt and equity) of CCG and each
of its Subsidiaries.
6.29 Related Party Agreements. Section 6.29 of the Disclosure Schedule
sets forth all agreements between CCG or any of its Subsidiaries and (i) any
Stockholder or any of its Affiliates or (ii) any officer, director or employee
of or consultant to CCG or any of its Subsidiaries or any of their respective
Affiliates, other than any agreement which may be terminated at will without any
payment.
6.30 Change in Control. Neither CCG nor any of its Subsidiaries is a party
to any contract or arrangement which contains a "change in control" or similar
provision, and the consummation of the transactions contemplated hereby shall
not (either alone or upon the
29
occurrence of additional acts or events) result in any payment or payments
becoming due from CCG or any of its Subsidiaries to any person or give any
person the right to terminate or alter the provisions of any agreement to which
CCG or any of its Subsidiaries is a party.
6.31 Board Recommendation. The board of directors of CCG at a meeting duly
called and held, has by unanimous vote of those directors present (who
constituted 100% of the directors then in office) (i) determined that, as of the
date hereof, this Agreement and the transactions contemplated hereby, including
the Merger, are fair to and in the best interests of the stockholders of CCG and
has approved the same, and (ii) resolved to recommend that the holders of CCG
Shares adopt this Agreement and the transactions contemplated hereby, including
the Merger.
6.32 Brokers Fees. Neither CCG, any of its officers, directors or
employees, nor any Stockholder has any Liability or obligation to pay any fees
or commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement.
6.33 Accreditation. (a) CCG is accredited as a provider of continuing
education by (i) the American Council of Pharmaceutical Education ("ACPE") with
respect to pharmacists and (ii) the Accreditation Council for Continuing Medical
Education ("ACCME") with respect to physicians. Except as set forth on Section
6.33 of the Disclosure Schedule, CCG is in compliance in all material respects
with the terms of such accreditations, and CCG has not received any written nor,
to its Knowledge, oral, notice that it is not in compliance therewith or that
its accreditation may not be renewed. Such accreditations are subject to renewal
on the dates indicated in Section 6.33 of the Disclosure Schedule. Copies of the
ACCME and ACPE accreditation certificate and letter, respectively, for
Scientific are attached to Section 6.33 of the Disclosure Schedule.
(b) CCG's current and past practices comply in all material respects
with all applicable federal and state health care laws, regulations, rules,
orders and FDA guidance publications, including without limitations, the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. xx.xx. 301 to 395).
6.34 CCG Affiliates. Section 6.34 of the Disclosure Schedule sets forth a
true and correct list of all Affiliates of CCG ("CCG Affiliates").
6.35 Licenses and Permits. Except as set forth in Section 6.35 of the
Disclosure Schedule CCG owns, holds or possesses all licenses, franchises,
permits, approvals and other governmental authorizations (collectively,
"Licenses and Permits") necessary to entitle it to use its corporate name, to
own or lease, operate and use its assets and properties and to carry on and
conduct its business and operations as presently conducted, except for such
Licenses and Permits the absence of which would not have a Material Adverse
Effect. CCG is not in
30
violation of or default under any Licenses or Permits or any judgment, order,
writ, injunction or decree of any court or administrative agency issued against
it or any law, ordinance, rule or regulation applicable to it in any case which
would have a Material Adverse Effect.
6.36 Consents. Section 6.36 of the Disclosure Letter lists each material
permit and contract (true and complete copies of which have been made available
to Xxxxxx) as to which notice to, or the consent of, a Governmental Authority or
Person is required as a condition to the transfer of control or the right to
control such material permit or contract in connection with the transactions
contemplated hereby. Except for (i) the aforementioned notices and consents,
(ii) compliance with and required filings under the Xxxx-Xxxxx-Xxxxxx Act, and
(iii) the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware and appropriate documents with the relevant authorities of
other states in which CCG is qualified to do business, no consents, approvals,
licenses, permits, orders or authorizations of, or registrations, declarations,
notices or filings with, any Governmental Authority or any Person (including,
without limitation, any compliance with or required filings under the
Xxxx-Xxxxx-Xxxxxx Act) are required to be obtained or made by or with respect to
CCG or any of its Subsidiaries on or prior to the Closing Date in connection
with (A) the execution, delivery and performance of this Agreement, the
consummation of the transactions contemplated hereby or the taking by CCG of any
other action contemplated hereby, (B) the continuing validity and effectiveness
immediately following the Effective Time of any material contract or permit of
CCG or any of its Subsidiaries, or (C) the conduct by CCG or any of its
Subsidiaries of their respective businesses immediately following the Closing as
conducted on the date hereof.
6.37 JHB Enterprises. The goods and services provided to CCG by JHB
Enterprises, Inc. have been provided at prices which are at least equal to those
obtainable from unaffiliated third parties in arm's length transactions. CCG
currently anticipates that it will be able to continue the relationship with JHB
Enterprises, Inc. immediately after the Closing on substantially the same terms
and CCG currently has no reason to believe that such terms will materially
change after the Closing.
6.38 Disclosure. The representations and warranties contained in this
Article 6 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Article 6 not misleading.
31
ARTICLE 7
PRE-CLOSING COVENANTS
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
7.1 General. Each of the Parties will use its reasonable best efforts to
take all action and to do all things reasonably necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction of the closing conditions set forth in Article
8 hereof), and each Party shall execute and deliver the agreements to which it
is a party referred to in Section 8.1 in substantially the forms of the Exhibits
hereto and shall use its reasonable best efforts to cause its counsel to deliver
the legal opinions referred to in Sections 8.2 and 8.3 hereof, respectively.
7.2 Notices and Consents. Each Party shall give any notices to third
parties and shall use its reasonable best efforts to obtain any third party
consents, undertakings, agreements and opinions that the other may reasonably
request in connection with the matters referred to in Section 7.1 above and in
Article 8 below. Each of the Parties shall give any notices to, make any filings
with, and use its reasonable best efforts to obtain any authorizations,
consents, and approvals of Governmental Authorities in connection with the
transactions contemplated hereby.
7.3 Maintenance of Business; Prohibited Acts. During the period from the
date of this Agreement to the Effective Time, CCG shall not, and CCG shall cause
each of its Subsidiaries not to take any action that materially adversely
affects the ability of CCG or any of its Subsidiaries (i) to pursue its business
in the Ordinary Course of Business, (ii) to seek to preserve intact its current
business organizations, (iii) to keep available the service of its current
officers and employees and (iv) to preserve its relationships with customers,
suppliers and others having business dealings with it; and CCG shall not, and
shall cause each of its Subsidiaries not to without Xxxxxx'x prior written
consent:
(a) except as contemplated elsewhere in this Agreement, issue, deliver,
sell, dispose of, pledge or otherwise encumber, or authorize or propose the
issuance, delivery, sale, disposition or pledge or other encumbrances of (i) any
additional shares of its capital stock of any class, or any securities or rights
convertible into, exchangeable for or evidencing the right to subscribe for any
shares of its capital stock, or any rights, warrants, options, calls,
commitments or any other agreements of any character to purchase or acquire any
shares of its capital stock or any other securities or rights convertible into,
exchangeable for or evidencing the right to subscribe for any shares of its
capital stock, or (ii) any other securities in respect of, in lieu of or in
substitution for shares of its capital stock outstanding on the date hereof;
32
(b) redeem, purchase or otherwise acquire, or propose to redeem, purchase
or otherwise acquire, any of its outstanding securities;
(c) split, combine, subdivide or reclassify any shares of its capital
stock or otherwise make any payments to any Stockholder in his capacity as a
stockholder of CCG;
(d) (i) grant any increases in the compensation of any of its directors,
officers or executives or grant any increases in compensation to any of its
employees, (ii) pay or agree to pay any pension retirement allowance or other
employee benefit not required or contemplated by any Employee Benefit Plan as in
effect on the date hereof to any such director, officer or employee, whether,
past or present, (iii) enter into any new or amend any existing employment or
severance agreement with any such director, officer or employee, except as
approved by Xxxxxx in its reasonable discretion, (iv) pay or agree to pay any
bonus to any director, officer or employee (whether in the form of cash, capital
stock or otherwise), or (v) except as may be required to comply with applicable
law, amend any existing, or become obligated under any new Employee Benefit
Plan;
(e) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization (other
than the Merger);
(f) make any acquisition, by means of merger, consolidation or otherwise,
of any direct or indirect ownership interest in or assets comprising any
business enterprise or operation;
(g) adopt any amendments to its certificate of incorporation or by-laws;
(h) incur any indebtedness for borrowed money or guarantee such
indebtedness or agree to become contingently liable, by guaranty or otherwise,
for the obligations or indebtedness of any other person or make any loans,
advances or capital contributions to, or investments in, any other corporation,
any partnership or other legal entity or to any other persons, except for any of
the foregoing incurred or made in the Ordinary Course of Business;
(i) engage in the conduct of any business the nature of which is
materially different from the business in which CCG and its Subsidiaries are
currently engaged;
(j) enter into any agreement providing for acceleration of payment or
performance or other consequence as a result of (or make any payment contingent
upon) a change of control of CCG or any of its Subsidiaries;
(k) forgive any indebtedness owed to CCG or any of its Subsidiaries or
convert or contribute by way of capital contribution any such indebtedness owed;
33
(l) authorize or enter into any agreement providing for management
services to be provided by CCG or any of its Subsidiaries to any third party or
an increase in management fees paid by any third party under existing management
agreements (except pursuant to the terms thereof in effect on the date hereof);
(m) mortgage, pledge, encumber, sell, lease or transfer any material
assets of CCG or any of its Subsidiaries except with the prior written consent
of Xxxxxx or as contemplated by this Agreement;
(n) take any action that, to CCG's Knowledge, would jeopardize the
treatment of the Merger as a "pooling-of-interests" under Opinion 16 of the
Accounting Principles Board and applicable SEC Accounting Series Releases and
related interpretations; or
(o) authorize or announce an intention to do any of the foregoing, or
enter into any contract, agreement, commitment or arrangement to do any of the
foregoing or to take any action described in clauses (a) through (u) of Section
6.8.
7.4 Access. CCG shall, and shall cause each of its Subsidiaries to, permit
representatives of Xxxxxx and Acquisition to have access upon reasonable notice
at all reasonable times, and in a manner so as not to interfere with the normal
business operations of CCG and its Subsidiaries to all premises, properties,
personnel, books, records (including Tax records), contracts, and documents of
or pertaining to CCG and each of its Subsidiaries.
7.5 Notice of Developments. Each of the Parties shall give prompt written
notice to the others of any material adverse development causing a breach of any
of the representations and warranties of such Party in this Agreement. No
disclosure by any Party pursuant to this Section 7.5, however, shall be deemed
to amend or supplement the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
7.6 Reorganization. From and after the date hereof and prior to the
Effective Time, except for the transactions contemplated or permitted herein,
none of the Parties shall knowingly take any action or fail to take any action
that would cause disqualification of the Merger as a reorganization within the
meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code.
7.7 Exclusivity. CCG shall not, directly or indirectly, (i) solicit,
initiate, or encourage the submission of any proposal or offer from any Person
relating to the acquisition of any capital stock or other voting securities or
any substantial portion of the assets of CCG or any of its Subsidiaries
(including any acquisition structured as a merger, consolidation, or share
exchange) or (ii) participate in any discussions or negotiations regarding,
furnish any
34
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing. CCG shall not vote in favor of or approve any such acquisition. CCG
shall notify Xxxxxx within 24 hours of receipt thereof if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing and,
if in writing, shall deliver to Xxxxxx a copy thereof.
7.8 Investment Representation Letter. CCG shall use its reasonable best
efforts to cause each of the Stockholders (other than any of the Persons who
previously executed an Agreement and Consent) to execute and deliver to Xxxxxx
an Investment Representation Letter in the form of Exhibit D hereto (the
"Investment Representation Letter").
7.9 Antitrust Matters. CCG and Xxxxxx, on August 7, 1998, filed with the
Federal Trade Commission ("FTC") and the U.S. Department of Justice ("DOJ") the
notification and report form required for the transactions contemplated hereby
pursuant to the Xxxx-Xxxxx-Xxxxxx Act. The Parties shall seek early termination
of the waiting period applicable to the filing. Each of CCG and Xxxxxx shall
furnish to each other's counsel such necessary information and reasonable
assistance as the other may request in connection with its preparation of any
filing or submission that is necessary under the Xxxx-Xxxxx-Xxxxxx Act. CCG and
Xxxxxx acknowledge that more than one filing may be required under the
Xxxx-Xxxxx-Xxxxxx Act in order to consummate the transactions contemplated by
this Agreement, and agree to cooperate and furnish to each other's counsel such
necessary information and reasonable assistance as the other may request in
connection with its preparation of any subsequent filing. Xxxxxx and CCG shall
keep each other apprised of the status of any communications with, and any
inquiries or requests for additional information from, the FTC and the DOJ and
shall comply promptly with any such inquiry or request. Each of Xxxxxx and CCG
shall use its reasonable best efforts to obtain any clearance required under the
Xxxx-Xxxxx-Xxxxxx Act for the consummation of the Merger, which efforts, for
purposes of this Agreement shall not require Xxxxxx in order to obtain any
consent or clearance from the DOJ or any other Governmental Authority to (i)
hold separate, sell or otherwise dispose of any assets, including assets of CCG,
the effect of any of which, in the reasonable judgment of Xxxxxx, would be to
materially impair the value of the Merger to Xxxxxx or (ii) contest any suit
brought or threatened by the FTC or DOJ or attempt to lift or rescind any
injunction or restraining order obtained by the FTC or DOJ adversely affecting
the ability of the parties hereto to consummate the transactions contemplated
hereby.
ARTICLE 8
CONDITIONS TO OBLIGATION TO CLOSE
8.1 Conditions to Each Party's Obligation. The respective obligations of
Xxxxxx, Acquisition and CCG to consummate the transactions contemplated by this
Agreement are
35
subject to the fulfillment at or prior to the Closing Date of each of the
following conditions, which conditions may be waived upon the written consent of
Xxxxxx and CCG, as the case may be:
(a) Governmental Approvals. The Parties shall have received any material
authorizations, consents, and approvals of governments and Governmental
Authorities referred to in Section 5.4, and Section 6.3 above and all applicable
waiting periods (and any extensions thereof) under the Xxxx-Xxxxx-Xxxxxx Act
shall have expired or otherwise been terminated.
(b) No Injunction or Proceedings. There shall not be in effect any action,
suit, or proceeding pending or threatened in writing before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge that would, in the reasonable
judgment of Xxxxxx or CCG, (A) prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation, (C) affect adversely
in any material respect the right of Xxxxxx to own the capital stock of the
Surviving Corporation, or (D) affect adversely in any material respect the right
of the Surviving Corporation to own its assets and to operate its businesses
(and no such injunction, judgment, order, decree, ruling, or charge is in
effect).
(c) Registration Rights Agreements. Each of the registration rights
agreement, in substantially the form attached hereto as Exhibit E (the
"Registration Rights Agreement"), and the shelf registration rights agreement,
in substantially the form attached hereto as Exhibit F (the "Shelf Registration
Rights Agreement"), shall have been executed and delivered by the parties
thereto.
(d) Escrow Agreement. Xxxxxx and the Stockholder Representatives shall
have executed and delivered counterparts of the Escrow Agreement in the form
attached hereto as Exhibit C, together with any counterparts signed by the
Escrow Agent and blank stock powers executed by the Stockholder Representatives
with respect to the Xxxxxx Common Shares to be held in the Escrow Deposit.
8.2 Conditions to Obligations of Acquisition and Xxxxxx. The obligations
of Acquisition and Xxxxxx to consummate the transactions to be performed by them
in connection with the Closing are subject to satisfaction of the following
conditions:
(a) CCG shall have delivered to Acquisition and Xxxxxx a certificate to
the effect that:
36
(i) the representations and warranties of CCG made hereunder are
true and correct in all material respects (except for those representations and
warranties that are qualified as to materiality, "Material Adverse Effect" or
knowledge, which shall be true and correct as written) at and as of the date
hereof and, except for those made at and as of a particular date, at and as of
the Closing Date as if made on the Closing Date (except for such representations
and warranties the failure of which to be true and correct is solely the result
of actions of CCG expressly permitted pursuant to this Agreement);
(ii) CCG has performed and complied with all of their covenants
hereunder in all material respects at and as of the Closing Date; and
(iii) no action, suit, or proceeding is pending or threatened in
writing before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge that would
(A) prevent consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation, (C) affect adversely in any material
respect the right of Xxxxxx to own the capital stock of the Surviving
Corporation, or (D) affect adversely in any material respect the right of the
Surviving Corporation to own its assets and to operate its businesses (and no
such injunction, judgment, order, decree, ruling, or charge is in effect);
(b) Acquisition and Xxxxxx shall have received an opinion dated as of the
Closing Date from Winthrop, Stimson, Xxxxxx & Xxxxxxx, counsel to the
Stockholders and CCG, addressed and in the form attached hereto as Exhibit G;
(c) Acquisition and Xxxxxx shall have received from CCG a copy of a letter
of Ernst & Young LLP addressed to CCG dated as of the Closing Date regarding the
firm's concurrence with CCG management's conclusions as to the appropriateness
of pooling of interests accounting for the Merger under Accounting Principles
Board Opinion No. 16 if closed and consummated in accordance with this
Agreement;
(d) Xxxxxx shall have received the resignations, effective as of the
Closing, of each director and officer of CCG other than those whom Xxxxxx shall
have specified in writing prior to the Closing;
(e) All stockholders of CCG Shares shall have waived appraisal of its
shares pursuant to the Delaware GCL in connection with the Merger; and
37
(f) Each Stockholder that executed an Agreement and Consent or an
Investment Representation Letter shall have performed his or its respective
obligations under the applicable Agreement and Consent or Investment
Representation Letter.
Xxxxxx may waive any condition specified in this Section 8.2 if it executes a
writing so stating at or prior to the Closing.
8.3 Conditions to Obligations of CCG. The obligation of CCG to consummate
the transactions to be performed by it in connection with the Closing is subject
to satisfaction of the following conditions:
(a) Acquisition and Xxxxxx shall have delivered to CCG a certificate to
the effect that:
(i) the representations and warranties of Acquisition and of Xxxxxx
made hereunder shall be true and correct in all material respects (except for
those representations and warranties that are qualified as to materiality,
"Material Adverse Effect" or knowledge, which shall be true and correct as
written) at and as of the date hereof and, except for those made at and as of a
particular date, at and as of the Closing Date as if made on the Closing Date
(except for such representations and warranties the failure of which to be true
and correct is solely due to the result of actions expressly permitted pursuant
to this Agreement);
(ii) Acquisition and Xxxxxx shall have performed and complied with
all of its covenants hereunder in all material respects through the Closing; and
(iii) no action, suit, or proceeding shall be pending or threatened
in writing before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this Agreement
or (B) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect) or (C) adversely affect in any
material respect the right of the holders of CCG Shares to own the Share
Consideration;
(b) Xxxxxx shall have furnished to its transfer agent irrevocable
instructions to deliver the Share Consideration to such accounts as may be
specified in writing by the Stockholders in accordance with Section 4.2.
(c) CCG shall have received an opinion dated as of the Closing Date from
Weil, Gotshal & Xxxxxx LLP, counsel to Acquisition and Xxxxxx, addressed and in
the form attached hereto as Exhibit H.
38
CCG may waive any condition specified in this Section 8.3 if it executes a
writing so stating at or prior to the Closing.
8.4 Frustration of the Closing Conditions. None of CCG, Xxxxxx or
Acquisition may rely on the failure of any condition precedent set forth in this
Article 8 to be satisfied if such failure was caused by such party's (or
parties') failure to act in good faith or to use its reasonable best efforts to
consummate the transactions contemplated by this Agreement in accordance with
Sections 7.1 and 7.2.
ARTICLE 9
TERMINATION
9.1 Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, before or
after the approval by CCG or by Xxxxxx, respectively, either by the mutual
written consent of Xxxxxx and CCG or by mutual action of the board of directors
of CCG and the board of directors of Xxxxxx.
9.2 Termination by Either Xxxxxx or CCG. This Agreement may be terminated
and the Merger may be abandoned:
(a) by Xxxxxx, (i) in the event of a failure of a condition to the
obligations of Xxxxxx and Acquisition set forth in Section 8.2 of this
Agreement, or (ii) if the Average Closing Price is less than $34.00;
(b) by CCG, (i) in the event of a failure of a condition to the
obligations of CCG set forth in Section 8.3 of this Agreement, or (ii) if
the Average Closing Price is less than $34.00;
(c) by either Xxxxxx or CCG, (i) if the Merger shall not have been
consummated on or prior to August 31, 1998, or (ii) if a United States
federal or state court of competent jurisdiction or United States federal
or state governmental agency shall have issued an order, decree or ruling
or taken any other action permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become final and
non-appealable;
and provided, that (i) in the case of a termination pursuant to clause (a), (b)
or (c) above, the terminating party shall not have breached in any material
respect its obligations under this Agreement in any manner that shall have
proximately contributed to the occurrence of the
39
failure referred to in such clause and (ii) subject to waiver as provided below,
if the Merger shall not have been consummated on or prior to August 31, 1998,
this Agreement shall be deemed terminated and the Merger abandoned unless on or
prior to such date CCG shall have delivered a written consent of the
Stockholders of CCG, executed by a majority of Stockholders (including Xxxxx X.
Xxxxxxxxxx and Brentwood Associates Buyout Fund II, L.P.) waiving clause (ii) of
this proviso.
9.3 Effect of Termination and Abandonment. In the event of termination of
this Agreement and abandonment of the Merger pursuant to this Article 9, no
Party hereto (or any of its directors or officers) shall have any liability or
further obligation to any other party to this Agreement, except that nothing
herein will relieve any party from liability for any breach of this Agreement.
ARTICLE 10
TAX MATTERS
10.1 Tax Periods Ending on or Before the Closing Date. (a) After the date
hereof, no election with respect to Taxes will be made without the written
consent of Xxxxxx (which consent shall not be unreasonably withheld or delayed).
Following the Merger, Xxxxxx shall cause to be prepared and filed all Tax
Returns for CCG and each of its Subsidiaries for all periods ending on or prior
to the Closing Date which are due after the Closing Date. Xxxxxx shall permit
the Stockholder Representatives to review and comment on each such Tax Return
(or the relevant portions of any consolidated, combined or unitary return that
includes CCG or any of its Subsidiaries) no later than 30 days prior to filing,
and shall not file any such Tax Return (other than any Tax Return that includes
Xxxxxx) without the prior written consent of the Stockholder Representatives
(which consent shall not be unreasonably withheld or delayed). Tax Returns will
be prepared in a manner consistent with positions taken on prior Tax Returns of
CCG and each of its Subsidiaries except either (i) as otherwise required by law,
(ii) to the extent inconsistent with prior positions taken on prior Tax Returns
of Xxxxxx and as consented to in writing by the Stockholder Representatives
(which consent shall not be unreasonably withheld or delayed) or (iii) as
otherwise consented to in writing by the Stockholder Representatives (which
consent shall not be unreasonably withheld or delayed). The Stockholder
Representatives and Xxxxxx shall attempt in good faith mutually to resolve any
disagreement regarding such Tax Return. Any disagreement that is not resolved at
least twenty (20) business days prior to the due date for the filing of such Tax
Return shall be promptly resolved in an arbitration by a Big Five accounting
firm mutually agreed upon by the Stockholder Representatives and Xxxxxx, and the
resolution by such accounting firm shall be binding on the Stockholders, the
Stockholder Representatives, CCG and Xxxxxx.
40
10.2 Straddle Periods. Except to the extent prohibited by law, the
Stockholders and Xxxxxx shall close the taxable period of CCG and each of its
Subsidiaries as of the Closing Date. For purposes of the representations in
Section 6.11 of this Agreement and the indemnity in Article 11 of this
Agreement, any allocation of income, deductions, credits or other items required
to apportion any Taxes attributable to any taxable period which begins before
the Closing Date and ends after the Closing Date (a "Straddle Period") shall be
made by means of a closing of the books and records of the applicable company or
companies as of the close of business on the Closing Date, provided that
exemptions, allowances, deductions, credits or other items or any Taxes (such as
property or similar Taxes) that are calculated on an annual or periodic basis
shall be allocated on a pro rata basis between the portion of the period ending
as of the Closing Date and the remainder of the period (by number of days).
10.3 Cooperation on Tax Matters. CCG and each of its Subsidiaries, Xxxxxx,
the Stockholder Representatives and the Stockholders shall cooperate fully, as
and to the extent reasonably requested in writing by any other party, and each
at its own expense, in connection with the preparation of the filing of any Tax
Returns (including any amended returns and claims for refund) and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation shall
include the retention and (upon the other party's written request) the provision
of records and information which are reasonably relevant to any such Tax Return,
audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. CCG and each of its Subsidiaries, the
Stockholder Representatives and the Stockholders agree (A) to retain all books
and records with respect to Tax matters pertinent to CCG or any of its
Subsidiaries relating to any taxable period beginning before the Closing Date
until the seventh anniversary of the Closing Date (and such longer period as
reasonably requested in writing), and (B) to give the other party reasonable
written notice prior to transferring, destroying or discarding any such books
and records and, in such event, if the other party so requests, to allow the
other party to take possession of such books and records. Nothing contained or
implied herein shall be construed to require any Person unreasonably to provide
any document, or to determine any information, not then in its possession or the
possession of its agents in response to a request under this Section 10.3.
10.4 Reorganization. From and after the Effective Time, except for the
transactions contemplated or permitted herein, none of the Parties shall
knowingly take any action or fail to take any action that would cause the
disqualification of the Merger as a reorganization within the meaning of
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code.
41
ARTICLE 11
INDEMNIFICATION
11.1 Indemnification of Xxxxxx. Subject to Section 11.5 and Section 11.6,
Xxxxxx and the Surviving Corporation, and each of their respective officers,
directors, employees, agents and advisors (collectively, "Xxxxxx Indemnified
Parties"), shall be entitled to indemnification from the Escrow Deposit for any
Xxxxxx Indemnity Claims arising under the terms and conditions of this
Agreement. For purposes of this Agreement, the term "Xxxxxx Indemnity Claim"
shall mean (i) any loss, damage, deficiency, claim, liability, obligation, suit,
action (including any tax audit, examination or other proceeding), fee, cost or
expense of any nature whatsoever (including, without limitation, all reasonable
fees and disbursements of counsel) (collectively, "Losses") incurred or suffered
by any Xxxxxx Indemnified Party and arising out of or resulting from (x) any
breach of any representation and warranty of the Stockholders or CCG which is
contained in this Agreement or any Schedule, Exhibit, agreement or certificate
delivered pursuant hereto (provided that for purposes of indemnification
pursuant to this Section, any breach of any representation or warranty shall be
deemed not to contain, and shall be determined without regard to, any
qualification related to materiality, "Material Adverse Affect" or knowledge
contained in such representation or warranty) or (y) any breach or
non-fulfillment of, or any failure to perform, any of the covenants, agreements
or undertakings of the Stockholders or CCG which are contained in or made
pursuant to this Agreement or any Schedule, Exhibit, agreement or certificate
delivered pursuant hereto; (ii) any Excess Transaction Expenses; (iii) any Taxes
of CCG or any of its Subsidiaries relating to or arising from periods (or
portions thereof) ending on or prior to the Most Recent Fiscal Year End (except
to the extent accruals for such Taxes were reflected in the Financial
Statements); (iv) any liability of CCG or any of its Subsidiaries under Treasury
Regulations ss. 1.1502-6 or any similar provision of state, local or foreign law
as a result of such company being a member of any Affiliated Group (other than
CCG and its Subsidiaries) at any time on or prior to the Closing Date (except to
the extent accruals for such liability were reflected on their books or in the
Financial Statements); (v) any Affiliate Obligations not satisfied in full on or
before August 31, 1999; and (vi) all interest, penalties and costs and expenses
arising out of or related to any indemnification made under this Section 11.1.
NO STOCKHOLDER SHALL HAVE ANY LIABILITY TO XXXXXX OR ANY XXXXXX INDEMNIFIED
PARTY FOR INDEMNIFICATION OR OTHERWISE PURSUANT TO THIS AGREEMENT, EXCEPT AS
PROVIDED IN THIS ARTICLE 11 (AND THEN ONLY TO THE EXTENT OF THE ESCROW DEPOSIT)
OR AS PROVIDED IN ANY AGREEMENT EXECUTED BY SAID STOCKHOLDER AND DELIVERED IN
CONNECTION THEREWITH.
11.2 Indemnity Obligations of Xxxxxx. Xxxxxx and the Surviving Corporation
hereby jointly and severally agree to indemnify and hold CCG, each of the
Stockholders, and each of their respective officers, directors, employees,
agents and advisors (collectively "CCG
42
Indemnified Parties"), harmless from, and to reimburse CCG Indemnified Parties
for, any CCG Indemnity Claims arising under the terms and conditions of this
Agreement. For purposes of this Agreement, the term "CCG Indemnity Claim" shall
mean any Losses incurred or suffered by the any CCG Indemnified Party and
arising out of or resulting from (i) any breach of any representation and
warranty of Acquisition and Xxxxxx which is contained in this Agreement or any
Schedule, Exhibit or certificate delivered pursuant thereto; (ii) any breach or
non-fulfillment of, or failure to perform, any of the covenants, agreements or
undertakings of Acquisition or Xxxxxx which are contained in or made pursuant to
the terms and conditions of this Agreement; and (iii) all interest, penalties,
costs and expenses arising out of or related to any indemnification made under
this Section 11.2.
11.3 Notification of Claims. Subject to the provisions of Sections 11.4
and 11.5, in the event of the occurrence of an event which any party asserts
constitutes a Claim, the party asserting such claim (such party hereinafter
referred to as the "indemnified party") shall provide prompt notice of such
event to the Stockholder Representatives (in the case of a Xxxxxx Indemnity
Claim) or Xxxxxx (in the case of a CCG Indemnity Claim) (such party hereinafter
referred to as the "indemnifying party") and shall otherwise make available to
the indemnifying party all relevant information which is material to the Claim
and which is in the possession of the indemnified party. An indemnified party's
failure to give timely notice or to furnish the indemnifying party with any
relevant data and documents in connection with any Third-Party Claim (as defined
below) shall not constitute a defense (in part or in whole) to any claim for
indemnification by such party, except and only to the extent that such failure
shall result in any material prejudice to the indemnifying party. If such event
involves the claim of any third party (a "Third-Party Claim") (other than in
respect of any Tax for any Straddle Period or any Xxxxxx Indemnity Claim for
Taxes with respect to a period ending after the Closing Date), and, so long as
the indemnifying party has acknowledged its liability for such indemnification
hereunder, such party may elect, at such party's sole expense, (without
prejudice to the right of the indemnified party to fully participate at its own
expense through counsel of its own choosing) to assume control of the defense,
settlement, adjustment or compromise of any Third-Party Claim, with counsel
reasonably acceptable to the indemnified parties, insofar as such claim relates
to a Xxxxxx Indemnity Claim or a CCG Indemnity Claim (subject to the limitations
specified in Section 11.5), if the indemnifying party gives written notice of
its intention to do so no later than thirty (30) days following notice thereof
by an indemnified party or such shorter time period as required so that the
interests of the indemnified parties would not be materially prejudiced as a
result of the failure to have received such notice; provided that (i) such
indemnifying party shall obtain the consent of all indemnified parties (which
consent shall not be unreasonably withheld or delayed) before entering into any
settlement, adjustment or compromise of such claims, or ceasing to defend
against such claims, if as a result thereof, or pursuant thereto, there would be
imposed on an indemnified party any material liability or obligation not covered
by the indemnity obligations of the indemnifying parties under this Agreement
(including, without
43
limitation, any injunctive relief or other remedy) and (ii) if the indemnified
party shall have reasonably concluded that separate counsel is required because
a conflict of interest would otherwise exist, the indemnified party shall have
the right to select separate counsel to participate in the defense of such
action on its behalf, at the expense of the indemnified party. If the
indemnifying party does not so choose to assume control of the defense,
settlement, adjustment or compromise of any such Third-Party Claim for which any
indemnified party would be entitled to indemnification hereunder, then the
indemnifying party shall have the right to elect to join in the defense,
settlement, adjustment or compromise of any such Third-Party Claim, and to
employ counsel to assist such indemnifying party in connection with the handling
of such claim, at the sole expense of the indemnifying party, and no such claim
shall be settled, adjusted or compromised, or the defense thereof terminated by
the indemnified party, without the prior consent of the indemnifying party
(which consent shall not be unreasonably withheld or delayed) unless and until
the indemnifying party shall have failed, after the lapse of a reasonable period
of time, but in no event more than 30 days after written notice to it of the
Third-Party Claim, to join in the defense, settlement, adjustment or compromise
of the same. In connection with any Third-Party Claim, the indemnified party, or
the indemnifying party if it has assumed the defense of such claim pursuant to
the this Section, shall diligently pursue the defense of such Third-Party Claim.
In the case of any Third-Party Claim in respect of any Tax for any Straddle
Period, Xxxxxx shall obtain the consent of the Stockholder Representatives
(which consent shall not be unreasonably withheld or delayed) before entering
into any settlement, adjustment or compromise of such claims, or ceasing to
defend against such claims, if such action or omission adversely affects the
liability of any CCG Indemnified Party or the Escrow Deposit for Taxes in
respect of such Straddle Period.
11.4 Survival. All representations and warranties, and, except as
otherwise provided in this Agreement, all covenants and agreements of the
Parties contained in or made pursuant to this Agreement, and the rights of the
Parties to seek indemnification with respect thereto, shall survive the Closing
Date. Such representations and warranties, and the rights of the Parties to seek
indemnification with respect thereto, shall expire, except with respect to
claims asserted prior to and pending at the time of such expiration, on the
earlier of (i) the first anniversary of the Closing Date or (ii) with respect
only to those matters that were discovered, or that normally and usually would
be discovered in an audit of the consolidated financial statements of CCG and
its Subsidiaries, following the release and delivery to the Board of Directors
of Xxxxxx of the final audit opinion covering Xxxxxx'x consolidated financial
statements for the year ended December 31, 1998; provided, however, that if a
notice is given in accordance with the Escrow Agreement before expiration of the
applicable representation or warranty, then notwithstanding the expiration
thereof any claim based on such representation or warranty shall survive until,
but only for purposes of, the resolution of such claim.
44
11.5 Limitations. (a) Notwithstanding the foregoing, any Xxxxxx Indemnity
Claim pursuant to Section 11.1(i) (other than in respect of any Xxxxxx Indemnity
Claim arising out of, relating to or otherwise in respect of the representations
and warranties contained in Section 6.2 hereof) or CCG Indemnity Claim pursuant
to Section 11.2(i) shall be recoverable only in the event that the accumulated
amount of such Xxxxxx Indemnity Claims pursuant to Section 11.1(i) or CCG
Indemnity Claims pursuant to Section 11.2(i), as the case may be, shall exceed
$500,000 in the aggregate (and shall be recoverable only for amounts in excess
of such $500,000 amount). Notwithstanding anything in this Article 11 to the
contrary, (x) CCG Indemnified Parties shall not be entitled to indemnification
for any CCG Indemnity Claims pursuant to Section 11.2 for any amounts, in the
aggregate, in excess of the Deemed Escrow Value, (y) the Xxxxxx Indemnified
Parties' exclusive remedy for indemnification for any Xxxxxx Indemnity Claims
pursuant to Section 11.1 shall be for claims against and satisfaction from the
Escrow Deposits in accordance with the terms of the Escrow Agreement and (z) no
Losses shall be recoverable by any Xxxxxx Indemnified Party or CCG Indemnified
Party pursuant to the provisions of this Article 11, and no claim therefor shall
be asserted for any purpose whatsoever hereunder, with respect to any individual
item of Loss except to the extent the amount thereof equals at least $5,000.
(b) The amount of any Loss otherwise recoverable under this Article 11 by
the Xxxxxx Indemnified Parties or CCG Indemnified Parties, as the case may be,
shall be (i) reduced by any amounts recovered by the indemnified party under
insurance policies (net of any costs incurred in connection with the collection
thereof) (it being understood that none of the Parties shall have any obligation
to, but agree to use its commercially reasonable efforts to, timely pursue all
reasonable remedies against applicable insurers) and (ii) (A) increased to take
account of any net Tax cost incurred by the indemnified party by reason of the
receipt of any indemnity payment (grossed-up for such increase) and (B) reduced
to take account of any net Tax benefit realized by the indemnified party in
respect of the taxable year in which such Loss is incurred or paid and, with
respect to a Tax benefit arising in a year subsequent to the year in which the
Loss is paid or incurred, the indemnified party shall pay to the indemnifying
party the amount of such Tax benefit at the incurrence or payment of any such
Loss. In computing the amount of any such Tax cost or Tax benefit, the
indemnified party shall be deemed to recognize all other items of income, gain,
loss, deduction or credit before recognizing any item arising from the receipt
of any indemnity payment hereunder or the incurrence or payment of any
indemnified loss, liability, claim, damage or expense.
11.6 Escrow. (a) On the Closing Date, Xxxxxx shall deposit into escrow,
with the Escrow Agent named in the Escrow Agreement, five percent (5%) of the
Xxxxxx Common Shares issuable to the Management Stockholders in connection with
the Merger (such deposit being referred to as the "Escrow Deposit"). All Xxxxxx
Indemnity Claims shall be satisfied out of the Xxxxxx Common Shares held in the
Escrow Deposit, as further provided under the terms of the Escrow Agreement. For
purposes hereof, all Xxxxxx Common Shares returned to
45
Xxxxxx in settlement of any Xxxxxx Indemnity Claims under the Escrow Agreement
shall be valued at the Average Closing Price.
(b) For purposes of this Agreement, the term "Deemed Escrow Value" shall
mean the value of the Xxxxxx Common Shares to be deposited by Xxxxxx into the
Escrow Deposit, determined by multiplying such number of Xxxxxx Common Shares by
the Average Closing Price. With respect to any Xxxxxx Common Shares to be
returned to Xxxxxx in settlement of Xxxxxx Indemnity Claims pursuant to this
Section 11.6, any dividends previously paid in respect of such returned Xxxxxx
Common Shares (whether paid in cash, Xxxxxx Common Shares or other property)
shall also be returned to Xxxxxx, provided that the value of such dividends
shall not be taken into account for purposes of determining the value of such
returned Xxxxxx Common Shares, as contemplated under paragraph 47g of Accounting
Principles Board Opinion No. 16 (Interpretation No. 121).
11.7 Xxxxxx Payment of CCG Indemnity Claims. Notwithstanding anything to
the contrary herein, any liability of Acquisition and Xxxxxx under this
Agreement for CCG Indemnity Claims shall be satisfied solely through the
issuance of additional Xxxxxx Common Shares, such additional Xxxxxx Common
Shares to be valued at the Average Closing Price.
ARTICLE 12
STOCKHOLDER REPRESENTATIVES
12.1 Authorization of Stockholder Representatives. (a) Upon adoption of
this Agreement by the board of directors of CCG and stockholder approval
pursuant to the Certificate of Incorporation and By-Laws of CCG and the
applicable provisions of the Delaware GCL, Xxxxx X. Xxxxxxxxxx and Xxxxx Xxxx,
acting jointly, are hereby appointed, authorized and empowered to act as the
stockholder representatives (the "Stockholder Representatives"), for the benefit
of the Stockholders and any other holders of the Capital Stock of CCG, in
connection with and to facilitate the consummation of the transactions
contemplated hereby and by the Shelf Registration Rights Agreement, the
Registration Rights Agreement and the Escrow Agreement, as the exclusive agents
and attorneys-in-fact to act on behalf each Stockholder and any other holder of
capital stock of CCG with respect to any and all CCG Indemnity Claims and any
and all Xxxxxx Indemnity Claims arising under this Agreement and in connection
with the performance of the various actions required or permitted to be
performed on behalf of the Stockholders any other holder of capital stock of CCG
under the Escrow Agreement, for the purposes and with the powers and authority
hereinafter set forth in this Section 12.1 and in the Escrow Agreement, which
shall include the power and authority:
46
(i) to execute and deliver the Escrow Agreement in substantially the
form annexed to this Agreement as Exhibit G hereto (with such modifications or
changes therein as to which the Stockholder Representatives, in their sole
discretion, shall have consented) and to agree to such amendments or
modifications thereto as the Stockholder Representatives, in their sole
discretion, determines to be desirable;
(ii) to execute and deliver such waivers and consents in connection
with this Agreement and the Escrow Agreement and the consummation of the
transactions contemplated hereby and thereby as the Stockholder Representatives,
in their sole discretion, may deem necessary or desirable;
(iii) to collect and receive all moneys and other proceeds and
property payable to the Stockholders pursuant to the terms of this Agreement and
the Escrow Agreement, including, without limitation, the Escrow Deposits and any
portion of or earnings accrued on the Escrow Deposits which are distributable to
Stockholders, subject to the Escrow Agreement, and, subject to any applicable
withholding and retention laws, to disburse and pay the same to each of the
Stockholders to the extent of, and in accordance with, the respective interests
of the Stockholders in the Share Consideration (the "Percentage Interests");
(iv) as Stockholder Representatives, to enforce and protect the
rights and interests of the Stockholders (including the Stockholder
Representatives, in their respective capacities as Stockholders) and to enforce
and protect the rights and interests of the Stockholder Representatives arising
out of or under or in any manner relating to this Agreement and the Escrow
Agreement, and each other agreement, document, instrument or certificate
referred to herein or therein or the transactions provided for herein or therein
(including, without limitation, in connection with any and all claims for
indemnification brought by any CCG Indemnified Party), and to take any and all
actions which the Stockholder Representatives believe are necessary or
appropriate under the Escrow Agreement and this Agreement for and on behalf of
the Stockholders, including, without limitation, asserting CCG Indemnity Claims
against Xxxxxx, defending all Xxxxxx Indemnity Claims, consenting to,
compromising or settling all CCG Indemnity Claims and Xxxxxx Indemnity Claims,
conducting negotiations with Xxxxxx and its representatives regarding such
claims, and engaging counsel, accountants or other representatives in connection
with the foregoing matters, and, in connection therewith, to (i) assert any
claim or institute any action, proceeding or investigation; (ii) investigate,
defend, contest or litigate any claim, action, proceeding or investigation
initiated by Xxxxxx, the Surviving Corporation or any Person, or by any federal,
state or local Governmental Authority against the Stockholder Representatives
and/or any of the Stockholders and/or the Escrow Deposits, and receive process
on behalf of any or all Stockholders in any such claim, action, proceeding or
investigation and compromise or settle on such terms as the Stockholder
Representatives shall determine to be appropriate, and give receipts, releases
and discharges with respect to, any such claim, action, proceeding
47
or investigation; (iii) file any proofs of debt, claims and petitions as the
Stockholder Representatives may deem advisable or necessary; (iv) settle or
compromise any claims asserted under the Escrow Agreement; and (v) file and
prosecute appeals from any decision, judgment or award rendered in any such
action, proceeding or investigation, it being understood that the Stockholder
Representatives shall not have any obligation to take any such actions, and
shall not have any liability for any failure to take any such actions;
(v) to refrain from enforcing any right of the Stockholders or any
of them and/or the Stockholder Representatives arising out of or under or in any
manner relating to this Agreement, the Escrow Agreement or any other agreement,
instrument or document in connection with the foregoing; provided, however, that
no such failure to act on the part of the Stockholder Representatives, except as
otherwise provided in the Escrow Agreement, shall be deemed a waiver of any such
right or interest by the Stockholder Representatives or by the Stockholders
unless such waiver is in writing signed by the waiving party or by the
Stockholder Representatives; and
(vi) to make, execute, acknowledge and deliver all such other
agreement, guarantees, orders, receipts, endorsements, notices, requests,
instructions, certificates, stock powers, letters and other writings, and, in
general, to do any and all things and to take any and all action that the
Stockholder Representatives, in their sole and absolute discretion, may consider
necessary or proper or convenient in connection with or to carry out the
transactions contemplated by this Agreement, the Escrow Agreement, and all other
agreements, documents or instruments referred to herein or therein or executed
in connection herewith and therewith.
(b) The Stockholder Representatives shall not be entitled to any fee,
commission or other compensation for the performance of its services hereunder,
but shall be entitled to the payment of all its expenses incurred as the
Stockholder Representatives. In connection with this Agreement, the Escrow
Agreement and any instrument, agreement or document relating hereto or thereto,
and in exercising or failing to exercise all or any of the powers conferred upon
the Stockholder Representatives hereunder (A) the Stockholder Representatives
shall incur no responsibility whatsoever to any Stockholders by reason of any
error in judgment or other act or omission performed or omitted hereunder or in
connection with the Escrow Agreement or any such other agreement, instrument or
document, excepting only responsibility for any act or failure to act which
represents willful misconduct, and (B) the Stockholder Representatives shall be
entitled to rely on the advice of counsel, public accountants or other
independent experts experienced in the matter at issue, and any error in
judgment or other act or omission of the Stockholder Representatives pursuant to
such advice shall in no event subject the Stockholder Representatives to
liability to any Stockholders. Each Stockholder shall indemnify, pro rata based
upon each Stockholder's Percentage Interest, the Stockholder Representatives
against all losses, damages, liabilities, claims, obligations, costs and
expenses, including reasonable attorneys', accountants' and other experts' fees
and
48
the amount of any judgment against them, of any nature whatsoever (including,
but not limited to, any and all expense whatsoever reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened or any claims whatsoever), arising out of or in connection with any
claim, investigation, challenge, action or proceeding or in connection with any
appeal thereof, relating to the acts or omissions of the Stockholder
Representatives hereunder, or under the Escrow Agreement or otherwise. The
foregoing indemnification shall not be deemed exclusive of any other right to
which the Stockholder Representatives may be entitled apart from the provisions
hereof. The foregoing indemnification shall not apply in the event of any action
or proceeding which finally adjudicates the liability of the Stockholder
Representatives hereunder for his or her gross negligence or willful misconduct.
In the event of any indemnification hereunder, upon written notice from
Stockholder Representatives to the Stockholders as to the existence of a
deficiency toward the payment of any such indemnification amount, each
Stockholder shall promptly deliver to the Stockholder Representatives full
payment of his or her ratable share of the amount of such deficiency, in
accordance with such Stockholder's Percentage Interest.
(c) All of the indemnities, immunities and powers granted to the
Stockholder Representatives under this Agreement shall survive the Closing
and/or any termination of this Agreement and/or the Merger Agreement and/or the
Escrow Agreement.
(d) Notwithstanding anything herein to the contrary, each Stockholder
hereby acknowledges that none of Xxxxxx, Acquisition nor CCG shall have any
responsibility or obligation whatsoever to any Stockholder or to any other party
with respect to or arising out of any actions taken or any inaction by the
Stockholder Representatives and nothing contained herein shall limit or affect
in any manner whatsoever the responsibilities or obligations of the Stockholder
Representatives to, howsoever arising, release the Stockholder Representatives
from any liabilities with respect to, Xxxxxx, Acquisition or CCG.
(e) Xxxxxx shall have the right to rely upon all actions taken or omitted
to be taken by the Stockholder Representatives pursuant to this Agreement, all
of which actions or omissions shall be legally binding upon the Stockholders.
(f) The grant of authority provided for herein (i) is coupled with an
interest and shall be irrevocable and survive the death, incompetency,
bankruptcy or liquidation of any Stockholder; and (ii) shall survive the
delivery of an assignment by a Stockholder of the whole or any fraction of his
or her interest hereunder, including his or her Percentage Interest.
(g) Any action taken by the Stockholder Representatives hereunder
evidenced by a written instrument shall only be effective if such instrument is
executed by both of the Stockholder Representatives (or their designated
representatives).
49
ARTICLE 13
MISCELLANEOUS
13.1 Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of Xxxxxx
and the Stockholder Representatives; provided, however, that Xxxxxx may make any
public disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities (in which
case Xxxxxx will use its commercially reasonable efforts to advise the other
Parties prior to making the disclosure) and, upon execution of this Agreement,
Xxxxxx may issue a public announcement, provided that Xxxxxx shall furnish a
draft of the announcement to CCG reasonably in advance of its release and
provide CCG an opportunity to consult with Xxxxxx with respect to the contents
thereof.
13.2 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
13.3 Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties with respect to the
subject matter hereof and supersedes any prior understandings, agreements, or
representations by or among the Parties, written or oral, to the extent they
related in any way to the subject matter hereof.
13.4 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of his
rights, interests, or obligations hereunder without the prior written approval
of Xxxxxx and the Stockholder Representatives; provided, however, that Xxxxxx
may (i) assign any or all of its rights and interests hereunder to one or more
of its Affiliates and (ii) designate one or more of its Affiliates to perform
its obligations hereunder (in any or all of which cases Xxxxxx nonetheless shall
remain responsible for the performance of all of its obligations hereunder).
13.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
13.6 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
50
13.7 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to CCG:
000 X. Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx
Attn: Xxxxx X. Xxxxxxxxxx
Telecopy: (000) 000-0000
With copies to:
Brentwood Associates
11150 Santa Xxxxxx Blvd. (Suite 1200)
Xxx Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxx
Telecopy: (000) 000-0000
Xxxxxx & Xxxxxxx
000 Xxxx 0xx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxxxx Xxxxxxxx
Telecopy: (000) 000-0000
Winthrop, Stimson, Xxxxxx & Xxxxxxx
000 X. Xxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Attn: Xxxxx Xxxxxx, Esq.
Telecopy: (000) 000-0000
51
If to Xxxxxx and Acquisition:
A. Xxxxxxx Xxxxxxx
Chief Financial Officer
Xxxxxx Communications, Inc.
Two Democracy Center
0000 Xxxxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
With a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
13.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
13.9 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
Xxxxxx, CCG and the Stockholder Representatives. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence. No such waiver given, or amendment signed, by CCG shall be effective
unless the same is accompanied by a resolution of the Board of Directors
approving such waiver or execution, as the case may be, by a Supermajority (as
defined in the
52
Certificate of Incorporation of CCG), which resolution shall be certified by the
Secretary of CCG.
13.10 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
13.11 Expenses. Each of the Parties will bear his, her or its own costs
and expenses (including legal fees and expenses) incurred in connection with the
preparation, negotiation, execution and delivery of this Agreement and the
transactions contemplated hereby ("Transaction Expenses"); provided, however,
that any Transaction Expenses incurred by CCG which exceed $600,000 (such
excess, the "Excess Transaction Expenses") shall be borne pursuant to Article
11. CCG has not borne and will not bear any of the Stockholders' costs and
expenses (including any of their legal fees and expenses) in connection with
this Agreement or any of the transactions contemplated hereby.
13.12 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. Whenever the context
may require, any pronouns used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular forms of nouns and
pronouns shall include the plural, and vice versa. The Parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance. If any Party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.
13.13 Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
13.14 Specific Performance. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an
53
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the United States or
any state thereof having jurisdiction over the Parties and the matter (subject
to the provisions set forth in Section 13.15 below), in addition to any other
remedy to which they may be entitled, at law or in equity.
13.15 Submission to Jurisdiction; Mediation. (a) Each of the Parties
submits to the jurisdiction of any federal court sitting in the State of New
York in any action or proceeding arising out of or relating to this Agreement
and agrees that all claims in respect of the action or proceeding may be heard
and determined in any such court.
(b) In connection with any dispute among the Parties arising out of or in
connection with this Agreement or any other agreement, instrument or other
document delivered pursuant to this Agreement, or any alleged breach hereof or
thereof, any Party may elect to utilize a non-binding resolution procedure
whereby each party presents its case at a hearing held in New York, New York
before a neutral advisor, who shall be selected from the CPR Institute For
Dispute Resolution. The Parties shall bear their respective costs incurred in
connection with this procedure including the fees and expenses of the neutral
advisor. Prior to the hearing, the Parties and the neutral advisor shall use
their reasonable best efforts to agree on a set of ground rules for the hearing.
At the closing of the hearing, the senior executive officers of the respective
Parties shall meet and attempt to resolve the matter. Only after the foregoing
procedure has been exhausted shall any Party resort to litigation as the final
adjudication of the dispute.
54
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
XXXXXX COMMUNICATIONS, INC.
By: /s/ A. Xxxxxxx Xxxxxxx
---------------------------------------------
Name: A. Xxxxxxx Xxxxxxx
Title: Chief Financial Officer
XXXXXX XX ACQUISITION, INC.
By: /s/ A. Xxxxxxx Xxxxxxx
---------------------------------------------
Name: A. Xxxxxxx Xxxxxxx
Title: Chief Financial Officer
CLINICAL COMMUNICATIONS GROUP INC.
By: /s/ Xxxxx Xxxxxxxxxx
---------------------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: President and Chief Executive Officer
55
