<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) April 6, 2000
-------------
CTI GROUP (HOLDINGS) INC.
-------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware 000-10560 51-0308583
- ------------------------- ----------------------- -------------------
(State or Other Juris- (Commission File Number) (IRS Employer Identi-
diction of Incorporation) fication No.)
2550 Eisenhower Avenue, Norristown, PA 19403
- -------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 610-666-1700
------------
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
------------------------------------
<PAGE>
Item 5. Other Events.
On April 6, 2000, CTI Group (Holdings) Inc. ("CTIG") announced a
proposed merger with Celltech Information Systems, Inc. ("Celltech"). A copy of
CTIG's press release concerning the proposed merger dated April 6, 2000, is
attached hereto as Exhibit A. A copy of the Agreement and Plan of Merger by and
among CTIG, CTI Billing Solutions Inc., Celltech, David A. Warren, Frank S.
Scarpa, Valerie S. Hart and Richard J. Donnelly, dated as of April 5, 2000, is
attached hereto as Exhibit B.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CTI Group (Holdings) Inc.
(Registrant)
Date: April 10, 2000 By: /s/ Anthony P. Johns
----------------------
Name: Anthony P. Johns
Title: President and Chief Executive Officer
<PAGE>
EXHIBIT INDEX
Exhibit
- -------
A. Press Release dated April 6, 2000.
B. Agreement and Plan of Merger by and between CTIG, CTI Billing Solutions
Inc., Celltech, David A. Warren, Frank S. Scarpa, Valerie S. Hart and
Richard J. Donnelly, dated as of April 5, 2000.
<PAGE>
Exhibit "A"
NEWS RELEASE APRIL 6, 2000
CTIG TO ACQUIRE CELLTECH FOR $5.25 MILLION
Three way closing to bring a new Billing and Customer Care powerhouse
to the convergent telecommunications marketplace.
Valley Forge, PA, CTI Group (Holdings) Inc. (OTC: CTIG) a leading provider of
software and services for the management of telecommunications systems,
announced today the signing of a definitive merger agreement with Texas-based
Celltech Information Systems Inc. (Celltech). This action, in combination with
the signing of a merger agreement with Centillion Data Systems of Indianapolis,
IN (Centillion), announced on February 3, 2000, will bring together three
companies addressing the processing and billing analysis needs of the
ever-changing telecommunications marketplace. The merger is expected to close by
the end of the 2nd quarter, subject to shareholder approval.
Founded in 1983, Celltech serves the needs of multi-service telecommunications
providers. Celltech's billing engine provides rating and bill processing
functions for wireless, PCS, Internet, long distance, local service and paging.
These convergent services can be processed and then presented on one convenient
billing statement.
Mr. David Warren, President of Celltech, said, "Since our roots are in the
wireless billing market, we are able to fully understand and share CTIG's vision
for convergent billing opportunities. Our combined strength will increase our
ability to respond to the needs of our base of customers."
CTIG will acquire Celltech with a combination of cash and stock for total
consideration valued at $5,251,977. The purchase will include $262,599 in cash;
the balance of $4,989,378 will be satisfied by the issuance of 1,663,126 newly
registered shares of common stock at an assumed value of $3.00 per share. The
shares, to be issued at closing, may be adjusted by the effect of a maximum 25%
ceiling and floor collar dependent on the average stock price during the
twenty-day trading period prior to the closing. In no event will Celltech's
shareholders receive fewer than 1,330,501 or more than 2,217,501 shares.
Approximately 47% of these common shares will be held in escrow for up to three
years pending the attainment of certain business goals to be accomplished by
Celltech.
Celltech generated EBIDTA (earnings before interest, taxes, depreciation and
amortization) of approximately $360,000 on net revenues of $6.4 million for its
fiscal year ended December 31, 1999. The EBITDA was achieved after expensing
significant development costs and before one-time charges for the period.
Mr. Tony Johns, Chairman and CEO of CTIG details how the merger would enable
service providers to bring increased service and cost savings to their
customers. "Celltech's core capabilities in wireless billing are a key part of
our joint vision to offer converged telecommunications billing and customer care
solutions to the market. Convergence of phone services, cable TV, Internet
content and wireless service is rapidly transforming the face of the media
landscape. Our combined software and services are better positioned to support
these dramatic changes."
Expanding on the market opportunity, Mr. Johns went on to say, "Software billing
products and solutions historically have been compartmentalized, having been
designed for either telecom, wireless, cable or internet use. With the evolution
of each of these markets, providers are responding to competition by
diversification into closely related industries. We recognize that in order to
retain and expand the high value we offer to customers, we must deliver a
comprehensive product suite, utilize the latest data mining techniques, offer
unified electronic bill presentation and analysis and provide security of
customer payment. We believe true billing and customer care will result from a
comprehensive service offering."
"The market for Billing and Customer Care solutions looks promising. Some
projections show external spending in this market could double to an estimated
$28 billion by 2003," Mr. Johns added. "Our energy will be directed toward
firmly positioning the business within this developing and dynamic market. We
will strive for explosive revenue growth through technology acquisition,
partnering and internal development in order to enhance long-term shareholder
value. Over the past five years, these three companies have collectively
invested as much as $50 million into their portfolio of software products and,
as a result, have attracted high profile business clients. This three-way
merger provides the building blocks to have a core infrastructure in place to
provide the development and support needed to lead the convergent Billing and
Customer Care market."
<PAGE>
Commenting on the acquisition, Mr. Harold Garrison, Chairman of Centillion,
said, "This transaction reflects our objective of growing by strategic
acquisition and business alliance. In order to enhance shareholder value, we
shall seize every opportunity to accelerate our plan to serve the evolving
convergent billing market."
Centillion shareholders are fully supportive of this strategic acquisition and
have committed an additional $1,500,000 to the Group (CTIG) at the closing of
this merger (for an additional 666,666 shares of class A Common Stock and a
666,666 reduction in shares of Class B Common Stock) in accordance with the
terms of its definitive merger agreement with CTIG. The addition of the Celltech
acquisition to the CTIG / Centillion merger will now necessitate a three-way
merger closing. The anticipated target closing date, of June 15th, 2000, should
not move by more than a week or two. As a further result of this transaction,
CTIG will apply for re-listing of its common stock on the NASDAQ National
Market, which will be contingent on the successful closing of this merger
combination.
CTIG develops, markets, and supports telemanagement solutions for corporate
users of telecommunications services and customer billing solutions. Centillion
is a growth-oriented international software development and information services
company. Celltech provides software to facilitate the complicated rating, taxing
and processing associated with billing wireless and other telecom services. All
three organizations will come together under the CTIG corporate name. The new
CTIG team will work with a collaborative international base of approximately 200
employees.
This release contains forward-looking statements that involve risks and
uncertainties. These statements may differ materially from actual future events
or results. Readers are referred to documents filed by CTIG with the U.S.
Securities and Exchange Commission.
Celltech was advised in this transaction by Peter A. Sokoloff & Co., Investment
Bankers and financial advisory specialists to the Billing and Customer Care and
related industries.
For more information, contact:
Anthony Paul Johns, Chairman & CEO
CTI Group (Holdings) Inc.
Valley Forge, PA 19484
Tel: (610) 666-1700
Fax: (610) 666-7707
Email: [email protected]
-------------------
<PAGE>
Exhibit "B"
AGREEMENT AND PLAN OF MERGER
by and among
CTI GROUP (HOLDINGS) INC.,
CTI BILLING SOLUTIONS INC.,
CELLTECH INFORMATION SYSTEMS, INC.,
DAVID A. WARREN,
FRANK S. SCARPA,
VALERIE S. HART
and
RICHARD J. DONNELLY
Dated as of April 5, 2000
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I - MERGER................................................................................................1
1.1 The Merger...........................................................................................1
1.2 Effective Time.......................................................................................2
1.3 Closing..............................................................................................2
1.4 Certificate of Incorporation and By-Laws of Surviving Corporation....................................2
1.5 Directors and Officers of Surviving Corporation......................................................2
1.6 Further Assurances...................................................................................2
1.7 Effect on Shares of Merger Sub and Company...........................................................3
1.8 .....................................................................................................4
1.9 Exchange Agent.......................................................................................4
1.10 Exchange Procedures..................................................................................4
1.11 Distributions with Respect to Unexchanged Shares.....................................................4
1.12 No Fractional Shares of CTIG Stock...................................................................5
1.13 No Liability.........................................................................................5
1.14 Lost Certificates....................................................................................5
1.15 Stock Transfer Books.................................................................................6
1.16 CTIG Dissenting Shares...............................................................................6
1.17 Escrowed Stock.......................................................................................6
1.18 Special Meeting......................................................................................7
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF COMPANY............................................................8
2.1 Organization.........................................................................................8
2.2 Capitalization.......................................................................................8
2.3 Authority............................................................................................9
2.4 No Violations; Consents and Approvals................................................................9
2.5 Financial Statements................................................................................10
2.6 Absence of Certain Changes..........................................................................10
2.7 Legal Proceedings...................................................................................11
2.8 Compliance with Laws and Agreements.................................................................11
2.9 SEC Filing Information..............................................................................12
2.10 State Antitakeover Statutes.........................................................................12
2.11 Broker's Fees.......................................................................................12
2.12 Environmental Matters...............................................................................12
2.13 Intellectual Property Rights........................................................................13
2.14 Taxes...............................................................................................14
2.15 Employee Benefit Plans..............................................................................14
2.16 Insurance...........................................................................................15
2.17 Contracts...........................................................................................16
2.18 Properties..........................................................................................17
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C> <C>
2.19 Employees and Independent Contractors...............................................................17
2.20 Year 2000...........................................................................................18
2.21 Certain Interests...................................................................................18
2.22 Customers and Suppliers.............................................................................18
2.23 Accounts Receivable.................................................................................18
2.24 America One Revenue.................................................................................18
2.25 Reorganization Treatment............................................................................18
2.26 Disclosure..........................................................................................19
ARTICLE IIA - REPRESENTATIONS AND WARRANTIES OF CELLTECH
STOCKHOLDERS................................................................................................19
2A.1 Ownership of Celltech Common Stock..................................................................19
2A.2 Agreement Not in Breach of Other Instruments Affecting Celltech
Stockholders........................................................................................19
2A.3 Valid and Binding Agreement. .......................................................................19
2A.4 No Claims Against Celltech..........................................................................19
2A.5 Further Assurances..................................................................................19
2A.6 Shareholder Meeting.................................................................................19
2A.7 Reorganization Treatment............................................................................20
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF CTIG
AND MERGER SUB..............................................................................................20
3.1 Organization........................................................................................20
3.2 Authority...........................................................................................20
3.3 No Violations; Consents and Approvals...............................................................20
3.4 Legal Proceedings...................................................................................21
3.5 Proxy Statement.....................................................................................21
3.6 Broker's Fees.......................................................................................21
3.7 Capitalization of Merger Sub........................................................................21
3.8 CTIG Disclosures....................................................................................21
3.9 Merger Stock........................................................................................22
3.10 Reorganization Treatment............................................................................22
ARTICLE IV - COVENANTS ..........................................................................................22
4.1 Conduct of Business of Celltech.....................................................................22
4.2 No Solicitation by Celltech.........................................................................24
4.3 Access to Information...............................................................................25
4.4 CTIG Proxy Statement and Special Meeting............................................................25
4.5 Preparation of Form S-4; Stockholders Meeting.......................................................26
4.6 Reasonable Best Efforts; Other Actions..............................................................26
4.7 Public Announcements................................................................................27
4.8 Notification of Certain Matters.....................................................................27
4.9 Expenses............................................................................................27
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE V - CONDITIONS TO THE OBLIGATIONS OF THE PARTIES ........................................................28
5.1 Stockholder Approval................................................................................28
5.2 Consents and Approvals..............................................................................28
5.3 Opinion of Financial Advisor........................................................................28
5.4 Employment Agreement................................................................................28
ARTICLE VI - CONDITIONS TO THE OBLIGATIONS OF CTIG
AND MERGER SUB .............................................................................................28
6.1 Representations and Warranties True.................................................................28
6.2 Performance.........................................................................................29
6.3 Additional Documents................................................................................29
6.4 Certain Proceedings.................................................................................29
6.5 Minimum Balance Sheet Requirements..................................................................29
6.6 Material Adverse Change.............................................................................30
ARTICLE VII - CONDITIONS TO THE OBLIGATIONS OF CELLTECH .........................................................30
7.1 Representations and Warranties True.................................................................30
7.2 Performance.........................................................................................30
7.3 Certificates........................................................................................30
7.4 Certain Proceedings.................................................................................30
7.5 Effectiveness of the Form S-4.......................................................................31
ARTICLE VIII - TERMINATION AND ABANDONMENT.......................................................................31
8.1 Termination by CTIG or Celltech.....................................................................31
8.2 Termination by CTIG.................................................................................31
8.3 Termination by Celltech.............................................................................31
8.4 Procedure for Termination...........................................................................32
8.5 Effect of Termination and Abandonment...............................................................32
ARTICLE IX - INDEMNIFICATION BY PRINCIPAL STOCKHOLDER............................................................32
9.1 Indemnification.....................................................................................32
9.2 Conditions of Indemnification.......................................................................32
9.3 Remedies............................................................................................33
ARTICLE X - DEFINITIONS .........................................................................................33
10.1 Terms Defined in the Agreement......................................................................33
ARTICLE XI - MISCELLANEOUS.......................................................................................35
11.1 Amendment and Modification..........................................................................35
11.2 Waiver of Compliance; Consents......................................................................35
11.3 Survivability; Investigations.......................................................................35
11.4 Reasonable Efforts..................................................................................36
11.5 Notices.............................................................................................36
11.6 Successor and Assigns...............................................................................38
11.7 Governing Law.......................................................................................38
11.8 Counterparts........................................................................................38
11.9 Severability........................................................................................38
11.10 Interpretation......................................................................................38
11.11 Entire Agreement....................................................................................39
11.12 Jurisdiction........................................................................................39
11.13 WAIVER OF JURY TRIAL................................................................................39
11.14 Class A Common Stock................................................................................39
</TABLE>
-iii-
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of April 5, 2000, is by and
among CTI GROUP (HOLDINGS) INC., a Delaware corporation ("CTIG"), CTI BILLING
SOLUTIONS INC., a Delaware corporation ("Merger Sub"), CELLTECH INFORMATION
SYSTEMS, INC., a Delaware corporation ("Celltech"), DAVID A. WARREN, an
individual ("Principal Stockholder"), FRANK S. SCARPA ("Scarpa"), VALERIE S.
HART ("Hart") and RICHARD J. DONNELLY ("Donnelly", and together with Scarpa and
Hart, the "Minority Stockholders"). Celltech and Merger Sub are sometimes
collectively referred to as the "Constituent Corporations." Principal
Stockholder and the Minority Stockholders are sometimes collectively referred to
as the "Celltech Stockholders".
BACKGROUND
----------
The Boards of Directors of CTIG, Merger Sub and Celltech, respectively,
deem it advisable and in their respective best interests and the best interests
of their respective stockholders that CTIG and Celltech combine in order to
advance the long-term business interests of CTIG and Celltech.
The combination of CTIG and Celltech shall be effected by the terms of this
Agreement through the merger (the "Merger") of Celltech with and into Merger
Sub, a wholly-owned subsidiary of CTIG.
The Boards of Directors of CTIG, Merger Sub and Celltech have approved this
Agreement and each of the documents required to be executed in connection with
this Agreement to which it is a party.
The Celltech Stockholders own 100% of the issued and outstanding shares of
Celltech Common Stock, no par value (the "Celltech Common Stock"), and believe
the Merger to be in Celltech's and their own best interests.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants,
representations, warranties and agreements herein contained, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree as
follows:
ARTICLE I
MERGER
1.1 The Merger.
(a) In accordance with the provisions of this Agreement
and the General Corporation Law of the State of Delaware (the "DGCL"), at the
Effective Time (as defined in Section 1.2 hereof), Celltech shall be merged with
and into Merger Sub, and Merger Sub shall be
<PAGE>
the surviving corporation (sometimes called the "Surviving Corporation") and
shall continue its corporate existence under the laws of the State of Delaware.
At the Effective Time the separate existence of Celltech shall cease.
(b) The Merger shall have the effects on Celltech and
Merger Sub as the constituent corporations of the Merger as provided under the
DGCL.
1.2 Effective Time. The Merger shall become effective at the
time of filing of, or at such later time as may be specified in, a Certificate
of Merger, in the form required by and executed in accordance with the DGCL,
with the Secretary of State of the State of Delaware in accordance with the
provisions of Section 251 of the DGCL (the "Certificate of Merger"). The date
and time when the Merger shall become effective is referred to as the "Effective
Time."
1.3 Closing. The closing of the Merger (the "Closing") will
take place at 10:00 a.m., Eastern Standard Time, on the second Business Day (as
defined below) after the satisfaction or (subject to applicable law) waiver of
the conditions (excluding conditions that, by their terms, cannot be satisfied
until the Closing Date) set forth in Articles V, VI and VII (the "Closing
Date"), unless another time or date is agreed to in writing by the parties
hereto. The Closing shall be held at the offices of Klehr, Harrison, Harvey,
Branzburg & Ellers LLP, 260 South Broad Street, Philadelphia, Pennsylvania
19102, unless another place is agreed to in writing by the parties hereto.
"Business Day" shall mean every day of the week excluding Saturdays, Sundays and
Federal holidays.
1.4 Certificate of Incorporation and By-Laws of Surviving
Corporation. The Certificate of Incorporation and By-Laws of Merger Sub shall be
the Certificate of Incorporation and By-Laws of the Surviving Corporation until
thereafter amended as provided by law.
1.5 Directors and Officers of Surviving Corporation.
(a) The number of directors of the Surviving Corporation
shall be as determined pursuant to the By-Laws of the Surviving Corporation. The
directors of Merger Sub shall be the directors of the Surviving Corporation and
will hold office from and after the Effective Time until their respective
successors are duly elected or appointed and qualify in the manner provided in
the Certificate of Incorporation and By-Laws of the Surviving Corporation or as
otherwise provided by law or their earlier resignation or removal.
(b) The officers of the Surviving Corporation shall be
determined by the Board of Directors of the Surviving Corporation immediately
after the Effective Time, and will hold office from and after the Effective Time
until their respective successors are duly appointed and qualify in the manner
provided in the By-Laws of the Surviving Corporation or as otherwise provided by
law or their earlier resignation or removal.
1.6 Further Assurances. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances, or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights,
2
<PAGE>
properties or assets of either of the Constituent Corporations acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out this Agreement, the officers and directors of
the Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf of each of the Constituent Corporations or otherwise, all
such deeds, bills of sale, assignments and assurances and to take and do, in the
name and on behalf of each of the Constituent Corporations or otherwise, all
such other actions and things as may be necessary or desirable to vest, perfect
or confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement and the transactions contemplated hereby.
1.7 Effect on Shares of Merger Sub and Company. At the
Effective Time, by virtue of the Merger, and without any action on the part of
the Celltech Stockholders, all issued and outstanding shares of Celltech Common
Stock (other than shares owned by Celltech) shall be converted into the
following (the "Merger Consideration") to be distributed among the Celltech
Stockholders, pro rata on a per share equivalent basis:
(a) the right to receive an aggregate $262,599 (the
"Merger Cash");
(b) 1,663,126 shares of CTIG Class A Common Stock, par
value .01 per share ("Class A Common Stock") subject to adjustment (the "Merger
Stock"), if any, as follows:
(i) in the event that the Average Market Price Per
Share (as defined below) of the CTIG Class A Common Stock on the Closing Date is
greater than $3.00, to a maximum of $3.75, or below $3.00 to a minimum of $2.25,
then the number of shares of Merger Stock shall be determined by dividing
$4,989,378 by such Average Market Price per Share; provided that in no event
will the Merger Stock be less than 1,330,501 shares nor more than 2,217,501
shares regardless of the Average Market Price per Share of CTIG Class A Common
Stock.
(ii) 52.63158% of the Merger Stock will be delivered
at Closing (the "Closing Stock") to be distributed pursuant to Sections 1.9
through 1.15, and 47.36842% of the Merger Stock (the "Escrowed Stock") will be
delivered to escrow to be held, delivered and/or cancelled in accordance with
Section 1.17.
(iii) For purposes of this Agreement, the "Average
Market Price per Share" of the Class A Common Stock at any date shall mean the
average of the daily last reported sale price per share of the Class A Common
Stock on the NASDAQ National Market System (or if such stock is then listed on
the New York Stock Exchange, on such Exchange) during the most recent 20
consecutive full Business Days before such date, provided that if there was no
reported sale on any such day or days, there shall be substituted the average of
the closing bid and asked quotations on that Market System or Exchange on that
day or days, and provided further that, if the Class A Common Stock is not
listed on that Market System or Exchange on any such day or days, there shall be
substituted the comparable sale price or average of bid and asked quotations on
the principal national securities exchange on which such Class A Common Stock is
so listed, or if not so listed on any national securities exchange, the average
of the highest bid and the lowest asked quotations in the over-the-counter
market that day or days.
3
<PAGE>
(c) Each share of Celltech Common Stock owned by Celltech
as treasury stock shall be cancelled.
(d) All shares of Celltech Common Stock shall be cancelled
and retired, and each certificate representing any such shares of Celltech
Common Stock shall thereafter represent only the right to receive the Merger
Consideration, and any cash in lieu of fractional shares of Merger Stock,
payable in exchange for such shares of Celltech Common Stock upon the surrender
of such certificate for payment in accordance with Sections 1.9 and 1.15.
1.8 [Intentionally left blank]
1.9 Exchange Agent. Prior to the Effective Time, CTIG shall
appoint American Stock Transfer or another commercial bank or trust company to
act as exchange agent for the purpose of exchanging certificates representing
Celltech Common Stock ("Certificates") for the applicable Merger Consideration
(the "Exchange Agent"). At or prior to the Effective Time, CTIG shall deposit
with the Exchange Agent, in trust for the benefit of holders of shares of
Celltech, sufficient funds and certificates representing the applicable Merger
Stock issuable at Closing pursuant to Section 1.7 in exchange for outstanding
shares of Celltech Common Stock in the Merger. CTIG agrees to make available to
the Exchange Agent from time to time as needed, cash sufficient to pay cash in
lieu of fractional shares pursuant to Section 1.12.
1.10 Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Surviving Corporation shall cause the Exchange
Agent to mail to each holder of a Certificate (i) a transmittal letter which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent, and (ii) instructions for effecting the surrender of Certificates in
exchange for the applicable Merger Consideration. Upon surrender of a
Certificate to the Exchange Agent together with the transmittal letter, duly
executed and completed in accordance with its instructions, and such other
documents as may reasonably be required by the Exchange Agent, the Certificate
holder shall be entitled to receive in exchange therefor (A) a pro rata portion
of the Merger Cash, (B) one or more shares of Class A Common Stock representing,
in the aggregate, the whole number of shares that such holder has the right to
receive pursuant to Section 1.7, and (C) a check in the amount equal to the cash
that such holder has the right to receive in lieu of any fractional shares of
Class A Common Stock pursuant to Section 1.12. All Certificates so surrendered
shall be canceled. No interest will be paid or will accrue on any cash so
payable.
1.11 Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made with respect to shares of
Class A Common Stock with a record date after the Effective Time shall be paid
to the holder of any un-surrendered Certificate with respect to the shares of
Class A Common Stock that such holder would be entitled to receive upon
surrender of such Certificate, and no cash payment in lieu of fractional shares
of Class A Common Stock shall be paid to any such holder until such holder shall
surrender such Certificate. Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to such holder of shares
of Class A Common Stock issuable in exchange therefor, without interest,
promptly after the time of such surrender, the amount of any cash
4
<PAGE>
payable in lieu of fractional shares of Class A Common Stock to which such
holder is entitled pursuant to Section 1.12 and the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to such whole shares of Class A Common Stock.
1.12 No Fractional Shares of CTIG Stock. No fractional shares
of Class A Common Stock shall be issued upon the surrender for exchange of
Certificates and such fractional share interests will not entitle the owner
thereof to vote or to have any rights of a shareholder of CTIG or a holder of
shares of CTIG Class A Common Stock. Each holder of shares of Celltech Common
Stock exchanged pursuant to the Merger who would otherwise have been entitled to
receive a fraction of a share of CTIG Class A Common Stock (after taking into
account all Certificates delivered by such holder) shall receive, in lieu
thereof, cash (without interest) in an amount equal to the product of (i) such
fractional part of a share of CTIG Class A Common Stock multiplied by (ii) the
Average Market Price per Share of CTIG Class A Common Stock. The fractional
share interests of CTIG Class A Common Stock will be aggregated, and no
recordholder of Celltech Capital Stock will receive cash in an amount equal to
or greater than the value of one full share of CTIG Class A Common Stock
determined as of the Effective Time.
1.13 No Liability. None of Celltech, Merger Sub or the
Exchange Agent shall be liable to any Person (as defined below) in respect of
any Merger Consideration, any dividends or distributions with respect thereto or
any cash in lieu of fractional shares of applicable Class A Common Stock, in
each case delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. For purposes of this Agreement, "Person" shall
mean any individual, corporation, partnership, limited liability company,
association, trust, joint venture, unincorporated association or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof. If any Certificate shall not have been surrendered
prior to six (6) months after the Effective Time (or immediately prior to such
earlier date on which any Merger Consideration, any dividends or distributions
payable to the holder of such Certificate or any cash payable in lieu of
fractional shares of Class A Common Stock pursuant to this Article I, would
otherwise escheat to or become the property of any Governmental Entity(as
defined below)), any such Merger Consideration, dividends or distributions in
respect thereof or such cash shall, to the extent permitted by applicable law,
be delivered to CTIG, upon demand, and any holders of Celltech Common Stock who
have not theretofore complied with the provisions of this Article I shall
thereafter look only to CTIG for satisfaction of their claims for such Merger
Consideration, dividends or distributions in respect thereof or such cash. For
purposes of this Agreement, "Governmental Entity" shall mean any nation or
government, any state or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including, but not limited to, any
government authority, agency, department, board, commission or instrumentality
of the United States, any State of the United States, or any political
subdivision thereof, and any tribunal or arbitrator(s) of competent
jurisdiction, and any self-regulatory organization.
1.24 Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person (such affidavit to be in a form and substance satisfactory to CTIG and
containing an appropriate indemnity against claims) claiming such
5
<PAGE>
Certificate to be lost, stolen or destroyed and, if required by the Surviving
Corporation, the posting by such Person of a bond in such reasonable amount as
the Surviving Corporation may direct as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent will
deliver in exchange for such lost, stolen or destroyed Certificate the
applicable Merger Consideration with respect to the shares of Celltech Capital
Stock formerly represented thereby, any cash in lieu of fractional shares of
Class A Common Stock, and unpaid dividends and distributions on shares of Class
A Common Stock deliverable in respect thereof, pursuant to this Agreement.
1.15 Stock Transfer Books. At the close of business, Eastern
Standard Time, on the day the Effective Time occurs, the stock transfer books of
Celltech shall be closed and there shall be no further registration of transfers
of shares of Celltech Common Stock thereafter on the records of Celltech. From
and after the Effective Time, the holders of Certificates shall cease to have
any rights with respect to such shares of Celltech Common Stock formerly
represented thereby, except as otherwise provided herein or by law.
1.16 CTIG Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary and unless provided for by applicable law, holders of
shares of CTIG Class A Common Stock that are issued and outstanding immediately
prior to the Effective Time and that are owned by stockholders who have properly
perfected their rights of appraisal within the meaning of Section 262 of the
DGCL (the "CTIG Dissenting Shares") shall be entitled to payment of the fair
value of such CTIG Dissenting Shares determined in accordance with Section 262
of the DGCL. If any such stockholder shall have failed to perfect or shall have
effectively withdrawn or lost such right of appraisal, each such share of CTIG
Class A Common Stock held by such stockholder shall thereupon be deemed to
remain issued and outstanding and unchanged as a validly issued, fully paid and
non-assessable share of capital stock of the Surviving Corporation. CTIG shall
give Celltech prompt notice of CTIG's receipt of any notice or demand for
appraisal or payment pursuant to Section 262 of the DGCL, withdrawals thereof
and any other instruments served in connection therewith pursuant to the DGCL
and received by CTIG.
1.17 Escrowed Stock.
(a) The Escrowed Stock shall be delivered to Celltech
Stockholders who received Merger Consideration at Closing only as follows:
(i) 50% of the Escrowed Stock will be subject to
release during the first Escrow Year (as defined below), 35% during the second
Escrow Year and the final 15% during the third Escrow Year.
(ii) At the end of each Escrow Quarter (as defined
below) a fraction (the "Quarter Fraction") shall be determined, the numerator of
which will be the actual gross revenue received from America One Communications,
Inc. ("America One") minus that portion of such gross revenue attributed to
postage ("America One Revenue") and the denominator of which will be $645,652.
If the Quarter Fraction is 1 or greater than 1, then no later than 10 Business
Days after the end of such Escrow Quarter, 25% of the Escrowed Stock that is
subject to release pursuant to Section 1.17(a)(i) for the Escrow Year in which
such Escrow Quarter
6
<PAGE>
occurs shall be released from escrow to the Celltech Stockholders. If the
Quarter Fraction is less than 1, then no later than 10 Business Days after the
end of such Escrow Quarter, said fraction shall be multiplied by 25% of the
Escrowed Stock that is subject to release pursuant to Section 1.17(a)(i) for the
Escrow Year in which such Escrow Quarter occurs, the product thereof shall be
rounded to the nearest whole number, and that number of shares of the Escrowed
Stock shall, no later than 10 Business Days after the end of such Escrow
Quarter, be released from escrow to the Celltech Stockholders.
(iii) If at the end of the third Escrow Year the
proportion that all Escrowed Stock released from escrow pursuant to Section
1.17(a)(ii) bears to the total Escrowed Stock placed in escrow pursuant to
Section 1.7(b)(ii) is less than the proportion that the aggregate America One
Revenue produced during all three Escrow Years bears to $7,747,821, then no
later then April 30, 2003 an additional number of shares of Escrowed Stock shall
be released to the Celltech Stockholders in order to eliminate such difference
up to a maximum of the total Escrowed Stock remaining in escrow; provided that
CTIG shall not issue any shares of CTIG Class A Common Stock in excess of the
number originally placed in escrow as Escrowed Stock, regardless of the amount
of such aggregate America One Revenue.
(iv) Notwithstanding the foregoing, if at any time
prior to the end of the third Escrow Year, CTIG sells or licenses software to
America One that replaces the software that has produced the gross revenue from
America One referred to in Section 2.24, resulting in a reduction or elimination
of America One Revenue, then within 10 Business Days after the end of the Escrow
Quarter in which such reduction or elimination first occurs, any shares of
Escrowed Stock then remaining in escrow shall be released to the Celltech
Stockholders.
(b) All releases of Escrowed Stock from escrow to the
Celltech Stockholders shall be made in the same proportions to Celltech
Stockholders as the Closing Stock was distributed. No fractional shares or scrip
representing shares of the Escrowed Stock shall be issued pursuant to this
Section 1.17. If at any time during any Escrow Year, America One discontinues
its relationship with the Surviving Corporation, then all Escrowed Stock then in
escrow shall be returned to CTIG and cancelled, and no additional shares of CTIG
Class A Common Stock shall be subject to issue to the Celltech Stockholders.
(c) For purposes of this Agreement, an "Escrow Year" shall
mean each of the first three consecutive 12 calendar month periods commencing on
March 1, 2000 and ending on February 28, 2003, and an "Escrow Quarter" shall
mean each of the three consecutive calendar month periods within a respective
Escrow Year.
1.18 Special Meeting.
(a) If required by applicable law in order to consummate
the Merger, CTIG, acting through its Board of Directors, shall, in accordance
with applicable law and subject to the applicable provisions of this Agreement:
7
<PAGE>
(i) duly call, give notice of, convene and hold a
special meeting (the "Special Meeting") of its stockholders as soon as
practicable following the execution of this Agreement for the purpose of
considering and taking action upon the Merger and this Agreement;
(ii) file with the Securities and Exchange Commission
(the "SEC") under the Securities Exchange Act of 1934 as amended (the "Exchange
Act"), a Proxy Statement (as defined below) and use its best efforts to obtain
and furnish the information required to be included by it in the Proxy Statement
and, after consultation with Celltech, to respond promptly to any comments made
by the SEC with respect to the Proxy Statement and any preliminary version
thereof and cause the Proxy Statement to be mailed to its stockholders at the
earliest practicable time following the execution of this Agreement;
(ii) include in the Proxy Statement the recommendation
of its Board of Directors that CTIG stockholders vote in favor of the approval
of this Agreement and the Merger and use its best efforts to obtain the
necessary approval of this Agreement and the Merger by its stockholders.
(b) As used in this Agreement, the term "Proxy Statement"
means the letter to CTIG stockholders, notice of meeting, proxy statement and
form of proxy, or the information statement, as the case may be, to be
distributed to CTIG stockholders in connection with the Merger, including any
schedules required to be filed with the SEC in connection therewith.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
Celltech and Principal Stockholder, jointly and severally,
represent and warrant to CTIG and Merger Sub as follows:
2.1 Organization. Celltech is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as now being conducted. It is duly
qualified or licensed and in good standing to do business in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not, individually or in the aggregate, have a material adverse
effect on the business, operations, assets, financial condition or results of
operations of Celltech or on the ability of Celltech to consummate the
transactions contemplated by this Agreement or perform its obligations hereunder
(a "Material Adverse Effect"). Celltech has delivered to CTIG complete and
correct copies of its certificate of incorporation and bylaws as currently in
effect. It does not own any equity interests in any corporation, partnership,
limited liability company or other entity.
2.2 Capitalization. Celltech's authorized capital stock
consists of 2,352.941 shares of Celltech Common Stock. Schedule 2.2 of the
Celltech Disclosure Schedules delivered to CTIG
8
<PAGE>
and Merger Sub together with this Agreement (the "Celltech Disclosure
Schedules") sets forth all stockholders of Celltech and the issued and
outstanding shares of Celltech Common Stock issued to each stockholder. There
are not now, and at the Effective Time there will not be, any existing options,
warrants, calls, subscriptions, or other rights, agreements or commitments
obligating Celltech to issue, transfer or sell any shares of capital stock of or
any other securities convertible into or evidencing the right to subscribe for
any such shares. All issued and outstanding shares of Celltech Common Stock are
duly authorized and validly issued, fully paid, non-assessable and free of
preemptive rights with respect thereto.
2.3 Authority.
(a) Celltech has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized and approved by its Board of Directors, and no corporate proceedings
are necessary to authorize this Agreement or the consummation of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Celltech, and it constitutes a legal, valid and
binding agreement of Celltech, enforceable against Celltech in accordance with
its terms.
(b) The provisions of Section 203 of the DGCL do not apply
to the transactions contemplated by this Agreement.
2.4 No Violations; Consents and Approvals.
(a) Neither the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby nor compliance by
Celltech with any of the provisions hereof will (i) violate any provision of its
certificate of incorporation or by-laws, (ii) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default, or give rise to any right of termination, cancellation or acceleration
or any right which becomes effective upon the occurrence of a merger,
consolidation or change in control, under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture or other instrument of
indebtedness for money borrowed to which it is a party, or by which it or any of
its properties is bound, or (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default, or
except as set forth in Schedule 2.4 of the Celltech Disclosure Schedules give
rise to any right of termination, cancellation or acceleration or any right
which becomes effective upon the occurrence of a merger, consolidation or change
in control, under, any of the terms, conditions or provisions of any license,
franchise, permit or agreement to which it is a party, or by which it or any of
its properties is bound, or (iv) violate any statute, rule, regulation, order or
decree of any public body or authority by which it or any of its properties is
bound, excluding from the foregoing clauses (iii) and (iv) violations, breaches,
defaults or rights which, either individually or in the aggregate, would not
have a Material Adverse Effect on Celltech or materially impair its ability to
consummate the transactions contemplated hereby or for which it has received or,
prior to the Closing Date, shall have received appropriate consents or waivers.
9
<PAGE>
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any Governmental Entity is required by
Celltech in connection with the execution and delivery of this Agreement or the
consummation by it of the transactions contemplated hereby, except the filing of
the Certificate of Merger with the Secretary of State of the State of Delaware.
2.5 Financial Statements.
(a) Celltech has provided CTIG the following financial
statements: (i) balance sheets as of December 31, 1998 and December 31, 1999
which have been reviewed by John Massanova, C.P.A., and (ii) statements of
income for the years ended December 31, 1998 and December 31, 1999 which have
been reviewed by John Massanova, C.P.A. As of their respective dates, the
Financial Statements were prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis during the periods
involved (except as may be indicated therein or in the notes thereto) and fairly
presented its financial position as at the dates thereof and the results of its
operations and statements of cash flows for the periods then ended (subject, in
the case of unaudited statements, to the lack of footnotes thereto, to normal
year-end audit adjustments and to any other adjustments described therein).
(b) As soon as practicable after the date hereof, Celltech
shall provide CTIG the following financial statements (the "Financial
Statements"): (i) balance sheets as of December 31, 1998 and December 31, 1999
audited by Arthur Andersen LLP, and (ii) statements of income for the years
ended December 31, 1998 and December 31, 1999 audited by Arthur Andersen LLP. As
of their respective dates, the Financial Statements will be prepared in
accordance with GAAP applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto) and will fairly
present Celltech's financial position as at the dates thereof and the results of
its operations and statements of cash flows for the periods then ended. The
December 31, 1999 audited balance sheet is referred to as the "Balance Sheet"
and the date thereof as the "Balance Sheet Date."
(c) There are no liabilities or obligations of Celltech
accrued, absolute, or contingent and whether due or to become due, other than
liabilities and obligations (i) reflected, or adequately reserved against, in
the Balance Sheet, (ii) arising in the ordinary course of business subsequent to
the date of the Balance Sheet, or (iii) which, individually or in the aggregate,
would not have a Material Adverse Effect.
2.6 Absence of Certain Changes. Since the Balance Sheet Date,
Celltech's business has been conducted in the ordinary course consistent with
past practices and, except as disclosed in Schedule 2.6 to the Celltech
Disclosure Schedules, there has not been:
(a) any change, event or development having, or that could
be reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on Celltech;
(b) any amendments or changes in its Certificate of
Incorporation or bylaws;
10
<PAGE>
(c) any material damage to, destruction or loss of any of
its assets (whether or not covered by insurance);
(d) any change by Celltech in its accounting methods,
principles or practices;
(e) any revaluation by Celltech of any of its assets,
including, without limitation, writing down the value of inventory or writing
off notes or accounts receivable other than in the ordinary course of business;
(f) any sale of a material amount of assets of Celltech,
except for the sale of inventory in the ordinary course of business;
(g) any declaration, setting aside or payment of any
dividend or distribution in respect of any of its capital stock or any
redemption, purchase or other acquisition of any of its securities;
(h) any entry by Celltech into any commitment or
transaction material to it, including, without limitation, any long-term supply
agreements or partnership, joint venture or other similar arrangements;
(i) any increase in or establishment of any bonus,
insurance, severance, deferred compensation, pension, profit sharing, stock
option (including without limitation, the granting of stock options, stock
appreciation rights, performance awards, or restricted stock awards), stock
purchase or other employee benefit plan, or any increase in the compensation
payable to any officers or key employees of Celltech except in the ordinary
course of business consistent with past practice;
(j) any issuance, delivery, or sale of, or authorization
of the issuance, delivery or sale of, any share of capital stock or any options
or rights with respect thereto, or modification or amendment of any right of any
holder of outstanding shares of capital stock or options with respect thereto;
or
(k) any incurring of (which shall be deemed to include
entering into credit agreements, lines of credit or similar arrangements until
borrowings are made under such arrangements) any indebtedness for borrowed money
or guarantee of any such indebtedness other than in the ordinary course of
business consistent with past practice.
2.7 Legal Proceedings. Except as disclosed in Schedule 2.7 of
the Celltech Disclosure Schedules there is no (a) claim, action, suit or
proceeding pending or, to its best knowledge, threatened, against or relating to
it or any of its assets before any court or Governmental Entity, or (b)
outstanding judgment, order, writ, injunction or decree, or application, request
or motion therefor, of any court or Governmental Entity in a proceeding to which
Celltech is a party.
2.8 Compliance with Laws and Agreements. Celltech is not (a)
in violation of or noncompliance with any statute, law, ordinance, regulation,
rule or order of any Governmental
11
<PAGE>
Entity, or any judgment, decree or order of any court, applicable to its
business or operations or (b) in violation, breach or default (with or without
due notice or lapse of time or both) under any of the terms, conditions or
provisions of any agreement to which it is a party, or by which its properties
are bound, except where any such violations or failures to comply or breaches or
defaults would not, individually or in the aggregate, have a Material Adverse
Effect. Celltech has all permits, licenses, authorizations and franchises from
Governmental Entities required to conduct its business as now being conducted,
except for such permits, licenses and franchises the absence of which would not,
individually or in the aggregate, have a Material Adverse Effect.
2.9 SEC Filing Information. If a Proxy Statement is required
for the consummation of the Merger under applicable law, the information
supplied or to be supplied by Celltech for inclusion in the Proxy Statement will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of circumstances under which they were made, not misleading.
2.10 State Antitakeover Statutes. No "business combination,"
"moratorium," "control share" or other state antitakeover statute or regulation
(a) prohibits or restricts Celltech's ability to perform its obligations under
this Agreement or its ability to consummate the transactions contemplated
hereby, (b) would have the effect of invalidating or voiding this Agreement, or
any material provision hereof, or (c) would subject CTIG or Merger Sub to any
material impediment or condition in connection with the exercise of any of their
respective rights under this Agreement or with respect to Celltech or the
Surviving Corporation.
2.11 Broker's Fees. Except for the engagement of PASCO
Business Trust ("PASCO") by Celltech, neither Celltech, any of its directors or
officers nor Principal Stockholder has employed any broker, finder or financial
advisor or incurred any liability for any broker's fees, commissions, or
financial advisory or finder's fees in connection with any of the transactions
contemplated by this Agreement. The Celltech Stockholders hereby assign to
PASCO, effective as of the Closing Date, their right to receive the Merger Cash,
on a pro rata basis, to pay all fees and expenses due PASCO, to an amount not to
exceed $262,599.
2.12 Environmental Matters. Except as set forth in Schedule
2.12 of the Celltech Disclosure Schedules or as would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect, (a) to
Celltech's knowledge no real property or any part thereof currently or formerly
owned or operated by Celltech is contaminated with any Hazardous Substance (as
defined herein) to an extent or in a manner or condition which may reasonably be
expected to require investigation or remediation under any Environmental Law (as
defined herein), (b) no judicial or administrative action, suit or other
proceeding is pending or to the knowledge of Celltech, threatened relating to or
arising out of any Environmental Law, including, but not limited to, claims with
respect to off-site disposal, off-site contamination, personal injury, property
damage or natural resources damages, (c) Celltech has not received any claims,
orders, citations, demands, requests for information or other notices alleging
or concerning liability or assessing a penalty under any Environmental Law; and
neither Celltech nor any of its operations is or has been in violation of or has
any liability under an applicable Environmental Law and no condition or event
has occurred with respect to Celltech that would
12
<PAGE>
constitute a violation of or create liability under such Environmental Law,
whether accrued, contingent, absolute, determined, determinable or otherwise,
except for any conditions or violations that would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect, and (d) no
expenditures by Celltech to maintain or achieve compliance with applicable
Environmental Laws during the three (3) year period following the date hereof
are anticipated except where such expenditures, individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect.
"Environmental Law" means any applicable federal, state or local law, including
common law, regulation, permit, license, certificate or other authorization,
agreement, standard, directive, order, decree, judicial opinion or any other
enforceable governmental authority requirement relating to noise, odor,
Hazardous Substances, public and worker health and safety or the protection of
the environment. "Hazardous Substance" means any toxic, hazardous or dangerous
material, substance, chemical, waste, pollutant or contaminant, including, but
not limited to petroleum and petroleum containing products, asbestos containing
materials, PCBs and radioactive substances that is regulated by or under
authority of any Environmental Law.
2.13 Intellectual Property Rights.
(a) Celltech owns or has the right to use all
Intellectual Property Rights (as defined below) necessary to the conduct of its
business. Schedule 2.13 of the Celltech Disclosure Statement contains a list of
all patents, trademarks, trade names, service marks, and registered copyrights
and any application for the foregoing owned by Celltech. Celltech has clear and
unencumbered title to the Intellectual Property Rights set forth in Schedule
2.13 of the Celltech Disclosure Schedules and such title has not been challenged
(pending or, to its best knowledge, threatened) by others except for the
encumbrances listed in Schedule 2.13 of the Celltech Disclosure Schedules.
Schedule 2.13 of the Celltech Disclosure Schedules also contains a list of
invention disclosures for which applications for patent are in progress. No
material rights or licenses to use the Intellectual Property Rights have been
granted or acquired by Celltech except those listed in Schedule 2.13 of the
Celltech Disclosure Schedules. Except as listed in Schedule 2.13 of the Celltech
Disclosure Schedules, there have been no claims or assertions made or, to
Celltech's best knowledge, threatened by others that Celltech does not own or
have the right to use all Intellectual Property Rights or that Celltech has
infringed or will infringe any Intellectual Property Rights of others and, to
the knowledge of Celltech, there has been no such infringement by the Celltech.
Except as listed in Schedule 2.13 of the Celltech Disclosure Schedules, Celltech
has no knowledge of any infringement of Intellectual Property Rights of Celltech
by others. All such registered patents, trademarks, service marks, and
copyrights owned by Celltech are in good standing, and are recorded in the name
of Celltech. True and complete copies of all material listed in Schedule 2.13 of
the Celltech Disclosure Statement have been delivered to CTIG.
(b) Except as set forth in Schedule 2.13 of the Celltech
Disclosure Schedules, none of the processes, techniques and formulae, research
and development results and other know-how relating to the business of Celltech,
the value of which to Celltech is contingent upon maintenance of the
confidentiality thereof has been disclosed by Celltech or any affiliate to any
third party other than third parties who are bound to hold such information in
confidence pursuant to confidentiality agreements or by operation of law, other
than any such disclosure
13
<PAGE>
which, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect.
(c) "Intellectual Property Rights" shall mean and include
rights relating to patents, trademarks, service marks, trade names, copyrights,
mask works, inventions, processes, trade secrets, know-how, confidentiality
agreements, consulting agreements, software and documentation.
2.14 Taxes. Except as set forth in Schedule 2.14 of the Celltech
Disclosure Schedules (a) Celltech has prepared and timely filed or will timely
file with the appropriate governmental agencies all franchise, income and all
other Tax (as defined below) returns and reports (Tax returns and reports are
hereinafter collectively referred to as "Tax Returns") required to be filed for
any period on or before the Effective Time, taking into account any extension of
time to file granted to or obtained on behalf of the Celltech (Schedules for
which the past three fiscal years have been delivered to CTIG to be followed by
delivery of returns to CTIG as requested) ; (b) all Taxes of Celltech due
(whether or not reported) in respect of the pre-Merger period have been paid in
full to the proper authorities or fully accrued, other than such Taxes as are
being contested in good faith by appropriate proceedings and are adequately
reserved for in accordance with GAAP; (c) all deficiencies resulting from Tax
examinations of federal, state and foreign income, sales and franchise and all
other Tax Returns filed by the Celltech have either been paid or adequately
reserved for in accordance with GAAP; (d) no deficiency has been asserted or
assessed against Celltech and is pending, and no examination of Celltech is
pending or, to Celltech's best knowledge, threatened for any amount of Tax by
any taxing authority (with respect to any such action, Schedule 2.14 of the
Disclosure Statement sets forth the periods at issue and the category of Tax,
and the examining authority's and any corresponding revenue agents' reports
relating to the issue have been delivered to CTIG); (e) no extension of the
period for assessment or collection of any Tax is currently in effect and no
extension of time within which to file any Tax Return has been requested, which
Tax Return has not since been filed; (f) no Tax liens have been filed with
respect to any Taxes; (g) Celltech has made timely payments of the Taxes
required to be deducted and withheld from the wages paid to its employees; and
(h) Celltech is not obligated to make any payments that would constitute excess
parachute payments within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code.")
"Tax" or "Taxes" shall mean all federal, state, local and foreign
taxes, duties, levies, charges and assessments of any nature, including social
security payments and deductibles relating to wages, salaries and benefits and
payments to sub-contractors (to the extent required under applicable Tax law),
and also including all interest, penalties and additions imposed with respect to
such amounts.
2.15 Employee Benefit Plans.
(a) Schedule 2.15 of the Celltech Disclosure Schedules identifies
each employment, severance or similar contract or arrangement (whether or not
written) or any plan, policy, fund, program or contract or arrangement (whether
or not written) providing for compensation, bonus, profit-sharing, stock option,
or other stock related rights or other forms of
14
<PAGE>
incentive or deferred compensation, vacation benefits, insurance coverage
(including any self-insured arrangements), health or medical benefits,
disability benefits, workers' compensation, supplemental unemployment benefits,
severance benefits and post-employment or retirement benefits (including
compensation, pension, health, medical or life insurance or other benefits) that
(i) has been entered into, maintained, administered or contributed to, as the
case may be, by Celltech and (ii) covers any employee or former employee (each,
an "Employee Plan").
(b) Celltech has furnished or made available to CTIG
copies of the Employee Plans (and, if applicable, related trust agreements) and
all amendments thereto and written interpretations thereof, together with the
most recent annual report (Form 5500 including, if applicable, Schedule B
thereto) and the most recent actuarial valuation report prepared in connection
with any Employee Plan.
(c) Each Employee Plan that is intended to be qualified
under Section 401(a) of the Code has been determined by the Internal Revenue
Service to be qualified under Section 401(a) of the Code and each trust related
thereto has been determined to be exempt from tax pursuant to Section 501(a) of
the Code, and Celltech is not aware of any event that has occurred since the
date of such determinations that would adversely affect such qualification or
tax exempt status. Celltech has provided CTIG with the most recent determination
letter of the Internal Revenue Service relating to each such Employee Plan. Each
Employee Plan has been maintained in compliance in all material respects with
its terms and with the requirements prescribed by any and all applicable
statutes, orders, rules and regulations, including but not limited to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the
Code.
(d) No Employee Plan is a multi-employer plan as defined
in Section 3(37) of ERISA or is a plan subject to Title IV of ERISA.
(e) Celltech does not have any current or projected
liability in respect of post-employment or post-retirement health or medical or
life insurance benefits for retired, former or current employees of Celltech,
except as required to avoid excise tax under Section 4980B of the Code.
(f) Except as set forth in Schedule 2.15 of the Celltech
Disclosure Schedules, there has been no amendment to, written interpretation of
or announcement (whether or not written) by Celltech relating to, or change in
employee participation or coverage under, any Employee Plan that would increase
materially the expense of maintaining such Employee Plan above the level of the
expense incurred in respect thereof for the most recent fiscal year ended prior
to the date hereof.
(g) Other than as described in Schedule 2.15 of the
Celltech Disclosure Schedules, no employee or former employee of Celltech will
become entitled to any bonus, retirement, severance, job security or similar
benefit or an enhancement of such benefit (including acceleration of vesting or
exercise of an incentive award) under any Employee Plan as a result of the
transactions contemplated hereby.
15
<PAGE>
2.16 Insurance. Schedule 2.16 to the Celltech Disclosure
Schedules is an accurate and complete list and description of all insurance
policies currently owned or maintained by Celltech (excluding insurance policies
that constitute Employee Benefit Plans) in connection with or for the benefit of
its business and all liability and errors and omissions insurance policies owned
or maintained by it or any of its predecessors at any time during the five years
prior to the date of this Agreement. Except as described in Schedule 2.16, all
such insurance policies are or were on an "occurrence" rather than a "claims
made" basis. Celltech has not received notice of cancellation with respect to
any such current insurance policy, and there is no basis for the insurer
thereunder to terminate any such current insurance policy. Each such insurance
policy is or was in full force and effect during the period(s) of coverage
indicated on Schedule 2.16. Except as described on Schedule 2.16, there are no
claims that are pending under any of the Insurance Policies described on
Schedule 2.16.
2.17 Contracts.
(a) Schedule 2.17 is an accurate and complete list of all
of the following types of Contracts to which Celltech is a party or by which
Celltech is bound (collectively, the "Contracts"), grouped into the following
categories and, where applicable, subdivided by product line: (a) each customer
Contract; (b) each supplier Contract, each Contract for the purchase, lease or
maintenance of computer equipment and other equipment and each Contract for the
purchase, license, lease or maintenance of software under which Celltech is the
purchaser, licensee, lessee or user; (c) Contracts for the purchase or lease of
real property or otherwise concerning real property owned or used by Celltech
including a description of the real property; (d) loan agreements, mortgages,
notes, guarantees and other financing Contracts; (e) employment, consulting and
sales representative Contracts other than those for "at will" employment; (f)
Contracts under which any rights in or ownership of Celltech's business, any
predecessor thereof, or any part of the customer base or business of Celltech's
business was acquired; and (g) other Contracts (excluding Contracts which
constitute insurance policies listed on Schedule 2.16, this Agreement and all
other Contracts entered into between Celltech and CTIG, or among Celltech, CTIG
and other parties in connection herewith). A description of each oral Contract
is included on Schedule 2.17, and copies of each written Contract have been
delivered to CTIG. Except as described in Schedule 2.17, with respect to each of
the Contracts, neither Celltech nor, to the knowledge of Celltech, any other
party thereto, is in breach, default or violation of any term, condition or
provision of any Contract, except for any breaches, defaults or violations that
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. Except as described in Schedule 2.17, Celltech has not
given or received any notice of default or notice of termination with respect to
any Contract.
(b) Each Contract is a valid, binding and enforceable
obligation of Celltech and, to the knowledge of Celltech, of each party thereto,
and is in full force and effect, except where the failure to be valid, binding
and enforceable and in full force and effect would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. Neither
Celltech nor, to the knowledge of Celltech, any party thereto, is in breach,
default or violation of any term, condition or provision of any Contract, except
for any breaches, defaults or violations that would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.
16
<PAGE>
2.18 Properties.
(a) Schedule 2.18 to the Celltech Disclosure Schedules
sets forth all tangible personal property owned by Celltech and all real
property owned or leased by Celltech, as of the date of this Agreement. Except
as set forth in Schedule 2.18, Celltech has good and marketable title, or valid
leasehold rights in the case of leased property, to all real property and all
personal property purported to be owned or leased by it, free and clear of all
liens, security interests, claims, encumbrances and charges, excluding (i) liens
for fees, taxes, levies, imposts, duties or governmental charges of any kind
which are not yet delinquent or are being contested in good faith by appropriate
proceedings which suspend the collection thereof, (ii) liens for mechanics,
materialmen, laborers, employees, suppliers or other liens arising by operation
of law for sums which are not yet delinquent or are being contested in good
faith by appropriate proceedings, and (iii) purchase money liens on office,
computer and related equipment and supplies incurred in the ordinary course of
business. All buildings, and all fixtures, equipment and other property and
assets held under leases or sub-leases by Celltech are held under valid
instruments enforceable in accordance with their respective terms, except to the
extent that certain leases for equipment set forth on Schedule 2.18 to the
Celltech Disclosure Schedule prohibit an assignment, merger or change of control
of Celltech, and the violation of which prohibition or loss of such lease, alone
or in the aggregate, would not have a Material Adverse Effect on Celltech or the
Surviving Corporation . The tangible personal property of Celltech has no
material defects and is in good operating condition and repair (ordinary wear
and tear excepted) and is adequate for its current uses. None of such tangible
personal property is in need of maintenance or repairs except for ordinary
routine maintenance and repairs that are not material in nature or cost.
(b) Except as set forth on Schedule 2.18, consummation of
the Merger will not result in any breach of or constitute a default (or an event
with which notice or lapse of time or both would constitute a default) under, or
give to others any rights of termination or cancellation or, or require the
consent of others under, any lease in which Celltech is a lessee.
2.19 Employees and Independent Contractors. Schedule 2.19 to
the Celltech Disclosure Schedules is a list of all of Celltech's employees and
(a) their titles or responsibilities; (b) their current salaries or wages; (c)
their last compensation changes and the dates on which such changes were made;
(d) any specific bonus, commission or incentive plans or agreements for or with
them; and (e) any outstanding loans or advances made to them. Celltech has
delivered to CTIG an accurate and complete list of all bonuses, commissions and
incentives paid to the employees listed on Schedule 2.19 at any time during the
past twelve months. Schedule 2.19 includes a list of all sales representatives
and independent contractors engaged in Celltech's business, their payment
arrangements, and a brief description of their jobs or projects currently in
progress. Celltech is in full compliance with all applicable statutes, laws,
ordinances, rules and regulations of any Governmental Entity respecting
employment practices. Celltech has never been a party to or bound by any union
or collective bargaining contract, nor is any such contract currently in effect
or being negotiated by or on behalf of Celltech. Celltech has not experienced
any labor problem that was or is material to its business. Celltech's relations
with its employees are currently on a good and normal basis, and no employee of
Celltech has indicated an intention to terminate his or her employment. Celltech
does not have any knowledge or belief that the
17
<PAGE>
transactions contemplated by this Agreement will adversely affect relations with
Celltech's employees.
2.20 Year 2000. Celltech has put into effect practices and
programs which Celltech believes will enable all material software, hardware and
equipment (including microprocessors) that are owned or utilized by Celltech in
the operations of its business to be capable of accounting for all calculations
using a century and date sensitive algorithm for the year 2000 and the fact that
the year 2000 is a leap year and to otherwise continue to function without any
interruption caused by the occurrence of the year 2000.
2.21 Certain Interests. Except as set forth in Schedule 2.21
of the Celltech Disclosure Schedules, none of Celltech, or any of its officers,
directors, or affiliates or Principal Stockholder, has (a) any direct or
indirect interest (other than the ownership of less than 1% of the outstanding
securities of a publicly held company) in any corporation or business that is
involved in or competes with Celltech, or (b) any direct or indirect interest in
any property or assets used by, or relating to, Celltech or its business, except
for the ownership of Celltech's capital stock.
2.22 Customers and Suppliers. Schedule 2.22 of the Celltech
Disclosure Schedules sets forth a list of Celltech's ten largest customers and
ten largest suppliers in terms of sales and purchases, respectively, during the
fiscal year ended December 31, 1999, showing the approximate total of sales by
Celltech to each such customer and the approximate total purchases by Celltech
from each such supplier during such year. Except as set forth on Schedule 2.22
of the Celltech Disclosure Schedules, no material adverse change has occurred in
the business relationship or contracts of Celltech with any such customer or any
such supplier and, to Celltech's knowledge, no facts exist and no events have
occurred that could reasonably be expected to result in a material adverse
change to any such relationship.
2.23 Accounts Receivable. Schedule 2.23 of the Celltech
Disclosure Schedules sets forth a true and complete list of all accounts
receivable of Celltech as of the date hereof and the aging thereof. All accounts
receivable of Celltech reflected on such Schedule or subsequently created
through the Effective Time (the "Accounts Receivable"), represent sales actually
made or services actually performed in the ordinary course of business and are
current and either have been collected in full or will be collectable in full
without any setoff. Notwithstanding the foregoing, no representation or warranty
is made with respect to the ability to collect an account receivable of Ameritel
Communications in the amount of $406,999.09.
2.24 America One Revenue. The gross revenue received by
Celltech from America One from March 1, 1999 to February 29, 2000 was
$3,758,691, with $1,176,084 of such revenue attributed to postage.
2.25 Reorganization Treatment. Except as required by this
Agreement, Celltech has not taken or agreed to take, and does not intend to
take, any action that would cause the Merger to fail to qualify as a
reorganization within the meaning of Section 368 of the Code.
18
<PAGE>
2.26 Disclosure. No representation or warranty by Celltech or
Principal Stockholder and no statement or information relating to Celltech
contained herein, or in any certificate furnished by or on behalf of Celltech to
CTIG or Merger Sub in connection herewith, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE IIA
REPRESENTATIONS AND WARRANTIES
OF CELLTECH STOCKHOLDERS
Each Celltech Stockholder severally makes the following
representations, warranties and agreements to and with CTIG and Merger Sub:
2A.1 Ownership of Celltech Common Stock. He or she owns the number of
shares of Celltech Common Stock set forth under his or her name on the signature
page to this Agreement. He or she has good, marketable and unencumbered title to
such shares, free and clear of all liens, security interests, pledges, claims,
encumbrances, options and rights of others. There are no restrictions on his or
her right to transfer such shares pursuant to this Agreement. No transfer of
record ownership of, or beneficial interest in, any of such shares will be made
between the date hereof and the Effective Time.
2A.2 Agreement Not in Breach of Other Instruments Affecting Celltech
Stockholders. The execution and delivery of this Agreement, the consummation of
the transactions provided for herein, and the fulfillment of the terms hereof by
the Celltech Stockholder, will not result in the breach of any of the terms and
provisions of, or constitute a default under, or conflict with, any agreement or
other instrument by which he or she is bound, any judgment, decree, order, or
award of any court, Governmental Entity, or arbitrator, or any applicable law,
rule or regulation.
2A.3 Valid and Binding Agreement. This Agreement constitutes the valid
and binding obligation of the Celltech Stockholder, and is enforceable against
him or her in accordance with its terms.
2A.4 No Claims Against Celltech. The Celltech Stockholder, as of the
date of this Agreement, has no claims, no intent to assert any claims and no
basis to make any claims, against Celltech, for any reason.
2A.5 Further Assurances. The Celltech Stockholder will take such
actions, and shall execute such additional documents, as shall be necessary or
appropriate, to effectuate the Merger and the transactions contemplated by this
Agreement.
2A.6 Shareholder Meeting. The Celltech Stockholder agrees to vote all
of his or her shares of Celltech Common Stock in favor of the Merger and this
Agreement at any meeting called for the authorization and approval thereof, or
to execute any consents in writing in lieu of such meeting.
19
<PAGE>
2A.7 Reorganization Treatment. Except as required by this Agreement,
the Celltech Stockholder has not taken or agreed to take, and does not intend to
take, any action that would cause the Merger to fail to qualify as a
reorganization within the meaning of Section 368 of the Code.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CTIG AND MERGER SUB
CTIG and Merger Sub hereby jointly and severally represent and warrant
to Celltech and the Celltech Stockholders as follows:
3.1 Organization. Each is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and each
has all requisite corporate power and authority to own, lease and operate its
respective properties and to carry on its respective businesses as now being
conducted. Each is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the property owned, licensed or operated
by it or the nature of the business conducted by it makes such qualification
necessary, except where failure to be so duly certified or licensed and in good
standing would not, individually and or in the aggregate, have a Material
Adverse Effect.
3.2 Authority. Each has full corporate power and authority to execute
and deliver this Agreement and, subject to approval of CTIG's stockholders, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized and approved by their respective Boards of
Directors and by CTIG as the sole stockholder of Merger Sub, and no other
corporate proceedings are necessary to authorize this Agreement or the
consummation of the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by CTIG and Merger Sub and, it
constitutes a legal, valid and binding agreement of CTIG and Merger Sub,
enforceable against each of them in accordance with its terms.
3.3 No Violations; Consents and Approvals.
(a) Neither the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby nor compliance by CTIG and
Merger Sub with any of the provisions hereof will violate any provision of their
respective certificates of incorporation or by-laws.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any Governmental Entity is required by
CTIG or Merger Sub in connection with the execution and delivery of this
Agreement or the consummation by either of the transactions contemplated hereby,
except (i) in connection, or in compliance, with the provisions of the Exchange
Act, (ii) the Proxy Statement, if required (iii) the Form S-4 (as defined in
Section 4.5), (iv) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware, (v) such consents, approvals, orders,
authorizations, notifications, approvals, registrations,
20
<PAGE>
declarations and filings as may be required under the corporation, takeover or
blue sky laws of various states and (vi) such other consents, orders,
authorizations, registrations, declarations and filings not obtained prior to
the Effective Time the failure of which to be obtained or made would not,
individually or in the aggregate, materially impair the ability of CTIG or
Merger Sub to perform their respective obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby or for which they
have received or, prior to the Closing Date shall have received, appropriate
consents or warranties.
3.4 Legal Proceedings. There is no (a) claim, action, suit or
proceeding pending or, to CTIG's best knowledge, threatened, against or relating
to it or any of its subsidiaries or any of their respective assets before any
court or Governmental Entity or (b) outstanding judgment, order, writ,
injunction or decree, or application, request or motion therefor, of any court
or arbitration tribunal or Governmental Entity in a proceeding to which CTIG or
any of its subsidiaries is a party, except any such claim, action, suit or
proceeding or judgment, order, writ, injunction, decree, application, request or
motion which would not, individually or in the aggregate, materially impair the
ability of CTIG or Merger Sub to perform their respective obligations hereunder
or prevent the consummation of any of the transactions contemplated hereby.
3.5 Proxy Statement. If a Proxy Statement is required for
consummation of the Merger under applicable law, none of the information to be
supplied by CTIG or Merger Sub for inclusion or incorporation by reference in
such Proxy Statement at the time of its mailing to its stockholders and at the
time of the Special Meeting, will contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading.
3.6 Broker's Fees. Neither CTIG nor Merger Sub or any of their
respective directors or officers has employed any broker, finder or financial
advisor or incurred any liability for any broker's fees, commissions, or
financial advisory or finder's fees in connection with any of the transactions
contemplated by this Agreement.
3.7 Capitalization of Merger Sub. The authorized capital stock
of Merger Sub consists of 1,000 shares of its common stock, $.01 par value per
share. 500 such shares are outstanding and owned beneficially and of record by
CTIG. All such outstanding shares were duly authorized and validly issued and
are fully paid and nonassessable. There are no outstanding options, warrants or
other rights to acquire any capital stock of Merger Sub.
3.8 CTIG Disclosures. (a) CTIG has made available to the
Celltech Stockholders the following documents:
(a) CTIG's Annual Report on Form 10-K for the fiscal year
ended March 31, 1999
(b) CTIG 's Proxy Statement for its 1999 annual meeting of
stockholders;
21
<PAGE>
(c) CTIG's Current Report on Form 8-K dated February 22,
2000;
(d) and CTIG's Form 10-Q for the quarterly period ended
December 31, 1999.
CTIG will provide the Celltech Stockholders with a copy of the
Prospectus (as defined in Section 4.5) at the same time it is provided to
stockholders of Centillion Data System, Inc.
Since December 31, 1999, CTIG has filed with the SEC all forms, reports
and documents required to be filed by it pursuant to the federal securities laws
and the rules and regulations promulgated by the SEC thereunder, and each such
form, report and document complied in all material respects with the applicable
substantive requirements of the Securities Act and the Exchange Act as in effect
at the time of the filing of such form, report or document.
3.9 Merger Stock. The Merger Stock (i) prior to Closing will be duly
authorized, (ii) upon issuance, delivery and payment therefor in the manner
described herein, will be validly issued, fully paid and nonassessable, (iii)
prior to Closing will be registered under the Securities Act as set forth in
Section 4.5 and upon issuance will not be listed and will be traded in the over
the counter market, (iv) will conform to the description thereof contained in
the Form S-4, (v) will be evidenced by certificates bearing no restrictive
legends relating to the securities laws, and (vi) subject to the foregoing, the
escrow of the Escrowed Stock and any restrictions on Principal Stockholder as
the result of any "affiliate" status under the securities laws, may be resold by
the holders thereof without further registration under the Securities Act,
except to the extent set forth in Section 4.5.
3.10 Reorganization Treatment. Except as required by this Agreement,
neither CTIG nor Merger Sub has taken, agreed to take, or intends to take any
action that would cause the Merger to fail to qualify as a reorganization within
the meaning of Section 368 of the Code.
ARTICLE
COVENANTS
4.1 Conduct of Business of Celltech. Except as contemplated by this
Agreement or as expressly agreed to in writing by CTIG, during the period from
the date of this Agreement to the Effective Time, Celltech will conduct its
operations according to its ordinary course of business consistent with past
practice, and will use all commercially reasonable efforts to preserve intact
its business organization, to keep available the services of its officers and
employees and to maintain satisfactory relationships with suppliers,
distributors, customers and others having business relationships with it and
will take no action which would materially adversely affect the ability of the
parties to consummate the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in this Agreement, prior to the Effective Time, Celltech will not,
without the prior written consent of CTIG:
(a) amend its certificate of incorporation or by-laws;
22
<PAGE>
(b) authorize for issuance, issue, sell, deliver, grant any options
for, or otherwise agree or commit to issue, sell or deliver any shares of any
class of its capital stock or any securities convertible into shares of any
class of its capital stock;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock or
purchase, redeem or otherwise acquire any shares of its capital stock;
(d) (i) create, incur, assume, maintain or permit to exist any
long-term debt or any short-term debt for borrowed money other than under
existing lines of credit or replacements thereof, or the negotiation of a
capital lease or buy-out agreement with Pitney Bowes at the expiration of the
current lease for a mail-inserter machine (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any Person, or (iii) make any loans, advances
or capital contributions to, or investments in, any Person;
(e) except as otherwise expressly contemplated by this Agreement or
as set forth in Schedule 4.1 of the Celltech Disclosure Statement, (i) increase
in any manner the compensation of any of its directors, officers or other
employees (other than regularly scheduled raises for employees other than
Principal Stockholder), or pay any bonuses to any director or officer or to
Principal Stockholder; (ii) pay or agree to pay any pension, retirement
allowance or other employee benefit not required, or enter into or agree to
enter into any agreement or arrangement with such director, officer or employee,
whether past or present, relating to any such pension, retirement allowance or
other employee benefit except as required under currently existing agreements,
plans or arrangements; (iii) grant any severance or termination pay to, or enter
into any employment or severance agreement with, any of its directors, officers
or other employees; or (iv) except as may be required to comply with applicable
law, become obligated under any new pension plan, welfare plan, multi-employer
plan, employee benefit plan, benefit arrangement, or similar plan or
arrangement, which was not in existence on the date hereof, including any bonus,
incentive, deferred compensation, stock purchase, stock option, stock
appreciation right, group insurance, severance pay, retirement or other benefit
plan, agreement or arrangement, or employment or consulting agreement with or
for the benefit of any Person, or amend any of such plans or any of such
agreements in existence on the date hereof;
(f) except as otherwise expressly contemplated by this Agreement,
enter into any material agreements, commitments or contracts, except agreements,
commitments or contracts for the purchase, sale or lease of goods or services in
the ordinary course of business, consistent with past practices; provided that
Celltech shall not enter into any agreement, commitment or contract that
requires payments by Celltech in excess of $50,000 without the prior written
consent of CTIG, which shall not be unreasonably withheld;
(g) authorize, recommend, propose or announce an intention to
authorize, recommend or propose, or enter into, any agreement in principle or
any agreement with respect to any plan of liquidation or dissolution, any sale,
transfer, lease, license, pledge, mortgage, or other disposition or encumbrance
of a material amount of assets or securities or any change in its
23
<PAGE>
capitalization, or any entry into a material contract or any amendment or
modification of any material contract or any release or relinquishment of any
material contract rights;
(h) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or all or
a substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof, or enter into any new material line of business outside its
existing core businesses;
(i) knowingly undertake any act, or suffer to exist any
condition, causing any insurance policy naming it as a beneficiary or a loss
payee to be canceled or terminated;
(j) take any action that would, or could reasonably be
expected to, result in (i) any of the conditions to the Merger set forth in
Article V and VI not being satisfied or (ii) a material delay in the
satisfaction of such conditions;
(k) make any material change in its methods of accounting
in effect at the Balance Sheet Date, except as required by changes in GAAP as
concurred in by its independent auditors, or change its fiscal year;
(l) take any action that would cause the representations
and warranties set forth in Article II to no longer be true and correct;
(m) commit to any capital expenditures, other than those
incurred or committed in the ordinary course of business and which are not in
excess of $15,000, individually or $50,000 in the aggregate; or
(n) agree to do or authorize any of the foregoing.
4.2 No Solicitation by Celltech. Celltech and Principal
Stockholder, jointly and severally, represent and warrant to, and covenant and
agree with, CTIG and Merger Sub that Celltech does not have any agreement,
arrangement or understanding with any other potential acquiror. Celltech and
each Celltech Stockholder agrees that from and after the date hereof and until
the earlier of the consummation of the Merger or the termination of this
Agreement, they shall, and Celltech and Principal Stockholder shall cause
Celltech's officers, directors, advisors, investment bankers, agents and
attorneys to (a) not solicit (or authorize any Person to solicit), directly or
indirectly, any inquiries, proposals or offers from any Person relating to any
acquisition or purchase of all or substantially all the assets of, or any equity
interest in, or any merger, consolidation or business combination with Celltech
(the foregoing being referred to as an "Acquisition Transaction"), (b) not enter
into any agreement with respect to any Acquisition Transaction, and (c) not
elicit any discussions of, participate in any negotiations regarding, cooperate
with, facilitate or encourage an Acquisition Transaction or furnish to any other
Person any information concerning Celltech in connection therewith. Celltech
shall immediately notify CTIG if any unsolicited proposal or offer with respect
to an Acquisition Transaction is received by Celltech and communicate to CTIG
the terms of any such proposal or offer.
24
<PAGE>
4.3 Access to Information.
(a) From the date of this Agreement until the Effective
Time, Celltech will continue to give CTIG and its authorized representatives
(including counsel, consultants, financial advisors, accountants and auditors)
reasonable access during normal business hours to all of its facilities,
personnel and operations and to all of its books and records, will continue to
permit CTIG to make such inspections as it may reasonably require and will
continue to cause its officers to furnish CTIG with such financial and operating
data and other information with respect to its business and properties as CTIG
may from time to time reasonably request.
(b) Each of the parties will hold, and CTIG, Merger Sub
and Celltech will cause all of their respective employees and representatives to
hold, in strict confidence all documents and information furnished to the other
in connection with the transactions contemplated by this Agreement.
4.4 CTIG Proxy Statement and Special Meeting.
(a) If required by applicable law, CTIG shall file the
Proxy Statement with the SEC as soon as practicable after the execution of this
Agreement. Celltech shall promptly furnish to CTIG all information, and take
such other actions, as may reasonably be requested by CTIG in connection with
the Proxy Statement. The Proxy Statement shall state that the Board of Directors
of CTIG has, subject to the applicable provisions of this Agreement, (i)
approved the Merger and (ii) determined that the Merger is fair and in the best
interest of the stockholders of CTIG.
(b) CTIG agrees that the Proxy Statement and each
amendment or supplement thereto, at the time of mailing thereof and at the time
of the Special Meeting, will not include any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the foregoing shall not apply to
the extent that any such untrue statement of a material fact or omission to
state a material fact was made by CTIG in reliance upon and in conformity with
information concerning Celltech to be furnished by it for use in the Proxy
Statement. Celltech agrees that none of the information to be furnished in
writing to CTIG for use in the Proxy Statement and each amendment or supplement
thereto, at the time of mailing thereof and at the time of the Special Meeting,
will include any untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. If at
any time prior to the Effective Time any event shall occur which is required to
be described in the Proxy Statement, the party that becomes aware of such event
shall immediately notify the other parties and such event shall be so described,
and an amendment or supplement shall be promptly filed with the SEC and, as
required by law, disseminated to the stockholders of CTIG. CTIG will advise
Celltech promptly after it receives notice thereof, of any comments by the SEC
on the Proxy Statement and the responses thereto and of any requests by the SEC
for additional information.
25
<PAGE>
(c) If required by applicable law, CTIG shall call the
Special Meeting, to be held as promptly as practicable in accordance with
applicable law for the purpose of voting upon the adoption of this Agreement and
the approval of the Merger.
4.5 Preparation of Form S-4; Stockholders Meeting. As promptly
as practicable following the date hereof, CTIG shall prepare and file with the
SEC a Registration Statement on Form S-4 with respect to the issuance of the
Closing Stock (the "Form S-4") in which a Proxy Statement (which may be a Proxy
Statement/Prospectus if the Special Meeting and Proxy Statement is required by
applicable law) will be included (the "Prospectus"). The Form S-4 shall also
register the Escrowed Stock on a "shelf" basis to be valid until the first of
the following to occur: (a) April 30, 2003, (b) the release to the Celltech
Stockholders and/or return to CTIG of all Escrowed Stock pursuant to Section
1.17, or (c) the longest period allowed by law, regulation or the SEC. The Form
S-4 and Prospectus shall comply as to form in all material respects with the
applicable provisions of the Securities Act and the Exchange Act. CTIG shall use
all reasonable efforts to have the Form S-4 declared effective under the
Securities Act as promptly as practicable after filing with the SEC and to keep
the Form S-4 effective as long as is necessary to consummate the Merger. The
parties shall promptly provide copies to and consult with each other and prepare
written responses with respect to any written comments received from the SEC
with respect to the Form S-4 and the Prospectus and promptly advise the other
party of any oral comments received from the SEC. CTIG agrees that none of the
information supplied or to be supplied by CTIG for inclusion or incorporation by
reference in the Prospectus and each amendment or supplement thereto, at the
time of mailing thereof and at the time of the Special Meeting, will contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Celltech agrees that
none of the information supplied or to be supplied by Celltech for inclusion or
incorporation by reference in the Prospectus and each amendment or supplement
thereto, at the time of mailing thereof and at the time of the Special Meeting
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. CTIG
agrees that upon release of any of the Escrowed Stock to the Celltech
Stockholders pursuant to Section 1.17 (i) CTIG shall file, from time to time, as
applicable, such supplemental prospectus for each such "shelf takedown" as may
be required by the SEC in respect thereof, and otherwise comply in all material
respects with the applicable provisions of the Securities Act and the Exchange
Act, and (ii) such released shares will be evidenced by certificates bearing no
restrictive legends relating to the securities laws, and, subject to any
restrictions on Principal Stockholder as the result of any "affiliate" status
under the securities laws, may be resold by the holders thereof without further
registration under the Securities Act.
4.6 Reasonable Best Efforts; Other Actions. Subject to the
terms and conditions of this Agreement and applicable law, the parties shall use
all commercially reasonable best efforts promptly to take, or cause to be taken,
all other actions and do, or cause to be done, consistent with the fiduciary
obligations of the respective Board of Directors, all other things necessary,
proper or appropriate under applicable laws and regulations to consummate and
make effective the transactions contemplated by this Agreement, including,
without limitation, (a) the obtaining
26
<PAGE>
of all necessary consents, approvals or waivers from third parties that are
required in connection with the Merger, and (b) the lifting of any legal bar to
the Merger.
4.7 Public Announcements. Before issuing any press release or
otherwise making any public statements with respect to transactions contemplated
by this Agreement, CTIG and Celltech will consult with each other as to its form
and substance and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law.
4.8 Notification of Certain Matters. Each of Celltech and CTIG
shall give prompt notice to the other of (a) any notice of, or other
communication relating to, a default or event which, with notice or lapse of
time or both, would become a default, received by it subsequent to the date of
this Agreement and prior to the Effective Time, under any contract material to
the financial condition, properties, businesses or results of operations of
Celltech or to which Celltech is a party or is subject, (b) any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement, (c) the occurrence or non-occurrence of any fact or event which would
be reasonably likely (i) to cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at any time
from the date hereof to the Effective Time or (ii) to cause any material
covenant, condition or agreement hereunder not to be complied with or satisfied
in all material respects and (d) any failure of CTIG or Celltech, as the case
may be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder in any material respect; provided,
however, that no such notification shall affect the representations or
warranties of any party or the conditions to the obligations of any party
hereunder.
4.9 Expenses. Except as set forth in Section 2.11, the parties
shall bear their respective expenses incurred in connection with the
transactions contemplated by this Agreement, including, without limitation, the
preparation, execution and performance of this Agreement and the transactions
contemplated hereby, and all fees and expenses of their respective investment
bankers, finders, brokers, agents, representatives, counsel and accountants;
provided that CTIG shall reimburse Celltech for fees it pays to Arthur Andersen
LLP to prepare the Financial Statements unless CTIG terminates this Agreement
pursuant to Section 8.2.
4.10 Line of Credit. As soon as practicable after the
Effective Time, the Surviving Corporation will exert reasonable commercial
efforts to cause Southwest Bank of Texas N.A. to remove Principal Stockholder as
a guarantor of that certain revolving line of credit promissory note, dated
August 26, 1999, in the original principal amount of $400,000, executed by
Celltech, and payable to the order of Southwest Bank of Texas N.A. If Surviving
Corporation is unable to remove Principal Stockholder as a guarantor, it will
terminate the foregoing line of credit facility.
27
<PAGE>
ARTICLE V
CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
The respective obligations of each party to effect the transactions
contemplated by this Agreement shall be subject to the fulfillment at or prior
to the Closing of each of the following conditions, any all of which may be
waived in whole or in part by CTIG or Celltech, as the case may be, to the
extent permitted by applicable law:
5.1 Stockholder Approval. If required by applicable law, the requisite
vote of the stockholders of CTIG necessary to consummate the Merger shall have
been obtained. The requisite vote of the Celltech Stockholders shall have been
obtained.
5.2 Consents and Approvals. All necessary consents and approvals of any
Governmental Entity or any other third party required for the consummation of
the transactions contemplated by this Agreement shall have been obtained, except
for such consents and approvals the failure to obtain which individually or in
the aggregate would not have a Material Adverse Effect.
5.3 Opinion of Financial Advisor. If CTIG determines that a "fairness
opinion" is required or appropriate for the Merger, CTIG shall have received the
written opinion of First Colonial Securities Group to the effect that the Merger
Consideration is fair from a financial point of view to the stockholders of
CTIG. A true and correct copy of such opinion shall have been delivered to
Celltech.
5.4 Employment Agreement. The employment agreement with David Warren,
in the form attached hereto as Exhibit "A," shall be executed.
5.5 Merger with Centillion Data Systems, Inc. The merger of CTIG and
Centillion Data Systems pursuant to an Agreement and Plan of Merger between
them, dated as of February 3, 2000 (the "Centillion Merger"), shall have closed.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF CTIG AND MERGER SUB
The obligations of CTIG and Merger Sub to effect the transactions
contemplated by this Agreement and to perform their other obligations to be
performed at or subsequent to the Closing shall be subject to the fulfillment at
or prior to the Closing of the following additional conditions, any one or more
of which may be waived by CTIG to the extent permitted by applicable law:
6.1 Representations and Warranties True. The representations and
warranties of Celltech and the Celltech Stockholders, contained in this
Agreement shall be true and correct on the date of this Agreement and at and on
the Closing Date as though such representations and warranties were made at and
on such dates (except where such representation and warranty speaks by its terms
as of a different date, in which case it shall be true and correct as of such
28
<PAGE>
date), except for such untruths or inaccuracies which would not, individually or
in the aggregate, have a Material Adverse Effect on Celltech.
6.2 Performance. Celltech and the Celltech Stockholders shall
have performed and complied in all material respects with all agreements,
obligations and conditions required by this Agreement to be performed or
complied with by it on or prior to the Closing Date.
6.3 Additional Documents. Celltech shall furnish the
following:
(a) such certificates of Celltech's President and of each
of the Celltech Stockholders to evidence compliance with the conditions set
forth in Sections 6.1 and 6.2 as may be reasonably requested by CTIG,
(b) resolutions of Celltech's Board of Directors and the
Celltech Stockholders authorizing and approving the Merger, this Agreement and
all transactions contemplated hereby, certified by Celltech's Secretary,
(c) a "good standing" certificate for Celltech and a
certified copy of its Certificate of Incorporation, and all amendments thereto,
issued by the Delaware Secretary of State and dated as of a date within five
days prior to the Closing Date,
(d) general releases in favor of Celltech executed by each
Celltech Stockholder and each director, in the form previously approved by CTIG,
releasing Celltech from all liability to such person,
(e) a general release, in the form previously approved by
CTIG, executed by Symphony Management Associates, Inc., releasing Celltech from
all liability,
(f) all consents and approvals by third parties that may
be required for Celltech to perform its obligations under this Agreement, and
(g) any documents of transfer reasonably requested by CTIG
including, without limitation, documents to be filed with the United States
Patent and Trademark Office with respect to Celltech's registered trademarks.
6.4 Certain Proceedings. No writ, order, decree or injunction
of a court of competent jurisdiction or Governmental Entity shall be in effect
against any of the parties, and no proceedings therefor shall have been
threatened or commenced by any Governmental Entity, which prohibits or restricts
the consummation of the Merger or would otherwise restrict the Surviving
Corporation's exercise of full rights to own and operate its business in a
manner which would have a Material Adverse Effect on Celltech or the Surviving
Corporation.
6.5 Minimum Balance Sheet Requirements. The adjusted balance
sheet of Celltech, on and as of the Closing Date (which shall be certified by
Celltech's President) must reflect: (i) net current assets (i.e., over current
liabilities) of not less than $1.00, (ii) no long term liabilities
29
<PAGE>
other than deferred taxes, and (iii) all earnings for the period from January 1,
2000 to the Effective Time.
6.6 Material Adverse Change. There shall not have occurred any
material adverse change in the business, operations, assets, financial condition
or results of operations of Celltech since the Balance Sheet Date.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF CELLTECH
The obligation of Company under this Agreement to effect the
transactions contemplated by this Agreement shall be subject to the fulfillment
on or before the Closing Date of each of the following additional conditions,
any one or more or which may be waived by Company:
7.1 Representations and Warranties True. The representations and
warranties of CTIG and Merger Sub contained in this Agreement shall be true and
correct on the date of this Agreement and at and on the Closing Date as though
such representations and warranties were made at and on such dates (except when
such representation and warranty speaks by its terms of a different date, in
which case it shall be true and correct as of such date), except for such
untruths or inaccuracies which would not, individually or in the aggregate, have
a Material Adverse Effect on CTIG and Merger Sub.
7.2 Performance. CTIG and Merger Sub shall have each performed and
complied in all material respects with all agreements, obligations and
conditions required by this Agreement to be performed or complied with by either
of them on or prior to the Closing Date.
7.3 Certificates.
(a) CTIG and Merger Sub shall furnish such certificates of their
respective Presidents to evidence compliance with the conditions set forth in
Sections 7.1 and 7.2 as may be reasonably requested by Celltech;
(b) evidence that the CTIG Board of Directors and/or CTIG
stockholders, as appropriate, have taken all appropriate corporate action
authorizing and approving the Merger, this Agreement and all transactions
contemplated thereby, certified by CTIG's Secretary; and
(c) a "good standing" certificate for Celltech issued by the
Delaware Secretary of State and dated as of a date within five days prior to the
Closing Date.
7.4 Certain Proceedings. No writ, order, decree or injunction of a
court of competent jurisdiction or Governmental Entity shall be in effect
against any of the parties, and no proceedings therefor shall have been
threatened or commenced by any governmental entity, which prohibits or restricts
the consummation of the Merger.
30
<PAGE>
7.5 Effectiveness of the Form S-4. The Form S-4 shall have been
declared effective by the SEC under the Securities Act. No stop order suspending
the effectiveness of the Form S-4 shall have been issued by the SEC and no
proceedings for that purpose shall have been initiated or threatened by the SEC.
ARTICLE VIII
TERMINATION AND ABANDONMENT
8.1 Termination by CTIG or Celltech. This Agreement may be terminated
at any time prior to the Effective Time, whether before or after approval by the
stockholders of CTIG and/or Celltech:
(a) by mutual consent of the Boards of Directors of CTIG and
Celltech;
(b) by either CTIG or Celltech if, without a material breach of
this Agreement by such terminating party, the Merger shall not have been
consummated on or before June 30, 2000, which date may be extended by mutual
written consent of CTIG and Celltech; or
(c) by either CTIG or Celltech, if any court of competent
jurisdiction in the United States or other Governmental Entity shall have issued
an order (other than a temporary restraining order) , decree or ruling or taken
any other action restraining, enjoining or otherwise prohibiting the Merger, and
such order, decree, ruling or other action shall have become final and
nonappealable; provided that the party seeking to terminate this Agreement shall
have used all commercially reasonable efforts to remove or lift such order,
decree or ruling; or
(d) if a Special Meeting is required by applicable law, by either
CTIG if the approval of CTIG's stockholders required for the consummation shall
not have been obtained.
8.2 Termination by CTIG. This Agreement may be terminated and the
transactions contemplated hereby abandoned by action of the Board of Directors
of CTIG, at any time prior to the Effective Time, before or after the approval
by the stockholders of CTIG, if (a) Celltech or Principal Stockholder shall have
failed to comply in any material respect with any of their respective covenants
or agreements contained in this Agreement to be complied with or performed by
Celltech or Principal Stockholder at or prior to such date of termination or (b)
there exists a material breach or breaches of any representation or warranty of
Celltech or a Celltech Stockholder contained in this Agreement such that the
closing condition set forth in Section 6.1 would not be satisfied as of the
Closing Date, or (c) if Celltech fails to deliver the Financial Statements as
required by Section 2.5(b).
8.3 Termination by Celltech. This Agreement may be terminated and the
transactions contemplated hereby abandoned at any time prior to the Effective
Time, before or after the approval by the stockholders of Celltech, by action of
the Board of the Directors of Celltech, if (a) CTIG or Merger Sub shall have
failed to comply in any material respect with any of their respective covenants
or agreements contained in this Agreement to be complied with or performed by
CTIG or Merger Sub at or prior to such date of termination, or (b) there exists
31
<PAGE>
a material breach or breaches of any representation or warranty of CTIG or
Merger Sub contained in this Agreement such that the closing condition set forth
in Section 7.1 would not be satisfied as of the Closing Date.
8.4 Procedure for Termination. In the event of termination of this
Agreement and abandonment of the transactions contemplated hereby by CTIG or
Celltech pursuant to this Article VIII, written notice thereof shall forthwith
be given to the other.
8.5 Effect of Termination and Abandonment. In the event of termination
of this Agreement and abandonment of the transactions contemplated hereby
pursuant to this Article VIII, no party (or any of its respective directors or
officers) shall have any liability or further obligation to any other party to
this Agreement; provided that nothing herein shall relieve any party from
liability for any breach of its representations, warrants, covenants and
agreements under this Agreement.
ARTICLE IX
INDEMNIFICATION BY PRINCIPAL STOCKHOLDER
9.1 Indemnification. Subject to the terms and conditions of this
Article IX, Principal Stockholder does hereby indemnify, defend and hold
harmless CTIG and Merger Sub (each an "Indemnified Party") for a period of one
year after the Effective Time, from and against all losses, claims, damages,
liabilities and expenses, including interest, penalties and reasonable
attorney's fees and expenses (collectively "Damages"), resulting or arising,
directly or indirectly, from (a) a material breach of any representation,
warranty or agreement of Celltech or Principal Stockholder contained in or made
part of this Agreement or any document executed in connection herewith, (b) any
material error contained in any statement, report, certificate or other document
or instrument delivered to CTIG or Merger Sub pursuant to this Agreement or
contained in any Schedule, (c) any claim, debt, liability or obligation of
Celltech or Principal Stockholder to any party, incurred prior to the Effective
Time or arising from any matter or thing occurring prior to the Effective Time,
including but not limited to claims made by current or former stockholders of
Celltech and claims made by Governmental Entities for Taxes, except for (i)
liabilities expressly disclosed in this Agreement, the Celltech Disclosure
Schedules or the Celltech Financial Statements, and (ii) liabilities incurred
between the date of this Agreement and the Effective Time, the incurrence of
which is not in violation of the provisions of this Agreement, and (d) the cause
of action filed by the Minority Stockholders styled Frank S. Scarpa, Valerie S.
Hart and Richard J. Donnelly, Plaintiffs v. David A. Warren and Celltech
Information Systems, Inc., Defendants in the Delaware Chancery Court, New Castle
Delaware, C.A. No. 17704 NC, including, without limitation, the settlement
thereof.
9.2 Conditions of Indemnification. The obligations and liabilities of
Principal Stockholder to indemnify the Indemnified Parties under Section 9.1
shall be subject to the following terms and conditions:
(a) An Indemnified Party shall give Principal Stockholder prompt
notice of any claim for Damages. Failure to provide, or a delay in providing,
the foregoing notice shall not
32
<PAGE>
relieve Principal Stockholder of his obligations under this Article IX unless,
and only to the extent that, his rights to defend a third party claim are
materially prejudiced thereby. In the event the claim is the result of an action
or threatened action by a third party, Principal Stockholder shall have the
right to undertake the defense thereof by representatives chosen by it. If
Principal Stockholder, within a reasonable time after notice of any such claim
by a third party, fails to defend an Indemnified Party against which such claim
has been asserted, such Indemnified Party shall upon further notice to Principal
Stockholder have the right to undertake the defense, compromise or settlement of
such claim on behalf of and for the account and risk of Principal Stockholder,
subject to the right of the Principal Stockholder to assume the defense of such
claim at any time prior to settlement, compromise or final determination
thereof.
(b) Principal Stockholder still have the right to contest a claim
for Damages by providing written notice to the Indemnified Party that is making
the claim within 10 days after receiving notice of the claim. All such contests
shall be resolved by final and binding arbitration before a panel of three
arbitrators in Wilmington, DE in accordance with the Commercial Arbitration
Rules of the American Arbitration Association.
9.3 Remedies.
(a) No shares of Principal Stockholder's Escrowed Stock
then in escrow shall be released pursuant to Section 1.17 after a claim for
Damages has been made, until all such claims have been resolved.
(b) Any Damages due an Indemnified Party shall first be
paid by reducing the number of shares of Principal Stockholder's Escrowed Stock
that would otherwise have been issued to Principal Stockholder by an amount
equal in value to such Damages. The number of shares by which such distribution
shall be reduced, shall be valued at the Average Market Price per Share of the
Class A Common Stock on the date notice of the claim for Damages was provided to
Principal Stockholder.
(c) In the event that the amount of Damages exceeds the
value of Principal Stockholder's Escrowed Stock then in escrow that would
otherwise have been issued to Principal Stockholder, then within 30 days after
the final determination of such number of shares Principal Stockholder shall pay
the balance due (the "Cash Indemnity Payment") by certified or bank check or by
wire transfer. Notwithstanding the foregoing, the parties agree that the Cash
Indemnity Payment shall not exceed $500,000 except to the extent such excess is
caused by a claim by a Minority Stockholder or former stockholders, if any, or
pursuant to Section 9.1(d) but in all cases the total amount of Principal
Stockholder's liability pursuant to this Article IX shall not exceed the value
of the Merger Consideration otherwise to be received by him.
ARTICLE X
DEFINITIONS
10.1 Terms Defined in the Agreement. The following capitalized
terms used herein shall have the meanings ascribed in the indicated sections.
33
<PAGE>
Accounts Receivable 2.23
Acquisition Transaction 4.2
America One 1.17
America One Revenue 1.17
Average Market Price Per Share 1.7
Balance Sheet 2.5
Balance Sheet Date 2.5
Business Day 1.3
CTIG Preamble
CTIG Dissenting Shares 1.16
Cash Indemnity Payment 9.3
Celltech Preamble
Celltech Common Stock Recitals
Celltech Disclosure Schedules 2.2
Celltech Stockholders Preamble
Celltech Common Stock 1.7
Centillion Merger 6.7
Certificate of Merger 1.2
Certificates 1.9
Class A Common Stock 1.7
Closing 1.3
Closing Date 1.3
Closing Stock 1.7
Code 2.14
Constituent Corporations Preamble
Contracts 2.17
DGCL 1.1
Damages 9.1
Effective Time 1.2
Employee Plans 2.15
Environmental Law 2.12
ERISA 2.15
Escrow Quarter 1.17
Escrow Year 1.17
Escrowed Stock 1.7
Exchange Act 1.18
Exchange Agent 1.9
Financial Statements 2.5
Form S-4 4.5
GAAP 2.5
Governmental Entity 1.13
Hazardous Substance 2.12
Indemnified Party 9.1
Intellectual Property Rights 2.13
Material Adverse Effect 2.1
34
<PAGE>
Merger Recitals
Merger Cash 1.7
Merger Stock 1.7
Merger Consideration 1.7
Merger Sub Preamble
Minority Stockholders Preamble
PASCO 2.11
Person 1.13
Principal Stockholder Preamble
Prospectus 4.5
Proxy Statement 1.18
SEC 1.18
SEC Reports 3.6
Securities Act 3.6
Special Meeting 1.18
Surviving Corporation 1.1
Target Revenue 1.17
Tax 2.14
Tax Returns 2.14
ARTICLE XI
MISCELLANEOUS
11.1 Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified or supplemented only by written
agreement of the parties at any time prior to the Effective Time with respect to
any of the terms contained herein; provided, however, that, after this Agreement
is adopted by the Celltech Stockholders, no such amendment or modification shall
reduce the amount or change the form of the Merger Consideration or in any way
adversely affect the rights of the Celltech Stockholders without their further
approval.
11.2 Waiver of Compliance; Consents. Any failure of CTIG and
Merger Sub or Celltech to comply with any obligation, covenant, agreement or
condition herein may be waived only by a written instrument signed by the party
granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this Section
11.2.
11.3 Survivability; Investigations. The respective
representations and warranties of the parties contained in this Agreement or in
any certificates or other documents delivered prior to or at the Closing (a)
shall not be deemed waived or otherwise affected by any investigation made by
any party hereto and (b) subject to the time limitation on Principal
Stockholder's indemnity set forth in Section 9.1 shall not survive beyond the
Effective Time except for the representations, warranties and agreements set
forth in Articles II, IIA and III, which shall survive the Effective
35
<PAGE>
Time for a period of three years, and Sections 1.6, 1.9, 1.10, 1.11, 1.12, 1.13,
1.14, 1.17, 4.7, 4.8 and 4.9 and Articles IX and XI, which shall survive the
Effective Time and a termination of this Agreement. This Section 11.3 shall have
no effect upon any other obligation of any of the parties hereto, whether to be
performed before or after the Closing Date.
11.4 Reasonable Efforts. Subject to the terms and conditions
herein provided, and applicable law, the parties each agree to use all
commercially reasonable best efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all things necessary, proper and advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement.
11.5 Notices. All notices and other communications hereunder
shall be in writing and shall be delivered personally, by next-day courier or
mailed by registered or certified mail (return receipt requested) , first class
postage prepaid, or telecopied with confirmation of receipt, to the Parties at
the addresses specified below (or at such other address for a party as shall be
specified by like notice; provided that notices of a change of address shall be
effective only upon receipt thereof). Any such notice shall be effective upon
receipt, if personally delivered or telecopied, one day after delivery to a
courier for next-day delivery, or three days after mailing, if deposited in the
U.S. mail, first class postage prepaid.
(a) if to Company, to
Celltech Information Systems, Inc.
152 Cloverly Road
Grosse Pointe Farms, MI
Telecopy: (313) 886-2466
Attention: David A. Warren, President
with a copy to:
Fouts & Moore, L.L.P
1300 Post Oak Boulevard
20th Floor
Houston, TX 77056-8000
Telecopy: (713) 986-7299
Attention: Robbie Morris, Esquire
(b) if to CTIG or Merger Sub, to
CTI Group (Holdings) Inc.
2550 Eisenhower Avenue
Norristown, PA 19403
Telecopy: (610) 666-7707
Attention: Anthony Johns
36
<PAGE>
with a copy to:
Klehr, Harrison, Harvey, Branzburg & Ellers LLP
260 S. Broad Street
Philadelphia, PA 19102
Telecopy: (215) 568-6603
Attention: Donald M. Millinger, Esquire
(c) if to Principal Stockholder:
David A. Warren
152 Cloverly Road
Grosse Pointe Farms, MI 48236
Telecopy: (313) 886-2466
with a copy to:
Fouts & Moore, L.L.P
1300 Post Oak Boulevard
20th Floor
Houston, TX 77056-8000
Telecopy: (713) 986-7299
Attention: Robbie Morris, Esquire
(d) if to a Minority Stockholder:
Frank Scarpa
c/o Daller Greenberg & Dietrich
Valley Green Corporate Center
7111 Valley Green Road
Fort Washington, PA 19034
Telecopy: (215) 836-2845
Attention: Edward A. Greenberg, Esquire
Valerie Hart
c/o Daller Greenberg & Dietrich
Valley Green Corporate Center
7111 Valley Green Road
Fort Washington, PA 19034
Telecopy: (215) 836-2845
Attention: Edward A. Greenberg, Esquire
37
<PAGE>
Richard Donnelly
c/o Daller Greenberg & Dietrich
Valley Green Corporate Center
7111 Valley Green Road
Fort Washington, PA 19034
Telecopy: (215) 836-2845
Attention: Edward A. Greenberg, Esquire
with a copy to:
Daller Greenberg & Dietrich
Valley Green Corporate Center
7111 Valley Green Road
Fort Washington, PA 19034
Telecopy: (215) 836-2845
Attention: Edward A. Greenberg, Esquire
11.6 Successor and Assigns. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
and their respective successors and permitted assigns. However neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties without the prior written consent of the other
parties, nor is this Agreement intended to confer any rights or remedies
hereunder upon any other Person.
11.7 Governing Law. This Agreement shall be governed by the
laws of the State of Delaware as to all matters, including but not limited to
matters of validity, construction, effect, performance and remedies,
notwithstanding any conflict of laws, doctrines of such state or any other
jurisdiction, and without the aid of any cannon, custom or rule of law requiring
construction against the draftsman.
11.8 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement shall
become effective when each party has received counterparts signed by all of the
other parties.
11.9 Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect against a party, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby. Such invalidity, illegality or unenforceability shall only
apply as to such party in the specific jurisdiction where such judgment shall be
made.
11.10 Interpretation. The article and section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement.
38
<PAGE>
11.11 Entire Agreement. This Agreement, including the
schedules and exhibits hereto and the documents and instruments referred to
herein and therein, embodies the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein and supersedes
all prior agreements and the understandings between the parties with respect to
such subject matter. There are no representations, promises, warranties,
covenants, or undertakings, other than those expressly set forth or referred to
herein and therein.
11.12 Jurisdiction. Each of the parties hereto (a) consents to
submit itself to the personal jurisdiction of any federal court located in the
State of Delaware or any Delaware state court in the event any dispute arises
out of this Agreement or any of the transactions contemplated by this Agreement,
(b) agrees that it will not attempt to deny or defeat such personal jurisdiction
by motion or other request for leave from any such court and (c) agrees that it
will not bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a federal or state court sitting in
the State of Delaware.
11.13 WAIVER OF JURY TRIAL. EACH OF CTIG, MERGER SUB, CELLTECH
AND THE CELLTECH STOCKHOLDERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
11.14 Class A Common Stock. Celltech and the Celltech
Stockholders acknowledge that (a) as of the date hereof, CTIG has a single class
of Common Stock, and (b) the Class A Common Stock to be issued to them will be
created by a redesignation of such Common Stock as Class A Common Stock pursuant
to amendments to CTIG's Certificate of Incorporation which will be effected in
connection with the Centillion Merger.
IN WITNESS WHEREOF, CTIG, MERGER SUB and CELLTECH have caused
this Agreement to be signed by their respective duly authorized officers, and
the CELLTECH STOCKHOLDERS have signed this Agreement, as of the date first above
written.
CTI GROUP (HOLDINGS) INC.
By: ___________________________
Name:
Title:
[SIGNATURES CONTINUED ON NEXT PAGE]
39
<PAGE>
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
CTI BILLING SOLUTIONS INC.
By: _____________________________________
Name:
Title:
CELLTECH INFORMATION SYSTEMS, INC.
By: _____________________________________
David A. Warren
President
-------------------------------------------------------
David A. Warren
Number of Shares of Celltech Common Stock Owned:2000
-------------------------------------------------------
Frank S. Scarpa
Number of Shares of Celltech Common Stock Owned:117.647
-------------------------------------------------------
Valerie S. Hart
Number of Shares of Celltech Common Stock Owned:117.647
-------------------------------------------------------
Richard J. Donnelly
Number of Shares of Celltech Common Stock Owned:117.647
40
<PAGE>
EXHIBIT "A"
-----------
DAVID WARREN EMPLOYMENT AGREEMENT
<PAGE>
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made on and as of __________ ___, 2000 (the
"Agreement Date") by and between DAVID A. WARREN ("Employee") and CTI BILLING
SOLUTIONS INC., a Delaware corporation ("Company").
BACKGROUND
A. Employee is and has been for approximately 12 years the President of
Celltech Information Systems, Inc. ("Celltech").
B. Celltech and Company are among the parties to that certain Agreement
and Plan of Merger, dated ____________________ (the "Merger Agreement"),
pursuant to which Company will be the surviving corporation of the merger
contemplated therein (the "Transaction").
C. Company desires to employ Employee, and Employee desires to be
employed by Company, upon the conditions and terms set forth in this Agreement.
NOW, THEREFORE, intending to be legally bound hereby, and in
consideration of the mutual covenants set forth this Agreement, Employee and
Company agree as follows:
1. Employment and Duties. Company shall employ Employee as Company's
Chief Operating Officer during the term of employment set forth in
Section 2 hereof. Employee shall have such responsibilities and
duties, consistent with his position and expertise, as may from time
to time be prescribed by Company's President. Employee shall devote
his full time, energy, skill and best efforts to the business and
affairs of Company, and shall not, during the term of this
Agreement, be engaged in any other business activity whether or not
such business activity is pursued for gain, profit or other
pecuniary advantage; provided, however, that nothing in this
Agreement shall prevent Employee from (i) engaging in charitable
activities, or (ii) investing his assets in such form or manner as
(A) will not require any services on Employee's part in the
operations or the affairs of the company in which such investments
are made (other than services to Company and its affiliates) and (B)
will not be an investment in any company which competes, directly or
indirectly, with Company in any manner; provided, further, that the
activities permitted in the foregoing subsections (i) and (ii) shall
not, either alone or together with other activities permitted under
those subsections, interfere in any material way with Employee's
responsibilities under this Agreement. Employee shall be employed by
Company, and shall spend his business time, allocated between
Company's location at Houston, TX (the "Houston Office") and the
office Employee maintains in his home in Michigan for the discharge
of Company business (the "Michigan Office"), such allocation of time
to be consistent with Employee's past practices as President of
Celltech.
2. Term. The term of Employee's employment under this Agreement shall
be a period of three (3) years commencing on the Effective Time as
defined in the Merger Agreement, and ending on the third anniversary
of the Effective Time, unless sooner terminated in accordance with
the other provisions of this Agreement (the "Term").
<PAGE>
3. Compensation.
3.1 Salary. Company shall pay to Employee as compensation for all
services rendered hereunder a base salary of $200,000 per year
("Salary"), payable in accordance with Company's normal payroll
practices for employees. Company shall deduct or cause to be
deducted from the Salary all taxes and amounts required by law to
be withheld. The Salary shall be reviewed by Company on an annual
basis.
3.2 Benefits. During the Term, subject to the other provisions of
this Agreement, Employee shall be entitled to participate and
shall be included in any savings, 401(K), pension,
profit-sharing, group medical, group disability or similar plan
adopted by Company, now existing or established hereafter, to the
extent he is eligible under the general provisions thereof.
3.3 Cash Bonus. In addition to his Salary, Employee may also receive
cash bonuses on such terms, at such times and in such amounts as
Company's President or Board of Directors may determine in his or
its sole discretion ("Cash Bonus").
3.4 Fringe Benefits.
3.4.1 Vacation. Employee shall be entitled to twenty (20) days
of paid vacation during each year.
3.4.2 Reimbursement of Expenses. Employee is authorized to incur
ordinary, necessary and reasonable expenses in the course
of Company's business, in accordance with Company's
standard expense and expense reimbursement procedures
applicable to executive employees of Company ("Business
Expenses"). Company shall reimburse Employee for Business
Expenses upon presentation by the Employee of an itemized
account of such Business Expenses in a manner reasonably
prescribed by Company, unless Business Expenses have been
paid directly by Company. The parties agree that Business
Expenses with respect to the Michigan Office will be
limited to the following direct expenses incurred in the
discharge of Company's business: (a) dedicated telephone
and facsimile lines, (b) long distance telephone calls,
(c) ISDN dial-up to connect to Company's internal LAN, (d)
cellular telephone and pager, (e) office equipment and
equipment maintenance (including personal computer,
photocopier and facsimile machine), (f) miscellaneous
office supplies and (g) travel expenses between the
Michigan Office and Houston Office consistent with prior
practice as President of Celltech, with air travel at
coach rates with the longest advance scheduling
practicable; provided that the foregoing Business Expenses
shall be subject to an annual budget agreed upon by the
parties consistent with prior years, and will not include
any allocation of Employee's home mortgage, utilities,
insurance, taxes or other overhead or indirect expenses.
2
<PAGE>
3.4.3 Options. Employee shall be entitled to participate in any
employee stock option plan adopted by CTI Group (Holdings)
Inc. ("CTIG"), Company's parent corporation, for the
benefit of employees of CTIG and its subsidiaries.
3.4.4 Automobile. Company shall provide Employee with an
automobile allowance of $500.00 per month. Employee shall
maintain liability, collision and comprehensive insurance
covering any such automobile, in such amounts and on such
terms as are required by applicable law and shall provide
Company with proof of such coverage as and when requested.
3.5 Entire Compensation. The compensation provided for in this
Section shall be the full consideration for the services to be
rendered by Employee to Company hereunder.
4. Termination.
4.1 Notice of Termination. Except as otherwise provided in this
Agreement, any termination of Employee's employment under this
Agreement shall be communicated by written Notice of Termination
to Employee. As used in this Agreement, "Notice of Termination"
means a notice specifying the termination provision in this
Agreement relied upon and setting forth the circumstances
providing the basis for termination of Employee's employment
under the provision specified. As used in this Agreement, "Date
of Termination" shall mean the date specified in the Notice of
Termination or, where notice is not required, the date employment
actually terminates.
4.2 Grounds for Termination.
4.2.1 Termination upon Death. Employee's employment with Company
and all of Employee's rights to compensation and benefits
hereunder shall automatically terminate upon his death,
except that Employee's heirs, personal representatives or
estate shall be entitled to any unpaid portion of his
Salary, his earned but unpaid bonus, if any, and accrued
benefits up to the Date of Termination and shall also be
entitled to reimbursement for any Business Expenses
properly incurred by Employee.
4.2.2 Termination upon Disability. If Employee becomes disabled,
Employee shall continue to receive all of his compensation
and benefits in accordance with Section 3 for a period of
six months following the Onset of Disability (as defined
in this Section 4.2.2). Any amounts due to Employee under
this Section 4.2.2 shall be reduced, dollar-for-dollar, by
any amounts received by Employee under any disability
insurance policy or plan ("Disability Payments") provided
to Employee by Company. "Onset of Disability" means the
3
<PAGE>
first day on which Employee shall be unable to attend to
his duties on a full time basis by reason of physical or
mental incapacity, sickness or infirmity. Company will
notify Employee promptly upon having made a determination
of the Onset of Disability. If Employee's disability
continues for more than six months after the Onset of
Disability or for periods aggregating more than six months
during any twelve (12) month period, then, Company shall
have the right to terminate Employee's employment
immediately upon notice, and all of his rights to
compensation and benefits hereunder shall simultaneously
terminate, except that Employee shall be entitled to any
unpaid portion of his Salary and accrued benefits up to
the Date of Termination and to any benefits which are to
be continued or paid after the Date of Termination in
accordance with the terms of the corresponding benefit
plans, if any. A determination of Employee's disability
shall be subject to the certification of a qualified
physician agreed to by Company and Employee or, in the
event of Employee's incapacity to designate a physician,
Employee's legal representative. In the absence of
agreement between Company and Employee, each party shall
nominate a qualified physician and the two physicians
shall select a third physician, who shall make the
determination as to disability.
4.2.3 Termination for Cause. At any time during the Term,
Company may terminate Employee's employment hereunder for
Cause (as defined below), effective immediately upon
notice to Employee.
For purposes of this Agreement, Cause shall mean: (1) Employee
breaches, neglects or fails to diligently perform any or all of his duties under
this Agreement (other than such failure resulting from Employee's incapacity due
to physical or mental illness within the meaning of Section 4.2.2), (2) Employee
commits an act of dishonesty or breach of trust, or acts in a manner which is
inimical or injurious to the business or interests of Company, either during the
Term or in connection with the Transaction, (3) Employee violates or breaches
any of the provisions of this Agreement, and, shall have either failed to remedy
such breach within 30 days after his receipt of written notice from Company
identifying the breach in reasonable detail and demanding that he remedy such
breach, or, if incapable of full cure within such 30 day period, shall have
failed to take all reasonable steps to that end during such 30-day period and
thereafter fails to fully cure within an additional period of 15 days, (4)
Employee's intentional act or omission to act results in or is intended to
result directly in gain to or personal enrichment of Employee and injury to
Company or, (5) Employee is indicted for or convicted of a felony or any crime
involving larceny, embezzlement or moral turpitude (which, in the case of moral
turpitude, materially adversely affects Company in any financial manner).
On termination of this Agreement pursuant to this Section 4.2.3, all
rights to compensation and benefits of Employee shall cease as of the Date of
Termination, except Employee shall be entitled to any unpaid portion of his
Salary and benefits earned to the Date of Termination.
4.3 Procedure Upon Termination. On termination of employment regardless
of the reason, Employee shall promptly return to Company all information
regarding Company in whatever manner or media such information is stored or
maintained, and all documents (including copies) and other property of Company,
including without limitation, customer lists, manuals, letters, materials,
reports, and records in his possession or control no matter from whom or in what
manner acquired.
4
<PAGE>
5. Employee's Covenants.
5.1 Discoveries. Employee shall communicate to Company and preserve as
confidential information of Company each discovery, idea, design, invention and
improvement relating in any manner to Company's business, whether or not
patentable and whether or not reduced to practice, which is conceived, developed
or made by Employee, whether alone, or jointly with others, at any time during
the Term hereof (such discoveries, ideas, designs, inventions and improvements
are referred to as "Employee's Discoveries"). All of Employee's Discoveries
shall be Company's exclusive property, and all of Employee's right, title and
interest therein are hereby irrevocably assigned to Company. Employee shall not,
except with Company's express prior written consent, or except in the proper
course of his employment with Company, use any of Employee's Discoveries for his
own benefit or the benefit of any Person (as defined herein), or disclose any of
Employee's Discoveries to any outside Person through publication or in any other
manner.
For purposes of this Agreement, the term "Person" means a natural
person, corporation, partnership, trust, estate, joint venture, sole
proprietorship, government (and any branch or subdivision thereof), governmental
agency, association, cooperative or other entity.
5.2 Nondisclosure. At all times during and after the Term, Employee
shall keep confidential and shall not, except with Company's express prior
written consent, or except in the proper course of his employment with Company,
directly or indirectly, communicate, disclose, divulge, publish, or otherwise
express, to any Person, or use for his own benefit or the benefit of any Person,
any trade secrets, confidential or proprietary knowledge or information, no
matter when or how acquired, concerning the conduct and details of Company's
business, including without limitation names of customers and suppliers,
marketing methods, trade secrets, policies, prospects and financial condition.
For purposes of this Section 5.2, confidential information shall not include any
information which is now known by or readily available to the general public or
which becomes known by or readily available to the general public other than as
a result of any improper act or omission of Employee.
5.3 Noncompetition. During the Term hereof and for a period of one (1)
year thereafter, Employee shall not, except with Company's express prior written
consent, directly or indirectly, in any capacity, for the benefit of any Person:
(1) Communicate with or solicit or employ any Person who is or
during such period becomes a customer, supplier, employee,
salesman, agent or representative of Company, in any manner
which interferes or might interfere with such Person's
relationship with Company, or in an effort to obtain such Person
as a customer, supplier, employee, salesman, agent, or
representative of any business in competition with Company.
5
<PAGE>
(2) Establish, engage, own, manage, operate, join or control, or
participate in the establishment, ownership, management,
operation or control of, or be a director, officer, employee,
salesman, agent or representative of, or be a consultant to, any
Person in any business in competition with Company, at any
location in North America or the United Kingdom or any other
location where Company now conducts or during the Term begins
conducting any business, or act or conduct himself in any manner
which he would have reason to believe harmful or contrary to the
best interests of Company.
5.4 Enforcement. Employee acknowledges that any breach by him of any of
the covenants and agreements of this Section 5 ("Covenants") will result in
irreparable injury to Company for which money damages could not adequately
compensate Company, and therefore, in the event of any such breach, Company
shall be entitled, in addition to all other rights and remedies which Company
may have at law or in equity, to have an injunction issued by any competent
court enjoining and restraining Employee and/or all other Persons involved
therein from continuing such breach. The existence of any claim or cause of
action which Employee or any such other Person may have against Company shall
not constitute a defense or bar to the enforcement of any of the Covenants. If
Company is obliged to resort to litigation to enforce any of the Covenants which
has a fixed term, then such term shall be extended for a period of time equal to
the period during which a material breach of such Covenant was occurring,
beginning on the date of a final court order (without further right of appeal)
holding that such a material breach occurred or, if later, the last day of the
original fixed term of such Covenant.
5.5 Consideration. Employee expressly acknowledges that the Covenants
are a material part of the consideration bargained for by Company and, without
the agreement of Employee to be bound by the Covenants, Company would not have
agreed to enter into this Agreement.
5.6 Scope. If any portion of any Covenant or its application is
construed to be invalid, illegal or unenforceable, then the other portions and
their application shall not be affected thereby and shall be enforceable without
regard thereto. If any of the Covenants is determined to be unenforceable
because of its scope, duration, geographical area or similar factor, then the
court making such determination shall have the power to reduce or limit such
scope, duration, area or other factor, and such Covenant shall then be
enforceable in its reduced or limited form.
6. Additional Terms and Provisions.
6.1 Notices. All notices, requests, demands, consents, waivers, and
other communications required or permitted under this Agreement must be in
writing and shall be deemed to have been given (i) upon delivery to the
appropriate addresses stated below, if delivered personally, or (ii) three (3)
days after the date mailed to the appropriate addresses stated below, if mailed
by first class certified mail, registered mail, or express mail, in each case
with postage prepaid and return receipt requested, or (iii) one (1) day after
the date sent to the appropriate addresses stated below, if sent by a nationally
recognized overnight delivery or courier service, with delivery charges prepaid
and proof of delivery or receipt requested, or (iv) on the date sent to the
appropriate addresses or fax numbers stated below, if sent by prepaid telegram,
e-mail, or fax, provided that a copy is sent within twenty-four (24) hours
thereafter by one of the other methods of giving notices permitted under this
Section. The addresses, e-mail addresses, and fax numbers of the parties for
purposes of this Section are set forth below. Any party may change its
addresses, e-mail addresses, or fax numbers for purposes of this Section by
giving notice of such change to all other parties in the manner permitted under
this Section.
6
<PAGE>
If to Company:
CTI Billing Solutions Inc.
2550 Eisenhower Avenue
Norristown, PA 19403
Attn: President
with a copy to:
Klehr, Harrison, Harvey, Branzburg & Ellers LLP
260 S. Broad Street
Philadelphia, PA 19102
Facsimile: (215) 568-6060
Attn: Donald M. Millinger, Esq.
If to Employee:
David A. Warren
152 Cloverly Road
Grosse Pointe Farms, MI 48236
Telecopy: (313) 886-2466
with a copy to:
Fouts & Moore, L.L.P.
1300 Post Oak Boulevard
20th Floor
Houston, TX 77056-8000
Telecopy: (713) 986-7299
Attention: Robbie Morris, Esquire
6.2 Entire Understanding. This Agreement sets forth the entire
understanding between the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous, written, oral, expressed or implied,
communications, agreements and understandings with respect to the subject matter
hereof.
6.3 Modification. This Agreement shall not be amended, modified,
supplemented or terminated except in writing signed by both parties.
6.4 Prior Agreements. Employee represents to Company (1) that there are
no restrictions, agreements or understandings whatsoever to which Employee is a
party which would prevent or make unlawful his execution of this Agreement or
his employment hereunder, (2) that his execution of this Agreement and his
employment hereunder shall not constitute a breach of any contract, agreement or
understanding, oral or written to which he is a party or by which he is bound
and (3) that he is free and able to execute this Agreement and to enter into
employment by Company.
7
<PAGE>
6.5 Termination of Prior Employment Agreements. All prior employment
agreements between Employee and Company (and/or any of its predecessors or
affiliates) are hereby terminated as of the date hereof as fully performed on
both sides.
6.6 Parties in Interest. This Agreement and all rights of Employee
hereunder shall inure to the benefit of, bind and be enforceable by Employee and
his heirs, personal representatives, estate and beneficiaries, and Company and
its successors and assigns.
6.7 Assignment. This Agreement is a personal employment contract of
Company, being for the personal services of Employee, and shall not be
assignable by Employee. This Agreement shall inure to the benefit of and be
binding upon any corporate or other successor of the Company which may acquire,
directly or indirectly, by merger, consolidation, purchase, or otherwise, all or
substantially all of the assets of Company, and shall otherwise inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
executors, administrators, successors and assigns. Nothing in the Agreement
shall preclude Company from consolidating or merging into or with or
transferring all or substantially all of its assets to another person. In that
event, such other Person shall assume this Agreement and all obligations of
Company hereunder. Upon such a consolidation, merger, or transfer of assets and
assumption, the term " Company" as used herein, shall mean such other person and
this Agreement shall continue in full force and effect.
6.8 Severability. If any provision of this Agreement is construed to be
invalid, illegal or unenforceable, then the remaining provisions hereof shall
not be affected thereby and shall be enforceable without regard thereto.
6.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original
hereof, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one counterpart hereof.
6.10 Section Headings. Section and subsection headings in this
Agreement are inserted for convenience of reference only, and shall neither
constitute a part of this Agreement nor affect its construction, interpretation,
meaning or effect.
6.11 References. All words used in this Agreement shall be construed to
be of such number and gender as the context requires or permits.
6.12 Controlling Law. This Agreement is made under, and shall be
governed by, construed and enforced in accordance with, the substantive laws of
the State of Delaware applicable to agreements made and to be performed entirely
therein, notwithstanding any conflict-of-laws doctrines of such state or other
jurisdiction to the contrary, and without the aid of any canon, custom or rule
of law requiring construction against the draftsman.
8
<PAGE>
6.13 Settlement of Disputes. Any claims, controversies, demands,
disputes or differences between or among the parties hereto or any persons bound
hereby arising out of, or by virtue of, or in connection with, or relating to
this Agreement shall be submitted to and settled by arbitration in Wilmington,
DE before a single arbitrator who shall be knowledgeable in the field of
business law and employment relations and such arbitration shall be in
accordance with the rules then obtaining of the American Arbitration
Association. The parties agree to bear joint and equal responsibility for all
fees of the arbitrator, abide by any decision rendered as final and binding, and
waive the right to submit the dispute to a public tribunal for a jury or
non-jury trial.
6.14 Exclusive Jurisdiction. The parties hereto irrevocably consent to
the exclusive jurisdiction of the state and federal courts located in the City
of Wilmington, DE in any action or proceeding between the parties hereto and
both of the parties agree to service of process by hand delivery or by certified
mail, to the addresses set forth herein for each party.
6.15 Indulgences, Etc.. Neither the failure nor delay on the part of
either party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall the single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or any other right, remedy, power or privilege, nor shall
any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Agreement Date.
CTI BILLING SOLUTIONS INC.
By: ______________________________
Witness:
________________________ _____________________________(SEAL)
DAVID A. WARREN
9
