<PAGE>
---------------------------
OMB APPROVAL
---------------------------
OMB NUMBER 3235-0145
EXPIRES: DECEMBER 31, 1997
ESTIMATED AVERAGE BURDEN
HOURS PER FORM 14.90
---------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No.__)*
CB Commercial Real Estate Services Group, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.01 Par Value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
12479F103
- --------------------------------------------------------------------------------
(CUSIP Number)
William M. Wardlaw
11100 Santa Monica Blvd., Suite 1900
Los Angeles, CA 90025
Telephone: (310) 444-1822
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
August 28, 1997
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [X]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 22
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 12479F103 PAGE 2 OF 22 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
FS Equity Partners III, L.P., a Delaware limited partnership
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [X]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
OO (see Item 3)
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF -0-
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
3,278,448 (see Item 5)
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING -0-
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
3,278,448 (see Item 5)
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
3,278,448 (see Item 5)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
17.5%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
PN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 2 of 7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 12479F103 PAGE 3 OF 22 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
FS Capital Partners L.P., a California limited partnership
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [X]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
OO (see Item 3)
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
California
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF -0-
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
3,278,448 (see Item 5)
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING -0-
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
3,278,448 (see Item 5)
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
3,278,448 (see Item 5)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
17.5%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
PN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 2 of 7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 12479F103 PAGE 4 OF 22 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
FS Holdings Inc., a California corporation
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [X]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
OO (see Item 3)
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
California
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF -0-
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
3,278,448 (see Item 5)
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING -0-
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
3,278,448 (see Item 5)
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
3,278,448 (see Item 5)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
17.5%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 2 of 7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 12479F103 PAGE 5 OF 22 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
FS Equity Partners International, L.P., a Delaware limited partnership
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [X]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
OO (see Item 3)
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF -0-
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
124,015 (see Item 5)
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING -0-
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
124,015 (see Item 5)
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
124,015 (see Item 5)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
0.7%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
PN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 2 of 7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 12479F103 PAGE 6 OF 22 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
FS&Co. International, L.P. a Cayman Islands exempted limited partnership
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [X]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
OO (see Item 3)
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Cayman Islands
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF -0-
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
124,015 (see Item 5)
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING -0-
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
124,015 (see Item 5)
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
124,015 (see Item 5)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
0.7%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
PN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 2 of 7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 12479F103 PAGE 7 OF 22 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
FS International Holdings Limited, a Cayman Islands exempted company
limited by shares
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [X]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
OO (see Item 3)
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Cayman Islands
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF -0-
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
124,015 (see Item 5)
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING -0-
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
124,015 (see Item 5)
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
124,015 (see Item 5)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
0.7%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 2 of 7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 12479F103 PAGE 8 OF 22 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Bradford M. Freeman
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [X]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
OO (see Item 3)
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF -0-
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
3,402,463 (see Item 5)
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING -0-
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
3,402,463 (see Item 5)
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
3,402,463 (see Item 5)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
18.2%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 2 of 7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 12479F103 PAGE 9 OF 22 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Ronald P. Spogli
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [X]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
OO (see Item 3)
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF -0-
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
3,402,463 (see Item 5)
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING -0-
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
3,402,463 (see Item 5)
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
3,402,463 (see Item 5)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
18.2%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 2 of 7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 12479F103 PAGE 10 OF 22 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
William M. Wardlaw
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [X]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
OO (see Item 3)
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF -0-
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
3,402,463 (see Item 5)
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING -0-
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
3,402,463 (see Item 5)
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
3,402,463 (see Item 5)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
18.2%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 2 of 7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 12479F103 PAGE 11 OF 22 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
J. Frederick Simons
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [X]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
OO (see Item 3)
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF -0-
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
3,402,463 (see Item 5)
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING -0-
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
3,402,463 (see Item 5)
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
3,402,463 (see Item 5)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
18.2%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 2 of 7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 12479F103 PAGE 12 OF 22 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
John M. Roth
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [X]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
OO (see Item 3)
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF -0-
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
3,402,463 (see Item 5)
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING -0-
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
3,402,463 (see Item 5)
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
3,402,463 (see Item 5)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
18.2%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 2 of 7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 12479F103 PAGE 13 OF 22 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Charles P. Rullman, Jr.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [X]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
OO (see Item 3)
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF -0-
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
3,402,463 (see Item 5)
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING -0-
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
3,402,463 (see Item 5)
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
3,402,463 (see Item 5)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
18.2%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 2 of 7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
Item 1. Security and Issuer.
-------------------
This statement on Schedule 13D (this "Statement") relates to the
Common Stock, $.01 par value per share, CUSIP Number 12479F103 (the "Issuer
Common Stock"), of CB Commercial Real Estate Services Group, Inc., a Delaware
corporation (the "Issuer"), which has its principal executive offices at 533
South Fremont Avenue, Los Angeles, California 90071-1798.
Item 2. Identity and Background.
-----------------------
This Statement is filed pursuant to the Joint Reporting Agreement
attached hereto as Exhibit 1 on behalf of FS Equity Partners III, L.P., a
---------
Delaware limited partnership ("FSEP III"), FS Capital Partners, L.P., a
California limited partnership ("Capital Partners"), FS Holdings, Inc., a
California corporation ("FS Holdings"), FS Equity Partners International, L.P.,
a Delaware limited partnership ("FSEP International"), FS&Co. International,
L.P., a Cayman Islands exempted limited partnership ("FS&Co. International"), FS
International Holdings Limited, a Cayman Islands exempted company limited by
shares ("International Holdings"), Bradford M. Freeman ("Freeman"), Ronald P.
Spogli ("Spogli"), William M. Wardlaw ("Wardlaw"), J. Frederick Simmons
("Simmons"), John M. Roth ("Roth") and Charles P. Rullman, Jr. ("Rullman", and
together with FSEP III, Capital Partners, FS Holdings, FSEP International,
FS&Co. International, International Holdings, Freeman, Spogli, Wardlaw, Simmons
and Roth, the "Filing Persons").
FS Holdings is the general partner of Capital Partners, which is the
general partner of FSEP III. International Holdings is the general partner of
FS&Co. International which is the general partner of FSEP International.
FSEP III, Capital Partners and FS Holdings each has its principal
business address and its principal office at 11100 Santa Monica Boulevard, Suite
1900, Los Angeles, California 90025. FSEP III was formed to make private equity
investments. Capital Partners and FS Holdings were each formed to organize and
manage the transactions in which FSEP III is the principal investor.
FSEP International, FS&Co. International and International Holdings
each has its principal business address and its principal office at c/o Paget-
Brown & Company, Ltd., West Winds Building, Third Floor, P.O. Box 1111, Grand
Cayman, Cayman Islands, B.W.I. FSEP International was formed to make private
equity investments. FS&Co. International and International Holdings were each
formed to organize and manage the transactions in which FSEP International is
the principal investor.
14
<PAGE>
Freeman, Spogli, Wardlaw, Simmons, Roth and Rullman are the directors,
executive officers and sole shareholders of FS Holdings and International
Holdings. The principal occupation of each of Freeman, Spogli, Wardlaw,
Simmons, Roth and Rullman is to serve as the directors and executive officers of
Freeman Spogli & Co. Incorporated, a Delaware corporation formed to make private
equity investments ("FS&Co."). Each of Freeman, Spogli, Wardlaw, Simmons and
Rullman has his principal business address and his principal office at 11100
Santa Monica Boulevard, Suite 1900, Los Angeles, California 90025. Roth has his
principal business address and his principal office at 599 Lexington Avenue,
18th Floor, New York, New York 10022.
During the last five years, none of FSEP III, Capital Partners, FS
Holdings, FSEP International, FS&Co. International, International Holdings,
Freeman, Spogli, Wardlaw, Simmons, Roth or Rullman has been convicted in a
criminal proceeding (excluding traffic violations and similar misdemeanors) or
was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgement, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to federal or state securities laws or finding
any violation with respect to such laws. Each of Freeman, Spogli, Wardlaw,
Simmons, Roth and Rullman is a citizen of the United States.
Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
The Filing Persons received shares of Issuer Common Stock in exchange
for shares of common stock, $.01 par value per share ("KRES Common Stock"), of
Koll Real Estate Services, a Delaware corporation ("KRES"), in connection with a
merger (the "Merger") of a wholly-owned subsidiary of the Issuer with and into
KRES, resulting in KRES becoming a wholly-owned subsidiary of the Issuer.
Item 4. Purpose of Transaction.
----------------------
Pursuant to the terms and conditions of an Agreement and Plan of
Reorganization, dated as of May 14, 1997 (the "Merger Agreement") by and among
the Issuer, CBC Acquisition Corporation ("Acquisition Corp."), KRES, FSEP III,
FSEP International, AP KMS Partners, L.P., a Delaware limited partnership ("AP
Partners"), AP KMS II, LLC, a Delaware limited liability company ("AP LLC"), The
Koll Holding Company, a California corporation ("KHC"), Raymond E. Wirta
("Wirta"), William S. Rothe ("Rothe") and Donald M. Koll ("Koll"), on August 28,
1997, Acquisition Corp. was merged with and into KRES (the "Merger") and KRES
became a wholly-owned subsidiary of the Issuer. Pursuant to the Merger, at the
Effective Time (as defined in the Merger Agreement), each share of KRES Common
Stock was canceled and converted into the
15
<PAGE>
right to receive 0.776175 share of Issuer Common Stock and 0.083238 warrants to
purchase Issuer Common Stock ("Warrants").
In the Merger, 4,223,852 shares of KRES Common Stock held by FSEP III
were converted into 3,278,448 shares of Issuer Common Stock and 351,585 Warrants
and 159,778 shares KRES Common Stock held by of FSEP International were
converted into 124,015 shares of Issuer Common Stock and 13,299 Warrants. By
their terms, the Warrants are not exercisable until three years after the
Effective Time. In connection with the Merger, Freeman, Wirta and Koll were
elected by the stockholders of the Issuer to the Issuer's Board of Directors.
The Merger Agreement contains customary representations and
warranties, covenants and termination provisions.
The foregoing description is qualified in its entirety by the Merger
Agreement which is attached hereto as Exhibit 2 and incorporated by reference.
---------
Other than as described above, none of the Filing Persons presently
has any plans or proposals that relate to or would result in any of the actions
described in subparagraphs (a) through (j) of Item 4 of Schedule 13D (although
they reserve the right to develop such plans).
Item 5. Interest in the Securities of the Issuer.
----------------------------------------
The percentages of outstanding Issuer Common Stock reported in this
Item 5 are based on the assumptions that there are 18,690,843 shares of Issuer
Common Stock outstanding. The responses of the Filing Persons to Items 7
through 11 of the cover pages hereto are herein incorporated by reference.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
---------------------------------------------------------------------
to Securities of the Issuer.
---------------------------
A. Joint Reporting Agreement.
-------------------------
The Filing Persons have executed a Joint Reporting Agreement dated
August 28, 1997 which is attached hereto as Exhibit 1 and incorporated herein by
---------
reference, pursuant to which they have agreed to file one joint statement on
behalf of all of them with respect to the subject matter of this Statement.
B. Merger Agreement.
----------------
On May 14, 1997, the Issuer, Acquisition Corp., KRES FSEP III, FSEP
International, AP Partners, AP LLC, KHC, Wirta, Rothe and Koll entered into the
Merger Agreement as discussed in Item 4 above.
16
<PAGE>
C. Registration Rights Agreement.
-----------------------------
On May 14, 1997, the Issuer entered into a Registration Rights
Agreement (the "Registration Rights Agreement") with FSEP III, FSEP
International, AP Partners, AP LLC, KHC, Wirta and Rothe for the registration of
the shares of Issuer Common Stock issued to such individuals and entities in the
Merger or upon exercise of the Warrants. Pursuant to the Registration Rights
Agreement, upon the request of such stockholders of the Issuer holding a
threshold amount of Issuer Common Stock, the Issuer is obligated to use its best
efforts to initiate two registrations during its 1998 fiscal year, two during
its 1999 fiscal year and two during the period beginning fiscal year 2000 and
ending at the end of fiscal year 2002. Each such registration is required to be
underwritten.
D. Warrant Agreement.
-----------------
On August 28, 1997, the Issuer entered into a Warrant Agreement with
each of the stockholders and optionholders of KRES, including FSEP III, FSEP
International, AP Partners, AP LLC, KHC and Rothe, for the issuance and sale of
up to 600,000 shares of Issuer Common Stock upon exercise of the Warrants issued
in the Merger. The Warrants have a term of seven years from the Effective Time
and become first exercisable three years from the Effective Time at an exercise
price of $30 per share of Issuer Common Stock.
E. Limited Partnership Agreements.
------------------------------
Capital Partners is the sole general partner of FSEP III under an
Amended and Restated Agreement of Limited Partnership dated as of August 25,
1993, as amended (the "FSEP III Agreement"). The FSEP III Agreement provides
for the formation of FSEP III as a partnership to invest the funds of the
partnership in private equity investments. Capital Partners, as general partner
of FSEP III, has the exclusive right and power to manage the business and
affairs of the partnership, including the power to purchase and dispose of
Issuer Common Stock owned by FSEP III. The general partner and limited partners
of FSEP III have certain rights to receive the proceeds of the sales of
securities, if any, in accordance with the FSEP III Agreement. FS Holdings is
the sole general partner of Capital Partners and has the exclusive right and
power to manage the business and affairs of Capital Partners. Freeman, Spogli,
Wardlaw, Simmons, Roth and Rullman are the directors, executive officers and
sole shareholders of FS Holdings.
FS&Co. International is the sole general partner of FSEP International
under an Agreement of Limited Partnership dated as of February 25, 1994 (the
"FSEP International
17
<PAGE>
Agreement"). The FSEP International Agreement provides for the formation of
FSEP International as a partnership to invest the funds of the partnership in
private equity investments. FS&Co. International, as general partner of FSEP
International, has the exclusive right and power to manage the business and
affairs of the partnership, including the power to purchase and dispose of
Issuer Common Stock owned by FSEP International. The general partner and
limited partners of FSEP International have certain rights to receive the
proceeds of the sales of securities, if any, in accordance with the FSEP
International Agreement. International Holdings is the sole general partner of
FS&Co. International and has the exclusive right and power to manage the
business and affairs of FS&Co. International. Freeman, Spogli, Wardlaw,
Simmons, Roth and Rullman are the directors, executive officers and sole
shareholders of International Holdings.
Item 7. Material to be Filed as Exhibits.
--------------------------------
The Filing Persons file as exhibits the following:
Exhibit 1. Joint Reporting Agreement among FSEP III, Capital
---------
Partners, FS Holdings, FSEP International, FS&Co. International, International
Holdings, Freeman, Spogli, Wardlaw, Simmons, Roth and Rullman dated August 28,
1997.
Exhibit 2. Agreement and Plan of Reorganization by and among the
---------
Issuer, Acquisition Corp., KRES, FSEP III, FSEP International, AP Partners, AP
II, KHC, Wirta, Rothe and Koll dated as of May 14, 1997.
Exhibit 3. Registration Rights Agreement by and among the Issuer,
---------
FSEP III, FSEP International, AP Partners, AP LLC, KHC, Wirta and Rothe dated as
of May 14, 1997.
Exhibit 4. Warrant Agreement by and among the Issuer and the
---------
stockholders and optionholders of KRES dated as of August 28, 1997.
18
<PAGE>
SIGNATURE
---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: August 28, 1997
FS EQUITY PARTNERS III, L.P.,
a Delaware limited partnership
By: FS Capital Partners, L.P.
Its: General Partner
By: FS Holdings, Inc.
Its: General Partner
By: /s/ J. Frederick Simmons
-------------------------
J. Frederick Simmons
Title: Vice President
FS CAPITAL PARTNERS, L.P.,
a California limited partnership
By: FS Holdings, Inc.
Its: General Partner
By: /s/ J. Frederick Simmons
-------------------------
J. Frederick Simmons
Title: Vice President
FS HOLDINGS, INC.,
a California corporation
By: /s/ J. Frederick Simmons
-------------------------
J. Frederick Simmons
Title: Vice President
19
<PAGE>
FS EQUITY PARTNERS INTERNATIONAL, L.P.,
a Delaware limited partnership
By: FS&Co. International, L.P.
Its: General Partner
By: FS International Holdings Limited
Its: General Partner
By: /s/ J. Frederick Simmons
-------------------------
J. Frederick Simmons
Title: Vice President
FS&CO. INTERNATIONAL, L.P.,
a Cayman Islands exempted limited partnership
By: FS International Holdings Limited
Its: General Partner
By: /s/ J. Frederick Simmons
-------------------------
J. Frederick Simmons
Title: Vice President
FS INTERNATIONAL HOLDINGS LIMITED,
a Cayman Islands exempted company limited by shares
By: /s/ J. Frederick Simmons
-------------------------
J. Frederick Simmons
Title: Vice President
20
<PAGE>
/s/ Bradford M. Freeman
---------------------------------
Bradford M. Freeman
/s/ Ronald P. Spogli
---------------------------------
Ronald P. Spogli
/s/ William M. Wardlaw
---------------------------------
William M. Wardlaw
/s/ J. Frederick Simmons
---------------------------------
J. Frederick Simmons
/s/ John M. Roth
---------------------------------
John M. Roth
/s/ Charles P. Rullman, Jr.
---------------------------------
Charles P. Rullman, Jr.
21
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Sequential
Page No.
-------------
<S> <C> <C>
Exhibit 1 Joint Reporting Agreement among
FSEP III, Capital Partners, FS
Holdings, FSEP International,
FS&Co. International,
International Holdings, Freeman,
Spogli, Wardlaw, Simmons, Roth and
Rullman dated August 28, 1997.
Exhibit 2 Agreement and Plan of
Reorganization dated as of May 14,
1997 by and among the Issuer,
Acquisition Corp., KRES, FSEP III,
FSEP International, AP Partners,
AP LLC, KHC, Wirta, Rothe and
Koll.
Exhibit 3 Registration Rights Agreement by
and among the Issuer, FSEP III,
FSEP International, AP Partners,
AP LLC, KHC, Wirta and Rothe dated
as of May 14, 1997.
Exhibit 4 Warrant Agreement by and among the
Issuer and the stockholders and
optionholders of KRES dated as of
August 28, 1997.
</TABLE>
22
<PAGE>
EXHIBIT 1
JOINT REPORTING AGREEMENT
In consideration of the mutual covenants herein contained, each of the
parties hereto represents to and agrees with the other party as follows:
(a) Such party is eligible to file a statement or statements on
Schedule 13D pertaining to the Common Stock, $.01 par value per share, of CB
Commercial Real Estate Services Group, Inc., to which this agreement is an
exhibit, for filing of the information contained herein.
(b) Such party is responsible for timely filing of such statement and
any amendments thereto and for the completeness and accuracy of the information
concerning such party contained herein, provided that no such party is
responsible for the completeness or accuracy of the information concerning the
other parties making the filing, unless such party knows or has reason to
believe that such information is inaccurate.
(c) Such party agrees that such statement is filed by and on behalf of
each party and that any amendment thereto will be filed on behalf of each such
party.
This Joint Reporting Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original instrument, but
all of such counterparts together shall constitute but one agreement.
Dated: August 28, 1997
FS EQUITY PARTNERS III, L.P.,
a Delaware limited partnership
By: FS Capital Partners, L.P.
Its: General Partner
By: FS Holdings, Inc.
Its: General Partner
By: /s/ J. Frederick Simmons
-------------------------
J. Frederick Simmons
Title: Vice President
EXHIBIT 1
<PAGE>
FS CAPITAL PARTNERS, L.P.,
a California limited partnership
By: FS Holdings, Inc.
Its: General Partner
By: /s/ J. Frederick Simmons
-------------------------
J. Frederick Simmons
Title: Vice President
FS HOLDINGS, INC.,
a California corporation
By: /s/ J. Frederick Simmons
-------------------------
J. Frederick Simmons
Title: Vice President
FS EQUITY PARTNERS INTERNATIONAL, L.P.,
a Delaware limited partnership
By: FS&Co. International, L.P.
Its: General Partner
By: FS International Holdings Limited
Its: General Partner
By: /s/ J. Frederick Simmons
-------------------------
J. Frederick Simmons
Title: Vice President
FS&CO. INTERNATIONAL, L.P.,
a Cayman Islands exempted limited partnership
By: FS International Holdings Limited
Its: General Partner
By: /s/ J. Frederick Simmons
-------------------------
J. Frederick Simmons
Title: Vice President
<PAGE>
FS INTERNATIONAL HOLDINGS LIMITED,
a Cayman Islands exempted company limited by shares
By: /s/ J. Frederick Simmons
-------------------------
J. Frederick Simmons
Title: Vice President
<PAGE>
/s/ Bradford M. Freeman
---------------------------------
Bradford M. Freeman
/s/ Ronald P. Spogli
---------------------------------
Ronald P. Spogli
/s/ William M. Wardlaw
---------------------------------
William M. Wardlaw
/s/ J. Frederick Simmons
---------------------------------
J. Frederick Simmons
/s/ John M. Roth
---------------------------------
John M. Roth
/s/ Charles P. Rullman, Jr.
---------------------------------
Charles P. Rullman, Jr.
<PAGE>
EXHIBIT 2
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made and
entered into as of the 14th day of May, 1997, by and among CB COMMERCIAL REAL
ESTATE SERVICES GROUP, INC., a Delaware corporation ("CBC"), CBC ACQUISITION
CORPORATION, a Delaware corporation and wholly-owned subsidiary of CBC
("Acquisition Corporation"), KOLL REAL ESTATE SERVICES, a Delaware corporation
("Koll") and FS Equity Partners III, L.P. and FS Equity Partners
International, L.P. (collectively, "FS"), AP KMS Partners, L.P., and AP KMS
II, LLC (collectively "Apollo"), The Koll Holding Company ("KHC"), William S.
Rothe ("WSR") and Raymond Wirta ("RW") (collectively the "Koll Shareholders"),
and Donald M. Koll ("DMK") (for purposes of Sections 7.3, 10.14, 11.2(f) and
11.2(g)).
R E C I T A L S:
A. Subject to the provisions of this Agreement, immediately following the
CBC Stockholders' Meeting, Koll shall execute a Certificate of Merger (the
"Certificate of Merger") in substantially the form attached hereto as Exhibit
A, which provides for the merger (the "Merger") of Acquisition Corporation
into Koll at the time provided for in Article II thereof (the "Merger Date").
Following the Merger in accordance with the terms of this Agreement, Koll
shall be a wholly-owned subsidiary of CBC. Pursuant to the Stock Exchange
Ratio set forth in Section 2.3(c) of this Agreement, shares of Common Stock,
$.01 par value, of Koll issued and outstanding as of the Effective Date ("Koll
Common") will be converted into shares of Common Stock, $.01 par value, of CBC
("CBC Common").
B. The respective Boards of Directors of Koll and CBC have approved the
Merger.
C. The parties hereto intend that the Merger constitute a reorganization
under Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code.
D. The parties hereto desire to enter into this Agreement for the purpose of
setting forth certain representations, warranties and covenants made by each
to the other as an inducement to the execution and delivery of this Agreement
and the conditions precedent to the consummation of the Merger.
NOW, THEREFORE, in consideration of the premises and of the mutual
provisions, agreements and covenants herein contained, CBC, Acquisition
Corporation, Koll, the Koll Shareholders and DMK hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Certain Definitions. The terms defined in this Section 1.1 shall, for
all purposes of this Agreement, have the meanings herein specified, unless the
context expressly or by necessary implication otherwise requires:
(a) "CBC Stockholders' Meeting" shall mean the meeting of the holders of CBC
Common called and convened for the purpose of their consideration of and
voting upon the transactions contemplated by this Agreement, and any
adjournments thereof.
(b) "Dissenting Shares" means shares of Koll Common which shall be owned by
stockholders who shall duly perfect and pursue their appraisal rights with
respect to such shares in accordance with Section 262 of the Delaware General
Corporation Law.
(c) "Dissenting Stockholders" means those stockholders of Koll who are
holders of and are entitled to Dissenting Shares.
1-1
<PAGE>
(d) "Employee Benefit Plan" means (a) any Employee Pension Benefit Plan; (b)
any Employee Welfare Benefit Plan; (c) any bonus, deferred compensation,
incentive, restricted equity, equity purchase, equity option, equity
appreciation right, phantom equity, debenture, supplemental pension, profit-
sharing, royalty pool, commission, cafeteria or similar plan or arrangement;
(d) any plan, program, agreement, policy, commitment or other arrangement
relating to severance or termination pay, whether or not published or
generally known; (e) any plan, program, agreement, policy, commitment or other
arrangement relating to the provision of any benefit described in Section 3(1)
of ERISA to former employees or directors or to their survivors or (f) any
other plan, program, agreement, procedure, policy, commitment, understanding
or other arrangement relating to employee benefits, executive compensation,
fringe benefits, severance pay, collective bargaining, terms of employment or
services as an independent contractor, whether foreign or domestic.
(e) "Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
(f) "Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
(g) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
(h) "ERISA Affiliate" means any entity that, together with Koll, is treated
as a single employer under section 414(b), 414(c), 414(m) or 414(o) of the
Code.
(i) "Fiduciary" has the meaning set forth in ERISA Section 3(21).
(j) "50% JV" shall mean, for any entity, any corporation, partnership or
other entity of which 50% of the securities or other ownership interests
having by their terms ordinary voting power to elect the board of directors or
appoint or elect other persons performing similar functions of such
corporation, partnership or other entity (irrespective of whether or not at
the time securities or other ownership interests of any other class or classes
of such corporation, partnership or other entity shall have or might have
voting power by reason of the happening of any contingency) is at the time
owned or controlled directly or indirectly by such entity or by one or more
Subsidiaries of such entity or by such entity and one or more Subsidiaries of
such entity.
(k) "Form S-4" shall mean the registration statement of CBC on Form S-4 to
be filed with and declared effective by the SEC in connection with the
issuance of the CBC Common and Warrants pursuant to the Merger.
(l) "Koll Stockholders' Meeting" shall mean the meeting of the holders of
Koll Common called and convened for the purpose of their consideration of and
voting upon the transactions contemplated by this Agreement, and any
adjournments thereof.
(m) "Material Adverse Effect" shall mean a material adverse effect on the
financial condition, results of operations, properties or business of Koll and
Subs or CBC and its Subsidiaries, as the case may be, taken as a whole.
(n) "Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
(o) "PBGC" means the Pension Benefit Guaranty Corporation.
(p) "Proxy Statement" shall mean the proxy material delivered to the holders
of CBC Common between the date hereof and the CBC Stockholders' Meeting, which
shall describe the transactions contemplated by this Agreement, and which
shall solicit the approval of the holders of CBC Common of such transactions,
and any amendments or supplements thereto, all as required by applicable law.
(q) "SEC" shall mean the Securities and Exchange Commission.
1-2
<PAGE>
(r) "Subsidiary" shall mean, for any entity, any corporation, partnership or
other entity of which a majority of the securities or other ownership
interests having by their terms ordinary voting power to elect the board of
directors or appoint or elect other persons performing similar functions of
such corporation, partnership or other entity (irrespective of whether or not
at the time securities or other ownership interests of any other class or
classes of such corporation, partnership or other entity shall have or might
have voting power by reason of the happening of any contingency) is at the
time owned or controlled directly or indirectly by such entity or by one or
more Subsidiaries of such entity or by such entity and one or more
Subsidiaries of such entity.
1.2 Other Definitions. In addition to the terms defined in Section 1.1,
certain other terms are defined elsewhere in this Agreement, and, whenever
such terms are used in this Agreement, they shall have their respective
defined meanings, unless the context expressly or by necessary implication
otherwise requires.
<TABLE>
<CAPTION>
DEFINED TERMS SECTIONS
- ------------- ----------
<S> <C>
Acquisition Corporation Common....................................... 5.2
Acquisition Transaction.............................................. 6.5
Affiliate............................................................ 10.11
CBC Balance Sheet.................................................... 5.5
CBC Balance Sheet Date............................................... 5.5
CBC Common........................................................... Recitals
CBC Companies........................................................ 5.1
CBC Financial Statements............................................. 5.5
CBC Minimum Amount................................................... 13.2(b)
CBC Options.......................................................... 5.4(a)
CBC SEC Documents.................................................... 5.6
CBC's Indemnified Persons............................................ 13.2(a)
Certificate.......................................................... 2.4
Closing.............................................................. 12.1
Closing Date......................................................... 12.1
Code................................................................. 2.7
Consents............................................................. 3.5
Effective Time....................................................... 2.1
Environmental Regulation............................................. 3.9(c)
Environmental Litigation............................................. 3.9(c)
Exchange Act......................................................... 3.5
Filing Fees.......................................................... Article 14
GAAP................................................................. 3.6
Golden Parachute Payment............................................. 3.24(j)
Governmental Entity.................................................. 3.5
Group................................................................ 5.1
Hazardous Substances................................................. 3.9(b)
HSR Act.............................................................. 3.5
Indemnified Agents................................................... 8.8(a)
Indemnified Liabilities.............................................. 8.8(a)
Indemnified Person................................................... 13.4
Indemnifying Party................................................... 8.8(a)
Indemnifying Person.................................................. 13.4
Koll Affiliate Agreements............................................ 10.11
Koll Balance Sheet................................................... 3.6
Koll Balance Sheet Date.............................................. 3.6
Koll Common.......................................................... Recitals
Koll Financial Statements............................................ 3.6
</TABLE>
(Table continued on next page)
1-3
<PAGE>
<TABLE>
<CAPTION>
DEFINED TERMS SECTIONS
- ------------- ----------
<S> <C>
Koll Options......................................................... 2.8
Koll Plans........................................................... 3.24(a)
License Agreement.................................................... 11.2(h)
Liens................................................................ 3.8
LJM.................................................................. 5.1
Losses............................................................... 13.2(a)
Material Subsidiaries................................................ 5.4(b)
NASDAQ............................................................... 2.3(f)
Non-Competition Agreements........................................... 11.2(f)
Options.............................................................. 3.2(c)
Permits.............................................................. 3.13
Preferred Stock...................................................... 3.2(a)
Proceeding........................................................... 8.8(a)
Proprietary Rights................................................... 3.17
Recipient............................................................ 3.24(j)
Rule 145............................................................. 10.11
Selling Shareholder.................................................. Article 4
Shareholders' Indemnified Persons.................................... 13.3
Stock Exchange Ratio................................................. 2.3(c)
Subs................................................................. 3.1
Surviving Corporation................................................ 2.2
Taxes................................................................ 3.11
Third Party.......................................................... 15.1(h)(i)
Unindemnified Liabilities............................................ 8.8(a)
WM................................................................... 5.1
</TABLE>
ARTICLE 2
THE MERGER
2.1 Effective Time of the Merger. Subject to the provisions of this
Agreement, including the satisfaction or waiver of the conditions set forth in
Article 11 hereof, a Certificate of Merger shall be duly prepared, executed
and acknowledged by the Surviving Corporation (as defined in Section 2.2) and
thereafter delivered to the Secretary of State of the State of Delaware, for
filing, in accordance with the Delaware General Corporation Law on the Closing
Date (as defined in Article 12). The Merger shall become effective upon the
filing of the Certificate of Merger with the Delaware Secretary of State (the
"Effective Time").
2.2 Effects of the Merger. At the Effective Time, the separate existence of
Acquisition Corporation shall cease and Acquisition Corporation shall be
merged with and into Koll, which shall be the surviving corporation (the
"Surviving Corporation"); the Certificate of Incorporation of Acquisition
Corporation immediately prior to the Effective Time shall be the Certificate
of Incorporation of the Surviving Corporation; the Bylaws of Acquisition
Corporation shall be the Bylaws of the Surviving Corporation; the directors of
the Surviving Corporation shall be as set forth in Section 2.5 hereof; the
officers of the Surviving Corporation shall be as set forth in Section 2.5
hereof; and the Merger shall, from and after the Effective Time, have all the
effects provided by applicable law, including the Delaware General Corporation
Law.
2.3 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any of the issued
and outstanding shares of Koll Common:
(a) Capital Stock of Acquisition Corporation. All issued and outstanding
shares of capital stock of Acquisition Corporation shall continue to be issued
and shall be converted into 1,000 shares of Common Stock of the Surviving
Corporation. Each stock certificate of Acquisition Corporation evidencing
ownership of any such shares shall continue to evidence ownership of such
shares of capital stock of the Surviving Corporation.
1-4
<PAGE>
(b) Cancellation of Koll-Owned and CBC-Owned Stock. All shares of Koll
Common, if any, that are owned directly or indirectly by Koll and by CBC or
any of its Subsidiaries shall be canceled, and no stock of CBC or other
consideration shall be delivered in exchange therefor.
(c) Conversion of Koll Common. Other than shares to be canceled pursuant to
Section 2.3(b), Dissenting Shares and fractional shares as provided in Section
2.3(e) and (f), each share of Koll Common issued and outstanding immediately
prior to the Effective Time shall be converted, without any action on the part
of the holders thereof, into (i) 0.776175 shares of CBC Common subject to
adjustment as set forth in Section 2.3(d) (hereinafter the "Stock Exchange
Ratio") and (ii) a number of Warrants (the "Warrants") equal to (A) 600,000
divided by (B)(1) the number of shares of Koll Common outstanding and held by
immediately prior to the Effective Time plus (2) the number of shares of Koll
Common into which Koll Options outstanding and held by individuals who are
directors, employees or consultants of Koll or Subs immediately prior to the
Effective Time are exercisable (the "Warrant Exchange Ratio"); each Warrant
shall be exercisable into one share of CBC Common at an exercise price of
$30.00 per share of CBC Common. In addition, each Warrant shall have a term of
7 years from the Closing Date, shall become exercisable on the third
anniversary of the Closing Date, shall be subject to the terms and conditions
of the Warrant Agreement attached hereto as Exhibit B and shall be in
substantially the form of the Warrant Certificate attached as an Exhibit
thereto. Anything to the contrary contained herein notwithstanding, (i) the
number of shares of Koll Common (including Dissenting Shares and fractional
shares) and securities exercisable or convertible into Koll Common (including
without limitation Koll Options) issued and outstanding immediately prior to
the Effective Time shall not exceed 7,233,243, (ii) the number of shares of
CBC Common issued in exchange for Koll Common pursuant hereto shall not exceed
5,614,261 minus the Stock Exchange Ratio multiplied by the sum of the number
of Dissenting Shares plus the number of fractional shares and (iii) the number
of shares of CBC Common into which all Warrants issued pursuant hereto shall
be exercisable shall not exceed 600,000.
(d) Adjustment of Exchange Ratio. If, between the date of this Agreement and
the Effective Time, the outstanding shares of CBC Common or Koll Common shall
have been changed into a different number of shares or a different class by
reason of any reclassification, recapitalization, split-up, combination,
exchange of shares or readjustment, the Stock Exchange Ratio shall be
correspondingly adjusted. In addition, for each $100,000 by which Bank
Indebtedness exceeds $47,375,000 or by which any subcategory of Bank
Indebtedness exceeds the applicable sublimit (but without duplication), the
Stock Exchange Ratio shall be reduced by .0005883.
(e) Dissenters' Rights of Stockholders of Koll. Any Dissenting Shares shall
not be converted into CBC Common and Dissenting Stockholders shall not have
the right to receive any Warrants. Dissenting Shares shall be converted into
the right to receive such consideration as may be determined pursuant to
Section 262 of the Delaware General Corporation Law, if the Dissenting
Stockholder holding such shares is entitled to dissenters' rights under such
section. Koll agrees that, except with the prior written consent of CBC, or as
required under the Delaware General Corporation Law, it will not voluntarily
make any payment with respect to, or settle or offer to settle, any such
demand for appraisal. Each Dissenting Stockholder who, pursuant to the
provisions of Section 262 of the Delaware General Corporation Law, and subject
to any agreements binding upon such Dissenting Stockholder, becomes entitled
to payment of the value of shares of Koll Common shall receive payment
therefor (but only after the value therefor shall have been agreed upon or
finally determined pursuant to such provisions). In the event of the legal
obligation, after the Effective Time, to deliver shares of CBC Common to any
Dissenting Stockholder who shall have failed to make an effective demand for
appraisal or shall have lost his status as a Dissenting Stockholder, CBC shall
issue and deliver, upon surrender by such Dissenting Stockholder of his
certificate or certificates representing shares of Koll Common, the shares of
CBC Common, Warrants and payments in lieu of fractional shares to which such
Dissenting Stockholder is then entitled under this Section 2.3 and Section 262
of the Delaware General Corporation Law.
(f) Fractional Shares. No fractional shares of CBC Common shall be issued,
but in lieu thereof each holder of shares of Koll Common who would otherwise
be entitled to receive a fraction of a share of CBC Common (after aggregating
all fractional shares of CBC Common to be received by such holder) shall
receive from CBC an amount of cash (rounded up to the nearest whole cent)
equal to the product of the fraction of a share of CBC
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Common to which such holder would otherwise be entitled, times the average
closing sale price of a share of CBC Common for the ten (10) most recent days
on which CBC Common has traded ending the trading day immediately prior to the
Closing Date, as reported on the Nasdaq National Market ("NASDAQ"). Each
holder of Koll Common will be issued one certificate representing all Warrants
to which it is entitled rounded down to the nearest whole number.
2.4 Exchange of Certificates. At the Closing, each holder of shares of Koll
Common other than Dissenting Stockholders will surrender the certificate(s) (a
"Certificate") representing such shareholder's shares of Koll Common to CBC.
Upon surrender of a Certificate for cancellation to CBC, the holder of such
Certificate shall be entitled to receive in exchange therefor the number of
shares of CBC Common (represented by a certificate), payments in lieu of
fractional shares and Warrants to which the holder of Koll Common is entitled
pursuant to Section 2.3 and the Certificate of Merger and is represented by
the Certificate so surrendered. The Certificate so surrendered shall forthwith
be canceled. In the event of a transfer of ownership of Koll Common which is
not registered in the transfer records of Koll, the appropriate number of
shares of CBC Common may be delivered to a transferee if the Certificate
representing the right to receive such CBC Common is presented to CBC and
accompanied by all documents required to evidence and effect such transfer and
to evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.4, each Certificate shall be
deemed at any time after the Effective Time to represent the right to receive
upon such surrender the number of shares of CBC Common as provided by this
Section 2.4 and the Delaware General Corporation Law. CBC shall follow the
same procedure with respect to lost, stolen or mutilated Koll certificates as
it follows with respect to lost, stolen or mutilated CBC certificates. Unless
and until any such certificates shall be so surrendered, any dividends paid or
other distributions made to holders of record of CBC Common after the
Effective Time shall be retained by CBC and paid over to such holder when such
certificate is surrendered in accordance with this Section 2.4(c).
2.5 Board of Directors; Officers. Upon the Effective Time:
(a) The directors of the Surviving Corporation shall be as named in the
Certificate of Merger and each shall remain a director from the Effective Time
until such director's successor shall have been elected and shall qualify, or
as otherwise provided in the By-laws of the Surviving Corporation.
(b) The officers of the Surviving Corporation shall be as named in the
Certificate of Merger and shall each hold office from the Effective Time until
such officer's successor shall have been elected and shall qualify, or as
otherwise provided in the By-laws of the Surviving Corporation.
(c) If at the Effective Time a vacancy shall exist in the Board of Directors
or in any of the offices of the Surviving Corporation, such vacancy may
thereafter be filled in the manner provided in the Bylaws of the Surviving
Corporation.
2.6 No Further Ownership Rights in Koll Common. All CBC Common delivered
upon the surrender for exchange of shares of Koll Common in accordance with
the terms hereof shall be deemed to have been delivered in full satisfaction
of all rights pertaining to such shares of Koll Common. There shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Koll Common which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they shall be canceled
and exchanged as provided in this Article 2.
2.7 Tax Treatment. The parties intend that the Merger will be treated as a
reorganization under Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal
Revenue Code of 1986, as amended (the "Code"), and that this Agreement be
treated as a Plan of Reorganization for such purpose.
2.8 Employee Stock Options. All options to purchase shares of Koll Common
("Koll Options") outstanding as of the Effective Time under Koll option plans
shall be treated in accordance with Section 10.12.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF KOLL
Koll represents and warrants to CBC and Acquisition Corporation as of the
date hereof and as of the Effective Time as follows:
3.1 Organization. Each of Koll, each of its Subsidiaries (each a "Sub" and
collectively, the "Subs") each other corporation, partnership, limited
liability company, trust or other entity with respect to which it or one or
more of its Subsidiaries has a material investment or is subject to unlimited
liability as a general partner or otherwise (each an "Investment Entity" and
collectively the "Investment Entities") and each 50% JV is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization and is qualified to do business in each jurisdiction where it is
required to be so qualified except where the failure to be so qualified will
not have a Material Adverse Effect and has all requisite power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted, and possesses all regulatory and other licenses, permits,
authorizations, franchises, rights and privileges necessary for the conduct of
its business as conducted and as proposed to be conducted, except for such
licenses, permits, authorizations, franchises, rights and privileges where the
failure to obtain or possess same would not have a Material Adverse Effect.
3.2 Capital Structure. (a) The authorized capital stock of Koll consists of
8,000,000 shares of Common Stock, $.01 par value per share and 2,000,000
shares of Preferred Stock, $.01 par value per share ("Preferred Stock"). As of
the date hereof, there were and immediately preceding the Effective Time there
will be (i) no more than an aggregate of 7,233,243 shares of Koll Common
issued and outstanding and issuable upon the exercise of Koll Options; (ii)
590,000 shares of Koll Common reserved for issuance upon exercise of options
under Koll's stock option plans and (iii) no shares of Preferred Stock
outstanding.
(b) All of the outstanding Koll Common was issued in compliance with
applicable federal and state securities laws, and no further registration,
qualification or other compliance under such securities laws is required. All
of the outstanding shares of Koll Common are duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights created by
statute, Koll's Certificate of Incorporation or Bylaws or any agreement to
which Koll is a party or is bound.
(c) Schedule 3.2(c) sets forth a complete list of all equity securities of
Koll outstanding on the date hereof, together with the holders thereof, and,
with respect to Koll Options, the exercise price, vesting schedule (taking
into account any acceleration in contemplation of or triggered by the
transactions contemplated hereby) and termination date of each. As of the
Effective Time, each holder of Koll Common or Koll Options shall have no more
than the aggregate number of Koll Common and Koll Options as set forth on
Schedule 3.2(c). As of the date hereof, except as set forth on Schedule 3.2(c)
and as of the Effective Time without exception, each Koll Shareholder has and
will have good and valid title to all shares of Koll Common shown beside such
Koll Shareholder's name on Schedule 3.2(c), and no other shares free and clear
of all Liens other than liens in favor of Koll, in each case other than those
certain options in favor of RW and WSR to purchase 672,000 and 100,800 shares
of Koll Common, respectively, held by KHC. As of the date hereof, except as
set forth on Schedule 3.2(c), and as of the Effective Time without exception,
each Koll Shareholder is not a party to or holder of any option, warrant,
call, right, commitment or agreement of any character (collectively "Options")
obligating Koll to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of Koll or obligating Koll to grant,
extend or enter into any such option, warrant, call right, commitment or
agreement. As of the date hereof, except as set forth on Schedule 3.2(c), and
as of the Effective Time without exception, each Koll Shareholder has sole
voting power with respect to such shares and is not a party to any stockholder
agreement, voting agreement, voting trust, proxy or other agreement with
respect to voting, restrictions on transfer, or otherwise pertaining to such
Koll Shareholder's Shares.
(d) Schedule 3.2(d) sets forth a complete and correct list of each Sub,
Investment Entity and 50% JV and Koll's or a Sub's or Investment Entity's
interest therein. Except as disclosed in Schedule 3.2(d), all of the
outstanding shares of capital stock or partnership or other equity interests
of each material Sub, material
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Investment Entity and material 50% JV are duly authorized, validly issued,
fully paid and nonassessable and the interests therein owned by Koll, a Sub or
an Investment Entity, as shown on Schedule 3.2(d) are owned, beneficially and
of record, by Koll or such Sub or Investment Entity, free and clear of any
Liens. Except as disclosed in Schedule 3.2(d), there are not (i) outstanding
Options obligating Koll, any material Sub or any material Investment Entity to
issue or sell any shares of capital stock or partnership or other equity
interests of any material Sub or any material Investment Entity or to grant,
extend or enter into any such Option or (ii) voting trusts, registration
rights, proxies or other commitments, understandings, restrictions or
arrangements in favor of any person other than Koll or a Sub wholly owned,
directly or indirectly, by Koll with respect to the voting of or the right to
participate in dividends or other earnings on any capital stock or partnership
or other equity interests of Koll or any material Sub.
(e) Except as disclosed in Schedule 3.2(e), there are no outstanding
contractual obligations of Koll, any Sub or any Investment Entity to
repurchase, redeem or otherwise acquire any shares of Koll Common or any
capital stock or partnership or other equity interests of any Sub or any
Investment Entity or to provide funds to, or make any investment (in the form
of a loan, capital contribution or otherwise) in, any Sub or any Investment
Entity or any other person.
3.3 Obligations With Respect to Capital Stock. Koll shall provide notice of
the Merger to the holders of all Koll Options. Any Koll Option that remains
unexercised at the Effective Time shall be substituted by CBC in accordance
with the provisions of Section 10.12 hereof. Except as set forth in Schedule
3.2(c), there are no equity securities of any class of Koll or Subs, or any
security exchangeable into or exercisable for such equity securities, issued,
reserved for issuance or outstanding. Except as set forth in Schedule 3.2(c),
there are no options, warrants, calls, rights, commitments or agreements of
any character to which Koll or Subs is a party or by which it is bound
obligating Koll or Subs to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of Koll or Subs or
obligating Koll or Subs to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement.
3.4 Equity Investments. Except for Subs and Investment Entities listed on
Schedule 3.2(d) and investments aggregating less than $500,000 in invested or
committed dollars, Koll does not own any equity interest, directly or
indirectly, in any corporation, partnership, joint venture, firm or other
entity and neither Koll nor any of the Subs owns any equity interest directly
or indirectly, in any corporation, partnership, joint venture, firm or other
entity.
3.5 Authority.
(a) Each of Koll and each of the Koll Shareholders and DMK has all requisite
individual, corporate or partnership, as applicable, power and authority to
enter into this Agreement and the Certificate of Merger and, subject to
satisfaction of the conditions set forth herein, to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Certificate of Merger and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action, corporate, partnership or otherwise, on the part of each of
Koll and each of the Koll Shareholders subject to approval by the stockholders
of Koll. This Agreement has been duly executed and delivered by each of Koll
and each of the Koll Shareholders and DMK and constitutes a valid and binding
obligation of Koll and each of the Koll Shareholders and DMK enforceable in
accordance with its terms, subject to the approval of the stockholders of
Koll.
(b) Provided the conditions in Article 11 are satisfied, the execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated hereby will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or
to loss of a material benefit under (i) any provision of the charter documents
or Bylaws of Koll or Subs or any Koll Shareholder or (ii) any material
agreement or instrument, permit, franchise, license, judgment or order,
applicable to Koll or Subs or any Koll Shareholder or their respective
properties or assets, other than any such conflicts, violations, defaults,
terminations, cancelations
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or accelerations which individually or in the aggregate would not have a
Material Adverse Effect. Schedule 3.5 contains a full and complete list of all
necessary consents, waivers and approvals (together with any other consents,
waivers or approvals from third parties, the "Consents") of third parties
(other than Governmental Entities) applicable to the operations of Koll and
Subs that are required to be obtained by Koll and Subs in connection with the
execution and delivery of this Agreement or the Certificate of Merger by Koll
and the performance of Koll's obligations hereunder or thereunder, except for
such Consents for which the failure to obtain the same would not have a
Material Adverse Effect. Prior to the Closing Date, Koll or Subs, as
applicable, will obtain all Consents the failure of which to obtain would have
a Material Adverse Effect, other than with respect to that certain Amended and
Restated Credit Agreement, dated as of January 9, 1997, among Koll Management
Services, Inc., the Lenders listed therein, Bankers Trust Company, as agent
for the Lenders, and The First National Bank of Boston and BHF-Bank
Aktiengesellschaft, as co-agents for the Lenders, as amended, with respect to
which Koll will obtain, prior to Closing, the Lenders' consent to an extension
of such Credit Agreement until sixty (60) days following the Effective Time as
set forth in Section 11.2(n). Notwithstanding the foregoing, Koll will not
obtain any consents under its or its Affiliates' property or facilities
management agreements, provided, however, that if any such property or
facilities management agreements are terminated pursuant to any "Change of
Control", "Assignment", or similar provision and such terminations,
individually or in the aggregate and subject to Section 6.1, have a Material
Adverse Effect, it shall constitute the failure of a condition to CBC's and
Acquisition Corporation's respective obligations to close. Subject to the
immediately following paragraph, no such Consents are required to be obtained
by the Koll Shareholders in connection with the execution and delivery of this
Agreement or the performance of their obligations hereunder.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any national (Federal or foreign), state or local
government, any political subdivision thereof or any governmental, quasi-
governmental, judicial, public or statutory agency, commission, authority,
instrumentality, body or entity (a "Governmental Entity"), is required by or
with respect to Koll or Subs or the Koll Shareholders in connection with the
execution and delivery of this Agreement by Koll and the Koll Shareholders or
the Certificate of Merger by Koll or the consummation by Koll and the Koll
Shareholders of the transactions contemplated hereby or thereby, except for
(i) the filing of a pre-merger notification report under the Hart-Scott-Rodino
Act ("HSR Act"), (ii) the filing of a Form S-4 with the SEC, (iii) the filing
of the Certificate of Merger with the Delaware Secretary of State, and
appropriate documents with the relevant authorities of other states in which
Koll is qualified to do business, (iv) the filing of the Proxy Statement with
the SEC in accordance with the Securities Exchange Act of 1934 (the "Exchange
Act"), (v) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable state securities
laws and the laws of any foreign country, and (vi) such other consents,
approvals, orders, authorizations, registrations, declarations and filings
which if not obtained or made would not have a Material Adverse Effect.
3.6 Financial Statements. Koll has furnished to CBC (i) its audited
consolidated statement of operations, statement of stockholders' equity and
statement of cash flows for the fiscal year ended March 31, 1995 and 1996 and
for the nine months ended December 31, 1996, (ii) Koll's unaudited
consolidated statement of operations, statement of stockholders' equity and
statement of cash flows for the three months ended March 31, 1996 and March
31, 1997, (iii) Koll's audited consolidated balance sheet as of March 31, 1995
and 1996 and December 31, 1996 and (iv) Koll's unaudited consolidated balance
sheet as of March 31, 1997. Koll shall furnish monthly unaudited consolidated
financial statements to CBC for each month after March 31, 1997, until the
Closing Date, which monthly financial statements shall contain substantially
all the information currently contained in what is commonly referred to as the
"Green Book." The unaudited consolidated balance sheet at March 31, 1997 is
hereinafter referred to as the "Koll Balance Sheet," and all such financial
statements are hereinafter referred to collectively as the "Koll Financial
Statements." The Koll Financial Statements have been and will be prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis during the periods involved, except as noted in the notes to
the Koll Financial Statements, and are and will be in accordance with Koll's
books and records, and fairly present in all material respects the financial
position of Koll and the results of its operations as of the date and for the
periods indicated thereon, subject in the case of the unaudited portion of the
Koll Financial Statements to normal year-end audit adjustments which will not
be material and the absence of certain footnote disclosures. At the date of
the Koll Balance Sheet (the "Koll Balance Sheet Date")
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and as of the Closing Date, Koll had and will have no liabilities or
obligations, secured or unsecured (whether accrued, absolute, contingent or
otherwise) not recorded on the Koll Balance Sheet or disclosed in the
accompanying notes thereto, if any, except for liabilities incurred in the
ordinary course of business since the date of said Balance Sheet which are
usual and normal in amount and liabilities incurred in connection with
acquisitions permitted under Section 6.6. There are no liabilities with
respect to any Investment Entity or 50% JV which would have a Material Adverse
Effect. Except as set forth on Schedule 3.6, each Sub is treated as a
consolidated subsidiary of Koll in the Koll financial statements for all
periods covered thereby.
3.7 Business Changes. Except as set forth on Schedule 3.7, since the Koll
Balance Sheet Date, except as otherwise contemplated by this Agreement, each
of Koll and Subs has conducted its business only in the ordinary course and,
without limiting the generality of the foregoing:
(a) Subject to Section 6.1, there have been no changes in the financial
condition, results of operations, business or properties of Koll, Subs,
Investment Entities or any 50% JV which, in the aggregate, have had or may be
reasonably expected to have a Material Adverse Effect, excluding any change
caused by the loss of the services of its present officers, employees, agents
and representatives.
(b) Neither Koll nor any of the Subs has issued, or authorized for issuance,
or entered into any commitment to issue, any equity security, bond, note or
other security of Koll or Subs, except for shares of Koll Common issued upon
the exercise of the outstanding Koll Options.
(c) Neither Koll nor any of the Subs has incurred additional material debt
for borrowed money, except for acquisitions permitted under Section 6.6(a) and
working capital loans under credit facilities existing as of the date hereof
in the ordinary course of business consistent with past practices.
(d) Neither Koll nor any of the Subs has incurred any obligation or
liability except in the ordinary course of business.
(e) Neither Koll nor any of the Subs has paid any material obligation or
material liability, or discharged, settled or satisfied any claim, lien or
encumbrance, except for current liabilities in the ordinary course of
business.
(f) Neither Koll nor any of the Subs has declared or made any dividend,
payment or other distribution on or with respect to any share of capital stock
of Koll or such Subs.
(g) Neither Koll nor any of the Subs has purchased, redeemed or otherwise
acquired or committed itself to acquire, directly or indirectly, any share or
shares of capital stock of Koll or any of the Subs except for repurchases of
shares of Koll Common pursuant to a Koll Plan, which repurchases are not
material in the aggregate.
(h) Neither Koll nor any of the Subs has mortgaged, pledged, or otherwise
voluntarily or involuntarily encumbered any of its material assets or
properties, except for liens for current taxes which are not yet delinquent
and purchase-money liens arising out of the purchase or sale of products made
in the ordinary course of business and except for liens arising under credit
facilities existing as of the date hereof relating to working capital loans
made in the ordinary course of business consistent with past practice.
(i) Neither Koll nor any of the Subs has disposed of, or agreed to dispose
of, by sale, lease, license or otherwise, any capital stock of any of the Subs
or any other material asset or property, tangible or intangible, except, in
the case of such other material assets and property, in the ordinary course of
business, and in each case for a consideration believed to be at least equal
to the fair value of such material asset or property and in any event not in
excess of $50,000 for any single item or $200,000 in the aggregate.
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(j) Neither Koll nor any of the Subs has purchased or agreed to purchase or
otherwise acquire any (i) general partnership interests in any entity or (ii)
material amount of securities of any corporation, partnership, joint venture,
firm or other entity; neither Koll nor any of the Subs has made any material
expenditure or commitment for the purchase, acquisition, construction or
improvement of a material capital asset, except in the ordinary course of
business and in any event not in excess of $250,000 for any single item or
$500,000 in the aggregate.
(k) Neither Koll nor any of the Subs has entered into any material
transaction or contract, or made any commitment to do the same, except in the
ordinary course of business.
(l) Neither Koll nor any of the Subs has sold, assigned, transferred or
conveyed, or committed itself to sell, assign, transfer or convey, any
material Proprietary Rights (as defined in Section 3.17).
(m) Neither Koll nor any of the Subs has adopted or amended any bonus,
incentive, profit-sharing, stock option, stock purchase, pension, retirement,
deferred-compensation, severance, life insurance, medical or other benefit
plan, agreement, trust, fund or arrangement for the benefit of employees of
any kind whatsoever, nor entered into or amended any agreement relating to
employment, services as an independent contractor or consultant, or severance
or termination pay, nor agreed to do any of the foregoing other than to allow
for the acceleration of the vesting schedules of options outstanding as of the
date hereof other than ordinary pay increases consistent with past practices
given to employees who are not officers or directors and reasonable
arrangements to retain employees agreed to in advance by Koll and CBC.
(n) Neither Koll nor any of the Subs has made or agreed to make any change
in its directors, officers or key employees.
(o) Neither Koll nor any of the Subs has made or committed itself to make
any amendment or modification in its charter documents or Bylaws, except as
contemplated in this Agreement or the Certificate of Merger.
3.8 Properties. The Koll Balance Sheet reflects in all material respects all
of the real and personal property used by Koll and Subs in their business or
otherwise held by Koll and Subs, except for property acquired or disposed of
in the ordinary course of the business of Koll and Subs since the date of such
balance sheet, and personal property or leasehold interests not required under
GAAP to be reflected thereon. Koll and Subs have good and marketable title to
all assets and properties reflected on the Koll Balance Sheet and thereafter
acquired, free and clear of any imperfection of title, lien, claim,
encumbrance, restriction, charge or equity of any nature whatsoever
(collectively, "Liens"), except for (i) the lien of current taxes not yet
delinquent (ii) Liens which, individually or in the aggregate, would not have
a Material Adverse Effect and (iii) Liens existing as of the date hereof under
credit facilities existing as of the date hereof. All of the fixed assets and
properties listed on the Koll Balance Sheet or thereafter acquired are in
satisfactory condition and repair for the requirements of the business as
presently conducted by Koll and Subs, except for imperfections that would not
have a Material Adverse Effect.
3.9 Real Property.
(a) Attached hereto as Schedule 3.9(a) is a full and complete list of all
real property owned and leased by Koll or Subs, which, in the case of leased
real property, is subject to annual rental payments in excess of $30,000 or
under option to purchase by Koll or Subs. All such property leased by Koll or
Subs is held under valid, subsisting and enforceable leases, except for
imperfections which would not have a Material Adverse Effect. Neither real
property owned or leased by Koll or any of its Subs nor the operations of Koll
or Subs thereon, violate any applicable building code, zoning requirement or
classification, or pollution control ordinance or statute relating to the
property or to such operations, and such non-violation is not dependent, in
any instance, on so-called non-conforming use exemptions, except for such
violations as would not have a Material Adverse Effect. No notice from any
governmental or public safety authority of any uncorrected condition, unpaid
assessment charge or fine relating to the facilities or the conduct of
business thereon or notice of any pending or contemplated condemnation or
change in zoning which would have a Material Adverse Effect on Koll or any of
its Subs has been received by Koll or any of its Subs.
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(b) Except as disclosed on Schedule 3.9(b), there are no Hazardous
Substances in, under or about the air, soil, sediment, surface water or
groundwater on, under or around any properties at any time owned, leased or
occupied by Koll or any of its Subs which would have a Material Adverse
Effect. Neither Koll nor Subs have disposed of any Hazardous Substances on or
about such property which would have a Material Adverse Effect. Neither Koll
nor any of its Subs have disposed of any materials at any site being
investigated or remediated for contamination or possible contamination of the
environment which would have a Material Adverse Effect. "Hazardous Substances"
shall mean any substance regulated or prohibited by any law or designated by
any governmental agency to be hazardous, toxic, radioactive, regulated medical
waste or otherwise a danger to health or the environment.
(c) Koll and Subs have conducted their business in accordance with all
applicable laws, regulations, orders and other requirements of governmental
authorities relating to Hazardous Substances and the use, storage, treatment,
disposal, transport, generation, release and exposure of others to Hazardous
Substances (collectively, "Environmental Regulation"), except for such
noncompliance as would not have a Material Adverse Effect. Except as set forth
on Schedule 3.9(c), Koll has not received any notice of any investigation,
claim or proceeding against Koll or Subs relating to Hazardous Substances and
Koll is not aware of any fact or circumstance which could involve Koll or Subs
in any environmental litigation, proceeding, investigation or claim or impose
any environmental liability upon Koll or any of its Subs (collectively,
"Environmental Litigation") which if resolved adversely to Koll or any Sub
would have a Material Adverse Effect. Between the date hereof and Closing,
there shall not have occurred any failure by Koll or Subs to comply with
applicable Environmental Regulation and there shall not have occurred any
Environmental Litigation that, in each case, would have a Material Adverse
Effect on Koll or any of its Subs.
3.10 Accounts Receivable. All of the accounts receivable of Koll and Subs
shown on the Koll Balance Sheet or arising between the Koll Balance Sheet Date
and the Effective Time arose or will arise in the ordinary course of their
respective businesses. The values at which accounts receivable are carried
reflect the accounts receivable valuation policy of Koll which is consistent
with past practice and in accordance with GAAP applied on a consistent basis.
3.11 Taxes. Koll and Subs have duly filed with the appropriate United
States, state, local and foreign governmental agencies all tax returns and
reports required to be filed (subject to permitted extensions applicable to
such filings), which returns are accurate and complete, and have paid or
accrued in full all taxes, duties, charges, withholding obligations and other
governmental liabilities (including, without limitation, net income,
alternative or add-on minimum tax, profits, premium, estimated, excise, sales,
use, occupancy, gross income, gross receipts, franchise, ad valorem, stamp,
severance, capital levy, production, transfer, withholding, license,
employment and payroll, and property taxes, environmental or windfall profits
taxes and import duties) as well as any interest, penalties, assessments or
deficiencies, if any, due to, or claimed to be due by, any governmental
authority (All such items are collectively referred to herein as "Taxes"). The
Koll Balance Sheet fully accrues (and the balance sheets subsequent to the
date of the Koll Balance Sheet and provided to CBC prior to the Closing Date
will fully accrue) all current and deferred Taxes, as required in accordance
with GAAP. Except as set forth on Schedule 3.11, neither Koll nor Subs is a
party to any pending actions or proceedings, nor, to the knowledge of Koll,
are any such actions or proceedings threatened by any governmental authority
for the assessment or collection of Taxes except for such actions or
proceedings which, if resolved adversely, individually or in the aggregate,
would not have a Material Adverse Effect. Since March 31, 1996, no liability
for Taxes has been incurred other than in the ordinary course of business.
There are no liens for Taxes which are material, individually or in the
aggregate, except for liens for property taxes not yet delinquent. Except as
set forth on Schedule 3.11, neither Koll nor Subs is a party to any Tax
sharing, Tax allocation or Tax indemnity agreement and in the past five (5)
years has not been included on any consolidated combined or unitary return
with any entity other than Koll or Subs.
3.12 Compensation. Except as set forth on Schedule 3.12, since March 31,
1997, neither Koll nor Subs has paid or committed itself to pay to or for the
benefit of any of its directors, officers, employees or stockholders any
compensation of any kind other than wages, salaries, commissions and benefits
at times and rates in effect
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on March 31, 1997, subject to wage increases in the ordinary course of
business of less than seven percent (7%) paid or payable to employees other
than Key Employees and directors. Schedule 3.12 contains a full and complete
list of all directors and all employees of Koll and Subs whose total
compensation (base salary, automobile allowances, moving allowances, bonuses
and commissions) paid by Koll or Subs for the twelve-month period ended March
31, 1997 was $100,000 or more or whose base compensation (excluding bonuses
and commissions) is currently $100,000 or more, together with a detailed
statement setting forth their respective salaries, bonuses, any incentive
payments, perquisites, benefits and other forms of compensation and any
amounts payable as a result of a change in control of Koll or Subs and to
which they are entitled or would become entitled after the Merger.
3.13 Compliance with Law. All licenses, franchises, permits, consents,
certificates and other evidences of authority ("Permits") of Koll and Subs
which are necessary to the conduct of Koll and Subs' businesses are in full
force and effect, except for such Permits where the failure to obtain same or
the failure of same to be in full force and effect would not have a Material
Adverse Effect, and neither Koll nor Subs is in violation of any Permit in any
respect that would have a Material Adverse Effect. Except for possible
violations which would not have a Material Adverse Effect, the business of
Koll and Subs has been conducted in accordance with all applicable laws,
regulations, orders and other requirements of governmental authorities.
3.14 Litigation. Except as set forth on Schedule 3.14 and except for normal
authorizations, permits and orders issued in the ordinary course of business,
there is no claim, dispute, action, proceeding, suit, appeal or investigation,
at law or in equity, pending against Koll or Subs, or involving any of their
respective assets or properties, before any court, agency, governmental
department or agency, commission, authority, arbitration panel or other
tribunal (other than those, if any, with respect to which service of process
or similar notice has not yet been made on Koll or Subs), and, to the
knowledge of Koll and Subs, none have been threatened which, in each case,
would have a Material Adverse Effect. There are no facts which, if known to
stockholders, customers, governmental authorities or other persons, would
result in any such claim, dispute, action, proceeding, suit or appeal or
investigation which would have a Material Adverse Effect. Except as set forth
on Schedule 3.14, neither Koll nor Subs is subject to any order, writ,
injunction or decree of any court, agency, authority, arbitration panel or
other tribunal, nor is it in default with respect to any notice, order, writ,
injunction or decree.
3.15 Contracts. Schedule 3.15 contains a complete and accurate list in all
material respects of each executory contract and agreement in the following
categories to which Koll or any Sub is a party, or by which it is bound in any
respect: agreements for the purchase, sale, lease or other disposition of
equipment, goods, materials, research and development, supplies, studies or
capital assets, or for the performance of services, which agreements are in
one or more of the following categories: (i) outside the ordinary course of
business or (ii) involving payments by Koll in excess of $200,000 in any
twelve-month period; contracts or agreements for the joint performance of work
or services, and all other joint venture agreements; contracts with
management, employment contracts, consulting contracts, collective bargaining
contracts, termination and severance agreements; notes, mortgages, deeds of
trust, loan agreements, security agreements, guarantees, debentures,
indentures, credit agreements and other evidences of indebtedness; stock
option, stock purchase, warrant, repurchase or other contracts or agreements
relating to any share of capital stock of Koll or Subs; contracts or
agreements with agents, brokers, solicitors, consignees, sale representatives
or distributors involving terms or commissions outside the ordinary course of
business; contracts or agreements with any director, officer, employee,
consultant or stockholder; material powers of attorney or similar
authorizations granted by Koll or Subs to third parties; material licenses,
sublicenses, royalty agreements and other material contracts or agreements to
which Koll or Subs is a party, or otherwise subject, relating to Proprietary
Rights; investment management and advisory contracts, (k) property management
and facilities management contracts involving payments to Koll or any Sub of
over $200,000 per year and (l) other material contracts.
Except as set forth on Schedule 3.15, neither Koll nor any of the Subs has
entered into any contract or agreement containing covenants limiting the right
of Koll or Subs to compete in any business or with any person. As used in this
Agreement, the terms "contract" and "agreement" include every contract,
agreement, commitment, understanding and promise, whether written or oral.
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3.16 No Default.
(a) Each of the contracts, agreements or other instruments set forth in
Schedule 3.15, each of the real property leases set forth in Schedule 3.9(a)
and each of the employment agreements or contracts of Koll or Subs is a legal,
binding and enforceable obligation of Koll or Subs, subject to the effect of
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
federal or state laws affecting the rights of creditors and the effect or
availability of rules of law governing specific performance, injunctive relief
or other equitable remedies (regardless of whether any such remedy is
considered in a proceeding at law or in equity), except for such contracts,
agreements and other instruments the failure of which, individually or in the
aggregate, to be legal, binding and enforceable would not have a Material
Adverse Effect. No party with whom Koll or Subs has an agreement or contract
is in default thereunder or has breached any terms or provisions thereof which
default or breach would reasonably be expected to have a Material Adverse
Effect.
(b) Koll and Subs have performed, or are now performing, the obligations of,
and Koll and Subs are not in default (or would by the lapse of time and/or the
giving of notice be in default) in respect of, any contract, agreement or
commitment binding upon their respective assets or properties, except for
noncompliance or defaults as would not have a Material Adverse Effect. Except
for those matters which, individually or in the aggregate, do not and will not
have a Material Adverse Effect, (i) no third party has raised any claim,
dispute or controversy with respect to any of the contracts of Koll and Subs,
nor (ii) has Koll or Subs received notice or warning of alleged
nonperformance, delay in delivery or other noncompliance by Koll or Subs with
respect to their respective obligations under any of their respective
contracts, nor (iii) are there any facts which exist indicating that any of
their contracts may be totally or partially terminated or suspended by the
other parties thereto.
3.17 Proprietary Rights.
(a) (i) Each of Koll and Subs owns or possesses licenses or other rights to
use all computer software, software programs, patents, patent applications,
trademarks, trademark applications, trade secrets, service marks, trade names,
copyrights, inventions, customer lists, proprietary information, or other
rights with respect thereto (collectively referred to as "Proprietary
Rights"), used in the business of Koll and Subs, except for those Proprietary
Rights with respect to which the failure of Koll or Subs to own or license
would not have a Material Adverse Effect, and (ii) those Proprietary Rights
owned or licensed are sufficient to conduct the business of Koll and Subs as
it has been and is now being conducted.
(b) The operations of Koll or Subs do not conflict with or infringe, and no
one has asserted to Koll or Subs that such operations conflict with or
infringe, any Proprietary Rights of any third party. There are no claims,
disputes, actions, proceedings or suits pending against Koll or Subs with
respect to any Proprietary Rights (other than those with respect to which
service of process or similar notice may not yet have been made on Koll or
Subs), and, to the knowledge of Koll and Subs, none has been threatened
against Koll or Subs. There are no facts or alleged facts which would
reasonably serve as a basis for any claim that Koll or Subs does not have the
right to use, free of any rights or claims of others, all Proprietary Rights
in the conduct of the business of Koll and Subs as it has been and is now
being conducted.
3.18 Insurance. As of the date of this Agreement, Schedule 3.18 contains a
complete list of all material policies of insurance to which Koll or Subs is a
party or is a beneficiary or named insured and all material claims which have
been made to the insurers during the past five years. Koll and Subs have in
full force and effect, with all premiums due thereon paid, the policies of
insurance set forth therein, except where the failure so to do would not have
a Material Adverse Effect. Koll believes that the insurable properties of Koll
and Subs are insured in amounts and coverages and against risks and losses
which are adequate and usually insured against by persons holding or operating
similar properties in similar businesses. There were no claims in excess of
policy limits asserted under any of the material insurance policies of Koll
and Subs in respect of all motor vehicle, general liability, fidelity bonds,
professional liability, reinsurance and workers' compensation, and medical
claims for the period after December 31, 1996 to the date of this Agreement.
The insurers have no right to
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terminate or reduce such coverage before the end of applicable policy periods
and Koll and Subs have complied in all material respects with their
obligations under such policies. Koll will promptly notify CBC of any changes
in its insurance coverage occurring between the date hereof and the Effective
Time.
3.19 Brokers or Finders. Koll has not dealt with any broker or finder in
connection with the transactions contemplated by this Agreement. Koll has not
incurred, and shall not incur, directly or indirectly, any liability for any
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
3.20 Certain Advances. Except as set forth on Schedule 3.20, there are no
receivables of Koll or Subs owing from directors, officers, employees,
consultants or stockholders of Koll or Subs, or owing by any Affiliate of any
director or officer of Koll or Subs, other than advances in the ordinary
course of business to officers and employees for reimbursable business
expenses which are not in excess of $15,000 individually.
3.21 Related Parties. Except as set forth on Schedule 3.21, no officer or
director of Koll or Subs, or any Affiliate (as defined in Section 10.11
hereof) of any such person, has, either directly or indirectly, an interest in
any corporation, partnership, firm or other person or entity which furnishes
or sells services or products which are similar to those furnished or sold by
Koll or Subs, or a beneficial interest in any contract or agreement to which
Koll or Subs is a party or by which Koll or Subs may be bound. For purposes of
this Section 3.21, there shall be disregarded any interest which arose solely
from the ownership of less than a five percent (5%) equity interest in a
corporation whose stock is regularly traded on any national securities
exchange or in the over-the-counter market.
3.22 Underlying Documents. Copies of any underlying documents listed or
described as having been disclosed to CBC pursuant to this Agreement have been
furnished or made available to CBC. All such documents furnished to CBC are
true and correct copies, and there are no material amendments or modifications
thereto, that have not been disclosed to CBC. The minute books of Koll and
Subs contain complete and accurate records of all meetings and other corporate
actions taken by the directors and stockholders of Koll and Subs.
3.23 Employees and Union Activities. Koll and Subs have complied with all
applicable state and federal laws and regulations related to employees and
employment practices, except where the failure to comply would not have a
Material Adverse Effect on Koll and Subs. As of the date hereof, Koll's
employee relations and those of each of the Subs are good and there is no
pending or threatened labor dispute. As of the date hereof, no union
representation question exists respecting any employees; no collective
bargaining agreement is currently being negotiated by Koll or any of the Subs;
no demand has been made for recognition by a labor organization by or with
respect to any employees; no union organizing activities by or with respect to
any employees are taking place; and none of the employees is represented by
any labor union or organization. Koll with promptly notify CBC of any change
in the foregoing between the date hereof and the Closing Date.
3.24 Employee Benefit Plans.
(a) Except as set forth in Schedule 3.24(a) (collectively, the "Koll
Plans"), neither Koll nor any ERISA Affiliate as of the Effective Time,
sponsors, maintains, is a party to, contributes to, or is obligated to
contribute to, (i) any Employee Benefit Plan within the meaning of Title I of
ERISA or (ii) any profit sharing, deferred compensation, bonus, stock
purchase, stock option, pension, retirement, severance, welfare, fringe
benefit, incentive, excess benefit (whether funded or unfunded) or cafeteria
plan, agreement or arrangement.
(b) Except as disclosed in Schedule 3.24(b), as of the Effective Time,
neither of Koll nor any ERISA Affiliate sponsors, is a party to, or is
obligated to contribute to, any Multiemployer Plan or any Employee Pension
Benefit Plan which is or was a defined benefit plan or which is subject to
Code Section 412 or Title IV of ERISA. The value, determined on a termination
basis using the actuarial assumptions stated in the plan, of all accrued and
ancillary benefits (whether or not vested) under each defined benefit plan
(other than Multiemployer Plans) maintained by Koll or any of its ERISA
Affiliates did not exceed, as of the most recent valuation date, and will not
exceed as of the Effective Time, the then current fair market value of the
assets of the plan.
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(c) Except with respect to Multiemployer Plans, Koll has provided to CBC or
will provide or make available to CBC at least thirty days prior to the
Closing (i) complete and accurate copies of the currently effective plan
document of each Koll Plan; (ii) if no such written plan document exists, a
description of such Koll Plan; (iii) any agreements or contracts pursuant to
which custody, funding or administrative services are being provided to Koll
Plans; (iv) with respect to each Koll Plan that is intended to qualify under
section 401(a) of the Code, the most recent determination letter concerning
the plan's qualification under section 401(a) of the Code, as issued by the
Internal Revenue Service; and (v) the current summary plan description,
summary of material modifications, and the most recently filed Form 5500
pertaining to each of the Koll Plans.
(d) Except with respect to Multiemployer Plans, with respect to each Koll
Plan, (i) the applicable reporting, disclosure and record retention
requirements set forth in Part 1 of Subtitle B of Title I of ERISA and any
filing requirements under the Code, including Section 6039D thereof, have been
met on a timely basis, and (ii) there has been no violation of Title I,
Subtitle B, Part 4 of ERISA (pertaining to fiduciary responsibility) nor any
violation of Code Section 4975(c), in each case except for such non-compliance
which would not have a Material Adverse Effect.
(e) Except with respect to Multiemployer Plans, each Koll Plan that is
intended to qualify under section 401(a) of the Code meets in all material
respects all requirements for qualification under section 401(a) of the Code
and the regulations thereunder, except to the extent that such requirements
may be satisfied by adopting prior to the Closing retroactive amendments under
section 401(b) of the Code and the regulations thereunder. Each such Koll Plan
has been administered in all material respects in accordance with its terms
and the applicable provisions of ERISA and the Code and the regulations
thereunder.
(f) Neither Koll nor any ERISA Affiliate has any liability to (i) any Koll
Plan or any plan, agreement or arrangement that would have been required to be
disclosed on Schedule 3.24(a) had Koll sponsored, contributed to, been a party
to, or been obligated to contribute to it as of the Effective Time or (ii) the
PBGC, to any Multiemployer Plan, to any trustee or to any plan participant
under Title IV of ERISA (other than liability for plan contributions which are
not overdue and for premiums under Section 4007 of ERISA), in each case except
for liabilities that would not have a Material Adverse Effect. If Koll and its
ERISA Affiliates withdrew or partially withdrew from all Multiemployer Plans
to which they have an obligation to contribute, based on the latest
information available with respect to such Multiemployer Plans, no withdrawal
liability would be imposed.
(g) All material amounts of contributions, premiums or other payments due
from Koll or any ERISA Affiliate to (or under) any Koll Plan have been fully
paid or adequately accrued on the books and the Koll Financial Statements. All
material amounts of such payments are fully deductible for federal income tax
purposes. No changes affecting any Koll Plan will occur before Closing that
will result in a material increase in the amount of contributions or
liabilities of Koll and its ERISA Affiliates with respect to any Koll Plan.
(h) Except with respect to Multiemployer Plans, each Koll Plan complies in
all material respects with all applicable requirements of the Age
Discrimination in Employment Act of 1967, as amended, and the regulations
thereunder, Title VII of the Civil Rights Act of 1964, as amended, and the
regulations thereunder, the health care continuation provisions of COBRA, the
Americans with Disabilities Act, the Family and Medical Leave Act and any
other applicable law.
(i) Except as set forth on Schedule 3.14, there is no pending or threatened
litigation, or other actions or claims, relating to any Koll Plan or any plan,
agreement or arrangement that would have been required to be disclosed on
Schedule 3.24(a) had Koll sponsored, contributed to, been a party to, or been
obligated to contribute to it as of the Effective Time (other than (i) such
litigation, actions or claims, relating to Multiemployer Plans where neither
Koll nor any of its ERISA Affiliates are parties and (ii) routine claims for
benefits and qualified domestic relations orders) against or involving (i) any
Koll Plan, or (ii) any Fiduciary of such plan (within the meaning of Section
3(21)(A) of ERISA) brought on behalf of any administrative agency (whether
local, state or federal), participant, beneficiary, or Fiduciary thereunder,
nor is there any reasonable basis for any such claim. There are no
investigations, proceedings, or lawsuits, either currently in progress or, to
Koll's knowledge, to be instituted in the future, relating to any Koll Plan,
by any administrative agency (whether local, state, or federal).
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(j) Except as disclosed on Schedule 3.24(j), no payment made to any
employee, officer, director or independent contractor of Koll (the
"Recipient") pursuant to any employment contract, severance agreement or other
arrangement (the "Golden Parachute Payment") will be nondeductible by Koll
because of the application of sections 280G and 4999 of the Code to the Golden
Parachute Payment, nor will Koll be required to compensate any Recipient
because of the imposition of an excise tax (including any interest or
penalties related thereto) on the Recipient by reason of sections 280G and
4999 of the Code.
(k) Neither Koll nor any ERISA Affiliate has any unfunded liability relating
to retiree life and medical benefits for its respective current or former
employees and their dependents, other than any liability under COBRA or state
law conversion rights.
(l) There will be no liability of Koll under any insurance policy or similar
arrangement procured in connection with any Koll Plan in the nature of a
retroactive rate adjustment, loss sharing arrangement, or other similar
liability arising wholly or partially out of events occurring before the
Effective Time, in each case, except for such liabilities which would not have
a Material Adverse Effect. No Koll Plan has any interest in any annuity
contract or other investment or insurance contract issued by an insurance
company that is the subject of bankruptcy, conservatorship, rehabilitation, or
similar proceeding, except for such interests, other investment contracts or
insurance contracts which are not material to such Koll Plan.
(m) None of the persons performing services for Koll have been improperly
classified as independent contractors or as being exempt from the payment of
wages for overtime, except for such improper classifications which would not
have a Material Adverse Effect. No persons classified by Koll as independent
contractors or leased employees are wrongfully excluded from participation in
any Koll Plans or any plan, agreement or arrangement that would have been
required to be disclosed on Schedule 3.24(a) had Koll sponsored, contributed
to, been a party to, or been obligated to contribute to it as of the Effective
Time.
3.25 Misstatements. Neither Koll nor any Koll Shareholder has knowingly
furnished or shall knowingly furnish any information to CBC in writing
pursuant to this Agreement (including without limitation all information and
financial data pertaining to Koll and Subs contained in the Form S-4 and Proxy
Statement) or in the Schedules referred to in this Agreement, at any time
prior to the Effective Time, which contained or will contain any untrue
statement of a material fact or omitted or will omit any material fact
necessary to make any statement, in light of the circumstances under which
such statement is made, not misleading. For purposes of this Section 3.25, the
knowledge of Koll shall mean the actual knowledge of RW, WSR, Richard G.
Wollack ("RGW"), Gary Nielson and Richard S. Abraham ("RSA"), without any duty
to inquire.
3.26 Full Disclosure. Neither Koll nor any Koll Shareholder has furnished
and neither shall furnish any information for inclusion in the Form S-4, and
the Prospectus included therein which, at the date such information is
supplied contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
3.27 Customers. Schedule 3.27 contains a complete list of all customers or
clients of Koll or any Sub who, as of the date of this Agreement, have
indicated that they are either materially dissatisfied with the services
provided by Koll or any Sub or they are materially dissatisfied with the
proposed Merger excluding in each case customers or clients who on an
annualized basis, account for revenues to Koll of $250,000 or less, provided,
however, that neither Koll nor any Sub shall have any duty to inquire with
respect to such matters.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF KOLL SHAREHOLDERS
Each of the Koll Shareholders represents and warrants to CBC and Acquisition
Corporation as of the date hereof and as of the Effective Time as follows:
4.1 Title to Shares.
(a) As of the date hereof, except as set forth on Schedule 3.2(c), and as of
the Effective Time without exception, each Koll Shareholder has and will have
good and valid title to all shares of Koll Common shown beside such Koll
Shareholder's name on Schedule 3.2(c), and no other shares free and clear of
all Liens, in each case other than those certain options in favor of RW and
WSR to purchase 672,000 shares and 100,800 shares, respectively, of Koll
Common held by KHC. As of the date hereof, except as set forth on Schedule
3.2(c), and as of the Effective Time without exception, except for Liens in
favor of Koll, each Koll Shareholder is not a party to or holder of any Option
obligating Koll to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of Koll or obligating Koll to grant,
extend or enter into any such Option. As of the date hereof, except as set
forth on Schedule 3.2(c), and as of the Effective Time without exception, each
Koll Shareholder has sole voting power with respect to such shares and is not
a party to any stockholder agreement, voting agreement, voting trust, proxy or
other agreement with respect to voting, restrictions on transfer, or otherwise
pertaining to such Koll Shareholder's Shares.
(b) Each of the Koll Shareholders and DMK has all requisite individual,
corporate or partnership, as applicable, power and authority to enter into
this Agreement and, subject to satisfaction of the conditions set forth
herein, to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Certificate of Merger and the
consummation of the transactions contemplated hereby and thereby have been
duly authorized by all necessary action, corporate, partnership or otherwise,
on the part of each of the Koll Shareholders subject to approval by the
stockholders of Koll. This Agreement has been duly executed and delivered by
each of the Koll Shareholders and DMK and constitutes a valid and binding
obligation of each of the Koll Shareholders and DMK enforceable in accordance
with its terms, subject to the approval of the stockholders of Koll.
4.2 Undisclosed Liabilities. At the Koll Balance Sheet Date and as of the
Closing Date, Koll had and will have no liabilities or obligations, secured or
unsecured (whether accrued, absolute, contingent or otherwise) not recorded on
the Koll Balance Sheet or disclosed in the accompanying notes thereto (of a
type and amount required to be disclosed by GAAP on the face of the Koll
Balance Sheet or in such notes) except for liabilities incurred in the
ordinary course of business since the date of said Balance Sheet which are
usual and normal in amount and liabilities incurred in connection with
acquisitions permitted under Section 6.6.
4.3 Misstatements. No Koll Shareholder has knowingly furnished or shall
knowingly furnish any information to CBC in writing pursuant to this Agreement
(including without limitation all information and financial data pertaining to
Koll and Subs contained in the Form S-4 and Proxy Statement) or in the
Schedules referred to in this Agreement, at any time prior to the Effective
Time, which contained or will contain any untrue statement of a material fact
or omitted or will omit to state any material fact necessary to make any
statement, in light of the circumstances under which such statement is made,
not misleading. For purposes of this Section 4.3, "knowledge" means actual
knowledge of a Koll Shareholder, without any duty of inquiry.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF CBC AND ACQUISITION CORPORATION
Except as disclosed in the CBC SEC Documents filed prior to the execution of
this Agreement or as contemplated by this Agreement, CBC and Acquisition
Corporation represent and warrant to Koll and the Koll Shareholders as of the
date hereof and as of the Effective Time as follows:
5.1 Organization. Each of CBC, Acquisition Corporation, CB Commercial Real
Estate Group, Inc. ("Group"), L.J. Melody & Company ("LJM") and Westmark
Realty Advisors, L.L.C. ("WM") (collectively, the "CBC Companies") is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. Group, LJM and WM are the only material
Subsidiaries of CBC. Each of the CBC Companies is duly qualified to do
business and is in good standing in its state of incorporation and in each of
the other jurisdictions in which it is required to be so qualified, except
where the failure to be so qualified would not have a Material Adverse Effect.
Each of the CBC Companies has all requisite power and authority to own, lease
and operate its properties and to carry on its business as now being
conducted, and possesses all licenses, franchises, rights and privileges
necessary to the conduct of its respective business as conducted and as
proposed to be conducted, except for such licenses, permits, authorizations,
franchises, rights and privileges where the failure to obtain or possess same
would not have a Material Adverse Effect.
5.2 Acquisition Corporation Capital Structure. The authorized capital stock
of Acquisition Corporation consists of 1,000 shares of Common Stock, $.01 par
value ("Acquisition Corporation Common"). Upon the execution of this
Agreement, 1,000 shares of Acquisition Corporation Common were validly issued
and outstanding and were held by CBC of record and beneficially.
5.3 Authority.
(a) CBC and Acquisition Corporation have all requisite corporate power and
authority to enter into this Agreement and, subject to satisfaction of the
conditions set forth herein, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of CBC and Acquisition Corporation,
subject to approval by the stockholders of CBC. This Agreement has been duly
executed and delivered by CBC and Acquisition Corporation and constitutes a
valid and binding obligation of CBC and Acquisition Corporation, enforceable
in accordance with its terms, subject to approval of the Stockholders of CBC.
(b) Provided the conditions set forth in Article 11 are satisfied, the
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under (i) any provision of the
Certificate of Incorporation or Bylaws of CBC or Acquisition Corporation or
(ii) any material agreement or instrument, permit, judgment, order, statute,
law, ordinance, rule or regulation applicable to any CBC Company or their
respective properties or assets, other than any such conflicts, violations,
defaults, terminations, cancelations or accelerations which individually or in
the aggregate would not have a Material Adverse Effect. Schedule 5.3 contains
a full and complete list of all necessary Consents of third parties (other
than Governmental Entities) applicable to the operations of the CBC Companies
that are required to be obtained by the CBC Companies in connection with the
execution and delivery of this Agreement or the Certificate of Merger by CBC
and Acquisition Corporations and the performance of their respective
obligations hereunder or thereunder, except for such Consents for which the
failure to obtain the same would not have a Material Adverse Effect. Prior to
the Closing Date, a CBC Company will obtain all such Consents.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to any CBC Company in connection with the execution and delivery of
this Agreement by CBC and Acquisition Corporation or the consummation by CBC
and Acquisition
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Corporation of the transactions contemplated hereby, except for the filing of
a pre-merger notification report under the HSR Act, the filing of the Form S-4
with the SEC, the filing of the Certificate of Merger, and related
certificates with the Delaware Secretary of State and appropriate documents
with the relevant authorities of other states in which CBC or Acquisition
Corporation is qualified to do business, such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required
under applicable state securities laws and the law of any foreign country, the
filing of such reports under Section 13 of the Exchange Act as may be required
in connection with this Agreement and the transactions contemplated hereby,
the listing of the CBC Common on the Nasdaq National Market; and such other
consents, authorizations, filings, approvals and registrations which if not
obtained or made would not have a Material Adverse Effect.
5.4 Capital Structure.
(a) The authorized capital stock of CBC consists of 100,000,000 shares of
Common Stock, $.01 par value, and 8,000,000 shares of Preferred Stock, $.01
par value. At the close of business on May 5, 1997 (i) 13,345,649 shares of
CBC Common were issued and outstanding; (ii) 1,653,677 shares of CBC Common
were reserved for issuance upon exercise of options to purchase CBC Common
("CBC Options") under the CBC 1990 Stock Option Plan, the CBC 1991 Service
Providers Stock Option Plan and the L.J. Melody Stock Option Acquisition Plan,
under which options to purchase 1,094,857 shares were outstanding in the
aggregate; (iii) 517,069 shares of Common Stock were reserved for issuance
under CBC's Deferred Compensation Plan and CBC's Omnibus Stock and Incentive
Plan, of which 611 shares have been issued to employees; (iv) 1,000,000 shares
of CBC's Series A-1 Preferred Stock were outstanding; (v) 2,000,000 shares of
CBC's Series A-2 Preferred Stock were outstanding; (vi) 1,000,000 shares of
CBC's Series A-3 Preferred Stock were outstanding and; (vii) 3,120,000 shares
of Common Stock are reserved for issuance upon conversion of the Preferred
Stock.
All of the outstanding shares of CBC Common and CBC Preferred are, and any
shares of CBC Common issuable upon exercise of any CBC Option or any Warrant
or conversion of any CBC Preferred, when issued pursuant to such exercise or
conversion, will be duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights created by statute, CBC's
Certificate of Incorporation or Bylaws or any agreement to which CBC is a
party or is bound.
(b) Except as disclosed in Schedule 5.4(b), all of the outstanding shares of
capital stock of each of LJM, WM and Group (the "Material Subsidiaries") are
duly authorized, validly issued, fully paid and nonassessable and are owned,
beneficially and of record, by CBC or Group, free and clear of any Liens.
Except as disclosed in Schedule 5.4(b), there are not (i) outstanding Options
obligating CBC or any Material Subsidiary to issue or sell any shares of
capital stock of any Material Subsidiary or to grant, extend or enter into any
such Option or (ii) voting trusts, registration rights, proxies or other
commitments, understandings, restrictions or arrangements in favor of any
person other than CBC a Subsidiary wholly owned, directly or indirectly, by
CBC with respect to the voting of or the right to participate in dividends or
other earnings on any capital stock of any Material Subsidiary.
(c) Except as disclosed in Schedule 5.4(c), there are no outstanding
contractual obligations of CBC or any Material Subsidiary to repurchase,
redeem or otherwise acquire any shares of CBC Common or any capital stock of
any Material Subsidiary or to provide funds to, or make any investment (in the
form of a loan, capital contribution or otherwise) in, any Material
Subsidiary.
5.5 Financial Statements. CBC has furnished or will furnish prior to the
Closing to Koll (i) its audited consolidated statement of operations,
statement of stockholders' equity and statement of cash flows for the two
fiscal years ended December 31, 1996, (ii) CBC's audited consolidated balance
sheet at December 31, 1995 and 1996 and (iii) CBC's unaudited statement of
operations, statement of stockholders' equity and statement of cash flows for
the three months ended, and unaudited balance sheet as of, March 31, 1997. CBC
will promptly furnish to Koll those financial statements which it furnishes to
its Board of Directors between the date hereof and the Closing Date. The
balance sheet at December 31, 1996 is hereinafter referred to as the "CBC
Balance Sheet," and all such financial statements are hereinafter referred to
collectively as the "CBC Financial Statements." The
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CBC Financial Statements have been and will be prepared in accordance with
GAAP applied on a consistent basis during the periods involved, except as
noted in the notes to the CBC Financial Statements, and are or will be in
accordance with the books and records of CBC, and fairly present the financial
position of CBC and the results of its operations as of the dates and for the
periods indicated thereon, subject in the case of the unaudited portion of the
CBC Financial Statements to normal year end audit adjustments and the absence
of certain footnote disclosures. At the date of the CBC Balance Sheet (the
"CBC Balance Sheet Date") and as of the Closing Date, CBC had no liabilities
or obligations, secured or unsecured (whether accrued, absolute, contingent or
otherwise) not reflected on the CBC Balance Sheet or the accompanying notes
thereto (of a type and amount required to be disclosed by GAAP) except for
liabilities incurred in the ordinary course of business since the date of said
balance sheet which are usual and normal in amount and liabilities incurred in
connection with acquisitions permitted under Section 8.4. Except as set forth
on Schedule 5.5, each Subsidiary of CBC is treated as a consolidated
subsidiary of CBC in the CBC Financial Statements for all periods covered
thereby.
5.6 SEC Documents. CBC will furnish, or make available to Koll, a true and
complete copy of CBC's Form 10-K for the year ended December 31, 1996 and Form
10-Q for the nine (9) months ended September 30, 1996 and any other statement,
report, registration statement or definitive proxy statement filed by CBC with
the SEC from the date hereof to the Effective Date of the Merger (the "CBC SEC
Documents"). As of their respective filing dates, the CBC SEC Documents will
comply in all material respects with the requirements of the Exchange Act or
the Securities Act, and none of the CBC SEC Documents will contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading, except
to the extent corrected by a subsequently filed CBC SEC Document.
5.7 Information Supplied. CBC has not furnished and shall not furnish any
information for inclusion in the Form S-4, and the Prospectus included therein
which, at the date such information is supplied contains or will contain any
untrue statement of a material fact or omits or will omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading.
5.8 Absence of Certain Changes or Events. Except as set forth on Schedule
5.8, since the Balance Sheet Date CBC and its Subsidiaries have not incurred
any material liability, except in the ordinary course of their business nor
has there been any change, in the business, assets, financial condition or
results of operations of CBC or any of its Subsidiaries which has had, or
would have a Material Adverse Effect on CBC.
5.9 Shares of Common Stock. The shares of CBC Common will, when issued and
delivered to the stockholders of Koll in accordance with this Agreement, be
duly authorized, validly issued, fully paid and nonassessable and not subject
to preemptive rights created by statute, CBC's Certificate of Incorporation or
Bylaws or any agreement to which CBC is a party or is bound.
5.10 Brokers or Finders. CBC has not dealt with any broker or finder in
connection with the transactions contemplated by this Agreement. CBC has not
incurred, and shall not incur, directly or indirectly, any liability for any
brokerage or finders' fees or agents commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
5.11 Compliance with Law. All Permits of CBC and its Subsidiaries which are
necessary to the conduct of CBC and its Subsidiaries' businesses are in full
force and effect, except for such Permits where the failure to obtain same or
the failure of same to be in full force and effect would not have a Material
Adverse Effect, and neither CBC nor its Subsidiaries is in violation of any
Permit in any respect that would have a Material Adverse Effect. Except for
possible violations which would not have a Material Adverse Effect on CBC and
its Subsidiaries, the business of CBC and its Subsidiaries has been conducted
in accordance with all applicable laws, regulations, orders and other
requirements of governmental authorities.
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5.12 Litigation. Except for normal authorizations, Permits and orders issued
in the ordinary course of business, there is no claim, dispute, action,
proceeding, suit, appeal or investigation, at law or in equity, pending
against CBC or its Subsidiaries, or involving any of their respective assets
or properties, before any court, agency, governmental department or agency,
commission, authority, arbitration panel or other tribunal (other than those,
if any, with respect to which service of process or similar notice has not yet
been made on CBC or its Subsidiaries), and, to the knowledge of CBC and its
Subsidiaries, none have been threatened, which would have a Material Adverse
Effect on CBC and its Subsidiaries. There are no facts which, if known to
stockholders, customers, governmental authorities or other persons, would
result in any such claim, dispute, action, proceeding, suit or appeal or
investigation which would have a Material Adverse Effect on CBC and its
Subsidiaries. Neither CBC nor its Subsidiaries is subject to any order, writ,
injunction or decree of any court, agency, authority, arbitration panel or
other tribunal, nor is it in default with respect to any notice, order, writ,
injunction or decree.
5.13 Properties. The CBC Balance Sheet reflects all of the real and personal
Property used by CBC and its consolidated Subsidiaries in their respective
businesses or otherwise held by CBC and its Subsidiaries, except for (a)
property acquired or disposed of in the ordinary course of business of CBC and
its Subsidiaries since the date of the CBC Balance Sheet and (b) personal
property or leasehold interests not required under GAAP to be reflected
thereon. The CBC Companies have good and marketable title to all assets and
properties reflected on the CBC Balance Sheet and thereafter acquired, free
and clear of any Lien, except for (i) the lien of current taxes not yet
delinquent (ii) Liens which, individually or in the aggregate, would not have
a Material Adverse Effect and (iii) existing Liens under credit facilities
existing as of the date hereof. All of the fixed assets and properties listed
on the CBC Balance Sheet or thereafter acquired are in satisfactory condition
and repair for the requirements of the business as presently conducted by the
CBC Companies.
5.14 Taxes. CBC and its Subsidiaries have duly filed with the appropriate
United States, state, local and foreign governmental agencies all tax returns
and reports required to be filed (subject to permitted extensions applicable
to such filings), which returns are accurate and complete, and have paid or
accrued in full all Taxes. The CBC Balance Sheet fully accrues (and the
balance sheets subsequent to the date of the CBC Balance Sheet and provided to
Koll prior to the Closing Date will fully accrue) all current and deferred
Taxes to the extent required by GAAP. Neither CBC nor any of its Subsidiaries
is a party to any pending actions or proceedings, nor, to the knowledge of
CBC, are any such actions or proceedings threatened by any governmental
authority for the assessment or collection of Taxes except for such actions or
proceedings which if resolved adversely, individually or in the aggregate,
would have a Material Adverse Effect. Since March 31, 1996, no liability for
Taxes has been incurred other than in the ordinary course of business. There
are no liens for Taxes which are material individually or in the aggregate,
except for liens for property taxes not yet delinquent. Neither CBC nor any of
its Subsidiaries is a party to any Tax sharing, Tax allocation or Tax
indemnity agreement and in the past five (5) years has not been included on
any consolidated combined or unitary return with any entity other than CBC or
Subsidiaries. As of December 31, 1996, CBC and its Subsidiaries had a net
operating loss carryforward for federal tax purposes approximately equal to
$184.3 million and the consummation of the transactions contemplated hereby
will not limit the utilization of such net operating loss carryforward under
Section 382 of the Code.
5.15 No Default. CBC and its Subsidiaries have performed, or are now
performing, the obligations of, and CBC and its Subsidiaries are not in
default (or would by the lapse of time and/or the giving of notice be in
default) in respect of, any contract, agreement or commitment binding upon
their respective assets or properties, except for noncompliance or defaults as
would not have a Material Adverse Effect. Except for those matters which,
individually or in the aggregate, do not and will not have a Material Adverse
Effect, (i) no third party has raised any claim, dispute or controversy with
respect to any of the contracts of CBC and its Subsidiaries, nor (ii) has CBC
or its Subsidiaries received notice or warning of alleged nonperformance,
delay in delivery or other noncompliance by CBC or its Subsidiaries with
respect to their respective obligations under any of their respective
contracts, nor (iii) to the knowledge of CBC and its Subsidiaries, are there
any facts which exist indicating that any of their contracts may be totally or
partially terminated or suspended by the other parties thereto.
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ARTICLE 6
COVENANTS RELATING TO CONDUCT OF BUSINESS
During the period from the date of this Agreement and continuing until the
Effective Time, Koll shall and shall cause Subs to (except as expressly
contemplated by this Agreement or to the extent that CBC shall otherwise give
its prior consent in writing) comply with the following:
6.1 Ordinary Course. Each of Koll and each of its Subs shall carry on their
business in the regular and ordinary course, including the payment of all
state and federal taxes, in substantially the same manner as heretofore
conducted and, to the extent consistent with such businesses, use all
commercially reasonable efforts consistent with past practice and policies to
preserve intact its present business organization, keep available the services
of its present officers, key employees, agents and representatives and
preserve its goodwill and relationships with existing and potential customers,
employees, independent contractors, clients, suppliers, and others with whom
business relationships exist to the end that its goodwill and ongoing
businesses shall be unimpaired at the Effective Time. Neither Koll nor any Sub
shall enter into any agreement which would prevent Koll from consummating the
transactions contemplated hereby. In determining whether Koll has maintained
relationships with existing customers or clients or whether a loss of
customers or clients has had a Material Adverse Effect under this Agreement, a
customer or client shall not be considered lost if (i) such customer or
client, upon termination of its relationship with Koll or a Koll Affiliate,
(A) contracts with CBC or a CBC Affiliate to substantially provide the same
services previously provided by Koll or a Koll Affiliate or (B) does not
contract with any third party to provide such services (and an Affiliate of
such customer or client shall not be deemed to be a third party) or (ii) such
customer or client terminates its relationship with Koll or a Koll Affiliate
due to the fact that it has sold the property with respect to which Koll or a
Koll Affiliate was rendering services to an unaffiliated third party or has
converted the property into or contributed the property to a real estate
investment trust. In addition, when determining whether Koll has maintained
such relationships, or whether a loss of customers or clients has had a
Material Adverse Effect under this Agreement, the addition of new customers or
clients who have entered into a binding agreement with Koll or a Koll
Affiliate shall be taken into account to offset any loss of customers or
clients.
6.2 Dividends; Changes in Equity. Except as disclosed on Schedule 6.2, Koll
and its Subs and Investment Entities that are not wholly owned shall not and
shall not propose to declare or pay any dividends on or make other
distributions in respect of any of their capital stock or partnership or other
equity interests, except for partnership and limited liability company
distributions in the ordinary course of business consistent with past
practice, split, combine or reclassify any of its capital stock or partnership
or other equity interests or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of their
capital stock or partnership or other equity interests, or repurchase or
otherwise acquire any shares of its capital stock or partnership or other
equity interests or rights to acquire any shares of their capital stock or
partnership or other equity interests except for repurchases of Koll Common
under the Koll Plans which in the aggregate are not material.
6.3 Issuance of Securities. Except as set forth on Schedule 6.3, Koll, Subs,
Investment Entities and 50% JVs shall not issue, deliver or sell or authorize
or propose the issuance, delivery or sale of, or purchase or propose the
purchase of, any shares of its capital stock or partnership or other equity
interests of any class or securities convertible into, or rights, warrants or
options to acquire, any such shares or interests or other convertible
securities, other than the issuance of Koll Common upon the exercise of the
Koll Options in accordance with their present terms. Neither Koll nor its
Board of Directors shall take any action to change the exercise price or any
other term of presently outstanding Koll Options. Notwithstanding the
foregoing, Koll may accelerate the vesting schedules of Koll Options and
restricted stock outstanding on the date hereof and may terminate repurchase
rights and rights of first refusal given in connection therewith.
6.4 Governing Documents. Neither Koll nor Subs shall amend or agree to amend
their charter documents or Bylaws.
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6.5 No Solicitations. Except as set forth on Schedule 6.5, Koll and Subs
shall not, directly or indirectly, through any officer, director, employee or
agent (including any investment banker, financial advisor, attorney,
accountant or other representative or agent) or otherwise, solicit, initiate
or encourage inquiries or the submission of proposals or offers from any Third
Party relating to any acquisition or purchase of all or substantially all of
the business, properties or assets of, or any equity interest in, Koll or any
of the Subs or any merger, consolidation, business combination or similar
transaction, other than pursuant to this Agreement involving Koll or any of
the Subs (an "Acquisition Transaction"), other than the sale by Koll Dove
Global Disposition Services, L.L.C., of certain assets to which it takes title
in the ordinary course of its auction business consistent with past practice
or participate in any discussions or negotiations regarding, or furnish to any
other person any confidential information with respect to, or otherwise
cooperate in any way with, or participate in, facilitate or agree to endorse
or encourage, any effort or attempt by any other person to do or seek any of
the foregoing. Koll shall (i) promptly advise CBC orally and in writing of any
such offer and of any inquiries or proposals of or contacts with third parties
for any Acquisition Transaction involving Koll or any of the Subs and (ii)
immediately inform CBC of the details of such offer, proposal, inquiry or
contact and provide CBC copies of any written material related thereto, and
(iii) not accept (nor shall Koll's Board of Directors or any committee thereof
recommend) any such proposal or offer.
6.6 No Acquisitions or Investments.
(a) Except as set forth on Schedule 6.6, Koll and Subs shall not acquire or
agree to acquire by merging or consolidating with, or by purchasing a
substantial portion of the assets or stock of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof.
(b) Except as set forth on Schedule 6.6, Koll and Subs shall not purchase or
otherwise acquire (through a joint venture or otherwise) or agree to purchase
or otherwise acquire more than a five percent (5%) interest in the assets,
equity or business of any other corporation, partnership, trust, limited
liability company or other entity.
6.7 No Dispositions. Except as set forth on Schedule 6.7, Koll and Subs
shall not and shall not agree to sell, lease or otherwise dispose of any of
its assets that are material, individually or in the aggregate, to Koll and
Subs, taken as a whole, except in the ordinary course of business consistent
with prior practice (which includes the sale by Koll Dove Global Disposition
Services, L.L.C., of certain assets to which it takes title in the ordinary
course of its auction business consistent with past practice).
6.8 Indebtedness. Koll and Subs shall not and shall not agree to incur any
indebtedness for borrowed money (other than in connection with acquisitions
permitted under Section 6.6 or under credit facilities existing as of the date
hereof relating to working capital loans made in the ordinary course of
business consistent with past practice and working capital advances made by
Koll or a Sub to a Sub, Investment Entity or 50% JV in the ordinary course of
business, consistent with past practice) or guarantee any such indebtedness or
issue or sell any debt securities of Koll or Subs or guarantee any debt
securities of others.
6.9 Other Actions. Koll and Subs shall not permit any of their officers,
directors, employees or agents to take any action that would, or reasonably
would be expected to, result in any of its representations and warranties set
forth in this Agreement being or becoming untrue in any material respect, or
in any of the conditions set forth in Article 11 not being satisfied.
6.10 Advice of Changes. Koll and Subs shall confer on a regular basis with
CBC, report on operational matters and promptly advise CBC orally and in
writing of any change or event having, or which, insofar as can reasonably be
foreseen, could have, a Material Adverse Effect or which would cause or
constitute a material breach of any of the representations, warranties or
covenants of Koll or Subs contained herein. Except where prohibited by
applicable statues and regulations, Koll and Subs shall promptly provide CBC
(or its counsel) with copies of all filings made by Koll and Subs with any
state or federal governmental entity in connection with this Agreement or the
transactions contemplated hereby.
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6.11 Accounting Methods. Koll and Subs shall not change their methods of
accounting in effect at December 31, 1996, except as required by changes in
GAAP as concurred in by Koll's independent auditors and except to change their
fiscal year to conform with that of CBC.
6.12 Tax-Free Reorganization Treatment. Koll and Subs shall not take or
cause to be taken any action, whether before or after the Effective Time, that
would disqualify the Merger as a reorganization under Sections 368(a)(1)(A)
and 368(a)(2)(E) of the Code.
6.13 Compensation; Benefit Plans.
(a) Except as previously disclosed in writing to CBC prior to the execution
of this Agreement, Koll and Subs will not adopt or amend in any material
respect any collective bargaining agreement with employees, enter into, adopt,
amend or terminate any benefit plan or any other employee benefit plan or any
agreement, arrangement, plan or policy between such party and one or more of
its directors or officers, in each case so as to materially increase benefits
thereunder, increase the compensation or fringe benefits of any officer or
employee who earned $100,000 or more in total compensation during the twelve-
month period ended March 31, 1997 ("Key Employee") or any director or provide
any other benefit not required by any plan or arrangement in effect as of the
date hereof (including, without limitation, the granting of stock options,
stock appreciation rights, restricted stock, restricted stock units or
performance units or shares) other than to accelerate the vesting schedule of
Koll options outstanding on the date hereof or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing, except (with
respect to employees who are not Key Employees or directors only) for normal
increases and benefit changes in the ordinary course of business consistent
with past practice or bonuses paid under policies consistent with past
practice that, in the aggregate, do not result in a material increase in
benefits or compensation expense to such party, create or amend any stock plan
or grant any equity based award pursuant to any stock plan or otherwise or
enter into or renew any contract, agreement, commitment or arrangement
providing for the payment to any Key Employee or director of such party of
compensation or benefits contingent, or the terms of which are materially
altered, upon the occurrence of any of the transactions contemplated by this
Agreement, except for contracts, agreements, arrangements or commitments which
create an at-will employment relationship with an employee (other than a
director) or which provide for a severance payment to such an employee equal
to or less than eight months base salary for such employee, based on such
employee's current average monthly base salary.
(b) Schedule 6.13 contains a complete and correct list of all bonuses or
other compensation (not accrued on Koll's March 31, 1997 balance sheet or
included in the "Bonus Basket" (as defined below)) other than base salary (and
standard benefits), brokerage commissions and regular periodic payments (other
than bonuses) to agents and independent contractors in the ordinary course of
business consistent with past practice that may be paid to any officer,
employee, agent, director or independent contractor of Koll between the date
hereof and the Effective Time and the name of the individual designated to
receive such bonus or other compensation. Koll covenants and agrees that
between the date hereof and the Effective Time, it will not pay any bonus or
other compensation (other than base salary (and standard benefits), brokerage
commissions and regular periodic payments (other than bonuses) to agents and
independent contractors in the ordinary course of business consistent with
past practice) to any of its officers, directors, employees, agents or
independent contractors other than bonuses and other compensation set forth on
Schedule 6.13, accrued on Koll's March 31, 1997 balance sheet or included in
the Bonus Basket. In no event will the aggregate amount of all such bonuses
paid or payable between the date hereof and the Effective Time exceed the sum
of (i) the amount accrued on Koll's March 31, 1997 balance sheet plus (ii) the
aggregate amount shown on Schedule 6.13 plus (iii) the amount of the Bonus
Basket. For purposes of this Section 6.13(b) the "Bonus Basket" shall be an
amount not to exceed $500,000 and shall be accrued on Koll's June 30, 1997
balance sheet together with any bonus amounts accrued on Koll's March 31, 1997
balance sheet which are not paid between March 31, 1997 and June 30, 1997.
6.14 Liability Limitations. (i) The aggregate amount of indebtedness owed by
Koll, Subs, the Investment Entities and 50% JVs directly or indirectly
(including letters of credit), to Banks, savings and loans, thrifts and
similar institutions ("Bank Indebtedness") shall not exceed $47,375,000 as of
the Effective Time (exclusive of
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(A) indebtedness of Investment Entities or Subs which serve as investment
vehicles for clients of Koll or of Subs which indebtedness is secured solely
by the assets of such Investment Entity or Subs and (B) indebtedness under
those certain two revolving lines of credit by and between Comerica Bank and
Koll Dove Global Disposition Services LLC, not to exceed $600,000 under that
line of credit to be used for financing pre-auction expenses and not to exceed
$400,000 under that line of credit to be used for issuing standby letters of
credit) and the amounts owed for subcategories within the $47,375,000 shall
not exceed $2,375,000 with respect to a letter of credit securing the payment
of the balance of the purchase price with respect to the acquisition of CBS,
$3,750,000 with respect to financing the "Convenience Store Project" (but with
no obligation to do such project) and $41,250,000 for all other subcategories,
(ii) the aggregate amount loaned by Koll, Subs, each Investment Entity and
each 50% JV to employees, Affiliates and related persons shall not exceed the
amount so loaned on March 31, 1997 (excluding loans to entities with respect
to which Koll, a Sub, an Investment Entity or a 50% JV has an investment
management relationship for the purpose of purchasing real property and
working capital advances between wholly-owned Subs), and (iii) the aggregate
amount owed by Koll, Subs, Investment Entities and 50% JVs (other than any
amount which is reflected in Bank Indebtedness, which for purposes of this
clause (iii) shall include all amounts payable pursuant to the CC&F redemption
agreement referred to in Section 11.2(j)) with respect to the purchase of
businesses (whether structured as an asset purchase or a stock purchase) shall
not exceed the amount owed as of the date hereof (exclusive of earnouts and
profit participations). Notwithstanding anything to the contrary contained
herein, a breach of clause (i) this Section shall not give rise to any cause
of action for damages, but only a purchase price adjustment as set forth in
Section 2.3(d), except to the extent a breach of clause (i) of this Section
results in a Material Adverse Effect on Koll, in which case CBC shall have the
right to terminate this agreement.
6.15 Certain Payments. Koll and its Subs will make all salary, benefit,
bonus and minority interest payments on a timely basis consistent with past
practice and any delay in making any such payment which is not consistent with
past practice and which causes the amount shown on the consolidated balance
sheet of Koll and its Subs as of the last day of the month preceding the
Closing to increase by over $250,000 from what it would have been if past
practice had been observed shall be treated as an increase in Bank
Indebtedness for purposes of Sections 2.3(c) and (d).
ARTICLE 7
ADDITIONAL AGREEMENTS OF KOLL SHAREHOLDERS
During the period from the date of this Agreement and continuing until the
Effective Time, the Koll Shareholders agree to comply with the following:
7.1 No Solicitations. The Koll Shareholders shall not, directly or
indirectly, through any officer, director, employee or agent (including any
investment banker, financial advisor, attorney, accountant or other
representative or agent) or otherwise, solicit, initiate or encourage
inquiries or the submission of proposals or offers from any Third Party
relating to any Acquisition Transaction or participate in any discussions or
negotiations regarding, or furnish to any other person any confidential
information with respect to, or otherwise cooperate in any way with, or
participate in, facilitate or agree to endorse or encourage, any effort or
attempt by any other person to do or seek any of the foregoing. The Koll
Shareholders shall (i) promptly advise CBC orally and in writing of any such
offer and of any inquiries or proposals of or contacts with third parties for
any Acquisition Transaction involving Koll or any of the Subs and (ii)
immediately inform CBC of the details of such offer, proposal, inquiry or
contact and provide CBC copies of any written material related thereto, and
(iii) not recommend or vote for acceptance of any such proposal or offer.
7.2 No Transfer. No Koll Shareholder shall directly or indirectly, transfer,
sell, assign, pledge, hypothecate, encumber or grant any option with respect
to or other interest in, any shares of Koll Common to any person or entity or
enter into any agreement or agree so to do.
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7.3 Agreement to Vote Shares. In consideration for the execution of this
Agreement and the Certificate of Merger by CBC and Acquisition Corporation,
each Koll Shareholder agrees to enter into a Voting Agreement and Irrevocable
Proxy in favor of CBC in substantially the form of Exhibit C hereto (which
Voting Agreement and Irrevocable Proxy will grant CBC the right, among other
things, to vote all of each such Koll Shareholders' shares of Koll Common in
favor of the Merger) and to vote all shares of Koll Common held by such person
entitled to vote at the Koll Stockholder's Meeting (and at any adjournment
thereof) in favor of the Merger.
ARTICLE 8
AGREEMENTS OF CBC
During the period from the date of this Agreement and continuing until the
Effective Time, CBC shall and shall cause its Subsidiaries to comply with the
following:
8.1 Ordinary Course. Each of CBC and each of its Subsidiaries shall carry on
their business in the usual, regular and ordinary course, including the
payment of all state and federal taxes, in substantially the same manner as
heretofore conducted and, to the extent consistent with such businesses, use
all commercially reasonable efforts consistent with past practice and policies
to preserve intact its present business organization, keep available the
services of its present officers, key employees, agents and representatives
and preserve its goodwill and relationships with existing and potential
customers, employees, independent contractors, clients, suppliers, and others
with whom business relationships exist to the end that its goodwill and
ongoing businesses shall be unimpaired at the Effective Time. Neither CBC nor
any of its Subsidiaries shall enter into any agreement which would prevent CBC
from consummating the transactions contemplated hereby.
8.2 Dividends; Changes in Stock. Each of CBC and its Subsidiaries that are
not wholly-owned shall not and shall not purpose to declare or pay any
dividends on or make other distributions in respect of any of its capital
stock, split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of their capital stock, or repurchase or otherwise
acquire any shares of its capital stock or rights to acquire any shares of
their capital stock. Notwithstanding the foregoing, nothing contained in this
Agreement shall restrict (i) CBC from paying dividends on its Preferred Stock
or (ii) CBC or any of its Subsidiaries from purchasing stock or other equity
interest in a direct or indirect wholly-owned Subsidiary.
8.3 Governing Documents. CBC shall not amend or agree to amend its charter
documents or Bylaws other than to change the authorized number of its
directors.
8.4 No Acquisitions. CBC and Subsidiaries shall not acquire or agree to
acquire by merging or consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof, or otherwise acquire or agree to acquire any assets which
individually or in the aggregate involve total consideration in excess of
$12,500,000.
8.5 No Dispositions. CBC and its Subsidiaries shall not sell, issue, lease
or otherwise dispose of any portion of its capital stock or assets that is
material, individually or in the aggregate, to CBC and its Subsidiaries taken
as a whole, or enter into any agreement or agree so to do, except in the
ordinary course of business consistent with prior practice and upon the
exercise of CBC options or other securities convertible into CBC Common or
enter into any merger, exchange, consolidation or other agreement not
permitted by Section 8.4, or enter into any agreement which would prevent CBC
from completing the transactions contemplated herein.
8.6 Other Actions. CBC and its Subsidiaries shall not permit any of their
officers, directors, employees or agents to take any action that would, or
reasonably would be expected to, result in any of its representations and
warranties set forth in this Agreement being or becoming untrue in any
material respect, or in any of the conditions set forth in Article 11 not
being satisfied.
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8.7 Accounting Methods. CBC and its Subsidiaries shall not change their
methods of accounting in effect at December 31, 1996, except as required by
changes in GAAP as concurred in by CBC's independent auditors.
8.8 Indemnification of Directors and Officers.
(a) CBC and Group shall indemnify and hold harmless, to the fullest extent
permitted by applicable law as it presently exists or may hereafter be
amended, any person who was or is made or is threatened to be made a party or
is otherwise involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding") by reason of the
fact that he, or a person for whom he is the legal representative, is or was a
director or officer of Koll or any Sub prior to the Effective Time (an
"Indemnified Agent"), against all liability and loss suffered and expenses
(including attorneys' fees) reasonably incurred by such person. CBC shall not
be required to indemnify and hold harmless a person in connection with a
Proceeding (or part thereof) (i) initiated by such person unless the
Proceeding (or part thereof initiated by such person) was authorized by the
Board of Directors or (ii) in which it is determined that such Indemnified
Agent had actual knowledge at or prior to the Closing of any fact, event or
circumstance which would have constituted a breach of this Agreement.
(b) The right to indemnification conferred by this Article 8 shall be
presumed to have been relied upon by the Indemnitee and shall be enforceable
as a contract right. CBC may enter into contracts to provide individual
Indemnitees with specific rights of indemnification to the fullest extent
permitted by applicable law and may create trust funds, grant security
interests, obtain letters of credit or use other means to ensure the payment
of such amounts as may be necessary to effect the rights provided in this
Article 8 or in any such contract.
(c) Except for any Proceeding described in the last sentence of Section
8.8(a), upon making a request for indemnification, the Indemnitee shall be
presumed to be entitled to indemnification under this Section 8.8 and CBC
shall have the burden of proof to overcome that presumption in reaching any
contrary determination. Such indemnification shall include the right to
receive payment in advance of any reasonable expenses incurred by the
Indemnitee in connection with any Proceeding (other than a Proceeding
described in the last sentence of Section 8.8(a)) consistent with the
provisions of applicable law.
(d) If any Proceeding shall be brought or asserted under this Section 8.8,
the Indemnified Agent shall give prompt written notice of such action or claim
to the Indemnifying Party who shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Agent and the
payment of all expenses; except that any delay or failure to so notify the
Indemnifying Party shall relieve the Indemnifying Party of its obligations
hereunder only to the extent, if at all, that it is prejudiced by reason of
such delay or failure. The Indemnified Agent shall have the right to employ
separate counsel in any of the foregoing Proceedings and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of the Indemnified Agent. In the event that the Indemnifying Party,
within ten days after notice of any such action or claim, fails to assume the
defense thereof, the Indemnified Agent shall have the right to undertake the
defense, compromise or settlement of such Proceeding for the account of the
Indemnifying Party and the Indemnifying Party shall use reasonable efforts to
assist in the defense of such matter, subject to the right of the Indemnifying
Party to assume, at its expense, the defense of such Proceeding with counsel
satisfactory to the Indemnified Agent at any time prior to the settlement,
compromise or final determination thereof, and provided that CBC shall not be
liable for any settlement of any claim effected without its written consent,
which shall not be unreasonably withheld. Anything in this Section 8.8 to the
contrary notwithstanding, the Indemnifying Party shall not, without the
Indemnified Agent's prior written consent, settle or compromise any action or
claim or consent to the entry of any judgment with respect to any Proceeding
for anything other than money damages paid by the Indemnifying Party. The
Indemnifying Party may, without the Indemnified Agent's prior written consent,
settle or compromise any such Proceeding or consent to entry of any judgment
with respect to any such action or claim that requires solely the payment of
money damages by the Indemnifying Party and that includes as an unconditional
term thereof the release by the claimant or the plaintiff of the Indemnified
Agent from all liability with respect to such Proceeding. The Indemnified
Agents as a group may retain only one law firm to represent them with respect
to each such matter, at CBC's and Group's expense, unless there is, under
applicable standards of conduct, a conflict on any significant issue between
any two or more Indemnified Agents or between an
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Indemnified Agent and an Indemnifying Party which is a co-defendant in the
proceeding and is represented by the same counsel. Notwithstanding the
foregoing, nothing in this Section 8.8(b) shall be construed to require any
Indemnifying Party to indemnify any Indemnified Agent for any Unindemnified
Liability.
(e) This Section 8.8 is intended for the benefit of the Indemnified Agents
(each of whom shall be entitled to enforce this Section 8.8 against CBC) and
shall be binding upon all successors and assigns to CBC. This Section 8.8
shall survive the Effective Time and continue in full force and effect for a
period of six years after the Effective Time; provided, that, in the event any
claim is asserted or made within such six year period, all rights to
indemnification in respect of any such claim shall continue until final
disposition of such claim.
(f) If this Section 8.8 is found to be unenforceable under applicable law or
materially limited by a contract to which CBC or Group is a party, CBC and
Group shall indemnify the Indemnified Agents in accordance with the terms of
their current indemnity agreements with Koll and the current Bylaws and
Certificate of Incorporation of Koll.
8.9 Tax Treatment. CBC and its Subsidiaries shall not take or cause to be
taken any action, whether before or after the Effective Time, that would
disqualify the Merger as a reorganization under Sections 368(a)(1)(A) and
368(a)(2)(E) of the Code. CBC and Acquisition Corporation agree to make such
reasonable representations as may be requested by Koll or the Koll
Shareholders in connection with the opinion to be delivered by counsel for
Koll pursuant to Section 11.3(g).
8.10 Listing on NASDAQ. CBC shall take all appropriate actions for listing
the shares of CBC Common to be received in the Merger on NASDAQ.
8.11 Advice of Changes. CBC shall confer on a regular basis with Koll,
report on operational matters and promptly advise Koll orally and in writing
of any change or event having, or which, insofar as can reasonably be
foreseen, could have, a Material Adverse Effect or which would cause or
constitute a material breach of any of the representations, warranties or
covenants of CBC contained herein. Except where prohibited by applicable
statues and regulations, CBC shall promptly provide Koll (or its counsel) with
copies of all filings made by CBC with any state or federal governmental
entity in connection with this Agreement or the transactions contemplated
hereby.
ARTICLE 9
ADDITIONAL AGREEMENTS RELATING TO THE FORM S-4 AND THE PROXY STATEMENT
As promptly as practicable after the date hereof, CBC, with the cooperation
of Koll, shall prepare and file the Form S-4 with the SEC, in which the Proxy
Statement will be included as part of a prospectus. CBC shall use its best
efforts to promptly respond to comments from the SEC and to file amendments to
the Form S-4 in order to have the Form S-4 declared effective under the
Securities Act as promptly as practicable after such filing. CBC shall also
take any action required to be taken under any applicable state securities or
blue sky laws in connection with the issuance of the CBC Common in the Merger.
Koll shall use its best efforts to furnish to CBC all information concerning
Koll and the holders of its outstanding securities as may be reasonably
requested in connection with any action contemplated by this Article 9. CBC
will promptly notify Koll and provide Koll with copies of any correspondence
between CBC and its representatives, on the one hand and the SEC, its staff or
any state securities administrators on the other.
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ARTICLE 10
ADDITIONAL AGREEMENTS
10.1 Access to Information. Koll shall afford to CBC and shall cause its
independent accountants to afford to CBC, and its accountants, counsel and
other representatives, reasonable access during normal business hours during
the period prior to the Effective Time to all of Koll and Sub's properties,
books, contracts, commitments and records and to the independent accountants
reasonable access to the audit work papers and other records of Koll's
accountants. During such period, Koll shall use reasonable efforts to furnish
promptly to CBC a copy of each report, schedule and other document filed or
received by Koll during such period pursuant to the requirements of federal
and state securities laws and all other information concerning the business,
properties and personnel of Koll and Subs as CBC may reasonably request. CBC
will not use such information for purposes other than this Agreement and will
otherwise hold such information in confidence (and CBC will cause its
consultants and advisors also to hold such information in confidence) pursuant
to the terms of that certain Confidentiality Agreement, dated as of March 21,
1997, by and among CBC, Koll, FS, Apollo and Donald M. Koll until such time as
such information otherwise becomes publicly available, and in the event of
termination of this Agreement for any reason CBC shall promptly return, or
cause to be returned, to the disclosing party all documents obtained from Koll
and Subs, and any copies made of such documents, extracts and copies thereof.
CBC shall provide to Koll and its counsel, independent accountants and other
representatives, access to such information regarding CBC as, in CBC's sole
opinion, would customarily be provided to an underwriter in connection with a
Registration Statement on Form S-1 covering shares of CBC Common or attached
as an exhibit thereto.
10.2 Legal Conditions to the Merger. Each party will take and will cause its
respective Subsidiaries to take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed on such party with
respect to the Merger (including furnishing all information required under the
HSR Act) and will promptly cooperate with and furnish information to the other
party in connection with any such requirements imposed upon such other party
or any Subsidiary of such other party in connection with the Merger. Each
party will take, and will cause its respective Subsidiaries to take, all
reasonable actions to obtain (and to cooperate with the other party and its
Subsidiaries in obtaining) any consent, authorization, order or approval of,
or any exemption by, any governmental authority, or other third party,
required to be obtained or made by such party or its Subsidiaries (or by the
other party or its Subsidiaries) in connection with the Merger or the taking
of any action contemplated thereby or by this Agreement. For purposes of this
Section 10.2 only, Koll will not be considered a Subsidiary of FS.
10.3 Koll Stockholders' Approval. Koll agrees to submit this Agreement, the
Certificate of Merger and any related matters to its stockholders for
approval, all as provided by law and its Certificate of Incorporation and
Bylaws, at a meeting which will be held as soon as practicable after the date
hereof. The Board of Directors of Koll has unanimously recommended to the Koll
stockholders that such stockholders approve the transactions contemplated by
this Agreement and the Certificate of Merger.
10.4 CBC Stockholders' Approval. CBC agrees to submit this Agreement, the
Certificate of Merger and any related matters to its stockholders for
approval, by means of the Proxy Statement, all as provided by law and its
Certificate of Incorporation and Bylaws, at a meeting which will be held as
soon as practicable after the date hereof. The Board of Directors of CBC has
unanimously recommended to the CBC stockholders that such stockholders approve
the transactions contemplated by this Agreement and the Certificate of Merger.
10.5 Dissenting Shares. As promptly as practicable after the date of the
Koll Stockholders' Meeting and prior to the Closing Date, Koll shall furnish
CBC with the name, address and number of Dissenting Shares owned by each
Dissenting Stockholder.
10.6 Communications. Between the date hereof and the Effective Time, neither
Koll nor CBC will (i) furnish any communication to its stockholders, any
analysts, the press or to the public generally if the subject matter thereof
relates to the other party or to the transactions contemplated by this
Agreement or the Certificate
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of Merger without the prior approval of the other party as to the content
thereof, which approval shall not be unreasonably withheld (unless such
disclosure is nonetheless required in the opinion of counsel), and (ii)
respond to all inquiries from stockholders, analysts, the press or the public
generally regarding the other parties hereto or transactions contemplated by
this Agreement or the Certificate of Merger with "No comment", subject, in
each case, to each party's compliance with applicable law. Notwithstanding the
foregoing, Koll and CBC may communicate with their respective customers and
clients on a "need-to-know" basis and provided that each such client or
customer agrees to keep the information conveyed confidential.
10.7 Delivery of Stock Certificates. CBC will promptly issue and deliver as
and when required by the provisions of this Agreement, the certificates
representing the shares of CBC Common into which the shares of Koll Common
outstanding immediately prior to the Effective Time shall have been converted
as provided in this Agreement.
10.8 Update to Disclosures.
(a) Without limiting any party's right to rely on the representations and
warranties as of the date of this Agreement, each party shall provide the
others with updates to the disclosures provided or made available to the other
as to material facts which arise between the date of this Agreement and the
Closing Date and which, if they had occurred and been known prior to the date
of this Agreement, would have been required to have been disclosed in order to
make the representations and warranties contained in Articles 3, 4 or 5, as
applicable, true and correct as of the date of this Agreement.
(b) Koll will advise CBC as soon as reasonably practicable if any customers
from whom it receives annualized revenue of more than $250,000 indicates that
it is either materially dissatisfied with services being provided by Koll or
any Sub or the proposed Merger.
10.9 Good Faith. Each party shall act in good faith in an attempt to cause
all the conditions precedent to its obligations under this Agreement to be
satisfied. Each party will act in good faith and take all reasonable action
within its capability necessary to render accurate as of the Effective Time
its representations and warranties contained in this Agreement.
10.10 State Statutes. If any state takeover law shall become applicable to
the transactions contemplated by this Agreement, CBC and its Board of
Directors or Koll and its Board of Directors, as the case may be, shall use
their reasonable best efforts to obtain such approvals and take such actions
as are necessary so that the transactions contemplated by this Agreement may
be consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effects of such state takeover law on
the transactions contemplated by this Agreement.
10.11 Affiliates. At least ten days prior to the date of the Koll
Stockholders' Meeting, Koll shall deliver to CBC a list of names and addresses
of those persons who were, in Koll's reasonable judgment, at the record date
for the Koll Stockholders' Meeting, "affiliates" of Koll within the meaning of
Rule 145 (each such person, together with the persons identified below, an
"Affiliate") of the rules and regulations promulgated by the SEC under the
Securities Act ("Rule 145"). Koll shall provide CBC such information and
documents as CBC shall reasonably request for purposes of reviewing such list.
There shall be added to such list the names and addresses of any other person
(within the meaning of Rule 145) that CBC reasonably identifies (by written
notice to Koll within three Business Days after CBC's receipt of such list) as
being a person who may be deemed to be an Affiliate of Koll within the meaning
of Rule 145; provided, however, that no such person identified by CBC shall be
added to the list of Affiliates of Koll if CBC shall receive from Koll, on or
before the Effective Time, an opinion of counsel reasonably satisfactory to
CBC to the effect that such person is not an Affiliate. Koll shall use its
best efforts to deliver or cause to be delivered to CBC, prior to the
Effective Time, from each of the Affiliates of Koll identified in the
foregoing list (as the same may be supplemented as aforesaid), agreements
(collectively, the "Koll Affiliate Agreements") substantially in the form
attached to this Agreement as Exhibit D. CBC and Acquisition Corporation shall
be entitled to issue appropriate stop transfer instructions to the transfer
agent for CBC Common Stock, consistent with the terms of such Affiliate
Agreements, whether or not such Affiliate Agreements are actually delivered to
CBC.
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10.12 Koll Options.
(a) Substitute CBC Options. Subject to the provisions of this Section 10.12,
at and as of the Effective Time, CBC will substitute a CBC Option for each
Koll Option outstanding under a Koll option plan held by an individual who is
a director, employee or consultant of Koll or Subs immediately prior to the
Effective Time. In addition, following the Effective Time, each such
individual entitled to receive a CBC Option will receive a number of Warrants
equal to the Warrant Exchange Ratio multiplied by the number of shares of Koll
Common into which such Koll Option is exercisable. Each and every CBC Option
so substituted by CBC under this Agreement will continue to have, and be
subject to, substantially the same terms and conditions set forth in the Koll
option plans and/or in the other documents governing such Koll Option
immediately prior to the Effective Time, except that such CBC Option will be
exercisable for that number of whole shares of CBC Common equal to the product
of the number of shares of Koll Common that were purchasable under such Koll
Option immediately prior to the Effective Time multiplied by the Stock
Exchange Ratio, rounded down to the nearest whole number of shares of CBC
Common, and the per share exercise price for the shares of CBC Common issuable
upon exercise of such CBC Option will be equal to the quotient determined by
dividing the exercise price per share of Koll Common at which such Koll Option
was exercisable immediately prior to the Effective Time by the Stock Exchange
Ratio, and rounding the resulting exercise price up to the nearest whole cent.
The parties shall use their best efforts to provide that the transactions
contemplated by this Agreement will not terminate or accelerate any
substituted CBC Option or any right of exercise, vesting or repurchase
thereunder with respect to shares acquired upon exercise of such option other
than Koll Options intentionally accelerated by Koll in contemplation of the
Merger. The right to receive a substituted CBC Option issued pursuant to any
documents governing such substituted CBC Option may not be assigned or
transferred in any manner except by operation of law, by will or by the laws
of descent. Any attempted assignment in violation of this Section shall be
void. As of the Effective Time, CBC shall have reserved for issuance and
continue to maintain shares of CBC Common sufficient to issue the required
shares of CBC Common pursuant to the exercise of the substituted CBC Options
after the Effective Time. CBC shall use its reasonable best efforts to cause
any CBC Options issued in substitution for existing Koll Options and any
Warrants issued in respect of such Koll Options pursuant to this Section 10.12
to be covered by an effective Registration Statement under the Securities Act
of 1933, as amended (the "Securities Act") at or before the Effective Time.
CBC covenants and agrees that on or prior to the Closing Date, CBC's Board of
Directors (or a committee thereof composed solely of two or more non-employee
directors (as defined in Rule 16b-3(b)(3)(i) of the Exchange Act)) shall have,
in accordance with Rule 16b-3(d)(1) of the Exchange Act, approved the grant of
such substituted CBC Options, identified the individuals receiving such CBC
Options and identified which of such individuals are or following the Merger
will be directors or officers of CBC subject to Section 16(b) of the Exchange
Act.
(b) Documentation. At the Closing, CBC shall issue to each holder of an
outstanding Koll Option a document evidencing the substitution of a CBC Option
for such Koll Option pursuant to this Section, in a form mutually satisfactory
to the parties hereto.
(c) Reallocation of Warrants. Following the Effective Time and until the
Warrants become exercisable, if any CBC Option substituted for a Koll Option
expires or is terminated without being exercised, all Warrants issued in
respect of such option shall be forfeited by the holder thereof. At such time
as the Warrants become exercisable, all Warrants forfeited pursuant to the
immediately preceding sentence shall be reallocated among those individuals
who held shares of Koll Common or Koll Options as of the date hereof (as set
forth on Schedule 3.2(c)) (each a "Reallocation Holder" and collectively, the
"Reallocation Holders") pro rata based on the aggregate number of shares of
the CBC Common issued and shares of CBC Common underlying CBC Options issued
to each Reallocation Holder pursuant hereto divided by the total number of
shares of CBC Common issued and shares of CBC Common underlying CBC Options
issued to all Reallocation Holders pursuant hereto.
10.13 Composition of CBC Board. Following the Effective Time, so long as the
Koll Shareholders who are signatories to this Agreement hold shares equal to
60% of the shares originally issued to them pursuant to this Agreement (as
adjusted to reflect stock splits, reverse stock splits, reclassifications,
recapitalizations and
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similar events) CBC will cause three individuals selected by the Koll
Shareholders (the "Majority Koll Shareholders") holding a majority of the
shares of CBC Common received in the Merger and then held by the Koll
Shareholders and reasonably satisfactory to the Corporate Governance Committee
of CBC's Board of Directors to be nominated for election to CBC's Board of
Directors. For so long as they are employed or engaged by CBC two of those
individuals will be RW and DMK. In addition to the three directors referred to
above, following the Effective Time and until the election of directors to
CBC's Board of Directors first following the Effective Time, CBC will cause
one individual selected by AP KMS II, LLC and reasonably satisfactory to the
Corporate Governance Committee of CBC's Board of Directors to be nominated to
CBC's Board of Directors. In the event that the Koll Shareholders no longer
hold shares equal to 60% of the shares originally issued to them pursuant to
this Agreement (as adjusted to reflect stock splits, reverse stock splits,
reclassifications, recapitalizations and similar events), so long as FS owns
60% of the shares originally issued to FS pursuant to this Agreement (as
adjusted to reflect stock splits, reverse stock splits, reclassifications,
recapitalizations and similar events) CBC will cause one individual selected
by FS and reasonably satisfactory to CBC to be nominated for election to CBC's
Board of Directors. Upon their election to CBC's Board of Directors, CBC shall
enter into an indemnity agreement with the directors described above in the
form which CBC's current directors and CBC are parties to.
10.14 Agreements of Donald M. Koll. DMK hereby agrees (i) to the assignment
to CBC of the License Agreement and the Noncompetition Agreements and (ii) to
cause KHC to enter into the Voting Agreement and to otherwise comply with the
provisions of Section 7.3.
10.15 Tax Treatment. Each party hereto agrees to take such further actions
consistent with the terms of this Agreement and applicable law as may be
reasonably necessary to cause the Merger to be treated as a reorganization
under Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code, including but not
limited to preparing appropriate returns, filings and reports consistent with
the treatment of the Merger as such a reorganization, provided, however, that
CBC shall not be required to take any action which, in the sole judgment of
CBC, would incur or result in it incurring a material economic cost.
10.16 Reservation of Shares. CBC will at all times reserve and keep
available out of its authorized but unissued shares of CBC Common such number
of shares as is issuable upon exercise of all outstanding Warrants, CBC
Options or other rights to subscribe for or purchase CBC Common.
10.17 K/B Opportunity Funds. Koll will do the following with respect to K/B
Opportunity Fund I, K/B Opportunity Fund II and K/B Opportunity Fund III
(individually a "K/B Fund" and collectively the "K/B Funds"):
(a) Prior to the Closing, Koll will cause the general partner of each K/B
Fund to advise each limited partner or other investor in such K/B Fund of the
impending merger between Koll and CBC and that the general partner intends to
engage Group as a listing broker where it is the best choice as listing broker
and where Group is not the listing broker to pay it an appropriate commission
only if and when it provides the buyer for any property sold by such K/B Fund.
After the Closing, the Koll Shareholders will use their reasonable best
efforts to cause each K/B Fund to engage Group as the exclusive listing broker
for the disposition of such fund's properties or, where that is not feasible,
to engage Group as the listing broker on a property by property basis.
(b) In the event at any time prior to January 1, 2003, a K/B Fund is unable
to pay Group a commission (whether as listing or procuring broker) because one
or more limited partners in a K/B Fund has objected to such payment, and such
K/B Fund is unable to resolve the objection within 60 days so that Group may
receive its commission if it is the listing or procuring broker, then the Koll
Shareholders will owe to Group the applicable commission with respect to such
property as determined from Schedule 10.17. In the event the partnership
agreement of any K/B Fund is amended in a legally binding manner to permit
Group to be paid commissions with respect to all of the properties of such
Fund this Section 10.17 shall not apply to such Fund. To the extent the
limited partners of and any other investors in any K/B Fund consent (in a
legally binding manner) to Group
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receiving commissions with respect to one or more properties or waive (in a
legally binding manner) any prohibition on Group receiving commissions on one
or more properties then this Section 10.17 shall not apply to such properties.
(c) The Koll Shareholders shall have no obligation to pay a commission with
respect to any property transferred to a Real Estate Investment Trust as to
which a Koll Affiliate is an asset manager, a sub asset manager or a property
manager (an "Affiliated REIT") or to the extent Group has received commissions
with respect to the sale of properties by the K/B Funds (whether from the K/B
Funds, the Koll Shareholders or a third party) equal to half of the maximum
commission applicable to "Eligible Properties" as determined pursuant to
Schedule 10.17. The term Eligible Properties means the properties listed on
Schedule 10.17 other than (i) any such properties listed as "Non-Included
Properties," (ii) any properties transferred, prior to January 1, 2003, to an
Affiliated REIT and (iii) any property sold prior to January 1, 2003 by such
fund where throughout the period such property has been offered for sale,
Group has the right or a full and fair competitive opportunity to receive a
commission from its sale if Group were the listing or procuring broker. The
Koll Shareholders may pay the aggregate amount, if any, due to Group by the
Koll Shareholders pursuant to this Section 10.17 at any time, up to and
including December 31, 2002, at which date all amounts due hereunder must be
paid. At such time as the Koll Shareholders pay the amounts due hereunder, if
any, in addition to the amounts due calculated in accordance with Schedule
10.17, the Koll Shareholders shall also pay interest on such amounts, at a
rate of eight percent (8%), compounded annually, from the date an obligation
is incurred hereunder until the date such payment is made. Any commissions
collected by Group with respect to the disposition of Eligible Properties in
excess of the amounts set forth on Schedule 10.17 with respect to a specified
K/B Fund shall be applied to reduce any amounts thereafter payable by the Koll
Shareholders with respect to the other K/B Funds.
(d) Notwithstanding anything else contained in this Agreement, the
provisions of this Section 10.17 shall survive the consummation of the Merger
and the Effective Time and shall continue until the earlier of (i) the Koll
Shareholders have satisfied all their obligations under Subsections (b) and
(c) hereof, (ii) Group has received commissions with respect to the sale of
properties by the K/B Funds (whether from the K/B Funds, the Koll Shareholders
or a third party) equal to half of the maximum commission applicable to
"Eligible Properties" as determined pursuant to Schedule 10.17 and Section
10.17(c) or (iii) all Eligible Properties have been transferred to an
Affiliated REIT.
ARTICLE 11
CONDITIONS PRECEDENT
11.1 Conditions to Each Party's Obligations to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction on or prior to the Closing Date of the following conditions
unless waived by such party:
(a) Stockholder Approval. This Agreement shall have been approved and
adopted by a majority vote of the holders of the outstanding shares of each of
CBC Common and Koll Common.
(b) Government Approvals. All authorizations, consents, orders or approvals
of, or declarations or filings with, or expiration of waiting periods imposed
by, any governmental authority necessary for the consummation of the
transactions contemplated by this Agreement including, but not limited to,
termination of the waiting period under the HSR Act, such requirements under
applicable state securities laws, the NASD and the Nasdaq National Market
shall have been filed, occurred or been obtained, other than filings and
approvals relating to the Merger if failure to make such filings or obtain
such approvals would not have a Material Adverse Effect on CBC or Koll.
(c) Third-Party Approvals. Any and all consents or approvals required from
third parties relating to contracts, agreements, Permits, leases and other
instruments, shall have been obtained (including without limitation the
consent of The Sumitomo Bank, Limited (the "Bank") under that certain Third
Amended and
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Restated Senior Secured Credit Agreement by and between CBC and the Bank and
the consent of Sumitomo (Dublin) Limited under that certain Senior
Subordinated Credit Agreement between CBC and Sumitomo (Dublin) Limited),
except for those consents or approvals with respect to which the failure to
obtain would not have a Material Adverse Effect.
(d) Form S-4. The Form S-4 shall have become effective under the Securities
Act and shall not be the subject of any stop order or proceeding seeking a
stop order. None of the information supplied by CBC or Koll for inclusion in
the Form S-4, and the Proxy Statement included therein, at the date such
information shall have been supplied and at the time of the Stockholders'
Meetings, shall have contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(e) Statutes. No statute, rule or regulation shall have been enacted by the
government of the United States or any state or agency thereof which would
make the consummation of the Merger illegal, prohibit CBC's or Surviving
Corporation's ownership or operation of all or a material portion of the
business or assets of Koll and Subs, taken as a whole, or compel CBC or
Surviving Corporation to dispose of or hold separate all or a material portion
of the business or assets of Koll and Subs, taken as a whole, as a result of
the Merger, or render CBC, Koll or Acquisition Corporation unable to
consummate the Merger, except for any waiting period provisions.
11.2 Conditions to Obligations of CBC and Acquisition Corporation. The
obligations of CBC and Acquisition Corporation to effect the Merger are
subject to the satisfaction on or prior to the Closing Date of the following
conditions, unless waived by CBC and Acquisition Corporation:
(a) Representations and Warranties. (i) The representations and warranties
of the Koll Shareholders and Koll set forth in this Agreement and the
Certificate of Merger and of RGW and RSA set forth in their respective
Minority Shareholders Agreements which are qualified with respect to
materiality or Material Adverse Effect shall be true and correct in all
respects and (ii) the representations and warranties of the Koll Stockholders,
Koll and of RGW and RSA that are not so qualified shall be true and correct in
all respects, except for such failures to be true and correct which would not
have a Material Adverse Effect, individually or in the aggregate, in both
cases as of the date of this Agreement and as if made at and as of the Closing
Date (except with respect to representations and warranties made as of another
date, for which compliance shall be determined as of such date), provided,
however, that the representations and warranties contained in Sections 3.2(a),
(b) and (c), 3.25, 4.1 and 4.3 of this Agreement and in Section 2 of each of
the Minority Shareholders Agreements shall be true and correct in all respects
regardless of whether the failure of such representations and warranties to be
true and correct would have a Material Adverse Effect. CBC shall have received
certificates signed by each Koll Shareholder and by the chief executive
officer and the president of Koll certifying as to all of the above.
(b) Performance of Obligations of Koll. Each Koll Shareholder, Koll and Subs
shall have performed in all material respects all obligations required to be
performed by each under this Agreement and the Certificate of Merger prior to
the Closing Date, and CBC shall have received certificates signed by each Koll
shareholder and by the chief executive officer and the president of Koll to
such effect.
(c) Opinion of Koll's Counsel. CBC shall have received an opinion dated the
Closing Date of Riordan & McKinzie, counsel to Koll, in form and substance
reasonably satisfactory to CBC and its counsel.
(d) Dissenting Shares. The number of Dissenting Shares shall not exceed
100,000 shares of Koll Common.
(e) No Material Adverse Change. Since December 31, 1996 there shall have
been no changes in the financial condition results of operations, business or
properties of Koll, Subs, the Investment Entities or the 50% JVs which
changes, individually or in the aggregate, have had or may be reasonably
expected to have a Material Adverse Effect, excluding any change caused by the
loss of the services of its present officers, employees, agents and
representatives.
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(f) Noncompetition Agreement. DMK shall have entered into a covenant not to
compete with CBC similar to those certain Noncompetition and Confidentiality
Agreements (the "Noncompetition Agreements), each dated as of April 1, 1996,
by and among (i) Koll, DMK and FS and (ii) Koll, DMK, and Apollo, and in
substantially the form of Exhibit E hereto.
(g) License Agreement. Koll, The Koll Company and DMK shall have executed
and delivered to CBC an Assignment Agreement in substantially the form of
Exhibit F hereto assigning that certain Amended License Agreement (the
"License Agreement"), dated as of November 23, 1994, by and among Koll, The
Koll Company and DMK and all rights of Koll thereunder to CBC.
(h) Voting Agreement. The Koll Shareholders shall have entered into a Voting
Agreement and Irrevocable Proxy in substantially the form of Exhibit C hereto
and such Voting Agreement shall be in full force and effect and there shall
have been no material breach by any Koll Shareholder thereunder.
(i) Legal Action. No temporary restraining order, preliminary injunction or
permanent injunction or other order preventing the consummation of the Merger
or materially limiting CBC's ability to own or operate Koll and Subs, taken as
a whole, shall have been issued by any federal or state court and remain in
effect, and no litigation or other proceeding instituted by any Governmental
Entity or by any of the stockholders of Koll seeking the issuance of such an
order or injunction, shall be pending which, in the good faith judgment of
CBC's Board of Directors has a reasonable probability of resulting in such
order or injunction. In the event any such order or injunction shall have been
issued, each party agrees to use its reasonable efforts to have any such
injunction lifted.
(j) CC&F. Koll/CC&F Management Services, a California General Partnership
shall have redeemed the interest of CC&F Asset Management Co., Inc. therein on
substantially the terms and conditions set forth in that certain draft
redemption agreement previously delivered to CBC by Koll pursuant to a jointly
signed memorandum and all provisions of the partnership agreement governing
such partnership (the "CC&F Partnership Agreement") which in any way, directly
or indirectly, restrict or could restrict Koll or CBC or any of their
respective Affiliates from engaging in any business in any geographic area at
any time, including without limitation rendering "Management Services" in the
"Project Territory" (as both such terms in quotes are defined in the CC&F
Partnership Agreement, as amended) shall be of no further force and effect and
there shall be no new provisions which could have any such effect.
(k) Restrictions on Business. Neither Koll nor any Sub, affiliate or entity
in which Koll has a direct or indirect investment shall be a party to any
agreement (i) entered into after the date hereof or (ii) entered into before
the date hereof and not disclosed on Schedule 11.2(i) hereto, which would
subject CBC or any Affiliate of CBC to any covenant not to compete or similar
agreement or provision which would materially affect CBC or any of its
Affiliates' respective businesses. Notwithstanding anything else contained
herein, neither Koll nor any Sub, Investment Entity, 50% JV or Affiliate of
Koll shall be a party to any agreement which would materially limit Group's
ability to provide sales or leasing brokerage services in the Cincinnati, Ohio
area.
(l) Termination of Agreements. The Third Amended and Restated Stockholders
Agreement and all Registrations Rights Agreements set forth on Schedule 3.3
and all other stockholders or shareholders, registrations rights and similar
agreements relating to equity securities of Koll (other than agreements
entered into pursuant hereto) shall have been terminated.
(m) No Liens. All shares of Koll Common delivered or exchanged pursuant
hereto shall be free and clear of all Liens other than Liens in favor of Koll.
(n) Credit Agreement. Bankers Trust Company ("BT") and such other lenders
under that certain Amended and Restated Credit Agreement, dated as of January
9, 1997, as amended, by and among BT, as agent, Koll and the other parties
thereto as are required to create an effective waiver shall have waived any
Event of Default which would be caused by the Merger for a period of 60 days
following the Effective Time and shall have agreed that no payments of
principal shall be due thereunder until such time and there shall be no other
Event of Default thereunder.
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(o) Change in Receivables. The result achieved by dividing the trade
accounts receivable of Koll and its Subs as of the last day of the month
preceding the Closing by revenues for the twelve months ending with such day
shall not be less than 97% of the Average Receivables Ratio. The term Average
Receivables Ratio shall be determined by adding together the results of the
following calculations and dividing by six:
Trade accounts receivable at 6/30/97 divided by revenues for the 12 months
ended 6/30/97
Trade accounts receivable at 5/31/97 divided by revenues for the 12 months
ended 5/31/97
Trade accounts receivable at 4/30/97 divided by revenues for the 12 months
ended 4/30/97
Trade accounts receivable at 3/31/97 divided by revenues for the 12 months
ended 3/31/97
Trade accounts receivable at 2/28/97 divided by revenues for the 12 months
ended 2/28/97
Trade accounts receivable at 1/31/97 divided by revenues for the 12 months
ended 1/31/97
All calculations shall be made in accordance with GAAP in a manner
consistent with the normal practices of Koll.
(p) Change in Payables. The average period for which accounts payable have
been outstanding for the month preceding the Closing shall not exceed by more
than 3% the sum of the average period for which trade payables have been
outstanding on the last day of each month for the twelve-month period ended
June 30, 1997 divided by 12. All calculations shall be made in accordance with
GAAP in a manner consistent with the normal practices of Koll.
(q) RW Stock Ownership. RW must be the sole legal and beneficial owner of a
minimum of 5,000 shares of Koll Common immediately prior to the Effective
Time.
(r) General Release. The Koll Shareholders shall have signed a General
Release in substantially the form of Exhibit G hereto.
(s) Minority Shareholder Agreements. Richard G. Wollack and Richard S.
Abraham shall each have executed an agreement (the "Minority Shareholders
Agreements") with CBC and Acquisition Corporation in substantially the form of
Exhibit I hereto, pursuant to which each makes certain representations and
warranties in favor of CBC and Acquisition Corporation.
11.3 Conditions to Obligations of Koll. The obligations of Koll to effect
the Merger are subject to the satisfaction on or prior to the Closing Date of
the following conditions unless waived by Koll:
(a) Representations and Warranties.
(i) The representations and warranties of CBC and Acquisition Corporation
set forth in this Agreement and the Certificate of Merger which are
qualified with respect to knowledge, materiality or Material Adverse Effect
shall be true and correct in all respects and
(ii) the representations and warranties of CBC and Acquisition
Corporation that are not so qualified shall be true and correct in all
respects, except for such failures to be true and correct which would not
have a Material Adverse Effect, individually or in the aggregate, in both
cases, as of the date of this Agreement and as if made at and as of the
Closing Date (except with respect to representations and warranties made as
of another date, for which compliance shall be determined as of such date),
provided, however, that the representations and warranties contained in
Section 5.3(a) and 5.9 must be true and correct in all respects regardless
of whether the failure of such representations and warranties to be true
and correct would have a Material Adverse Effect, Koll shall have received
a certificate signed by the chief executive officer of CBC to such effect.
(b) Performance of Obligations of CBC and Acquisition Corporation. CBC and
Acquisition Corporation shall have performed in all material respects all
obligations required to be performed by them under this Agreement prior to the
Closing Date, and Koll shall have received a certificate signed by the chief
executive officer of CBC to such effect (attaching all resolutions specified
in Section 10.12).
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(c) Opinion of CBC's Counsel. Koll shall have received an opinion dated the
Closing Date of Pillsbury Madison & Sutro LLP, in form and substance
reasonably satisfactory to Koll and its counsel.
(d) No Material Adverse Change. Since December 31, 1996 there shall have
been no changes in the financial condition results of operations, obligations
business or properties of CBC or its Subsidiaries which, in the aggregate,
have had or may be reasonably expected to have a Material Adverse Effect.
(e) Legal Action. No temporary restraining order, preliminary injunction or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any federal or state court and remain in effect, and
no litigation or other proceeding instituted by any Governmental Entity or by
any of the Koll stockholders seeking the issuance of such order or injunction,
shall be pending which, in the good faith judgment of Koll's Board of
Directors has a reasonable probability of resulting in such order or
injunction. In the event any such order or injunction shall have been issued,
each party agrees to use its reasonable efforts to have any such injunction
lifted.
(f) Registration Rights Agreement. CBC shall have entered into a
Registration Rights Agreement with the Koll Shareholders in substantially the
form of Exhibit H hereto.
(g) Tax Opinion. Koll and its stockholders shall have received a written
opinion of Riordan & McKinzie, counsel for Koll, in form and substance
reasonably satisfactory to them to the effect that the Merger will constitute
a reorganization within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E)
of the Code and that no gain or loss will be recognized by Koll and its
stockholders as a result of the receipt of CBC Common and Warrants pursuant
hereto. Counsel shall, in rendering such opinion, be entitled to rely on
representations of CBC, Acquisition Corporation, Koll and the Koll
Shareholders.
(h) Listing on NASDAQ. All appropriate actions shall have been taken for
listing the shares of CBC Common to be received in the Merger on NASDAQ.
(i) Substitute CBC Options. CBC shall have taken all actions required to
execute and deliver the CBC Option agreements pursuant to Section 10.12 which
agreements shall be effective as of the Effective Time and to otherwise comply
with Section 10.12.
(j) Warrant Agreement. CBC shall have entered into a Warrant Agreement in
substantially the form of Exhibit B hereto with the parties named therein.
ARTICLE 12
CLOSING
12.1 Closing Date. The Closing under this Agreement (the "Closing") shall be
held as promptly as practicable, but not more than one (1) business day
following the later of the approval of the Merger by the stockholders of CBC
at the CBC Stockholders Meeting, and satisfaction of all other conditions
precedent to the Merger specified in this Agreement, unless duly waived by the
party entitled to satisfaction thereof. In any event, if the Closing has not
occurred on or before October 31, 1997, this Agreement may be terminated as
provided in Section 15.1(c). Such date on which the Closing is to be held is
herein referred to as the "Closing Date." The Closing shall be held at the
offices of Pillsbury Madison & Sutro, 725 S. Figueroa Street, Los Angeles, CA
90017, at 10:00 A.M. on such date, or at such other time and place as the
parties may agree upon in writing.
12.2 Filing Date. Subject to the provisions of this Agreement, on the
Closing Date a fully executed and acknowledged copy of the Certificate of
Merger meeting the requirements of the Delaware General Corporation Law, shall
be filed with the Delaware Secretary of State, all in accordance with the
provisions of this Agreement.
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ARTICLE 13
INDEMNIFICATION
13.1 Survival. The representations, warranties and covenants of Koll, the
Koll Shareholders, CBC and Acquisition Corporation contained in this Agreement
shall terminate at the Effective Time with the exceptions of (i) the
representations and warranties of the Koll Shareholders made in Section 4.1
(Title and Authority) which shall be of unlimited duration, (ii) the
representations and warranties of the Koll Shareholders made in Section 4.2
(Undisclosed Liabilities) which shall survive for one year following the
Effective Time and (iii) the representations and warranties of the Koll
Shareholders contained in Section 4.3 (Misstatements) which shall survive for
one year following the Effective Time and (iv) the representations and
warranties of CBC made in Sections 5.3(a) (Authority) and 5.9 (Issuance of
Common Stock) which shall be of unlimited duration. Each of the
representations and warranties listed in the foregoing clauses (i), (ii),
(iii) and (iv), any updates to the Schedules relating thereto and the
Certificates delivered pursuant to Sections 11.2(a) and 11.3(a) to the extent
they relate thereto shall be deemed renewed by the appropriate party at the
Closing as if made at such time and shall survive the Closing and continue in
full force and effect thereafter, for the respective periods set forth in
Clauses (i), (ii), (iii) and (iv), even if the damaged party knew or had
reason to know of any misrepresentation or breach of warranty at the time of
Closing, unless such misrepresentation or breach is disclosed in an Exhibit or
Schedule hereto or any updates to the Schedules pursuant to Section 10.8
hereof.
13.2 Indemnification by the Koll Shareholders.
(a) Except as otherwise expressly provided in this Section 13.2, on and
after the Closing Date, the Koll Shareholders shall defend, indemnify and hold
harmless CBC and Acquisition Corporation, and each of their respective
Affiliates, officers, directors, employees, agents, successors and assigns
(collectively, "CBC's Indemnified Persons"), and shall reimburse CBC's
Indemnified Persons, for, from and against, each and every demand, claim, loss
(which shall include any diminution in value), liability, judgment, and damage
(and costs and expenses, including attorneys' fees, (collectively, "Losses")
imposed on or incurred by CBC's Indemnified Persons, directly or indirectly,
relating to, resulting from or arising out of any inaccuracy in any
representation or warranty (which survived the Closing pursuant to Section
13.1) in any respect, whether or not CBC's Indemnified Persons relied thereon
or had knowledge thereof.
(b) The Koll Shareholders shall have no liability under Section 13.2(a) in
the case of any inaccuracy contained in any representation or warranty
contained in Section 4.2 (Undisclosed Liabilities) or in Section 4.3
(Misstatements) unless and until the aggregate of all Losses relating thereto,
exceeds $2,000,000 (the "CBC Minimum Amount"), in which event the Koll
Shareholders shall be liable for all Losses, irrespective of the CBC Minimum
Amount.
(c) Notwithstanding any other provision of this Agreement, the CBC Minimum
Amount shall not apply to any Losses relating to any inaccuracy in any
representation or warranty contained in Section 4.1 (Title and Authority)
hereof, regardless of whether any Losses relating thereto may also constitute
a Loss arising from the breach of a representation or warranty contained in
Section 4.2 (Undisclosed Liabilities) or in Section 4.3 (Misstatements),
provided, however, that each Koll Shareholder shall only be liable with
respect to such Koll Shareholder's own representations under Section 4.1
(Title and Authority) and shall have no liability with respect to any other
Koll Shareholder's representations under Section 4.1 (Title and Authority).
(d) With respect to the breach of any representation or warranty contained
in Section 4.2 (Undisclosed Liabilities) only, (i) the maximum aggregate
amount for which the Koll Shareholders shall be liable pursuant to this
Article 13 shall be $17,500,000 and (ii) no Koll Shareholder shall be liable
for any Losses in excess of such Koll Shareholder's pro rata share of all
Losses relating to such inaccuracy, which pro rata share shall be determined
by dividing the aggregate value of shares of CBC Common issued plus the value
of all CBC Options issued to such Koll Shareholder pursuant to this Agreement
by the total value of all shares of CBC Common issued plus the value of all
CBC Options issued to the Koll Shareholders pursuant hereto.
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(e) A Koll Shareholder shall only have liability pursuant to Section 4.3
(Misstatements) if such Koll Shareholder knowingly furnished information which
breached Section 4.3 or had actual knowledge that Koll or a Koll Shareholder
furnished information which breached Section 4.3. In the case of a breach of
Section 4.3 (Misstatements), each Koll Shareholder with such knowledge shall
be jointly and severally liable for all losses relating thereto and, with
respect to a Koll Shareholder who is an individual, in addition to any other
liability hereunder, any CBC Options (other than those issued pursuant hereto)
held by such individual, whether vested or unvested, shall be terminated
immediately upon a finding by an arbitrator pursuant to Section 16.8 or by
another appropriate tribunal that such individual is liable pursuant hereto
and no such CBC Option may be exercised during any period during which a claim
made hereunder against such individual is being resolved.
(f) The maximum amount for which a Koll Shareholder shall be liable for all
breaches of Sections 4.2 and 4.3 shall not exceed the value of the shares of
CBC Common and the CBC Options received by such Koll Shareholder pursuant
hereto. Such shares of CBC Common shall be valued at the average closing sales
price of a share of CBC Common as reported on the NASDAQ for the ten (10)
trading days ending on the trading day immediately prior to the Closing Date
and the value of a CBC Option shall be the difference between the exercise
price per share of CBC Common under such CBC Option and such average closing
price multiplied by the number of shares of CBC Common underlying such CBC
Option.
(g) For purposes of determining pro rata share and the value received in the
Merger, the options of RW and WSR to purchase shares of Koll Common held by
KHC (described in Section 3.2(c)) shall be deemed to have been exercised
immediately prior to the Effective Time in a cashless exercise (such that
shares of Koll Common representing the exercise price shall be deemed to be
held by KHC and shares of Koll Common representing the value of such shares at
the Effective Time minus the exercise price shall be deemed to be held by RW
and WSR, as applicable). The value of each share of Koll Common for purposes
of this section shall be 0.79 multiplied by the average closing sales price of
a share of CBC Common as reported on the NASDAQ for the ten (10) trading days
ending on the trading day immediately prior to the Closing Date.
(h) Any amounts payable by a Koll Shareholder to CBC pursuant to this
Article 13 may be paid in cash or in CBC Common received in the Merger or a
combination thereof. For purposes of this Section 13.2(g), such CBC Common
shall be valued at the average closing sales price of a share of CBC Common as
reported on the NASDAQ for the ten (10) trading days ending on the trading day
immediately prior to the date on which the claim for a Loss is finalized and
liquidated.
13.3 Indemnification by CBC. Except as otherwise expressly provided in this
Section 13.3, on or after the Closing Date, CBC shall defend, indemnify and
hold harmless the Koll Shareholders and each of their respective Affiliates,
officers, directors, employees, agents, successors, heirs and assigns (the
Koll Shareholders and such other persons, collectively "Shareholders'
Indemnified Persons") and shall reimburse the Shareholders' Indemnified
Persons for, from and against all Losses imposed on or incurred by the
Shareholders' Indemnified Persons, directly or indirectly, relating to,
resulting from or arising out of any inaccuracy in any representation or
warranty contained in Sections 5.3(a) and 5.9 hereof in any respect, whether
or not Shareholders' Indemnified Persons relied thereon or had knowledge
thereof.
13.4 Notice and Defense of Third-Party Claims. If any Proceeding shall be
brought or asserted under this Section 13.4 against an indemnified party or
any successor thereto (the "Indemnified Person") in respect of which indemnity
may be sought under this Article 13 from an indemnifying person or any
successor thereto (the "Indemnifying Person"), the Indemnified Person shall
give prompt written notice of such Proceeding to the Indemnifying Person who
shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Person and the payment of all
expenses; except that any delay or failure to so notify the Indemnifying
Person shall relieve the Indemnifying Person of its obligations hereunder only
to the extent, if at all, that it is prejudiced by reason of such delay or
failure. The Indemnified Person shall have the right to employ separate
counsel in any of the foregoing Proceedings and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the Indemnified Person unless both the
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Indemnified Person and the Indemnifying Person are named as parties and the
Indemnified Person shall in good faith determine that the representation by
the same counsel is inappropriate. In the event that the Indemnifying Person,
within ten days after notice of any such Proceeding, fails to assume the
defense thereof, the Indemnified Person shall have the right to undertake the
defense, compromise or settlement of such Proceeding for the account of the
Indemnifying Persons, subject to the right of the Indemnifying Person to
assume, at its expense, the defense of such Proceeding with counsel
satisfactory to the Indemnified Person at any time prior to the settlement,
compromise or final determination thereof. Anything in this Article 13 to the
contrary notwithstanding, the Indemnifying Person shall not, without the
Indemnified Person's prior written consent, settle or compromise any
Proceeding or consent to the entry of any judgment with respect to any
Proceeding for anything other than money damages paid by the Indemnifying
Person. The Indemnifying Person may, without the Indemnified Person's prior
written consent, settle or compromise any such Proceeding or consent to entry
of any judgment with respect to any such Proceeding that requires solely the
payment of money damages by the Indemnifying Person and that includes as an
unconditional term thereof the release by the claimant or the plaintiff of the
Indemnified Person from all liability with respect to such Proceeding.
13.5 Exclusivity. From and after the Closing Date, the rights and remedies
provided in this Article 13 shall be the exclusive rights and remedies,
contractual or otherwise, of the Indemnified Persons with respect to
inaccuracies in the representations and warranties contained in this
Agreement.
ARTICLE 14
PAYMENT OF EXPENSES
CBC shall pay the reasonable fees and expenses incurred incident to the
preparation and carrying out of the transactions herein contemplated
(including legal, accounting and investment banking services and travel)
provided however that the aggregate amount payable by CBC and Koll for all
fees and expenses of all legal counsel to Koll and the Koll Shareholders shall
not exceed $500,000 and any amount payable in excess of such amount for fees
and expenses of legal counsel of Koll and the Koll Shareholders shall be
payable by the Koll Shareholders. CBC shall also pay all government filing
fees including under the HSR Act and with the SEC, any state securities
commission, and the Department of Corporations and the costs of printing,
filing and mailing the Form S-4 and Proxy Statement (collectively, the "Filing
Fees"). Notwithstanding the foregoing, Koll shall bear all the Filing Fees and
all reasonable fees and expenses (including without limitation, fees and
expenses payable to counsel to CBC, outside consultants, accountants and to
all investment banking firms and their respective counsel) actually incurred
by CBC and Acquisition Corporation in the event that Koll's stockholders fail
to approve the Merger by that date which is twenty (20) days after the
effective date of the Registration Statement on Form S-4 to be filed in
connection with the Merger or shareholders of Koll holding over 350,000 shares
exercise dissenter's rights. Also notwithstanding the foregoing, if the
transactions contemplated hereby are not consummated by October 31, 1997, each
party hereto shall be responsible for its own fees and expenses and Koll and
the Koll Shareholders shall promptly reimburse CBC for any amounts advanced,
reimbursed or otherwise paid to them by CBC pursuant to this provision. Each
party shall promptly advance upon request or reimburse such party's portion of
these fees.
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ARTICLE 15
TERMINATION, AMENDMENT AND WAIVER
15.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of matters presented in
connection with the Merger by the stockholders of Koll and CBC:
(a) by mutual written consent of Koll and CBC;
(b) (i) by CBC if there has been a breach of any representation, warranty,
covenant or agreement of the Koll Shareholders or Koll contained in this
Agreement which has had or would reasonably be expected to have a Material
Adverse Effect;
(ii) by the Koll Shareholders or Koll if there has been a breach of any
representation, warranty, covenant or agreement of CBC or Acquisition
Corporation contained in this Agreement which has had or would reasonably
be expected to have a Material Adverse Effect;
(c) by either CBC or Koll if the Merger shall not have been consummated
before October 31, 1997 (which failure, in the case of termination by CBC or
Acquisition Corporation, was due to a failure of any of the conditions to the
obligations of CBC and Acquisition Corporation set forth in Section 11.2
hereof and, in the case of termination by Koll or the Koll Shareholders, was
due to a failure of any of the conditions to the obligations of Koll or the
Koll Shareholders set forth in Section 11.3 hereof);
(d) by either CBC or Koll if there shall be a final nonappealable order of a
federal or state court in effect preventing consummation of the Merger or
there shall be any action taken, or any statute, rule, regulation or order
enacted, promulgated or issued or deemed applicable to the Merger by any
governmental authority which would make consummation of the Merger illegal;
(e) by CBC if any required approval of the stockholders of Koll shall not
have been obtained by that date which is twenty (20) days after the effective
date of the Registration Statement on Form S-4 to be filed in connection with
the Merger or by Koll if any required approval of the stockholders of CBC
shall not have been obtained by October 31, 1997;
(f) by CBC or Koll if there shall be any action taken, or any statute, rule,
regulation or order enacted, promulgated or issued or deemed applicable to the
Merger by any governmental authority, which would prohibit CBC's, Koll's or
Sub's ownership or operation of all or a material portion of the business or
assets of Koll and Subs or CBC and its Subsidiaries, in each case taken as a
whole, or compel CBC and its Subsidiaries or Koll or Subs to dispose of or
hold separate all or a material portion of the business or assets of Koll and
Subs or CBC and its subsidiaries, in each case taken as a whole, as a result
of the Merger or render CBC or Koll unable to consummate the Merger, except
for any waiting period provisions;
(g) by CBC if over 100,000 shares of Koll Common are Dissenting Shares;
(h) by CBC if any of the following Events occur:
(i) Koll or the Koll Shareholders advise CBC (or either is obligated by
Section 6.5 or Section 7.1, respectively, to advise CBC but has failed to
do so) that Koll or any Koll Shareholder has been advised in writing by
counsel that it is required to participate in negotiations, provide
information, or otherwise cooperate with any corporation, partnership,
person or other entity or group (as defined in Section 13(d) of the
Exchange Act) (other than Koll or an affiliate of Koll) (a "Third Party")
concerning an Acquisition Transaction and Koll intends to proceed with such
action or any Koll Shareholder intends to approve of, vote for or recommend
such action, or Koll (or its Subs), any Koll Shareholder or any of their
respective directors, officers or agents, directly or indirectly, solicits
or initiates any discussions in violation of Section 6.5 or 7.1;
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<PAGE>
(ii) Koll shall have adopted, approved or implemented or taken any action
in respect of or entered into an agreement with respect to, any plan of
liquidation or commenced or undertaken, any restructuring or
recapitalization plan which contemplates the disposition or distribution,
directly or indirectly, of any material amount of assets or securities of
Koll to some or all of its securityholders either by dividend, share
purchase, exchange offer, reclassification, merger, exchange or otherwise;
or
(iii) Koll's Board of Directors or any committee thereof shall have
withdrawn, or amended or modified in any manner adverse to CBC or
Acquisition Corporation, its approval or recommendation of this Agreement
or the Merger or taken any position inconsistent with such approval or
recommendation or shall have recommended another Acquisition Transaction or
resolved to do any of the foregoing.
(i) by CBC if any condition to CBC's obligation to complete the Merger has
not been satisfied or waived by CBC; and
(j) by Koll if any condition to Koll's obligation to complete the Merger has
not been satisfied or waived by Koll.
(k) by Koll if CBC shall have failed to obtain the consent of the Bank
referred to in Section 11.1(c) under the Third Amended and Restated Senior
Secured Credit Agreement by June 2, 1997.
(l) by CBC pursuant to Section 6.14.
15.2 Effect of Termination.
(a) In the event of termination of this Agreement by either Koll or CBC as
provided in Section 15.1, this Agreement and the Certificate of Merger shall
forthwith become void and there shall be no liability or obligation on the
part of CBC or Koll or their respective officers or directors except for the
last sentence of Section 10.1 and the provisions of Article 13, Article 14 and
this Section 15.2, and provided that nothing contained herein shall relieve
any party from the breach of any of its representations, warranties, covenants
or agreements set forth in this Agreement.
(b) In the event that CBC terminates this Agreement pursuant to Section
15.1(h), then Koll, within one day of notice from CBC shall pay to CBC in cash
or immediately available funds (i) a termination fee of $5,000,000 and (ii) an
amount equal to all Filing Fees paid by CBC or Acquisition Corporation and all
fees and expenses actually incurred by CBC and Acquisition Corporation in
connection with this Agreement and the transactions contemplated hereby
(including without limitation, fees and expenses payable to counsel to CBC,
outside consultants, accountants and to all investment banking firms and their
respective counsel).
15.3 Amendment. This Agreement may be amended by the parties hereto, at any
time before or after approval of matters presented in connection with the
Merger by the stockholders of Koll, CBC and Acquisition Corporation but, after
any such stockholder approval, no amendment shall be made which by law
requires the further approval of stockholders without obtaining such further
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
15.4 Extension; Waiver. At any time prior to the Effective Time, any party
hereto, by such corporate action as shall be appropriate, may, to the extent
legally allowed, (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties made to such party
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions for the benefit of such
party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid if set forth in an instrument in
writing signed on behalf of such party by a person duly authorized to so sign.
1-43
<PAGE>
ARTICLE 16
GENERAL
16.1 Notices. Any notice, request, instruction or other document to be given
hereunder by any party to the other shall be in writing and delivered
personally or sent by certified mail, postage prepaid, by telecopy, or by
courier service, as follows:
If to CBC to:
CB Commercial Real Estate Services
Group, Inc.
533 S. Fremont Avenue
Los Angeles, CA 90017
Attention: Chief Executive Officer
General Counsel
with a copy to:
Pillsbury, Madison & Sutro LLP
725 S. Figueroa St., 12th Fl.
Los Angeles, CA 90017
Attention: Peter V. Leparulo, Esq.
J. Keith Biancamano, Esq.
If to Koll or the Koll Shareholders to:
Koll Real Estate Services
4343 Von Karman Avenue
Newport Beach, CA 92660
Attention: Chief Executive Officer
with a copy to each of:
Riordan & McKinzie
300 S. Grand Ave., 29th Floor
Los Angeles, CA 90071
Attention: Richard J. Welch, Esq.
O'Melveny & Myers LLP
610 Newport Center Drive, Suite 1200
Newport Beach, CA 92660
Attention: Gary J. Singer, Esq.
Battle Fowler LLP
75 East 55th Street
New York, NY 10022
Attention: Steven L. Lichtenfeld, Esq.
or to such other persons as may be designated in writing by the parties, by a
notice given as aforesaid. Notice to any Koll Shareholder may be given at the
address for such shareholder set forth in the records of Koll.
16.2 Headings. The headings of the sections of this Agreement are inserted
for convenience of reference only and are not intended to affect the meaning
or interpretation of this Agreement.
16.3 Counterparts. This Agreement may be executed in counterparts, and when
so executed each counterpart shall be deemed to be an original, and said
counterparts together shall constitute one and the same instrument.
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<PAGE>
16.4 Binding Nature. This Agreement shall be binding upon and inure to the
benefit of the parties hereto. No party may assign or transfer any rights
under this Agreement.
16.5 Merger of Documents. This Agreement and all agreements and documents
contemplated hereby constitute one agreement and are interdependent upon each
other in all respects.
16.6 Incorporation of Schedules. All Exhibits and Schedules attached hereto
are by this reference incorporated herein and made a part hereof for all
purposes as if fully set forth herein.
16.7 Good Faith. Each of the parties hereto agrees that it shall act in good
faith in an attempt to cause all the conditions precedent to their respective
obligations to be satisfied.
16.8 Dispute Resolution. Any dispute arising out of or relating to this
Agreement (or any Exhibit or Schedule hereto or any other or certificate
delivered pursuant to this Agreement or the transactions contemplated hereby
or thereby or the breach, termination or validity hereof or thereof, including
any dispute based in whole or in part on tort or other non-contractual
principles of law, shall be resolved in the following manner:
(a) Any party may give written notice to the other parties of any dispute
which has arisen. Any other party may give notice within five (5) business
days of receipt of the first notice of any additional dispute(s), all to the
end that the parties may be reasonably aware of the matters in dispute.
(b) The parties to such dispute shall use all reasonable efforts to resolve
the dispute through direct discussions within 30 days of the first written
notice that there is such a dispute.
If no amicable settlement is reached as a result of the procedure in
subparagraph (b) hereof, the matter shall be fully and finally resolved by
arbitration conducted expeditiously by a single arbitrator in accordance with
the Rules for Non-Administered Arbitration of Business Disputes promulgated by
the CPR Institute for Dispute Resolution (formerly Center for Public
Resources). No arbitrator may serve who, during the three-year period
immediately preceding the date the arbitration notice is filed, has had a
material personal or financial relationship with any participant to the
dispute or any Affiliate of any such participant. The place of arbitration
shall be located in California, or (ii) any other location mutually agreed
upon by the Parties. The arbitration shall be governed by the United States
Arbitration Act, 9 U.S.C. (S)(S) 1-16 and judgment upon the award of the
arbitrator may be entered by any court having jurisdiction thereof. The
arbitrator is not empowered to act as amiable compositeur or to award damages
in excess of compensatory damages, and each Party hereto hereby waives any
claim it may otherwise have to money damages in excess of direct compensatory
damages. This Section 16.9 shall not apply to actions seeking enforcement of
this Agreement to arbitrate or to enforce Exhibit E (DMK Noncompetition
Agreement) and Exhibit C (Voting Agreement and the Irrevocable Proxy) or any
other noncompetition or nonsolicitation agreement entered into in connection
herewith or with respect to any request for provisional or interim relief
brought prior to the appointment of an arbitrator, provided that an
arbitration notice has been promptly filed prior to such action being brought.
(c) The dispute resolution proceedings contemplated by this provision shall
be as confidential and private as permitted by law. To that end, the parties
shall not disclose the existence, content or results of any claims hereunder
or proceedings conducted in accordance with this provision, and materials
submitted in connection with such proceedings shall not be admissible in any
other proceeding; provided, however, that this confidentiality provision shall
not prevent a petition to vacate or enforce an arbitral award, and shall not
bar disclosures required by law. The parties agree that any decision or award
resulting from proceedings in accordance with this dispute resolution
provision shall have no preclusive effect in any other matter involving third
parties.
16.9 Attorneys' Fees. If an arbitration or other legal proceeding is brought
to enforce or interpret the provisions of this Agreement or any other
agreement or instrument provided for herein or as to the rights or obligations
of any party to this Agreement or such other agreement or instrument, the
prevailing party in such
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<PAGE>
action shall be entitled to recover as an element of such party's costs of
suit, and not as damages, a reasonable attorney's fee to be fixed by the court
or the arbitrator. The prevailing party shall be the party who is entitled to
recover its costs of suit as ordered by the arbitrator, the court or by
applicable law or court rules. A party not entitled to recover its costs shall
not recover attorney's fees.
16.10 Applicable Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of Delaware as applied to
contracts entered into solely between residents of, and to be performed
entirely in, such state.
16.11 Severability. If for any reason whatsoever, any one or more of the
provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid as applied to any particular case or in all cases,
such circumstances shall not have the effect of rendering such provision
invalid in any other case or of rendering any of the other provisions of this
Agreement inoperative, unenforceable or invalid.
16.12 No Third Party Beneficiary. Except as expressly set forth herein, no
provision of this Agreement, including the Exhibits and Schedules hereto, is
intended or should be construed to create any third party beneficiaries or to
give any rights, including rights of subrogation, to any person other than the
parties to this Agreement.
16.13 Best Efforts; Further Assurances. Subject to the terms and conditions
of this Agreement, each party shall use its best efforts to take, or cause to
be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable consistent with applicable laws and regulations to
consummate the transactions contemplated by this Agreement as promptly as
possible. The parties hereto shall do and perform or cause to be done and
performed all such further actions and things and shall execute and deliver
all such other agreements, certificates, instruments or documents as any other
party hereby may reasonably request in order to carry out the intent and
purposes of this Agreement and the consummation of the transactions
contemplated hereby.
IN WITNESS WHEREOF, CBC, Acquisition Corporation, each of the Koll
Shareholders, Koll and DMK (for the purpose of Sections 7.3, 10.14, 11.2(f)
and 11.2(g)) have caused this Agreement to be signed either individually or by
their respective officers thereunto duly authorized, as the case may be, all
as of the date first above written.
CB COMMERCIAL REAL ESTATE SERVICES
GROUP, INC. a Delaware corporation
By /s/ James J. Didion
----------------------------------
Title _______________________________
ACQUISITION CORPORATION, a Delaware
corporation
By /s/ James J. Didion
----------------------------------
Title _______________________________
KOLL REAL ESTATE SERVICES, a
Delaware corporation
By /s/ Raymond E. Wirta
----------------------------------
Title _______________________________
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<PAGE>
FS EQUITY PARTNERS III, L.P.
By: FS Capital Partners, L.P.
Its: General Partner
By: FS Holdings, Inc.
Its: General Partner
By: /s/ Bradford M. Freeman
------------------------------
Name:
Title:
FS EQUITY PARTNERS INTERNATIONAL,
L.P.
By: FS&Co. International, L.P.
Its: General Partner
By: FS International Holdings
Limited
Its: General Partner
By: /s/ Bradford M. Freeman
------------------------------
Name:
Title:
AP KMS PARTNERS, L.P.
By: APGP KMS Partners, L.P.
Its: General Partner
By: AP KMS Acquisition Corporation
Its: General Partner
By: /s/ Ricardo Koenigsberger
------------------------------
Name:
Title:
AP KMS II, LLC
By: Apollo Real Estate Investment
Fund II, L.P.
Its: Member
By: Apollo Real Estate Advisors
II, L.P.
Its: General Partner
By: Apollo Real Estate Capital
Advisors II, Inc.
Its: General Partner
By: /s/ W. Edward Scheetz
------------------------------
Name:
Title:
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<PAGE>
RAYMOND WIRTA
/s/ Raymond E. Wirta
-------------------------------------
Raymond Wirta, an individual
THE KOLL HOLDING COMPANY
By: /s/ Donald M. Koll
---------------------------------
Name:
Title:
DONALD M. KOLL
/s/ Donald M. Koll
-------------------------------------
Donald M. Koll, an individual
WILLIAM S. ROTHE, JR.
/s/ William S. Rothe, Jr.
-------------------------------------
William S. Rothe, Jr., an individual
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<PAGE>
EXHIBIT 3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of the 14th day of May, 1997, by and among CB Commercial Real Estate
Services Group, Inc., a Delaware corporation (the "Company") and FS Equity
Partners III, L.P.; FS Equity Partners International, L.P. (collectively, "FS");
AP KMS Partners, L.P.; AP KMS II, LLC (collectively "Apollo"); Raymond E. Wirta,
Koll Holding Company and William S. Rothe, Jr. (collectively with FS and Apollo,
the "Koll Shareholders").
RECITALS
WHEREAS, pursuant to that certain Agreement and Plan of Reorganization
dated as of May 14, 1997 (the "Merger Agreement") among the Company, Koll Real
Estate Services, a Delaware corporation ("KRES"), CBC Acquisition Corporation, a
Delaware corporation and wholly-owned subsidiary of CBC ("Acquisition
Corporation") and the other parties thereto, Acquisition Corporation will be
merged with and into KRES (the "Merger") in a transaction in which issued and
outstanding shares of capital stock of KRES (the "KRES Stock") will be exchanged
for shares of Common Stock, $.01 par value, of CBC (the "CBC Common Stock") and
warrants exercisable with respect to CBC Common Stock (the "Warrants") on the
terms and conditions contained in the Merger Agreement;
WHEREAS, in connection with the Merger, the Company and the Koll
Shareholders desire to provide for certain rights of the Koll Shareholders with
respect to the registration of the shares of CBC Common Stock issued to them
pursuant to the Merger;
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the parties hereto agree as follows:
SECTION 1
Registration Rights
-------------------
1.1 Certain Definitions. As used in this Agreement, the following terms
-------------------
shall have the meanings set forth below:
(a) "Commission" means the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
(b) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar successor federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to time.
(c) "First 1998 Requested Registration" means the first request for
registration from the 1998 Initiating Koll Shareholders pursuant to Section
1.2(a) hereof during the 1998 Registration Period.
(d) "First Fiscal Quarter" means the first fiscal quarter of the
Company during any fiscal year, including the first fiscal quarters of each of
the 1998, 1999 and 2000-2002 Registration Periods.
<PAGE>
(e) "Fiscal Year End Financial Information" means, for each fiscal
year of the Company, the year-end financial statements of the Company and any
consolidated or significant subsidiaries, together with their respective
supporting schedules and notes (including the audited consolidated balance
sheets, consolidated statements of operations, consolidated statements of cash
flows and consolidated statements of stockholders' equity (deficit) as of the
close of such fiscal year), together with the report of its independent public
accountants thereon, in each case for such fiscal year of the Company.
(f) "1998 Koll Shareholder" means any Koll Shareholder who holds
Registrable Securities at the time during the 1998 Registration Period a request
for registration is made pursuant to Section 1.2(a) hereof.
(g) "1999 Koll Shareholder" means any Koll Shareholder who holds
Registrable Securities at the time during the 1999 Registration Period a request
for registration is made pursuant to Section 1.2(a) hereof.
(h) "2000-2002 Koll Shareholder" means any Koll Shareholder who holds
Registrable Securities at the time during the 2000-2002 Registration Period a
request for registration is made pursuant to Section 1.2(a) hereof.
(i) "Holder" means any Koll Shareholder and any holder of Registrable
Securities to whom the registration rights conferred by this Agreement have been
validly transferred in compliance with Section 1.8 hereof.
(j) "1998 Initiating Koll Shareholders" means any 1998 Koll
Shareholder(s) who in the aggregate hold not less than the respective Threshold
Amount of outstanding Registrable Securities.
(k) "1999 Initiating Koll Shareholders" means any 1999 Koll
Shareholder(s) who in the aggregate hold not less than the respective Threshold
Amount of outstanding Registrable Securities.
(l) "2000-2002 Initiating Koll Shareholders" means any 2000-2002 Koll
Shareholder(s) who in the aggregate hold not less than the respective Threshold
Amount of outstanding Registrable Securities.
(m) "Other Prior Registrable Shares" means other shares of CBC Common
Stock (including shares of CBC Common Stock issued upon conversion of shares of
any currently issued or unissued series of Preferred Stock of the Company and
any CBC Common Stock issued as a dividend or other distribution with respect to
or in exchange therefor or in replacement thereof), in each case with respect to
which registration rights have been granted prior to the date of the Merger
Agreement; provided however, that "Other Prior Registrable Shares" shall not
-------- -------
include Registrable Securities.
(n) "Other Shares" means Other Prior Registrable Shares and Other
Subsequent Registrable Shares.
(o) "Other Shareholders" means persons other than Holders who, by
virtue of agreements with the Company, are entitled to include their securities
in certain registrations hereunder.
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<PAGE>
(p) "Other Subsequent Registrable Shares" means other securities of
the Company (including shares of CBC Common Stock issued or issuable upon
conversion of shares of any currently issued or unissued series of Preferred
Stock of the Company) with respect to which registration rights are granted
after the date of the Merger Agreement; provided, however, that "Other
-------- -------
Subsequent Registrable Shares" shall not include Registrable Securities.
(q) "Registrable Securities" means (i) shares of CBC Common Stock
acquired by all of the Koll Shareholders together in connection with the Merger
and shares of CBC Common Stock issuable pursuant to exercise of the Warrants
acquired by all of the Koll Shareholders together in connection with the Merger
and (ii) any shares of CBC Common Stock that may be paid as a dividend or
otherwise distributed thereon or with respect thereto or issued or delivered in
exchange or substitution therefor; provided, however, that Registrable
-------- -------
Securities shall not include (x) any shares of CBC Common Stock which have
previously been registered pursuant to this Agreement or which have been sold
either pursuant to a registration statement effected pursuant to this Agreement
or pursuant to Rule 144 or (y) any shares of CBC Common Stock acquired other
than pursuant to the Merger or the exercise of the Warrants.
(r) "1998 Registration Period" means the period beginning on the
first day of the Company's 1998 fiscal year and ending on the last day of the
Company's 1998 fiscal year.
(s) "1999 Registration Period" means the period beginning on the
first day of the Company's 1999 fiscal year and ending on the last day of the
Company's 1999 fiscal year.
(t) "2000-2002 Registration Period" means (i) the period beginning on
the first day of the Company's 2000 fiscal year and ending on the last day of
the Company's 2000 fiscal year, (ii) the period beginning on the first day of
the Company's 2001 fiscal year and ending on the last day of the Company's 2001
fiscal year and (iii) the period beginning on the first day of the Company's
2002 fiscal year and ending on the last day of the Company's 2002 fiscal year.
(u) "Registration Expenses" means all expenses incurred in effecting
any registration pursuant to this Agreement, including, without limitation, all
registration, qualification, and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company, blue sky fees and expenses,
and expenses of any regular or special audits incident to or required by any
such registration, but shall not include Selling Expenses and shall not include
fees and disbursements of counsel for the Holders.
(v) "Remainder Apollo Registrable Securities" means the number of
Registrable Securities, not to exceed 200,000 shares of CBC Common Stock, held
by Apollo at the time of the First 1998 Requested Registration which were
excluded from the First 1998 Requested Registration pursuant to Section 1.2(f)
hereof and therefore not registered pursuant to the First 1998 Requested
Registration.
(w) "Rule 144" means Rule 144 as promulgated by the Commission under
the Securities Act, as such Rule may be amended from time to time, or any
similar successor rule that may be promulgated by the Commission.
(x) "Rule 145" means Rule 145 as promulgated by the Commission under
the Securities Act, as such Rule may be amended from time to time, or any
similar successor rule that may be promulgated by the Commission.
-3-
<PAGE>
(y) "Securities Act" means the Securities Act of 1933, as amended, or
any similar successor federal statute and the rules and regulations thereunder,
all as the same shall be in effect from time to time.
(z) "Selling Expenses" means all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and fees and
disbursements of counsel for any Koll Shareholder.
(aa) "Supplemental Apollo Demand Registration" means the registration
provided for in Section 1.2(b) hereof.
(bb) "Threshold Amount" means (A) with respect to the first request
from the 1998 Initiating Koll Shareholders at any time during the 1998
Registration Period pursuant to Section 1.2 (a) hereof, not less than 500,000
shares of the outstanding Registrable Securities (as adjusted for any stock
dividends, combinations or splits with respect to such shares) acquired by the
1998 Koll Shareholders in connection with the Merger and as of the effective
time of the Merger and (B) with respect to all other requests for registration
pursuant to Section 1.2 hereof other than the Supplemental Apollo Demand
Registration, means (i) fifty percent (50%) of the then outstanding Registrable
Securities acquired by all of the Koll Shareholders together in connection with
the Merger and as of the effective time of the Merger; provided, however, in the
-------- -------
case of this clause (B) such 50% constitutes at least 750,000 of the outstanding
Registrable Securities acquired by all of the Koll Shareholders together in
connection with the Merger and as of the effective time of the Merger (as
adjusted for any stock dividends, combinations or splits with respect to such
shares) and (ii) in the case of clause (B) in the event that less than 750,000
Registrable Securities are outstanding at any time, the entire balance of the
Registrable Securities held by all of the Koll Shareholders.
1.2 Requested Registration.
----------------------
(a) Request for Registration. Other than the Supplemental Apollo
------------------------
Demand Registration provided for below, if the Company shall receive from the
1998 Initiating Koll Shareholders at any time during the 1998 Registration
Period or from the 1999 Initiating Koll Shareholders at any time during the 1999
Registration Period or from the 2000-2002 Initiating Koll Shareholders at any
time during the 2000-2002 Registration Period a written request that the Company
effect any registration with respect to all or a part of the Registrable
Securities, the Company will:
(i) promptly give written notice of the proposed registration to
all other 1998 Koll Shareholders (in the case of a request by the 1998
Initiating Koll Shareholders), to all other 1999 Koll Shareholders (in the
case of a request by the 1999 Initiating Koll Shareholders) or to all other
2000-2002 Koll Shareholders (in the case of a request by the 2000-2002
Initiating Koll Shareholders; and
(ii) use its best efforts to effect such registration
(including, without limitation, filing post-effective amendments,
appropriate qualifications under applicable blue sky or other state
securities laws, and appropriate compliance with the Securities Act) and as
would permit or facilitate the sale and distribution of all or such portion
of such Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any 1998 Koll
Shareholders in the case of the 1998 Registration Period, 1999 Koll
Shareholders in the case of the 1999 Registration Period or 2000-2002 Koll
Shareholders in the case of the 2000-2002 Registration Period joining
-4-
<PAGE>
in such request as are specified in a written request received by the
Company within ten (10) days after such written notice from the Company is
mailed or delivered; provided, however, that notwithstanding anything to
-------- -------
the contrary contained in this Agreement or otherwise the Company shall not
be obligated pursuant to any provision of this Agreement to cause any
registration statement to become effective until a date as soon as
reasonably practicable after the end of its First Fiscal Quarter as the
Year End Financial Information for the Company's preceding fiscal year has
been prepared and is available to be included or incorporated by reference
in such registration statement and any related prospectus in accordance
with the Securities Act and the rules and guidelines of the Commission.
(b) Supplemental Apollo Demand Registration. In the event (i) the
---------------------------------------
Company receives a First 1998 Requested Registration prior to the end of its
first fiscal quarter for 1998 in which all Registrable Securities held by Apollo
request to be and are included in such registration and underwriting, and (ii)
the representative of the underwriters of the First 1998 Requested Registration
advises the 1998 Initiating Koll Shareholders pursuant to Section 1.2(f) hereof
that marketing factors require a limitation on the number of shares to be
underwritten, and (iii) as a result of such marketing factors the number of
Registrable Securities held by Apollo and requested to be included in the First
1998 Requested Registration is limited from inclusion in such registration and
underwriting in connection with the First 1998 Requested Registration, then upon
a written request by Apollo to the Company within thirty (30) days after the
closing of the First 1998 Requested Registration (the "Supplemental Demand
Notice"), the Company shall use its best efforts to prepare and file with the
Commission as soon as practicable after receipt of such request a registration
statement for an offering to be made on a continuous basis pursuant to Rule 415
under the Securities Act covering up to 200,000 shares of CBC Common Stock which
constitute the Remainder Apollo Registrable Securities. The offering pursuant to
the registration statement filed pursuant to this Section 1.2(b) shall not be
underwritten, and Apollo shall not enter into an underwriting agreement to
effect the offer and sale of Registrable Securities pursuant to this Section
1.2(b). The registration provided for in this Section 1.2(b) shall be referred
to herein as the "Supplemental Apollo Demand Registration".
(c) The Company shall not be obligated to effect, or to take any
action to effect, any such registration pursuant to this Section 1.2:
(A) In any particular jurisdiction in which the Company
would be required to execute a general consent to service of process
in effecting such registration, qualification, or compliance, unless
the Company is already subject to service in such jurisdiction and
except as may be required by the Securities Act;
(B) With respect to the Supplemental Apollo Demand
Registration pursuant to Section 1.2(b), after the Company has
initiated one such registration and, with respect to any registration
pursuant to Section 1.2(a) during the 1998 Registration Period, after
the Company has initiated two such registrations during the 1998
Registration Period and, with respect to any registration during the
1999 Registration Period, after the Company has initiated two such
registrations during the 1999 Registration Period pursuant to Section
1.2(a) (counting for these purposes registrations which have been
withdrawn by Apollo or the 1998 or 1999 Koll Shareholders, as the case
may be, or as to which Apollo or the respective 1998 or 1999 Koll
Shareholders have not elected to bear the Registration Expenses
pursuant to Section 1.4 hereof and would, absent such election, have
been required to bear such expenses);
-5-
<PAGE>
(C) With respect to any registration during the 2000-2002
Registration Period, after the Company has initiated two such
registrations during the 2000-2002 Registration Period pursuant to
Section 1.2(a) (counting for these purposes registrations which have
been withdrawn by the 2000-2002 Koll Shareholders as to which the
2000-2002 Koll Shareholders have not elected to bear the Registration
Expenses pursuant to Section 1.4 hereof and would, absent such
election, have been required to bear such expenses);
(D) During the period starting with the date thirty (30)
days prior to the Company's good faith estimate of the date of filing
of, and ending on a date ninety (90) days after the effective date of,
a Company-initiated registration, provided the Company is actively
employing in good faith all reasonable efforts to cause such
registration statement to become effective;
(E) Other than in connection with the Supplemental Apollo
Demand Registration, if the 1998 Initiating Koll Shareholders, the
1999 Initiating Koll Shareholders or the 2000-2002 Initiating Koll
Shareholders, as the case may be, do not request that such offering be
firmly underwritten by underwriters selected by the respective 1998,
1999, or 2000-2002 Initiating Koll Shareholders, respectively (subject
in each case to the consent of the Company, which consent will not be
unreasonably withheld);
(F) Other than in connection with the Supplemental Apollo
Demand Registration, if the Company and the respective 1998, 1999 or
2000-2002 Initiating Koll Shareholders are unable to obtain the
commitment of the underwriter described in clause (E) above to firmly
underwrite the offer; or
(G) With respect to Registrable Securities held by Apollo
or any subsequent Holder of Registrable Securities held by Apollo, at
any time after the Apollo Termination Date (as defined in Section
1.12(b) hereof).
It is the intention of the parties that the registration and other rights
provided for by Sections 1.2 and 1.4 hereof shall not accumulate or aggregate,
so that if the respective 1998, 1999 or 2001-2002 Koll Shareholders request that
the Company initiate less than two requested registrations during the 1998
Registration Period, less than two requested registrations during the 1999
Registration Period or less than two requested registrations during the 2000-
2002 Registration Period, the right of the respective Koll Shareholders to
request that the Company effect any registration during the respective
registration period during which such shareholder is entitled to request
registration (and any obligation of the Company to bear Registration Expenses
pursuant to Section 1.4) shall expire for each such registration period and
shall not cumulate or carry over into any successive registration period.
(d) Subject to the foregoing clauses (A) through (G) and further
subject to Section 1.2(a)(ii), the Company shall file a registration statement
covering the Registrable Securities so requested to be registered as soon as
reasonably practicable after receipt of the request or requests of the
respective 1998, 1999 or 2000-2002 Initiating Koll Shareholders in the case of
requests for registration pursuant to Section 1.2(a) hereof and shall file a
registration statement covering up to 200,000 shares of CBC Common Stock which
constitute Remainder Apollo Registrable Securities so requested to be registered
by Apollo as soon as reasonably practicable after receipt of a request by Apollo
pursuant to Section 1.2(b) hereof; provided,
--------
-6-
<PAGE>
however, that in each case if in the good faith judgment of the Acquisitions and
- -------
Investment Committee of the Board of Directors of the Company, any such
registration would be seriously detrimental to the Company and the Acquisitions
and Investment Committee of the Board of Directors of the Company concludes, as
a result, that it is essential to defer the filing of such registration
statement at such time (the "Deferral Period"), then the Company shall have the
right to defer such filing (except as provided in clause (D) above) for a period
of not more than 60 days after receipt of the request of the respective 1998,
1999 or 2000-2002 Initiating Holders (in the case of registrations pursuant to
Section 1.2(a) hereof) or receipt of the request by Apollo pursuant to Section
1.2(b) hereof (in the case of the Supplemental Apollo Demand Registration), and
the applicable 1998 Registration Period, 1999 Registration Period and the 2000-
2002 Registration Period shall be extended for a period of time equal to such
Deferral Period; provided further, however that such extension shall not result
-------- ------- -------
in the Company's being required to cause a registration statement to become
effective during any First Fiscal Quarter. In addition to the foregoing, in the
case of the Supplemental Apollo Demand Registration, in the event that, in the
judgment of the Acquisitions and Investment Committee of the Board of Directors
of the Company, it is advisable to suspend use of the prospectus relating to
such registration statement for a period of time due to pending material
corporate developments or similar material events that have not yet been
publicly disclosed and as to which the Acquisitions and Investment Committee of
the Board of Directors of the Company in good faith believes public disclosure
would be materially prejudicial to the Company, then the Acquisitions and
Investment Committee of the Board of Directors of the Company shall deliver a
certificate to Apollo or any Holder of Apollo's Registrable Securities to the
effect of the foregoing and, upon receipt of such certificate, Apollo or such
Holders agree not to dispose of any Registrable Securities covered by such
registration statement or prospectus; provided, however, that such deferral
-------- -------
period shall be no longer than 60 days and the Supplemental Registration
Expiration Date (as defined in Section 1.5(a) hereof) shall be extended for a
period of time equal to such deferral period (but shall not result in the
Company's being required to cause such registration statement to become
effective during any First Fiscal Quarter).
The registration statement filed pursuant to the request of the respective
1998, 1999 or 2000-2002 Initiating Koll Shareholders may pursuant to Section
1.2(a) hereof, subject to the provisions of Sections 1.2(d) and 1.10 hereof,
include other shares of CBC Common Stock (including Other Prior Registrable
Shares), with respect to which registration rights have been granted (whether
prior to or after the date of this Agreement), and may include CBC Common Stock
being sold for the account of the Company, but shall not include any type of
security other than CBC Common Stock.
(e) Underwriting. Other than pursuant to the Supplemental Apollo
------------
Demand Registration, the right of any 1998 Koll Shareholder, 1999 Koll
Shareholder or 2000-2002 Koll Shareholder to registration pursuant to Section
1.2 shall be conditioned upon such holder's participation in the firmly
underwritten offering and the inclusion of such holder's Registrable Securities
in the underwriting.
(f) Procedures. If the Company shall request inclusion in any
----------
registration pursuant to Section 1.2 of securities being sold for its own
account, or if other persons shall request inclusion in any registration
pursuant to Section 1.2(a) pursuant to registration rights granted prior to or
after the date of this Agreement, the 1998, 1999 or 2000-2002 Initiating Koll
Shareholders, as the case may be, shall offer to include such securities in the
underwriting and may condition such offer on their acceptance of the further
applicable provisions of this Section 1 (including Section 1.9). The Company
shall (together with all Holders and other persons proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary
-7-
<PAGE>
form with the representative of the underwriter or underwriters selected for
such underwriting by a majority in interest of the 1998, 1999 or 2000-2002
Initiating Koll Shareholders, as the case may be, which underwriters are
reasonably acceptable to the Company. Notwithstanding any other provision of
this Section 1.2, if the representative of the underwriters advises the 1998,
1999 or 2000-2002 Initiating Koll Shareholders in writing that marketing factors
require a limitation on the number of shares to be underwritten, the number of
shares to be included in the underwriting or registration shall be allocated as
set forth in Section 1.10 hereof. If a person who has requested inclusion in
such registration as provided above does not agree to the terms of any such
underwriting, such person shall be excluded therefrom by written notice from the
Company, the underwriter or (as the case may be) the 1998, 1999 or 2000-2002
Initiating Koll Shareholders. The securities so excluded shall also be withdrawn
from registration. Any Registrable Securities or other securities excluded shall
also be withdrawn from such registration. If shares are so withdrawn from the
registration and if the number of shares to be included in such registration was
previously reduced as a result of marketing factors pursuant to this Section
1.2(f), then the Company shall offer to all holders who have retained rights to
include shares of CBC Common Stock in the registration the right to include
additional shares of CBC Common Stock in the registration in an aggregate amount
equal to the number of shares so withdrawn, with such shares to be allocated
among such 1998, 1999 or 2000-2002 Koll Shareholders requesting additional
inclusion in accordance with Section 1.10.
1.3 Company Registration.
--------------------
After December 31, 1997, if (but without any obligation to do so) the
Company shall determine to register any CBC Common Stock for its own account or
for the account of any entity exercising registration rights in connection with
a firmly underwritten public offering solely of such CBC Common Stock and solely
for cash (other than pursuant to (i) Section 1.2 hereof, including the
Supplemental Apollo Registration, (ii) a registration relating to an employee
benefit plan (other than an underwritten registration of the resale of shares of
capital stock held within the Company's Capital Accumulation Plan), a dividend
or interest reinvestment plan or other similar plan, (iii) a registration
relating to a corporate reorganization or other transaction under Rule 145 of
the Securities Act, a reclassification, merger, consolidation or acquisition,
(iv) a registration on any registration form that does not permit secondary
sales or (v) a registration relating to shares of CBC Common Stock issued or
issuable upon the exercise of rights, options or warrants to acquire CBC Common
Stock or upon the conversion or exchange of indebtedness, shares of capital
stock or other securities other than CBC Common Stock in connection with anti-
takeover measures or transactions by the Company), the Company will:
(i) promptly give to each 1998, 1999 or 2000-2002 Koll
Shareholder written notice thereof; and
(ii) use its best efforts to include in such registration (and
any related qualification under blue sky laws or other compliance), except
as set forth in Section 1.3(b) below, and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made by any 1998, 1999 or 2000-2002 Koll Shareholder and received
by the Company within fifteen (15) days after the Company provides the
written notice described in clause (i) above. Such written request may
specify all or a part of a 1998, 1999 or 2000-2002 Koll Shareholder's
Registrable Securities.
(b) Underwriting. If the registration with respect to which the
------------
Company gives notice
-8-
<PAGE>
is for a registered public offering involving an underwriting, the Company shall
so advise the 1998, 1999 or 2000-2002 Koll Shareholders as a part of the written
notice given pursuant to Section 1.3(a)(i). In such event, the right of any
1998, 1999 or 2000-2002 Koll Shareholder to registration pursuant to this
Section 1.3 shall be conditioned upon such holder's participation in such
underwriting and the inclusion of such holder's Registrable Securities in the
underwriting to the extent provided herein. All Koll Shareholders proposing to
distribute Registrable Securities through such underwriting shall (together with
the Company and the other holders of securities of the Company with registration
rights to participate therein distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
representative of the underwriter or underwriters selected by the Company.
Notwithstanding any other provision of this Section 1.3, if the
representative of the underwriters advises the Company in writing that marketing
factors require a limitation on the number of shares to be underwritten or
offered or sold for the account or persons other than the Company, the
representative may exclude all Registrable Securities from, or limit the number
of Registrable Securities to be included in, the registration and underwriting.
The Company may limit, to the extent so advised by the underwriters, the amount
of securities (including Registrable Securities) to be included in the
registration by the Company's shareholders (including the 1998, 1999 and 2000-
2002 Koll Shareholders), or may exclude, to the extent so advised by the
underwriters, such underwritten or other securities entirely from such
registration. The Company shall so advise all holders of securities requesting
registration pursuant to Section 1.3(a)(ii), and the number of shares of
securities that are entitled to be included in the registration and underwriting
shall be allocated first to the Company for securities being sold for its own
account and thereafter as set forth in Section 1.10(b). If any person does not
agree to the terms of any such underwriting, such person shall be excluded
therefrom by written notice from the Company or the underwriter. Any Registrable
Securities or other securities excluded or withdrawn from such underwriting
shall be withdrawn from such registration.
1.4 Expenses of Registration. All Registration Expenses incurred in
------------------------
connection with any registration, qualification or compliance pursuant to
Section 1.3 hereof, the Supplemental Apollo Demand Registration pursuant to
Section 1.2(b) hereof and two registrations during each of the 1998 Registration
Period, the 1999 Registration Period and the 2000-2002 Registration Period
pursuant to Section 1.2(a) hereof, shall be borne by the Company. All Selling
Expenses relating to securities so registered under Sections 1.2 (including the
Supplemental Demand Registration) or 1.3 hereof shall be borne by the holders of
such securities pro rata on the basis of the number of shares of securities so
registered on their behalf.
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<PAGE>
1.5 Registration Procedures. In the case of each registration effected
-----------------------
by the Company pursuant to Section 1, the Company will use its best efforts to:
(a) Keep such registration effective for a period of (i) ninety (90)
days in the case of the First Requested Registration of the 1998 Initiating Koll
Shareholders, (ii) in the case of the Apollo Supplemental Demand Registration,
for a period equal to the earlier of the (x) the date when Apollo has completed
the distribution described in the registration statement relating thereto or (y)
a period of sixty (60) days (the "Supplemental Registration Expiration Date"),
and (iii) sixty (60) days in the case of each other registration; provided,
--------
however, that such 90-day and 60-day periods shall be extended for a period of
- -------
time equal to the period the 1998, 1999 or 2000-2002 Koll Shareholders, as the
case may be, refrain from selling any securities included in such registration
at the request of an underwriter of Registrable Securities of the Company and
the Supplemental Registration Expiration Date shall be extended during the
period of time Apollo refrains from selling any securities included in the
Supplemental Apollo Demand Registration at the request of the Company;
(b) As soon as reasonably practicable, prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such registration statement and
otherwise use its best efforts to comply with all applicable rules and
regulations of the Commission;
(c) Furnish such number of prospectuses and other documents incident
thereto, including any amendment of or supplement to the prospectus, as a 1998,
1999 or 2000-2002 Koll Shareholder, as the case may be, or, in the case of the
Supplemental Apollo Demand Registration, as Apollo, may reasonably request from
time to time;
(d) Notify each seller of Registrable Securities covered by such
registration statement upon discovery that, or upon the happening of any event
as a result of which, the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
(e) Cause all such Registrable Securities registered pursuant hereto
to be listed on each securities exchange on which similar securities issued by
the Company are then listed; and
(f) In connection with any underwritten offering pursuant to a
registration statement filed pursuant to Section 1.2(a) hereof, the Company will
cooperate with the underwriter and Koll Shareholders participating in such
registration and the Company and each Koll Shareholder participating in such
registration will do such other acts and things as the other party may
reasonably request to comply with the applicable provisions of the Securities
Act and the rules and regulations of the Commission with respect to such
registration statement and the disposition of the securities covered by such
registration statement in an orderly and efficient manner.
1.6 Indemnification.
---------------
(a) The Company will indemnify each Holder, each of its officers,
directors and partners, legal counsel, and accountants and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
with respect to which registration, qualification, or
-10-
<PAGE>
compliance has been effected pursuant to Section 1 hereof, and each underwriter,
if any, and each person who controls within the meaning of Section 15 of the
Securities Act any underwriter, against all expenses, claims, losses, damages,
and liabilities (or actions, proceedings, or settlements in respect thereof)
(collectively, "Losses") arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any prospectus,
offering circular or registration statement incident to any such registration,
qualification, or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading or any violation by the Company of the
Securities Act applicable to the Company and relating to action required of the
Company in connection with any such registration, and will reimburse each such
Holder, each of its officers, directors, partners, legal counsel, and
accountants and each person controlling such Holder, each such underwriter, and
each person who controls any such underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating and defending or
settling any such Loss; provided, however, that the Company will not be liable
-------- -------
in any such case to the extent that (i) any such Loss arises out of or is based
on any untrue statement or omission based upon written information furnished to
the Company by such Holder or underwriter expressly for use therein or (ii) the
Company has advised such Holder of an event as a result of which the prospectus
included in the registration statement covering any Registrable Securities, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
and any such claim, loss, damage, liability or expense is caused by such Holder
having offered or sold Registrable Securities notwithstanding such notice prior
to receipt of a supplement or amended prospectus as may be necessary; provided
--------
further, however, that the Company shall not be liable in any such case to the
- ------- -------
extent that any such claim, loss, damage, liability or expense arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any preliminary prospectus if such Holder failed to
send or deliver a copy of the prospectus with or prior to the delivery of
written confirmation of the sale of Registrable Securities to the person
asserting such claim, loss, damage, liability or expense who purchased such
Registrable Securities which are the subject thereof and provided further, that
-------- -------
the Company shall not be liable in any such case to the extent that any such
claim, loss, damage, liability or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission in
the prospectus, if such untrue statement or alleged untrue statement, omission
or alleged omission is corrected in an amendment or supplement to the prospectus
and if, having previously been furnished by or on behalf of the Company, with
copies of the prospectus as so amended or supplemented, such Holder thereafter
fails to deliver such prospectus as so amended or supplemented, prior to or
concurrently with the sale of a Registrable Security to the person asserting
such claim, loss, damage, liability or expense who purchased such Registrable
Security which is the subject thereof from such Holder. It is agreed that the
indemnity agreement contained in this Section 1.6(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent has not
been unreasonably withheld).
(b) Each Holder will, if Registrable Securities held by him are
included in the securities as to which such registration, qualification, or
compliance is being effected, furnish to the Company in writing such information
as the Company reasonably requests for use in connection with any prospectus,
preliminary prospectus, offering circular or registration statement, and will
indemnify the Company, each of its directors, officers, partners, legal counsel,
and accountants and each underwriter, if any, of the Company's securities
covered by such a registration statement, each person who controls the Company
or such underwriter within the meaning of Section 15 of the Securities Act, each
other such Holder and Other Shareholders,
-11-
<PAGE>
and each of their officers, directors, and partners, and each person controlling
such Holder or Other Shareholders, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular, or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company, such Holders, Other Shareholders,
directors, officers, partners, legal counsel, and accountants, persons,
underwriters, or control persons for any legal and any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability, or action, in each case to the extent that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular, or other
document in reliance upon and in conformity with written information furnished
to the Company by such Holder expressly for inclusion therein; provided,
--------
however, that the obligations of such Holder hereunder shall not apply to
- -------
amounts paid in settlement of any such claims, losses, damages, or liabilities
(or actions in respect thereof) if such settlement is effected without the
consent of such Holder (which consent shall not be unreasonably withheld); and
provided that no indemnity by a Holder under this Section 1.6 (b) shall exceed
the gross proceeds from the offering received by such Holder. The Company shall
be entitled to receive indemnities from underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution to the same extent as provided above with respect to information so
furnished in writing by such persons expressly for use in any prospectus,
registration statement, offering circular or other document.
(c) Each party entitled to indemnification under this Section 1.6
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which in demnity may be sought and,
unless under applicable law or standards of conduct, there exists a conflict on
any significant issue between any two or more Indemnified Parties or between an
Indemnified Party and an Indemnifying Party which is a co-defendant in the
proceeding and is represented by the same counsel, each Indemnified Party shall
permit the Indemnifying Party to assume the defense of such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 1.6, to the extent such
failure is not prejudicial. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect to such
claim or litigation. Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying Party may
reasonably request in writing and as shall be reasonably required in connection
with defense of such claim and litigation resulting therefrom.
(d) If the indemnification provided for in this Section 1.6 is held
by a court of competent jurisdiction to be unavailable to an Indemnified Party
with respect to any loss, liability, claim, damage, or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions that
-12-
<PAGE>
resulted in such loss, liability, claim, damage, or expense as well as any other
relevant equitable considerations. The relative fault of the Indemnifying Party
and of the Indemnified Party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into by a Holder in connection with an underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
1.7 Information by Holder. Each Holder of Registrable Securities shall
---------------------
furnish to the Company such information regarding such Holder, the Registrable
Securities held by it or him and the distribution proposed by such Holder as the
Company may request in writing in connection with any registration,
qualification, or compliance referred to in Section l.
1.8 Transfer or Assignment of Registration Rights. The right to cause
---------------------------------------------
the Company to effect the Supplemental Apollo Demand Registration shall not be
assigned or assignable by Apollo. The rights to cause the Company to register
securities granted to a Koll Shareholder by the Company under Section 1 (other
than the Supplemental Apollo Demand Registration) may be transferred or assigned
by a Holder only to a transferee or assignee of not less than 250,000 shares of
Registrable Securities (as constituted at the effective time of the Merger and
subject to subsequent adjustments for stock splits, stock dividends, reverse
stock splits, and the like), provided, however, that (i) the Company is given
-------- -------
written notice prior to such transfer or assignment, stating the name and
address of the transferee or assignee and identifying the securities with
respect to which such registration rights are being transferred or assigned,
(ii) the transferee or assignee of such rights assumes in writing the
obligations of such Holder under this Agreement and, (iii) such assignment shall
be effective only if immediately following such transfer the further disposition
of such securities by the transferee or assignee is restricted under the
Securities Act. The Company, Apollo and FS shall reasonably cooperate with each
other in connection with any proposed transfer or assignment of the rights to
cause the Company to register securities under this Agreement by Apollo or FS
to their respective limited partners and/or members; provided, however, that no
-------- -------
such transfer or assignment shall be effective without the prior written consent
of the Company (which shall not unreasonably be withheld). For the purposes of
determining the number of shares of Registrable Securities held by a transferee
or assignee, the holdings of transferees and assignees of a partnership who are
partners of such partnership (including spouses and ancestors, lineal
descendants and siblings of such partners or spouses who acquire Registrable
Securities by gift, will or intestate succession) shall be aggregated together
and with the partnership. All assignees and transferees who would not qualify
individually for assignment of registration rights shall have a single attorney-
in-fact for the purpose of exercising any rights, receiving notices or taking
any action under this Agreement.
1.9 "Market Stand-Off" Agreement in Connection with an Underwritten
---------------------------------------------------------------
Public Offering. If requested by the Company and an underwriter of CBC Common
- ---------------
Stock (or other securities) of the Company in connection with a registration by
the Company of CBC Common Stock or securities (other than indebtedness and other
than preferred stock which is convertible into shares of CBC Common Stock)
exercisable, convertible or exchangeable into shares of capital stock or other
securities of the Company in an offering having aggregate proceeds of
$20,000,000 or more to the Company, each Holder of at least five percent (5%) of
Registrable Securities shall not sell or otherwise transfer or dispose of any
Registrable Securities (or other securities) of the
-13-
<PAGE>
Company held by such Holder (other than those included in the registration)
during a reasonable and customary period of time (not to exceed 120 days) after
the effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that the obligations of Apollo (including but
-------- -------
not limited to any restriction on sale, transfer or disposition of the
Registrable Securities held by Apollo) under this Section 1.9 shall terminate
one year after the Effective Time (as defined in the Merger Agreement). The
Company may impose stop-transfer instructions with respect to the shares (or
securities) subject to the foregoing restriction.
1.10 Allocation of Registration Opportunities.
----------------------------------------
(a) Requested Registrations. Except with respect to the Supplemental
-----------------------
Apollo Demand Registration, in any circumstances of a requested registration
pursuant to Section 1.2(a) hereof in which all of the Registrable Securities and
Other Shares requested to be included in such registration on behalf of the
Holders or Other Shareholders cannot be so included as a result of market
limitations, as advised by the underwriter or otherwise pursuant to this
Agreement or, with respect to Other Shares, other agreements between the Company
and Other Shareholders, of the aggregate number of shares of Registrable
Securities and Other Shares that may be so included, the number of shares of
Registrable Securities and Other Shares that may be so included shall be
allocated as follows:
(i) first, among the holders requesting inclusion of Registrable
Securities and Other Prior Registrable Shares, pro rata on the basis of the
number of Registrable Securities and Other Prior Registrable Shares that
would be held by such holders, assuming conversion of any shares of capital
stock and exercise of the Warrants; provided, however, that such allocation
-------- -------
shall not operate to reduce the aggregate number of Registrable Securities
and Other Prior Registrable Shares to be included in such registration, if
any such holder does not request inclusion of the maximum number of shares
of Registrable Securities and Other Prior Registrable Shares allocated to
him pursuant to the above-described procedure, the remaining portion of his
allocation shall be reallocated among those requesting holders of
Registrable Securities and Other Prior Registrable Shares whose allocations
did not satisfy their requests pro rata on the basis of the number of
shares of Registrable Securities and Other Prior Registrable Shares which
would be held by such holders, assuming conversion of any capital stock and
exercise of the Warrants, and this procedure shall be repeated until all of
the shares of Registrable Securities and Other Prior Registrable Shares
which may be included in the registration on behalf of such holders have
been so allocated;
(ii) second, to the Company with respect to shares of CBC Common Stock
being sold for the account of the Company, and, subject to the second
paragraph of Section 1.2(d), among the holders of Other Subsequent
Registrable Shares requesting inclusion of Other Subsequent Registrable
Shares, as determined by the Company pursuant to such agreements as may
exist between the Company and holders of Other Subsequent Registrable
Shares.
In connection with the First 1998 Requested Registration, (i) the Company
agrees to use reasonable efforts (which shall not require the Company to grant
any consideration) to request that the holders of Other Prior Registrable Shares
requesting to be included in any registration pursuant to Section 1.2(a) hereof
permit the Registrable Securities requested by Apollo to have priority to be
included in any such registration in which all Registrable Securities and Other
Shares requested to be included cannot be so included and (ii) the Koll
Shareholders agree that Apollo shall have priority over the Koll Shareholders
other than Apollo with respect to the
-14-
<PAGE>
number of Registrable Securities that may be included in such registration.
(b) Company Registrations. In the event of a Company registration pursuant
---------------------
to Section 1.3 hereof or a Company-initiated registration pursuant to a request
by holders of Other Subsequent Registrable Shares pursuant to agreements that
may exist between the Company and holders of Other Subsequent Registrable
Shares, in which all of the Registrable Securities and Other Shares requested to
be included in a registration on behalf of the Holders and other selling
shareholders cannot be so included as a result of market limitations, as advised
by the underwriter or otherwise pursuant to this Agreement or, with respect to
Other Shares, other agreements between the Company and Other Shareholders, the
number of securities that are entitled to be included in the registration shall
first be allocated to the Company for securities being sold for its own account,
and thereafter the number of shares of Registrable Securities and Other Shares
that may be so included shall be allocated among the Holders and selling
shareholders requesting inclusion of shares, pro rata on the basis of the number
of shares of Registrable Securities and Other Shares that would be held by such
Holders and selling shareholders, assuming conversion and exercise of the
Warrants; provided, however, so that such allocation shall not operate to reduce
the aggregate number of Registrable Securities and Other Shares to be included
in such registration, if any Holder or other selling shareholder does not
request inclusion of the maximum number of shares of Registrable Securities and
Other Shares allocated to him pursuant to the above-described procedure, the
remaining portion of his allocation shall be reallocated among those requesting
Holders and other selling shareholders whose allocations did not satisfy their
requests pro rata on the basis of the number of shares of Registrable Securities
and Other Shares which would be held by such Holders and other selling
shareholders, assuming conversion and exercise of the Warrants, and this
procedure shall be repeated until all of the shares of Registrable Securities
and Other Shares which may be included in the registration on behalf of the
Holders and other selling shareholders have been so allocated.
1.11 Delay of Registration. No Holder shall have any right to take any
---------------------
action to restrain, enjoin, or otherwise delay any registration as the result of
any controversy that might arise with respect to the interpretation or
implementation of this Section 1.
1.12 Termination of Registration Rights.
----------------------------------
(a) Subject to Section 1.12(b) with respect to Apollo, the right of any
1998 Koll Shareholder, 1999 Koll Shareholder and 2000-2002 Koll Shareholder to
request registration pursuant to Section 1.2(a) shall terminate as to any such
holder on the earlier of (i) the end of the 1998, 1999 and 2000-2002
Registration Period, respectively or (ii) on the date on which such Holder holds
less than two percent (2%) of the Company's outstanding stock and all shares of
Registrable Securities held by such Holder may immediately be sold under Rule
144 during any 90-day period.
(b) Notwithstanding any provision in this Agreement to the contrary, the
rights of Apollo and any subsequent Holder of Apollo's Registrable Securities
pursuant to Section 1.2(a) hereof shall terminate on the "Apollo Termination
Date". The "Apollo Termination Date" shall mean the earliest to occur of the
following: (i) the date when all shares of Registrable Securities held by Apollo
may immediately be sold under Rule 144 during any 90-day period or (ii) the
first anniversary of the Effective Time (as defined in the Merger Agreement),
provided the Company is not then in violation of Section 3 of the Affiliates
Agreement dated as of May 14, 1997 between the Company, KRES and Apollo
(relating to the filing of reports required to be filed by the Company referred
to in paragraph (c)(1) of Rule 144) or (iii) the second anniversary of the
Effective Time (as defined in the Merger Agreement). As of the Apollo
Termination Date,
-15-
<PAGE>
notwithstanding any provision to the contrary contained herein, Apollo shall not
be deemed to be a 1998 Koll Shareholder, a 1999 Koll Shareholder or a 2000-2002
Koll Shareholder for purposes of Section 1.2(a) hereof and shall not have the
right to request registration or inclusion in any registration pursuant to
Section 1.2(a). The right of Apollo to request registration pursuant to Section
1.2(b) shall terminate on the earliest to occur of the following: (i) the time
within which Apollo is required to deliver a Supplemental Demand Notice and the
Company has not received such notice pursuant to Section 1.2(b) or (ii) the end
of the 1998 Registration Period or (iii) the Apollo Termination Date.
(c) The right of any Holder to request inclusion in any registration
pursuant to Section 1.3 shall terminate on the earlier to occur of the
following: (i) the date on which such Holder holds less than two percent (2%)
of the Company's outstanding stock and all shares of Registrable Securities held
by such Holder may immediately be sold under Rule 144 during any 90-day period
or (ii) six years after the date of this Agreement, unless such request is only
with respect to shares of CBC Common Stock issued pursuant to exercise of the
Warrants, in which case such six-year period shall be extended for an additional
consecutive two years.
(d) Notwithstanding any other provision hereof, the obligations of the
parties hereto shall terminate upon termination of the Merger Agreement for any
reason.
SECTION 2
Miscellaneous
-------------
2.1 Obligations of the Holders. Upon the receipt by a Holder of any
--------------------------
notice from the Company of (i) the existence of any fact or the happening of any
event as a result of which the prospectus included in a registration statement
filed pursuant to Section 1, as such registration statement is then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing, (ii) the
issuance by the Commission of any stop order or injunction suspending or
enjoining the use or the effectiveness of such registration statement or the
initiation of any proceedings for that purpose, or the taking of any similar
action by the securities regulators of any state or other jurisdiction, or (iii)
the request by the Commission or any other federal or state governmental agency
for amendments or supplements to such registration statement or related
prospectus or for additional information related thereto, such Holder shall
forthwith discontinue disposition of such Holder's Registrable Securities
covered by such registration or prospectus (other than in transactions exempt
from the registration requirements under the Securities Act) until such Holder's
receipt of the supplemented or amended prospectus or until such Holder is
advised in writing by the Company that the use of the applicable prospectus may
be resumed.
2.2 Governing law. This Agreement shall be governed in all respects by
-------------
the laws of the State of Delaware, as if entered into by and between Delaware
residents exclusively for performance entirely within Delaware.
2.3 Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto. Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations or liabilities under or
by reason of this Agreement, except as expressly provided herein.
-16-
<PAGE>
2.4 Entire Agreement; Amendment; Waiver.
-----------------------------------
(a) Except as otherwise provided herein or in the Merger Agreement, this
Agreement contains the entire understanding of the parties with respect to the
matters covered herein and supersedes all prior agreements and understandings,
written or oral, between the parties relating to the subject matter hereof.
(b) Any term of this Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the holders of a majority of the Registrable
Securities then outstanding. Any amendment or waiver effected in accordance with
this paragraph shall be binding upon each holder of any Registrable Securities
then outstanding, each future holder of all such Registrable Securities, and the
Company.
2.5 Notices, etc. All notices and other communications required or
------------
permitted hereunder shall be in writing and shall be sent by facsimile
transmission, mailed by United States first-class mail, postage prepaid, or
delivered personally by hand or nationally recognized courier addressed (a) if
to a Koll Shareholder or holder, as indicated on the signature page hereof, or
at such other address as such Koll Shareholder or Holder shall have furnished to
the Company in writing, or (b) if to the Company, at 533 South Fremont Avenue,
Los Angeles, CA 90071, Attention: Walter V. Stafford, with a copy to the
attention of the Corporate Secretary, or at such other address as the Company
shall have furnished to each holder in writing. All such notices and other
written communications shall be effective (i) if sent by facsimile transmission,
upon confirmation of receipt, (ii) if mailed, five (5) days after mailing, and
(iii) if delivered, upon delivery .
2.6 Delays or Omissions. No delay or omission to exercise any right,
-------------------
power or remedy accruing to any party hereunder, upon any breach or default of
another party hereunder shall impair any such right, power or remedy nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default therefore or thereafter occurring. Any waiver, permit, consent
or approval of any kind or character on the part of any party of any breach or
default under this Agreement or any waiver on the part of any party of any
provisions or conditions of this Agreement must be made in writing and shall be
effective only to the extent specifically set forth in such writing.
2.7 Severability. If one or more provisions of this Agreement are held
------------
to be unenforceable, invalid or void by a court of competent jurisdiction, such
provision shall be excluded from this Agreement and the balance of this
Agreement shall be interpreted as if such provision were so excluded and shall
be enforceable in accordance with its terms.
2.8 Information Confidential. Each Holder acknowledges that the
------------------------
information received by them pursuant hereto may be confidential and for its use
only, and it will not use such confidential information in violation of the
Exchange Act or reproduce, disclose or disseminate such information to any other
person (other than its employees or agents having a need to know the contents of
such information, and its attorneys), except in connection with the exercise of
rights under this Agreement, unless the Company has made such information
available to the public generally or such Holder is required to disclose such
information by a governmental body.
2.9 Titles and Subtitles. The titles of the paragraphs and
--------------------
subparagraphs of this
-17-
<PAGE>
Agreement are for convenience of reference only and are not to be considered in
construing this Agreement.
2.10 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
-18-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement effective as of the day and year first above written.
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
By: /s/ James J. Didion
-------------------------------------------
Name:
Title:
FS EQUITY PARTNERS III, L.P.
By: FS Capital Partners, L.P.
Its: General Partner
By: FS Holdings, Inc.
Its: General Partner
By: /s/ Bradford M. Freeman
----------------------------------
Name:
Title:
Address for Notice:
Freeman Spogli & Co. Incorporated
11100 Santa Monica Blvd.
Los Angeles, CA 90025
Telephone Number: (310) 444-1822
Facsimile Number: (310) 444-1870
-19-
<PAGE>
FS EQUITY PARTNERS INTERNATIONAL, L.P.
By: FS&Co. International, L.P.
Its: General Partner
By: FS International Holdings Limited
Its: General Partner
By: /s/ Bradford M. Freeman
-------------------------------
Name:
Title:
Address for Notice:
Freeman Spogli & Co. Incorporated
11100 Santa Monica Blvd.
Los Angeles, CA 90025
Telephone Number: (310) 444-1822
Facsimile Number: (310) 444-1870
AP KMS PARTNERS, L.P.
By: APGP KMS Partners, L.P.
Its: General Partner
By: AP KMS Acquisition Corporation
Its: General Partner
By: /s/ Ricardo Koenigsberger
-----------------------------
Name:
Title:
Address for Notice:
Apollo Real Estate Advisors, L.P.
1301 Avenue of the Americas, 38th Floor
New York, NY 10019
Telephone Number: (212) 261-4000
Facsimile Number: (212) 261-4060
-20-
<PAGE>
AP KMS II, LLC
By: Apollo Real Estate Investment Fund II, L.P.
Its: Member
By: Apollo Real Estate Advisors II, L.P.
Its: General Partner
By: Apollo Real Estate Capital Advisors II, Inc.
Its: General Partner
By: /s/ W. Edward Scheetz
-----------------------------------------
Name:
Title:
Address for Notice:
Apollo Real Estate Advisors, L.P.
1301 Avenue of the Americas, 38th Floor
New York, NY 10019
Telephone Number: (212) 261-4000
Facsimile Number: (212) 261-4060
RAYMOND E. WIRTA
/s/ Raymond E. Wirta
- --------------------------------------
Raymond E. Wirta, an individual
Address for Notice:
Raymond E. Wirta
49 Emerald Bay
Laguna Beach, CA 92651
Telephone Number: (714) 497-9115
Facsimile Number: (714) 497-7415
-21-
<PAGE>
KOLL HOLDING COMPANY
By: /s/ Donald M. Koll
----------------------------------
Name:
Title:
Address for Notice:
Koll Holding Company
4343 Von Karman Avenue
Newport Beach, CA 92660
Telephone Number: (714) 833-3030
Facsimile Number: (714) 250-4344
WILLIAM S. ROTHE, JR.
/s/ William S. Rothe, Jr.
- ----------------------------------------
William S. Rothe, Jr., an individual
Address for Notice:
William S. Rothe, Jr.
1633 Santiago Drive
Newport Beach, CA 92663
Telephone Number: (714) 631-4810
Facsimile Number: (714) 631-4810
-22-
<PAGE>
ANNEX 2
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (the "Agreement") is made and entered into as of
August 28, 1997 between CB Commercial Real Estate Services Group, Inc., a
Delaware corporation (the "Company"), FS Equity Partners III, L.P., FS Equity
Partners International L.P., AP KMS Partners, L.P., AP KMS II, LLC, Koll
Holding Company and the individuals listed on the signature pages hereto.
WHEREAS, pursuant to that certain Agreement and Plan of Reorganization (the
"Merger Agreement"), dated as of May 14, 1997 by and between the Company, Koll
Real Estate Services ("KRES") and the other parties listed therein, KRES will
be merged with a subsidiary of the Company and the holders of shares of common
stock of KRES and options exercisable into shares of common stock of KRES
shall receive warrants (the "Warrants") to purchase up to an aggregate of
500,000 shares (the "Warrant Shares") of the Common Stock of the Company (the
"Common Stock").
NOW THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows (capitalized terms used
herein and not otherwise defined have the meanings ascribed thereto in the
Merger Agreement):
SECTION 1. Exercise of Warrant. Subject to the terms of this Agreement, each
holder of a Warrant may, at any time on and after August 28, 2000, but not
later than August 27, 2004, exercise this Warrant in whole at any time or in
part from time to time for the number of Warrant Shares which such holder is
then entitled to purchase hereunder.
Each holder of a Warrant may exercise such Warrant, in whole or in part by
either of the following methods:
(a) delivering to the Company at its office maintained for such purpose
pursuant to Section 12(d) (i) a written notice of such holder's election to
exercise this Warrant, which notice shall specify the number of Warrant Shares
to be purchased, (ii) this Warrant and (iii) a sum equal to the Exercise Price
(as set forth in the Warrant Certificate attached hereto) therefor payable in
immediately available funds; or
(b) The holder of this Warrant may also exercise this Warrant, in whole or
in part, in a "cashless" or "net-issue" exercise by delivering to the Issuer
at its office maintained for such purpose pursuant to Section 12(d) (i) a
written notice of such holder's election to exercise this Warrant, which
notice shall specify the number of Warrant Shares to be delivered to such
holder and the number of Warrant Shares with respect to which this Warrant is
being surrendered in payment of the aggregate Exercise Price for the Warrant
Shares to be delivered to the holder, and (ii) the Warrant. For purposes of
this provision, all Warrant Shares as to which the Warrant is surrendered will
be attributed a value equal to the product of (x) the current market price per
share of Common Stock (determined in the manner set forth in Section 7(f))
minus the current Exercise Price per share of Common Stock.
Such notice may be in the form of Election to Purchase set out at the end of
this Warrant Agreement. Upon delivery thereof, the Company shall cause to be
executed and delivered to such holder within five business days a certificate
or certificates representing the aggregate number of fully-paid and
nonassessable shares of Common Stock issuable upon such exercise.
The stock certificate or certificates for Warrant Shares so delivered shall
be in such denominations as may be specified in said notice and shall be
registered in the name of such holder or such other name or names as shall be
designated in said notice. Such certificate or certificates shall be deemed to
have been issued and such holder or any other person so designated to be named
therein shall be deemed to have become a holder of record of such shares,
including to the extent permitted by law the right to vote such shares or to
consent or to receive notice as a stockholder, as of the time said notice is
delivered to the Issuer as aforesaid. If a Warrant shall have been exercised
only in part, the Company shall, at the time of delivery of said certificate
or certificates, deliver
2-1
<PAGE>
to such holder a new Warrant dated the date it is issued, evidencing the
rights of such holder to purchase the remaining Warrant Shares called for by
this Warrant, which new Warrant shall in all other respects be identical with
this Warrant, or, at the request of such holder, appropriate notation may be
made on this Warrant and the Warrant shall be returned to such holder.
All Warrant Shares issuable upon the exercise of a Warrant shall be validly
issued, fully paid and nonassessable and free from all liens and other
encumbrances thereon, other than liens or other encumbrances created by the
holder thereof.
The Company will not close its books against the transfer of a Warrant or of
any Warrant Shares in any manner which interferes with the timely exercise of
a Warrant. The Issuer will from time to time take all such action as may be
necessary to assure that the par value per share of the unissued Common Stock
acquirable upon exercise of a Warrant is at all times equal to or less than
the Exercise Price then in effect.
SECTION 2. Transfer, Division and Combination. The Warrants are, and all
rights thereunder are, transferable, in whole or in part, on the books of the
Company to be maintained for such purpose, upon surrender of a Warrant at the
office of the Company maintained for such purpose pursuant to Section 12(d),
together with a written assignment of such Warrant duly executed by the holder
thereof or its agent or attorney and payment of funds sufficient to pay any
stock transfer taxes payable upon the making of such transfer. Upon such
surrender and, if required, such payment, the Company shall, execute and
deliver a new Warrant or Warrants in the name of the assignee or assignees and
in the denominations specified in such instrument of assignment, and the
surrendered Warrant shall promptly be canceled. If and when a Warrant is
assigned in blank, the Company may (but shall not be obligated to) treat the
bearer thereof as the absolute owner of such Warrant for all purposes and the
Company shall not be affected by any notice to the contrary. A Warrant, if
properly assigned in compliance with this Section 2, may be exercised by an
assignee for the purchase of shares of Common Stock without having a new
Warrant issued.
A Warrant may, be divided or combined with other Warrants upon presentation
at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the holder hereof or its agent or attorney. Subject to compliance
with the preceding paragraph, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant
or Warrants in exchange for the Warrant or Warrants to be divided or combined
in accordance with such notice.
The Company agrees to maintain at its aforesaid office books for the
registration and transfer of the Warrants.
SECTION 3. Payment of Taxes. The Company will pay all documentary stamp
taxes attributable to the initial issuance of Warrant Shares upon the exercise
of Warrants; provided, however, that the Company shall not be required to pay
any tax or taxes which may be payable in respect of any transfer involved in
the issue of any Warrant Certificates or any certificates for Warrant Shares
in a name other than that of the registered holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and the Company shall not be
required to issue or deliver such Warrant Certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the
Company the amount of such tax or shall have established to the satisfaction
of the Company that such tax has been paid.
SECTION 4. Mutilated or Missing Warrants Certificates. In case any of the
Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Company may in its discretion issue, in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants, but only upon receipt of evidence satisfactory to the Company of
such loss, theft or destruction of such Warrant Certificate and indemnity, if
requested, also satisfactory to them. Applicants for such
2-2
<PAGE>
substitute Warrant Certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company may
prescribe.
SECTION 5. Reservation of Warrant Shares. The Company will at all times
reserve and keep available, free from preemptive rights, out of the aggregate
of its authorized but unissued Common Stock or its authorized and issued
Common Stock held in its treasury, for the purpose of enabling it to satisfy
any obligation to issue Warrant Shares upon exercise of Warrants, the maximum
number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants.
The Company or, if appointed, the transfer agent for the Common Stock (the
"Transfer Agent") and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the rights of
purchase aforesaid will be irrevocably authorized and directed at all times to
reserve such number of authorized shares as shall be required for such
purpose. The Company will keep a copy of this Agreement on file with the
Transfer Agent and with every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants. The Company will furnish such Transfer Agent a
copy of all notices of adjustments and certificates related thereto
transmitted to each holder pursuant to Section 10 hereof.
SECTION 6. Obtaining Stock Exchange Listings. The Company will from time to
time take all action which may be necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of Warrants, will be listed
on the principal securities exchanges and markets within the United States of
America (including the NASDAQ National Market), if any, on which other shares
of Common Stock are then listed.
SECTION 7. Adjustment of Exercise Price. The Exercise Price and the number
of Warrant Shares issuable upon the exercise of each Warrant are subject to
adjustment from time to time upon the occurrence of the events enumerated in
this Section 7. For purposes of this Section 7, "Common Stock" means shares
now or hereafter authorized of any class of common stock of the Company and
any other stock of the Company, however designated, that has the right
(subject to any prior rights of any class or series of preferred stock) to
participate in any distribution of the assets or earnings of the Company
without limit as to per share amount.
(a) Adjustment for Change in Capital Stock.
If the Company:
(1) pays a dividend or makes a distribution on its Common Stock in shares
of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a greater
number of shares;
(3) combines its outstanding shares of Common Stock into a smaller number
of shares;
(4) makes a distribution on its Common Stock in shares of its capital
stock other than Common Stock; or
(5) issues by reclassification of its Common Stock any shares of its
capital stock;
then the Exercise Price in effect immediately prior to such action and the
number and kind of shares into which a Warrant is exercisable shall all be
adjusted appropriately so that the holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of the
Company which he would have owned immediately following such action if such
Warrant had been exercised immediately prior to such action.
The adjustment shall become effective immediately after the record date in
the case of a dividend or distribution and immediately after the effective
date in the case of a subdivision, combination or reclassification.
If after an adjustment a holder of a Warrant upon exercise of it may receive
shares of two or more classes of capital stock of the Company, the Board of
Directors of the Company shall determine the allocation of the
2-3
<PAGE>
adjusted Exercise Price between the classes of capital stock. After such
allocation, the exercise privilege and the Exercise Price of each class of
capital stock shall thereafter be subject to adjustment on terms comparable to
those applicable to Common Stock in this Section.
Such adjustment shall be made successively whenever any event listed above
shall occur.
(b) Adjustment for Rights Issue.
If the Company distributes any rights, options or warrants to all holders of
its Common Stock entitling them for a period expiring within 60 days after the
record date for such distribution to purchase shares of Common Stock at a
price per share less than the current market price per share on that record
date, the Exercise Price shall be adjusted in accordance with the formula:
O + N X P
-----
E8 = E X M
-----
O + N
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding on the record date.
N = the number of additional shares of Common Stock offered pursuant to
such rights issue.
P = the offering price per share of the additional shares.
M = the current market price per share of Common Stock on the record date.
The adjustment shall be made successively whenever any such rights, options
or warrants are issued and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the rights,
options or warrants. If at the end of the period during which such rights,
options or warrants are exercisable, not all rights, options or warrants shall
have been exercised, the Exercise Price shall be immediately readjusted to
what it would have been if "N" in the above formula had been the number of
shares actually issued.
(c) Adjustment for Other Distributions.
If the Company distributes to all holders of its Common Stock any assets
(excluding cash) or debt securities or any rights or warrants to purchase debt
securities, assets or other securities, the Exercise Price shall be adjusted
in accordance with the formula:
E8 = E X M - F
-----
M
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
M = the current market price per share of Common Stock on the record date
mentioned below.
F = the aggregate fair market value on the record date of the assets,
securities, rights or warrants divided by the number of outstanding
shares of Common Stock on the record date for such distribution. The
Board of Directors of the Company shall determine the fair market value.
2-4
<PAGE>
The adjustment shall be made successively whenever any such distribution is
made and shall become effective immediately after the record date for the
determination of stockholders entitled to receive the distribution.
(d) Adjustment for Common Stock Issue:
If the Company issues shares of Common Stock for a consideration per share
less than the current market price per share on the date the Company fixes the
offering price of such additional shares, the Exercise Price shall be adjusted
in accordance with the formula:
P
-
E8 = E X O + M
-----
A
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the issuance of
such additional shares.
P = the aggregate consideration received for the issuance of such
additional shares.
M = the current market price per share on the date of issuance of such
additional shares.
A = the number of shares outstanding immediately after the issuance of such
additional shares.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
This subsection (d) does not apply to:
(1) any of the transactions described in subsections (b) and (c) of this
Section 7,
(2) the exercise of Warrants, or the conversion or exchange of other
securities convertible into, or exchangeable or exercisable for, Common
Stock,
(3) Common Stock issued to the Company's employees under bona fide
employee benefit plans adopted by the Board of Directors and approved by
the holders of Common Stock when required by law, if such Common Stock
would otherwise be covered by this subsection (d),
(4) Common Stock issued upon the exercise of rights or warrants issued to
the holders of Common Stock,
(5) Common Stock issued to shareholders of any person which merges into
the Company in proportion to their stock holdings of such person
immediately prior to such merger, upon such merger,
(6) Common Stock issued in a bona fide public offering pursuant to a firm
commitment underwriting,
(7) Common Stock issued in a bona fide private placement to, or through a
placement agent which is, a member firm of the National Association of
Securities Dealers, Inc., or
(8) Common Stock issued as a dividend on any preferred stock in
accordance with the stated terms of such preferred stock and in lieu of
cash dividends otherwise payable on such preferred stock pursuant to the
instrument under which the preferred stock was issued.
(e) Adjustment for Convertible Securities Issue.
If the Company issues any securities convertible into or exchangeable or
exercisable for Common Stock (other than securities issued in transactions
described in subsections (b) and (c) of this Section 7) for a
2-5
<PAGE>
consideration per share of Common Stock initially deliverable upon conversion
or exchange of such securities less than the current market price per share on
the date of issuance of such securities, the Exercise Price shall be adjusted
in accordance with this formula:
P
-
E8 = E X O + M
-----
O + D
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the issuance of
such securities.
P = the aggregate consideration received for the issuance of such
securities.
M = the current market price per share of Common Stock on the date of
issuance of such securities.
D = the maximum number of shares deliverable upon conversion or in exchange
for such securities at the initial conversion or exchange rate.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion or exchange of such
securities has not been issued when such securities are no longer outstanding,
then the Exercise Price shall promptly be readjusted to the Exercise Price
which would then be in effect had the adjustment upon the issuance of such
securities been made on the basis of the actual number of shares of Common
Stock issued upon conversion or exchange of such securities.
This subsection (e) does not apply to:
(1) convertible securities issued to shareholders of any person which
merges into the Company, or with a subsidiary of the Company, in proportion
to their stock holdings of such person immediately prior to such merger,
upon such merger,
(2) convertible securities issued in a bona fide public offering pursuant
to a firm commitment underwriting,
(3) convertible securities issued in a bona fide private placement
through a placement agent which is a member firm of the National
Association of Securities Dealers, Inc.,
(4) rights, warrants and convertible and exchangeable securities
outstanding on or prior to the date of issuance of the Warrant, or
(5) convertible securities or warrants issued in connection with the
incurrence of debt by the Company, so long as the fair value allocable to
such convertible securities or warrants (taking into account the terms of
the debt), together with any consideration payable to the Company upon
conversion or exercise of such convertible securities or warrants, treating
such convertible securities or warrants on an as converted basis, is no
less than the then current market price of Common Stock on the date of
issuance of such convertible securities or warrants.
(f) Current Market Price.
In subsections (b), (c), (d) and (e) of this Section 7 the current market
price per share of Common Stock on any date is the average of the Quoted
Prices of the Common Stock for 30 consecutive trading days commencing 45
trading days before the date in question. The "Quoted Price" of the Common
Stock is the last reported sales
2-6
<PAGE>
price of the Common Stock as reported by NASDAQ National Market, or if the
Common Stock is listed on a securities exchange, the last reported sales price
of the Common Stock on such exchange which shall be for consolidated trading
if applicable to such exchange, or if neither so reported or listed, the last
reported bid price of the Common Stock. In the absence of one or more such
quotations, the Board of Directors of the Company shall determine the current
market price on the basis of such quotations or other valuation information as
it in good faith considers appropriate.
(g) Consideration Received.
For purposes of any computation respecting consideration received pursuant
to subsections (d) and (e) of this Section 7, the following shall apply:
(1) in the case of the issuance of shares of Common Stock for cash, the
consideration shall be the amount of such cash, provided that in no case
shall any deduction be made for any commissions, discounts or other
expenses incurred by the Company for any underwriting of the issue or
otherwise in connection therewith;
(2) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair market value thereof as determined
in good faith by the Board of Directors (irrespective of the accounting
treatment thereof), whose determination shall be conclusive; and
(3) in the case of the issuance of securities convertible into or
exchangeable for shares, the aggregate consideration received therefor
shall be deemed to be the consideration received by the Company for the
issuance of such securities plus the additional minimum consideration, if
any, to be received by the Company upon the conversion or exchange thereof
(the consideration in each case to be determined in the same manner as
provided in clauses (1) and (2) of this subsection).
(h) When De Minimis Adjustment May Be Deferred.
No adjustment in the Exercise Price need be made unless the adjustment would
require on increase or decrease of at least 1% in the Exercise Price. Any
adjustments that are not made shall be carried forward and taken into account
in any subsequent adjustment.
All calculations under this Section shall be made to the nearest cent or
nearest 1/100th of a share as the case may be.
(i) When No Adjustment Required.
No adjustment need be made for a transaction referred to in subsection (a),
(b), (c), (d) or (e) of this Section 7 if Warrant holders are permitted to
participate in the transaction (without being required to exercise their
Warrants in order to do so) on a basis and with notice that the Board of
Directors of the Company determines to be fair and appropriate in light of the
basis and notice on which holders of Common Stock participate in the
transaction.
No adjustment need be made for rights to purchase Common Stock pursuant to a
Company plan for reinvestment of dividends or interest.
No adjustment need be made for a change in the par value or no par value of
the Common Stock.
To the extent the Warrants become convertible into cash, no adjustment need
be made thereafter as to the cash. Interest will not accrue on the cash.
2-7
<PAGE>
(j) Notice of Adjustment.
Whenever the Exercise Price is adjusted, the Company shall provide the
notices required by Section 10 hereof.
(k) Voluntary Reduction.
The Company from time to time may reduce the Exercise Price by any amount
for any period of time if the period is at least 20 days and if the reduction
is irrevocable during the period; provided, however, that in no event may the
Exercise Price be less than the par value of a share of Common Stock.
Whenever the Exercise Price is reduced, the Company shall mail to Warrant
holders a notice of the reduction. The Company shall mail the notice at least
15 days before the date the reduced Exercise Price takes effect. The notice
shall state the reduced Exercise Price and the period it will be in effect.
A reduction of the Exercise Price pursuant to this clause (k) does not
change or adjust the Exercise Price otherwise in effect for purposes of
subsections (a), (b), (c), (d) and (e) of this Section 7.
(l) Reorganization of Company.
If the Company consolidates or merges with or into, or sells, transfers or
leases all or substantially all of its assets to, any person, upon
consummation of such transaction the Warrants shall automatically become
exercisable for the kind and amount of securities, cash or other assets which
the holder of a Warrant would have owned immediately after the consolidation,
merger, sale, transfer or lease if the holder had exercised the Warrant
immediately before the effective date of the transaction. Concurrently with
the consummation of such transaction, the corporation formed by or surviving
any such consolidation or merger, if other than the Company, or the person to
which such transfer, sale or lease shall have been made, shall enter into a
supplemental Warrant Agreement so providing and further providing for
adjustments which shall be as nearly equivalent as may be practical to the
adjustments provided for in this Section. The successor Company shall mail to
warrant holders a notice describing the supplemental Warrant Agreement.
If the issuer of securities deliverable upon exercise of Warrants under the
supplemental Warrant Agreement is an affiliate of the formed, surviving,
transferee or lessee corporation, that issuer shall join in the supplemental
Warrant Agreement.
If this subsection (l) applies, subsections (a), (b), (c), (d) and (e) of
this Section 7 do not apply.
(m) Determinations Conclusive.
Any determination that the Company or the Board of Directors of the Company
must make pursuant to subsection (a), (c), (d), (e), (f), (g) or (i) of this
Section 7 is conclusive, provided the Board of Directors has acted reasonably.
(n) When Issuance or Payment May Be Deferred.
In any case in which this Section 7 shall require that an adjustment in the
Exercise Price be made effective as of a record date for a specified event,
the Company may elect to defer until the occurrence of such event (i) issuing
to the holder of any Warrant exercised after such record date the Warrant
Shares and such securities or assets, if any, issuable upon such exercise over
and above the Warrant Shares and such securities or assets, if any, issuable
upon such exercise on the basis of the Exercise Price and (ii) paying to such
holder any amount in cash in lieu of a fractional share pursuant to Section 9;
provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional warrant Shares, other capital stock and cash upon the occurrence of
the event requiring such adjustment.
2-8
<PAGE>
(o) Adjustment in Number of Shares.
Upon each adjustment of the Exercise Price pursuant to this Section 7, each
Warrant outstanding prior to the making of the adjustment in the Exercise
Price shall thereafter evidence the right to receive upon payment of the
adjusted Exercise Price that number of shares of Common Stock (calculated to
the nearest hundredth) obtained from the following formula:
N' = N x E
---
E'
where:
N' = the adjusted number of Warrant Shares issuable upon exercise of a
Warrant by payment of the adjusted Exercise Price.
N = the number of Warrant Shares previously issuable upon exercise of a
Warrant by payment of the Exercise Price prior to adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
SECTION 8. Forfeiture of Warrants. The Warrants issued in respect of options
to purchase KRES common stock are subject to forfeiture as set forth in
Section 10.12(c) of the Merger Agreement, if the option(s) to purchase KRES
common stock in respect of which such Warrant is issued expire or terminate
without being exercised. Upon the termination of any such option all such
Warrants issued in respect thereof shall be forfeit and the holder thereof
shall immediately surrender the Warrant Certificate representing such Warrants
to the Company. If the Warrant Certificate so surrendered to the Company
represents other Warrants in addition to those forfeited, the Company shall
promptly issue a new Warrant Certificate to the holder thereof representing
the number of Warrants represented by such Warrant Certificate and not
forfeited.
SECTION 9. Fractional Interests. The Company shall not be required to issue
fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the same
holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 9
be issuable on the exercise of any Warrants (or specified portion thereof),
the Company shall pay an amount in cash equal to the current Exercise Price,
multiplied by such fraction.
SECTION 10. Notices to Warrant Holders. Upon any adjustment of the Exercise
Price pursuant to Section 7, the Company shall promptly thereafter cause to be
given to each of the registered holders of the Warrant Certificates at its
address appearing on the Warrant register written notice of such adjustment by
first-class mail, postage prepaid. Where appropriate, such notice may be given
in advance and included as a part of the notice required to be mailed under
the other provisions of this Section 7.
In case:
(a) the Company shall authorize the issuance to all holders of shares of
Common Stock of rights, options or warrants to subscribe for or purchase
shares of Common Stock or of any other subscription rights or warrants; or
(b) the Company shall authorize the distribution to all holders of shares of
Common Stock of evidences of indebtedness or assets, including cash dividends
or cash distributions payable out of consolidated current or retained
earnings, but not including dividends payable in shares of Common Stock or
distributions referred to in subsection (a) of Section 7 hereof; or
2-9
<PAGE>
(c) of any consolidation or merger to which the Company is a party and of
which approval of any shareholders of the Company is required, or of the
conveyance, sale, transfer or lease of the properties and assets of the
Company substantially as an entirety, or of any reclassification or change of
Common Stock issuable upon exercise of the Warrants (other than a change in
par value, or from par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination), or a tender offer or
exchange offer for shares of Common Stock; or
(d) of the voluntary or involuntary dissolution, liquidation or winding up
of the Company; or
(e) the Company proposes to take any action (other than actions of the
character described in Section 7(a)) that would require an adjustment of the
Exercise Price pursuant to Section 7;
then the Company shall cause to be given to each of the registered holders of
the Warrant Certificates at his address appearing on the Warrant register, at
least 20 days (or 10 days in any case specified in clause (a) or (b) above)
prior to the applicable record date hereinafter specified, or promptly in the
case of events for which there is no record date, by first-class mail, postage
prepaid, a written notice stating (i) the date as of which the holders of
record of shares of Common Stock to be entitled to receive any such rights,
options, warrants or distribution are to be determined, or (ii) the initial
expiration date set forth in any tender offer or exchange offer for shares of
Common Stock, or (iii) the date on which any such consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up is expected to
become effective or consummated, and the date as of which it is expected that
holders of record of shares of Common Stock shall be entitled to exchange such
shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, conveyance, sale, transfer, lease,
dissolution, liquidation, winding up or other action. The failure to give the
notice required by this Section 10 or any defect therein shall not affect the
legality or validity of any distribution, right, option, warrant,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up, or the vote upon any action.
Nothing contained in this Agreement or in any of the Warrant Certificates
shall be construed as conferring upon the holders thereof the right to vote or
to consent or to receive notice as shareholders in respect of the meetings of
shareholders or the election of directors of the Company or any other matter
or any rights whatsoever as shareholders of the Company.
SECTION 11. Amendments. The terms of this Warrant Agreement and the Warrants
may be amended by the Company, and the observance of any term herein or
therein may be waived, but only with the written consent of the holders of
Warrants representing a majority in number of the total Warrant Shares at the
time purchasable upon the exercise of all then outstanding Warrants, provided
that no such action may change the Exercise Price (other than in accordance
with Section 7(k) hereof) without the written consent of all holders of
Warrants affected thereby.
SECTION 12. Miscellaneous.
(a) Issue Date. The provisions of this Warrant shall be construed and shall
be given effect in all respects as if it had been issued and delivered by the
Company on the date hereof.
(b) Successors. This Warrant shall be binding upon any successors or assigns
of the Company.
(c) Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware.
(d) Office of the Company. So long as the Warrants remain outstanding, the
Company shall maintain an office where the Warrants may be presented for
exercise, transfer, division and combination. Such office shall be at 533 S.
Fremont Ave., Los Angeles, California 90071, unless and until the Company
shall designate and maintain another office for such purposes, in which case
the Company shall deliver notice of such change to all holders of outstanding
Warrants in the manner set forth herein.
2-10
<PAGE>
(e) Headings. The headings used in this Warrant are used for convenience
only and are not to be considered in construing or interpreting this
agreement.
(f) Notices. Unless otherwise provided, any notice required or permitted
under this Warrant shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified or three days after
being sent via air courier, in all cases addressed to the party to be notified
at the address indicated for such party on the signature page hereof, or at
such other address as such party may designate by ten days advance written
notice to the other party. Notwithstanding the foregoing, notice may be given
by telex or facsimile provided that appropriate confirmation of receipt is
received.
(g) Saturdays, Sundays, Holidays. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday or a Sunday or shall be a legal holiday in the State of
California, then such action may be taken or such right may be exercised on
the next succeeding day not a legal holiday.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
CB COMMERCIAL REAL ESTATE SERVICES
GROUP, INC.
By: /s/ James J. Didion
-------------------
Name:
Title:
FS EQUITY PARTNERS III, L.P.
By: FS Capital Partners, L.P.
Its: General Partner
By: FS Holdings, Inc.
Its: General Partner
By: /s/ Bradford M. Freeman
-----------------------
Name:
Title:
FS EQUITY PARTNERS INTERNATIONAL, L.P.
By: FS&Co. International, L.P.
Its: General Partner
By: FS International Holdings Limited
Its: General Partner
By: /s/ Bradford M. Freeman
-----------------------
Name:
Title:
2-11
<PAGE>
AP KMS PARTNERS, L.P.
By: APGP KMS Partners, L.P.
Its: General Partner
By: AP KMS Acquisition Corporation
Its: General Partner
By: /s/ Ricardo Koenigsberger
-------------------------
Name:
Title:
AP KMS II, LLC
By: Apollo Real Estate Investment
Fund II, L.P.
Its: Member
By: Apollo Real Estate Advisors II, L.P.
Its: General Partner
By: Apollo Real Estate Capital
Advisors II, Inc.
Its: General Partner
By: /s/ Stuart Koenig
-----------------
Name:
Title:
KOLL HOLDING COMPANY
By: /s/ Raymond E. Wirta
--------------------
Name:
Title:
RICHARD S. ABRAHAM
By: /s/ Richard S. Abraham
----------------------
Richard S. Abraham, an individual
2-12
<PAGE>
DEVON A. ALLEN
By: /s/ Devon A. Allen
------------------
Devon A. Allen, an individual
DANIEL M. ARDELL
By: /s/ Daniel M. Ardell
--------------------
Daniel M. Ardell, an individual
PETER M. BREN
By: /s/ Peter M. Bren
-----------------
Peter M. Bren, an individual
MICHAEL D. BROOMELL
By: /s/ Michael D. Broomell
------------------------
Michael D. Broomell, an individual
JOHN W. DAVIS
By: /s/ John W. Davis
-----------------
John W. Davis, an individual
JAMES F. DORSEY
By: /s/ James F. Dorsey
-------------------
James F. Dorsey, an individual
2-13
<PAGE>
JESSE A. DUPREE
By: /s/ Jesse A. DuPree
-------------------
Jesse A. DuPree, an individual
JAMES C. EWING
By: /s/ James C. Ewing
------------------
James C. Ewing, an individual
WILLIAM D. FUGAZY, JR.
By: /s/ William D. Fugazy, Jr.
--------------------------
William D. Fugazy, Jr., an
individual
WADE H. GREENE
By: /s/ Wade H. Greene
------------------
Wade H. Greene, an individual
WILLIAM M. HARRIS
By: /s/ William M. Harris
---------------------
William M. Harris, an individual
RONALD E. JACKSON
By: /s/ Ronald E. Jackson
---------------------
Ronald E. Jackson, an individual
DONALD M. KOLL
By: /s/ Donald M. Koll
------------------
Donald M. Koll, an individual
2-14
<PAGE>
WILLIAM H. KNOTTS
By: /s/ William H. Knotts
---------------------
William H. Knotts, an individual
LYNDA M. LANE
By: /s/ Lynda M. Lane
-----------------
Lynda M. Lane, an individual
CHARLES B. LINDWALL
By: /s/ Charles B. Lindwall
-----------------------
Charles B. Lindwall, an individual
EDWARD R. LYONS
By: /s/ Edward R. Lyons
-------------------
Edward R. Lyons, an individual
BARRY J. McGOWAN
By: /s/ Barry J. McGowan
--------------------
Barry J. McGowan, an individual
LYNDA S. McMILLEN
By: /s/ Lynda S. McMillen
---------------------
Lynda S. McMillen, an individual
EDWARD N. MILTON
By: /s/ Edward N. Milton
--------------------
Edward N. Milton, an individual
By: /s/ Gary W. Nielson
-------------------
Gary W. Nielson, an individual
2-15
<PAGE>
ROBERT C. PETERSON
By: /s/ Robert C. Peterson
----------------------
Robert C. Peterson, an individual
MARK R. POOCHIGIAN
By: /s/ Mark R. Poochigian
----------------------
Mark R. Poochigian, an individual
D. GLEN RAIGER
By: /s/ D. Glen Raiger
------------------
D. Glen Raiger, an individual
WILLIAM S. ROTHE
By: /s/ William S. Rothe
--------------------
William S. Rothe, an individual
CHARLES J. SCHREIBER, JR.
By: /s/ Charles J. Schreiber, Jr.
-----------------------------
Charles J. Schreiber, Jr., an
individual
JOHN J. SHEPHARD, JR.
By: /s/ John J. Shephard, Jr.
-------------------------
John J. Shephard, Jr., an individual
JANA L. TURNER
By: /s/ Jana L. Turner
------------------
Jana L. Turner
2-16
<PAGE>
JOHN A. WALKER
By: /s/ John A. Walker
------------------
John A. Walker, an individual
HOWARD L. WEINSTEIN
By: /s/ Howard L. Weinstein
-----------------------
Howard L. Weinstein, an individual
JAMES ROBERT WHITE
By: /s/ James Robert White
----------------------
James Robert White, an individual
RAYMOND E. WIRTA
By: /s/ Raymond E. Wirta
--------------------
Raymond E. Wirta, an individual
RICHARD G. WOLLACK
By: /s/ Richard G. Wollack
----------------------
Richard G. Wollack, an individual
DAVID J. ZAK
By: /s/ David J. Zak
----------------
David J. Zak, an individual
2-17
<PAGE>
ELECTION TO PURCHASE
(TO BE EXECUTED UPON EXERCISE OF WARRANT)
The undersigned hereby irrevocably elects to exercise the right represented
by this Warrant Certificate, to receive shares of Common Stock and
hereby tenders payment for such shares [to the order of CB Commercial Real
Estate Services Group, Inc. by cash or immediately available funds in the
amount of $ ] [(by delivery to the Company of Warrant Shares
with respect to which this Warrant is being surrendered in payment of the
aggregate Exercise Price for the Warrant Shares to be delivered to the
holder)] in accordance with the terms hereof. The undersigned requests that a
certificate for such shares be registered in the name of ,
whose address is . If said number of shares is less than all of
the shares of Common Stock purchasable hereunder, the undersigned requests
that a new Warrant Certificate representing the remaining balance of such
shares be registered in the name of , whose address is
, and that such Warrant Certificate be delivered to
, whose address is .
Date: _______________________________
_____________________________________
Print Name
_____________________________________
Signature Guaranteed*
- --------
* The signature must be guaranteed by a bank or trust company having an
office in Los Angeles, California, or by a firm having membership on the
New York Stock Exchange.
2-18
<PAGE>
EXERCISABLE ON OR AFTER AUGUST 28, 2000
AND ON OR BEFORE AUGUST 27, 2004
No.
Warrants
WARRANT CERTIFICATE
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
This Warrant Certificate certifies that , or registered assigns, is
the registered holder of Warrants expiring (the
"Warrants") to purchase shares of Common Stock (the "Common Stock") of CB
Commercial Real Estate Services Group, Inc. (the "Company"). Each Warrant
entitles the holder upon exercise to receive from the Company on or after the
August 28, 2000 and on or before 5:00 p.m. Los Angeles Time on
August 27, 2004 one fully paid and nonassessable share of Common Stock (a
"Warrant Share") at the initial exercise price (the "Exercise Price") of
$30.00, payable in lawful money of the United States of America or in Warrant
Shares by "cashless exercise," upon surrender of this Warrant Certificate and
payment of the Exercise Price at the principal office of the Company, but only
subject to the conditions set forth herein and in the Warrant Agreement
referred to on the reverse hereof. The Exercise Price and number of Warrant
Shares issuable upon exercise of the Warrants are subject to adjustment upon
the occurrence of certain events set forth in the Warrant Agreement.
No warrant may be exercised before August 28, 2000 or after 5:00 PM, Los
Angeles time, on August 27, 2004 and to the extent not exercised by such
time such Warrants shall become void.
This Warrant, if issued in respect of an option to purchase common stock of
Koll Real Estate Services, is subject to forfeiture upon certain conditions
set forth in the Warrant Agreement.
This Warrant Certificate shall be governed and construed in accordance with
the internal laws of the State of Delaware.
IN WITNESS WHEREOF, CB Commercial Real Estate Services Group, Inc. has
caused this Warrant Certificate to be signed by its President and by its
Secretary, each by a facsimile of his signature.
Dated:
_____________________________________
By: _________________________________
President
By: _________________________________
Secretary
2-19
<PAGE>
[FORM OF WARRANT CERTIFICATE]
[REVERSE]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring August 27, 2004 entitling the
holder on exercise to receive shares of Common Stock, of the Company (the
"Common Stock"), $.01 par value, and are issued or to be issued pursuant to a
Warrant Agreement dated as of August 28, 1997 (the "Warrant Agreement"), duly
executed and delivered by the Company, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Company and the holders
(the words "holders" or "holder" meaning the registered holders or registered
holder) of the Warrants. A copy of the Warrant Agreement may be obtained by
the holder hereof upon written request to the Company.
Warrants may be exercised at any time on or after August 28, 2000 and on
or before August 27, 2004. The holder of Warrants evidenced by this Warrant
Certificate may exercise them, subject to the limitations set forth in the
Warrant Agreement, by surrendering this Warrant Certificate, with the form of
election to purchase set forth hereon properly completed and executed, together
with payment of the Exercise Price in cash or immediately available funds or in
Warrant Shares by "cashless exercise," at the principal office of the Company.
In the event that upon any exercise of Warrants evidenced hereby the number of
Warrants exercised shall be less than the total number of Warrants evidenced
hereby, there shall be issued to the holder hereof or his assignee a new Warrant
Certificate evidencing the number of Warrants not exercised. No adjustment shall
be made for any dividends on any Common Stock issuable upon exercise of this
Warrant.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and the number of Warrant Shares into which this Warrant is
exercisable set forth on the face hereof may, subject to certain conditions,
be adjusted. No fractions of a share of Common stock will be issued upon the
exercise of any Warrant, but the Company will pay the cash value thereof
determined as provided in the Warrant Agreement.
Warrant Certificates, where surrendered at the principal office of the
Company by the registered holder thereof in person or by legal representative
or attorney duly authorized in writing, may be exchanged, in the manner and
subject to the limitations provided in the Warrant Agreement, but without
payment of any service charge, for another Warrant Certificate or Warrant
Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the principal office of the Company a new Warrant Certificate
or Warrant Certificates of like tenor and evidencing in the aggregate a like
number of Warrants shall be issued to the transferee(s) in exchange for this
Warrant Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other governmental charge
imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) hereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and the Company shall not be
affected by any notice to the contrary. Neither the Warrants nor this Warrant
Certificate entitle any holder hereof to any rights of a stockholder of the
Company.
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