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EXHIBIT 99.1
STOCK PURCHASE AGREEMENT
BETWEEN
PRISON HEALTH SERVICES, INC.,
AND
THE SHAREHOLDERS OF
CORRECTIONAL HEALTH SERVICES, INC.
DATED AS OF APRIL 24, 2000
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TABLE OF CONTENTS
(Not a part of the Agreement)
1. PURCHASE AND SALE OF SHARES.........................................................1
1.1. Purchase And Sale Of Shares................................................1
1.2. Purchase Price; Escrow.....................................................2
1.3. Post-Closing Adjustment....................................................2
1.4. Method of Payment..........................................................3
1.5. Deliveries by Shareholders.................................................3
1.6. Deliveries by Purchaser....................................................3
2. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS RELATING TO THE COMPANY..........4
2.1. Corporate Organization.....................................................4
2.2. Articles and Bylaws; Corporate Records.....................................4
2.3. No Subsidiaries............................................................4
2.4. Authorization and Effect of Agreement......................................4
2.5. Capital Stock..............................................................5
2.6. Ownership of the Company...................................................5
2.7. Absence of Restrictions and Conflicts......................................5
2.8. Financial Information......................................................6
2.9. Undisclosed Liabilities....................................................6
2.10. No Material Adverse Change Relating to the Business........................6
2.11. Compliance with Applicable Law.............................................7
2.12. Real Property..............................................................7
2.13. Insurance..................................................................7
2.14. Intellectual Property......................................................8
2.15. Litigation; Decrees........................................................8
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2.16. Contract Rights............................................................9
2.17. Employee Contracts, Union Agreements and Benefit Plans....................11
2.18. Labor Relations...........................................................12
2.19. Personnel.................................................................13
2.20. Environmental Protection..................................................13
2.21. Tax Matters...............................................................14
2.22. Accounts Receivable.......................................................16
2.23. Broker's and Finders' Fees................................................16
2.24. Permits...................................................................16
2.25. Books and Records.........................................................17
2.26. Major Suppliers and Providers.............................................17
2.27. Medicare and Medicaid.....................................................17
2.28. Untrue Statements and Omissions...........................................17
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER....................................17
3.1. Corporate Organization....................................................17
3.2. Authorization And Effect Of Agreement.....................................18
3.3. No Restrictions Against Purchase Of The Share.............................18
3.4. Litigation................................................................18
3.5. Certain Fees..............................................................19
3.6. Investment Representations................................................19
3.7. Untrue Statements and Omissions...........................................19
4. PRE-CLOSING COVENANTS..............................................................19
4.1. Press Releases............................................................19
4.2. Regulatory Filings........................................................19
4.3. Injunctions...............................................................19
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4.4. Investigation By Purchaser................................................19
4.5. Confidential Nature of Information........................................20
4.6. Operation of the Business.................................................20
4.7. Purchaser's Supplemental Schedules........................................22
4.8. Shareholders' Supplemental Schedules......................................22
4.9. No Shop...................................................................23
4.10. Satisfaction Of Conditions................................................23
4.11. Customer Visits...........................................................23
4.12. Pre-Closing Redemption....................................................23
5. CONDITIONS PRECEDENT TO THE CLOSING................................................23
5.1. Conditions Precedent To Obligations Of Purchaser..........................23
5.1.1. No Misrepresentation Or Breach Of Covenants And Warranties......24
5.1.2. Shareholder Deliveries..........................................24
5.1.3. No Legal Obstruction............................................24
5.1.4. Certificates....................................................24
5.1.5. Opinion of Counsel For The Shareholders.........................24
5.1.6. Consents Under Key Agreements...................................25
5.1.7. No Material Adverse Change......................................25
5.1.8. Termination Statements..........................................25
5.1.9. Resignation of Officers and Directors...........................25
5.1.10. Employment and Non-Competition Agreements.......................25
5.1.11. Financing.......................................................25
5.1.12. Additional Deliveries...........................................25
5.1.13. No Undisclosed Liabilities......................................25
5.1.14. Escrow Agreement................................................25
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5.1.15. HSR Act.........................................................26
5.1.16. Customer Visits.................................................26
5.1.17. Cash Balance....................................................26
5.1.18. Termination of 401(k) Plan......................................26
5.1.19. Termination of Employment Agreements............................26
5.1.20. Employment Practices Insurance..................................26
5.2. Conditions Precedent To Obligations Of The Shareholders...................26
5.2.1. No Misrepresentation Or Breach Of Covenants And Warranties......26
5.2.2. Purchase Price..................................................27
5.2.3. No Legal Obstruction............................................27
5.2.4. Certificates....................................................27
5.2.5. Opinion of Counsel For Purchaser................................27
5.2.6. Escrow Agreement................................................27
5.2.7. HSR Act.........................................................27
6. THE CLOSING........................................................................28
6.1. The Closing...............................................................28
6.2. Extension of Closing......................................................28
6.3. Shareholder Obligations...................................................28
6.3.1. Shareholder Deliveries..........................................28
6.3.2. Receipts........................................................28
6.3.3. Escrow Agreement................................................28
6.3.4. Other...........................................................28
6.4. Purchaser's Obligations...................................................28
6.4.1. Purchase Price..................................................28
6.4.2. Purchaser Deliveries............................................28
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6.4.3. Escrow Agreement................................................28
6.4.4. Other...........................................................28
7. SURVIVAL AND INDEMNIFICATION.......................................................28
7.1. Survival..................................................................28
7.1.1. Survival of Representations And Warranties......................29
7.1.2. Survival of Covenants...........................................29
7.2. Limitations On Indemnification; Right of Offset...........................29
7.2.1. With Respect To Certain Representations And Warranties..........29
7.2.2. With Respect To Shareholders' Obligations.......................29
7.2.3. Right of Offset.................................................29
7.3. Indemnification...........................................................30
7.3.1. Indemnification by the Shareholders.............................30
7.3.2. Indemnification By Purchaser....................................30
7.3.3. Cumulative Rights...............................................30
7.3.4. Indemnity Payment; Indemnitee; Indemnifying Party...............30
7.3.5. Treatment of Indemnity Payments.................................31
7.4. Defense of Claims.........................................................31
7.4.1. Third Party Claims..............................................31
7.4.2. Direct Claims...................................................33
7.4.3. Failure to Give Timely Notice...................................33
7.4.4. Subrogation.....................................................33
7.4.5. Payment.........................................................33
7.5. Indemnification in Case of Indemnitee Negligence..........................33
7.6. Exclusive Remedy..........................................................33
8. TERMINATION........................................................................34
8.1. Termination...............................................................34
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8.2. Expenses In The Event Of Termination......................................34
9. MISCELLANEOUS PROVISIONS...........................................................34
9.1. Notices...................................................................34
9.2. Expenses..................................................................35
9.3. Successors And Assigns....................................................36
9.4. Waiver; Effect of Buyer's Investigation...................................36
9.5. Entire Agreement..........................................................36
9.6. Amendments, Supplements, Etc..............................................37
9.7. Rights Of The Parties.....................................................37
9.8. Further Assurances........................................................37
9.9. Shareholders' Representative..............................................37
9.10. Governing Law.............................................................37
9.11. Execution In Counterparts.................................................37
9.12. Titles And Headings.......................................................37
9.13. Certain Interpretive Matters And Definitions..............................37
9.14. Cross-References..........................................................38
9.15. Severability..............................................................38
9.16. Specific Performance......................................................38
9.17. Arbitration...............................................................38
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TABLE OF SCHEDULES
(Not a part of the Agreement)
Heading Number
------- ------
Shareholders; Share Ownership...............................................1.1
Form of Escrow Agreement....................................................1.2
List of Foreign Qualifications..............................................2.1
Restrictions and Conflicts..................................................2.7
1999 Comparative Audited Financial Statements...............................2.8(a)
1998 Comparative Audited Financial Statements...............................2.8(b)
Unaudited Financial Statements..............................................2.8(c)
Exceptions to GAAP..........................................................2.8(d)
Material Adverse Change Relating to the Business............................2.10
Violations of Law...........................................................2.11
Leased Real Property........................................................2.12
Insurance...................................................................2.13
Patent and Trademark Rights.................................................2.14(a)
Software....................................................................2.14(b)
Litigation; Decrees.........................................................2.15
Contract Rights.............................................................2.16
Employee Benefit Plans......................................................2.17(a)
Non-Compliance with respect to Benefit Plans................................2.17(b)
Labor Relations.............................................................2.18
Personnel...................................................................2.19
Environmental Protection....................................................2.20
Tax Returns and Tax Liabilities.............................................2.21(b)
Accounts Receivable.........................................................2.22(b)
Permits.....................................................................2.24
Major Suppliers and Providers...............................................2.26
Exceptions to Pre-Closing Restrictions......................................4.6(b)
Consents Under Key Agreements...............................................5.1.6
Termination Statements......................................................5.1.8
Form of Employment Agreement of Xxxxxx Xxxxxx...............................5.1.10(a)
Form of Employment Agreement of Xxxxxxx Xxxxxxx.............................5.1.10(b)
Form of Non-Competition Agreement of Xxxxxx Xxxxxx..........................5.1.10(c)
Form of Non-Competition Agreement of Xxxxxxx Xxxxxxx........................5.1.10(d)
Information Regarding Customer Contracts....................................5.1.12(a)
Licenses and Permits........................................................5.1.12(b)
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DEFINED TERMS
Term Section
---- -------
1954 Code..................................................................2.21(e)
Affiliate..................................................................9.13(c)
Agreement..................................................................Preamble
Ancillary Documents........................................................2.4
AJD........................................................................Preamble
AMD........................................................................Preamble
ASG........................................................................Recital C
Audited Balance Sheet......................................................2.8
Audited Financial Statements...............................................2.8
Closing....................................................................6.1
Closing Date...............................................................6.1
Closing Date Net Working Capital...........................................1.3(a)
Code.......................................................................2.21(d)
Company....................................................................Recital A
Company Accountants........................................................1.3(b)
Confidentiality Agreement..................................................4.5
Xxxxxx Children............................................................Preamble
Direct Claim...............................................................7.4.2
Drew.......................................................................Preamble
Employee Benefit Plans.....................................................2.17(a)
Environmental Laws.........................................................2.20(a)
ERISA......................................................................2.17(a)
ERISA Affiliate............................................................2.17(a)
Escrow Agent...............................................................1.2
Escrow Agreement...........................................................1.2
Final Closing Balance Sheet................................................1.3(b)
Financial Statements.......................................................2.8
FMLA.......................................................................2.18(a)
GAAP.......................................................................2.8
Governmental Agency........................................................9.13(c)
Hazardous Substances.......................................................2.20(a)
Headquarters...............................................................2.12
HSR Act....................................................................2.7
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Indemnifiable Losses.......................................................7.3.1
Indemnitee.................................................................7.3.4
Indemnifying Party.........................................................7.3.4
Indemnity Payment..........................................................7.3.4
Independent Accounting Firm................................................1.3(b)
Key Agreements.............................................................5.1.6
Xxxxxxx....................................................................Preamble
Knowledge..................................................................9.13(d)
Licensed Software..........................................................2.14(b)
Liens......................................................................2.6
Material Adverse Effect....................................................2.1
Medical Malpractice Claims.................................................5.1.12
NLRB.......................................................................2.18(a)
OSHA.......................................................................2.18(a)
Patent and Trademark Rights................................................2.14(a)
Preliminary closing Balance Sheet..........................................1.3(b)
Proprietary Software.......................................................2.14(b)
Purchaser..................................................................Preamble
Purchase Price.............................................................1.2
Purchase Price Agreement...................................................1.3(a)
Related Person.............................................................2.26
Representative.............................................................9.9
Respective Ownership Percentages...........................................1.2
RSJR.......................................................................Preamble
Securities Act.............................................................9.13(c)
Settlement Date............................................................1.3(a)
Shareholders...............................................................Preamble
Shares.....................................................................1.1
Software...................................................................2.14(b)
Subsidiary.................................................................9.13(c)
Target Net Working Capital.................................................1.3(a)
Tax Returns................................................................2.21(a)
Taxes......................................................................2.21(a)
Third Party Claim..........................................................7.4.1(a)
Unaudited Financial Statements.............................................2.8
WARN Act...................................................................2.18(a)
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of the 24th day of April, 2000, between PRISON HEALTH SERVICES,
INC., a Delaware corporation (the "Purchaser"); DREW ASSOCIATES INTERNATIONAL,
INC., a New Jersey corporation ("Drew"); XXXXXX X. XXXXXX, an individual
resident of the State of New Jersey ("AJD"); XXX X. XXXXXX, an individual
resident of the State of New Jersey ("AMD" and together with "AJD,"
collectively, the "Xxxxxx Children"); XXXXXXX XXXXXXX, an individual resident of
the State of New Jersey ("Xxxxxxx"); and RSJR ASSOCIATES, INC., a New Jersey
corporation ("RSJR") (Drew, Xxxxxx Children, Xxxxxxx and RSJR are hereinafter
referred to, collectively, as the "Shareholders").
RECITALS
A. The Shareholders own 100% of the issued and outstanding
shares of capital stock of Correctional Health Services, Inc., a New Jersey
corporation (the "Company").
B. Pursuant to the terms and conditions of this Agreement, the
Shareholders desire to sell to the Purchaser, and the Purchaser desires to
purchase from the Shareholders, all of the issued and outstanding shares of
capital stock of the Company.
C. America Service Group Inc., a Delaware corporation and the
parent corporation of the Purchaser ("ASG"), has guaranteed all obligations of
the Purchaser pursuant to this Agreement.
D. Pursuant to the terms of a Non-Competition Agreement, Xx.
Xxxxxx Xxxxxx, the President and Chief Executive Officer of the Company has
agreed not to compete with the Purchaser under the terms set forth therein in
exchange for a payment in the amount of $1,800,000.
E. Pursuant to the terms of a Non-Competition Agreement, Xx.
Xxxxxxx Xxxxxxx, the Executive Vice President and Chief Operating Officer of the
Company, has agreed not to compete with the Purchaser under the terms set forth
therein in exchange for a payment in the amount of $200,000.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and conditions
hereinafter set forth, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. PURCHASE AND SALE OF SHARES
1.1. Purchase And Sale Of Shares. On the terms and subject to the
conditions hereof, at the Closing (as hereinafter defined), each Shareholder
will sell, transfer and deliver to the Purchaser, and the Purchaser will
purchase and accept delivery of the number of shares of common stock of the
Company set forth opposite his or her name on Schedule 1.1 hereto (all of such
shares being sold hereunder being hereinafter referred to collectively as the
"Shares"), which Shares shall constitute all of the issued and outstanding
capital stock of the Company.
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1.2. Purchase Price; Escrow. Subject to the terms and conditions of
this Agreement, in consideration of the aforesaid sale, transfer and delivery of
the Shares, at the Closing Purchaser (i) shall pay to the Shareholders, in
accordance with the respective ownership percentages set forth opposite their
respective names on Schedule 1.1 hereto (the "Respective Ownership Percentages")
the sum of $13,000,000 U.S. Dollars (the "Purchase Price") and (ii) shall
deposit the amount of $2,000,000 U.S. Dollars in escrow with SunTrust Bank, as
escrow agent (the "Escrow Agent"), pursuant to an Escrow Agreement (the "Escrow
Agreement"), substantially in the form attached hereto as Schedule 1.2.
1.3. Post-Closing Adjustment.
(a) The Purchase Price shall be increased or decreased (the
"Purchase Price Adjustment") on a dollar-for-dollar basis by an amount equal to
the amount by which the Closing Date Net Working Capital (as hereinafter
defined) is in excess of or is less than the Target Net Working Capital (as
hereinafter defined). The payment of the Purchase Price Adjustment shall occur
within three (3) days after the final determination of the Closing Date Net
Working Capital, or on such other date as shall be mutually agreed to in writing
by the parties (the "Settlement Date"). If the Closing Date Net Working Capital
is greater than the Target Net Working Capital, the Purchaser shall pay to the
Shareholders, in accordance with their Respective Ownership Percentages, an
amount equal to the Purchase Price Adjustment. If the Closing Date Net Working
Capital is less than the Target Net Working Capital, the Shareholders shall pay
to the Purchaser, in accordance with their Respective Ownership Percentages, an
amount equal to the Purchase Price Adjustment. The term "Closing Date Net
Working Capital" means the difference between the current assets and current
liabilities of the Company, both computed in accordance with generally accepted
accounting principles and both as disclosed on the Final Closing Balance Sheet
(as hereinafter defined). For the avoidance of doubt, the Purchaser and the
Shareholders acknowledge and agree that the current liabilities of the Company
as of the close of business on the Closing Date shall include the accrued
federal, state and local income taxes with respect to the Company's operations
for the portion of the tax year of the Company ending on the Closing Date,
including any accrued taxes attributable to the Company's sale or distribution
of its marketable securities prior to the Closing Date. Furthermore, the
Purchaser and the Shareholders agree that the current liabilities of the Company
as of the close of business on the Closing Date shall include the amount of
$254,000 with respect to the uninsured liability of the Company for claims made
after the Closing Date for acts, occurrences or events that occurred prior to
the Closing Date. The term Target Net Working Capital means an amount equal to
$0.
(b) As promptly as practicable after the Closing and in any event
within forty-five (45) days of the Closing Date, the Shareholders and the
Purchaser shall cause the Company to prepare, in accordance with generally
accepted accounting principles, and shall cause Deloitte & Touche LLP,
Nashville, Tennessee (the "Company Accountants") to audit the financial
statements of the Company as of the close of business on the Closing Date (the
"Preliminary Closing Balance Sheet"). The Company shall pay the cost of the
audit. The expenses of the audit shall be disregarded in determining the Closing
Date Net Working Capital. The Preliminary Closing Balance Sheet shall be
delivered to the Shareholders and the Purchaser promptly following the
completion thereof. The Purchaser and the Shareholders shall each have fifteen
(15) days following delivery of the Preliminary Closing Balance Sheet during
which to
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notify the other of any dispute of any item contained in the Preliminary Closing
Balance Sheet, which notice shall set forth in reasonable detail the basis for
such dispute. If either party fails to notify the other of any dispute within
such 15-day period, the Preliminary Closing Balance Sheet shall be deemed to be
the "Final Closing Balance Sheet." The Purchaser and the Shareholders shall
cooperate in good faith to resolve any dispute as promptly as possible, and upon
such resolution, the Final Closing Balance Sheet shall be prepared in accordance
with the agreement of the Purchaser and the Shareholders. If the Purchaser and
the Shareholders are unable to resolve any dispute within fifteen (15) days (or
such longer period as the Purchaser and the Shareholders shall mutually agree in
writing) of delivery of such notice, such dispute shall be resolved by a
mutually agreeable nationally recognized, independent accounting firm
("Independent Accounting Firm"), and such determination shall be final and
binding on the parties. If the Shareholders and the Purchaser cannot mutually
agree on the identity of the Independent Accounting Firm, then the Shareholders
and the Purchaser shall each submit to the other party's independent auditor the
name of a national accounting firm, and the Independent Accounting Firm shall be
selected by lot from those two firms by the independent auditors of the two
parties. (If no national accounting firm shall be willing to serve as the
Independent Accounting Firm, then an arbitrator shall be selected to serve as
such, such selection to be according to the above procedures.) Any expenses
relating to the engagement of the Independent Accounting Firm shall be shared
equally by the Purchaser and the Shareholders. The Independent Accounting Firm
shall be instructed to use every reasonable effort to perform its services
within fifteen (15) days of submission of the Preliminary Closing Balance Sheet
to it and, in any case, as promptly as practicable after such submission. The
Final Closing Balance Sheet shall then be prepared by the Purchaser and the
Shareholders based on the determination of the Independent Accounting Firm.
1.4. Method of Payment. All payments from one party to another under
this Agreement shall be made by wire transfer of immediately available federal
funds to an account designated in writing by the person or entity to receive
such payment.
1.5. Deliveries by Shareholders. At the Closing, the Shareholders will
deliver or cause to be delivered to the Purchaser (unless delivered previously)
the following:
(a) The stock certificates representing all of the Shares, duly
endorsed in blank or accompanied by stock or similar powers duly endorsed in
blank;
(b) The resignations of all officers and members of the Board of
Directors of the Company;
(c) Those items set forth in Section 5.1; and
(d) All other documents, instruments and writings required or
reasonably requested by the Purchaser to be delivered by the Shareholders at or
prior to Closing pursuant to this Agreement or otherwise reasonably required in
connection herewith.
1.6. Deliveries by Purchaser. At the Closing, the Purchaser will
deliver or cause to be delivered to the Shareholders (unless previously
delivered) the following:
(a) The Purchase Price in accordance with Section 1.2 hereof;
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(b) Those items set forth in Section 5.2; and
(c) All other documents, instruments and writings required or
reasonably requested by the Shareholders to be delivered by the Purchaser at or
prior to Closing pursuant to this Agreement or otherwise reasonably required in
connection herewith.
2. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
RELATING TO THE COMPANY
In order to induce the Purchaser to enter into this Agreement, and to
consummate the transactions contemplated hereby, the Shareholders, jointly and
severally, represent and warrant to the Purchaser as follows:
2.1. Corporate Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey and has all requisite corporate power and authority and all permits
necessary to own, lease and operate its properties and to and to carry on its
business as presently conducted and is duly licensed or qualified to do business
as a foreign corporation and is in good standing in each jurisdiction in which
the nature of its properties and assets or the conduct of its business requires
it to be so licensed or qualified, except where the failure to be so qualified
would not have a Material Adverse Effect (as hereinafter defined). Schedule 2.1
hereto sets forth a list of each jurisdiction in which the Company is licensed
or qualified to do business as a foreign corporation. As used herein, the term
"Material Adverse Effect" shall mean any event, change or effect, individually
or in the aggregate with such other events, changes or effects, that has
occurred which has a material adverse effect upon the financial condition,
results of operations, business or prospects of the Company taken as a whole.
2.2. Articles and Bylaws; Corporate Records. The Company has delivered
to the Purchaser complete and correct copies of (i) the Company's Amended and
Restated Certificate of Incorporation and all amendments thereto (certified by
the Secretary or an Assistant Secretary of the Company), and (ii) its By-Laws
and all amendments thereto (certified by the Secretary or an Assistant Secretary
of the Company). The corporate minutes and stock records of the Company have
been made available to the Purchaser and are complete and correct in all
material respects as of the date hereof.
2.3. No Subsidiaries. The Company has no direct or indirect equity
interest by stock ownership or otherwise in any other corporation, partnership,
joint venture, firm, association or business enterprise.
2.4. Authorization and Effect of Agreement Each Shareholder has all
requisite power and authority to execute and deliver this Agreement and all of
the other agreements, certificates and other documents delivered or to be
delivered on or after the date hereof and at or prior to the Closing in
connection with the transactions contemplated hereby (the "Ancillary Documents")
to which it is or will be a party, and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by each Shareholder
of this Agreement and the Ancillary Documents to which it is or will be a party
and the consummation by each Shareholder of the transactions contemplated hereby
and thereby to be consummated by it have been duly
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authorized. This Agreement and the Ancillary Documents to which the Shareholders
are or will be parties have been or will be, as the case may be, duly executed
and delivered by each Shareholder and constitute or will constitute, as the case
may be, valid and binding obligations of each Shareholder, enforceable in
accordance with their respective terms, except as enforceability may be limited
by bankruptcy, insolvency or other similar laws of general application affecting
the enforcement of creditors' rights or by general principles of equity limiting
the availability of equitable remedies (whether applied in a proceeding at law
or equity).
2.5. Capital Stock. The authorized capital stock of the Company
consists of (i) 2,500,000 shares of preferred stock, $.01 par value per share,
no shares of which are outstanding on the date of this Agreement and (ii)
10,000,000 shares of common stock, $.01 par value per share, 3,800,000 shares of
which are issued and outstanding on the date of this Agreement. All of the
issued and outstanding shares of capital stock of the Company (x) are duly
authorized, validly issued, fully paid and nonassessable, (y) are held of record
by the Shareholders as set forth on Schedule 1.1, and (z) were not issued in
violation of the preemptive rights of any person or any agreement or law by
which the Company at the time of issuance was bound. No shares of capital stock
of the Company are reserved for issuance or are held as treasury shares. There
are no (i) outstanding options, warrants, rights, calls, commitments, conversion
rights, rights of exchange, subscriptions, claims of any character, agreements,
obligations, convertible or exchangeable securities or other plans or
commitments, contingent or otherwise, relating to the capital stock of the
Company, other than as contemplated by this Agreement; (ii) outstanding
contracts or other agreements of the Shareholders, the Company or any other
person to purchase, redeem or otherwise acquire any outstanding shares of the
capital stock of the Company, or securities or obligations of any kind
convertible into any shares of the capital stock of the Company; (iii) dividends
which have accrued or been declared but are unpaid on the capital stock of the
Company; and (iv) outstanding or authorized stock appreciation, phantom stock,
stock plans or similar rights with respect to the Company.
2.6. Ownership of the Company. The Shareholders are the owners of the
Shares in the Respective Ownership Percentages set forth on Schedule 1.1 hereto.
The Shareholders have good title to the Shares free and clear of all Liens. As
used herein, "Liens" means any mortgage, pledge, security interest, claim,
encumbrance, lien or charge of any kind (including, without limitation, any
option, conditional sale or other title retention agreement or lease in the
nature thereof), any sale of receivables with recourse against the Company or
any Affiliate (as hereinafter defined), any filing or agreement to file a
financing statement as debtor under the Uniform Commercial Code or any similar
statute other than to reflect ownership by a third party of property leased to
the Company under a lease which is not in the nature of a conditional sale or
title retention agreement, or any subordination arrangement in favor of another
person (other than any subordination arising in the ordinary course of
business).
2.7. Absence of Restrictions and Conflicts. Except as described on
Schedule 2.7, the execution, delivery and performance of this Agreement, the
Ancillary Documents, and the other transactions contemplated by this Agreement
and the fulfillment of and compliance with the terms and conditions of this
Agreement do not and will not, with the passing of time or the giving of notice
or both, violate, constitute a breach of or default under, result in the loss of
any material benefit under the terms or provisions of, or permit the
acceleration of any obligation under, (i) any term or provision of the Amended
and Restated Certificate of Incorporation or the
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Bylaws of the Company, (ii) any indenture, lease or other material contract to
which the Company or any Shareholder is bound, (iii) any judgment, decree or
order of any court or governmental authority or agency to which the Company or
any Shareholder is a party or by which the Company or any Shareholder or any of
their respective properties is bound, or (iv) any statute, law, regulation or
rule applicable to the Company or any Shareholder, so as to have, in the case of
subsections (ii) through (iv) above, a Material Adverse Effect. Except for
compliance with the applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), no consent, approval,
order or authorization of, or registration, declaration or filing with, any
governmental agency or public or regulatory unit, agency, body or authority with
respect to the Company is required in connection with the execution, delivery or
performance of this Agreement by the Company or the consummation of the
transactions contemplated by this Agreement by the Company, the failure to
obtain which would have a Material Adverse Effect.
2.8. Financial Information. Attached hereto as Schedule 2.8(a) and
2.8(b), respectively, are copies of (i) the audited balance sheet and related
statements of operations, shareholders' equity and cash flows of the Company for
the years ended December 31, 1999 and 1998, and (ii) the audited balance sheet
and related statements of operations, shareholders' equity and cash flows of the
Company for the years ended December 31, 1998 and 1997, with the reports thereon
of Xxxxxx Xxxxxxxx LLP (collectively, the "Audited Financial Statements.") The
audited balance sheet of the Company at December 31, 1999 is referred to herein
as the "Audited Balance Sheet." Attached hereto as Schedule 2.8(c) is a copy of
the unaudited balance sheet and related unaudited statements of operations,
shareholders' equity and cash flows of the Company for the quarter ended March
31, 2000 (the "Unaudited Financial Statements"). Except as set forth in Schedule
2.8(d) hereto, the Unaudited Financial Statements and the Audited Financial
Statements (collectively, the "Financial Statements") (x) are complete and
correct in all material respects and have been prepared in accordance with the
books and records of the Company, (y) present fairly in all material respects
the financial condition of the Company and the results of its operations as at
and for the respective periods then ended, and (z) have been prepared in
accordance with the generally accepted accounting principals in effect in the
United States of America at the time of application thereof applied on a basis
consistent with the prior applications of those principles in the audited
balance sheets of the Company ("GAAP").
2.9. Undisclosed Liabilities. Except as and to the extent reflected on
the Audited Balance Sheet (including the footnotes thereto) or in this Agreement
(including the Schedules hereto), the Company does not have any liabilities,
commitments or obligations of any nature, (whether absolute, accrued, contingent
or otherwise) which, under GAAP or the terms of this Agreement, are required to
be disclosed, other than those incurred in the ordinary course of business
consistent with past practice since the date of the Audited Balance Sheet.
2.10. No Material Adverse Change Relating to the Business. Except as
described on Schedule 2.10, since December 31, 1999, the business of the Company
has been conducted in the ordinary course and the Company has not (a) suffered
any material adverse change in its business, prospects, financial condition or
results of operations; (b) received any notice of termination of any contract or
other agreement which, in any case or in the aggregate, could reasonably be
expected to result in the Company's loss of $50,000 or more of revenues from
existing contracts; (c) suffered any damage, destruction or casualty loss
(whether or not covered
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by insurance) which individually or in the aggregate resulted in a Material
Adverse Effect; (d) made, declared or set aside for payment any dividend or any
other distribution with respect to its capital stock or consummated any direct
or indirect redemption, purchase or other acquisition of its capital stock or
sold or otherwise issued any shares of its capital stock; (e) incurred or
discharged any material obligation or liability except in the ordinary course of
business; (f) entered into any material transaction or made any material
expenditures or commitments not in the ordinary course of its business
consistent with past practice except, in any such case, as specified in or
contemplated by other sections of this Agreement; (g) mortgaged, pledged or
subjected to a lien or any other encumbrance any of its assets, tangible or
intangible (other than with respect to liabilities incurred since December 31,
1999 in the ordinary course of business that, individually and in the aggregate,
are not material); (h) sold or transferred any of the assets material to its
business, canceled any material debts or claims or waived any material rights,
except in the ordinary course of business; (i) granted any general or uniform
increase in the rates of pay of employees or any material increase in salary
payable or to become payable by the Company to any officer or employee,
consultant or agent (other than normal increases consistent with past
practices), or by means of any bonus or pension plan, contract or other
commitment, increased in a material respect the compensation of any officer,
employee, consultant or agent, except in the ordinary course of business; or (j)
entered into any agreement to do any of the foregoing.
2.11. Compliance with Applicable Law. Except as listed or described on
Schedule 2.11, the business of the Company is not being conducted in violation
of, and the Company has not received any notice of any current violation of, any
material laws, ordinances, rule or regulations of any federal, state, local or
foreign governmental authority which are applicable to the Company, other than
violations which will not, individually or in the aggregate, result in a
Material Adverse Effect.
2.12. Real Property. Except for the leased real property identified on
Schedule 2.12 and the leased corporate headquarters facility located in Verona,
New Jersey (the "Headquarters"), the Company does not own any fee or leasehold
or other interests in any real property used in the conduct of the business of
the Company or necessary for the continued conduct of the business as presently
conducted. The Company has a good, marketable and insurable leasehold interest
in the Headquarters.
2.13. Insurance. Schedule 2.13 sets forth a list and description,
including policy numbers, names and addresses of insurers and expiration dates,
of all material policies of fire, liability and other forms of insurance in
effect as of the date hereof maintained by the Company or any of its Affiliates
with respect to the business or the assets of the Company (all of which (or
similar policies) will be maintained in effect until the Closing). All such
policies are in full force and effect and all premiums due and payable in
respect thereof have been paid except to the extent set forth on Schedule 2.13.
Since the respective dates of such policies, no notice of cancellation or
non-renewal with respect to any such policy has been received by the Company.
Schedule 2.13 sets forth a list of all pending claims and the status as of the
date of this Agreement of all deductibles with respect to all such policies, and
loss run for the year ended December 31, 1999, with respect to such policies.
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2.14. Intellectual Property.
(a) Schedule 2.14(a) sets forth a complete and correct list of
each United States and foreign patent, trademark, trade name, service xxxx,
copyright and application therefor (hereinafter the "Patent and Trademark
Rights") owned by the Company and used primarily in the business of the Company.
To the knowledge of the Shareholders, the business of the Company as now
conducted does not conflict with and has not been alleged to conflict with any
patents, trademarks, trade names, service marks or copyrights of others. The
Shareholders do not know of any use by others of any of the Patent and Trademark
Rights that would be material to the business of the Company as presently
conducted.
(b) Schedule 2.14(b) set forth a complete and correct list of (i)
all computer software programs that are proprietary to the Company (the
"Proprietary Software") and used primarily in the business of the Company; (ii)
all computer software programs licensed to the Company that are material to the
conduct of the business of the Company (other than "off-the-shelf" software
owned by or licensed to the Company) (the "Licensed Software" and together with
the Proprietary Software, collectively, the "Software"); (iii) all agreements
relating to Licensed Software; and (iv) all agreements relating to the use by
third parties of any Software. The Company owns or possesses valid license
rights to all Software. There are no infringement suits, actions or proceedings
pending or, to the knowledge of the Shareholders, threatened against the Company
with respect to any Software. To the knowledge of the Shareholders, there are no
infringement suits, actions or proceedings pending or threatened against the
owner of any Licensed Software. To the knowledge of the Shareholders, the
Company's license, sublicense, agreement or permission covering the Licensed
Software is (i) legal, valid, binding and enforceable and is in full force and
effect and (ii) has not been breached by the Company or the third-party. Subject
to receipt of any consents described in Section 2.7 that are applicable to the
Licensed Software, the consummation of the transactions contemplated hereby will
not result in the loss or impairment of the Company's right to use any Licensed
Software that is material to the operations of the business of the Company
following the Closing.
2.15. Litigation; Decrees. There is no claim, action, suit, proceeding
or governmental investigation, including, without limitation, any such claim,
action, suit, proceeding or investigation relating to this Agreement or the
transactions contemplated by this Agreement, pending or, to the knowledge of the
Shareholders, threatened against the Company by or before any court,
governmental or regulatory authority or by any third party. Except as listed or
described on Schedule 2.15, there are no lawsuits, claims, administrative or
other proceedings or investigations pending or, to the knowledge of the
Shareholders, threatened by, against or affecting the Company or any of its
Affiliates, arising out of or relating to the conduct of the business of the
Company or otherwise which, if determined adversely, could, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect and the
Shareholders are not aware of any facts or circumstances that could be
reasonably expected to give rise to any such suits, claims, investigations or
proceedings. Except as set forth on Schedule 2.15, the Company is not in default
under any judgment, order or decree of any governmental agency to which the
Company is a party, or that, to the Shareholder's knowledge, is applicable to
the conduct of the business of the Company.
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2.16. Contract Rights. Except as listed or described on Schedule 2.16
or 2.17, the Company is not a party to or bound by any contract that is of a
type described below:
(a) Any employment or consulting contract (other than an Employee
Plan) with an employee that is not terminable at will by the Company and that
will require aggregate future payments in excess of $5,000 in the case of any
one contract or $15,000 in the aggregate for all contracts of such type;
(b) Any collective bargaining or other contract with any labor
union;
(c) Any contract for capital expenditures or the acquisition,
construction or modification of fixed assets which requires aggregate future
payments of $5,000 or more in the case of any one contract or $15,000 or more in
the aggregate for all contracts of such type;
(d) Any contract (other than a contract of the type referred to
in clause (a) or (c) of this Section 2.16 or a purchase order issued in the
ordinary course of business) for the purchase, maintenance or acquisition of
materials, supplies, merchandise, equipment or other property or services
(including consulting services) which is not terminable at will and requires
aggregate future payments or expenses in excess of $15,000;
(e) Any contract (other than a service contract issued in the
ordinary course of business) for the furnishing of services of the business (i)
entered into in the ordinary course and for an amount of $15,000 or more, (ii)
not entered into in the ordinary course of business or (iii) which is for a term
of 12 months or more;
(f) Any purchase order not terminable at will by the Company and
requiring aggregate future payments of $15,000 or more;
(g) Any service contract not terminable at will by the Company
and for an amount of $15,000 or more;
(h) Any contract relating to (i) clean-up, abatement or other
actions in connection with the remediation of any existing environmental
liabilities or relating to the performance of any environmental audit or study
or (ii) disposal of hazardous or biomedical wastes;
(i) Any contract not terminable at will by the Company and
granting to any person a right at such person's option to purchase or acquire
any asset or property of the Company's business (or any interest therein) with a
value in excess of $5,000 in the case of any one contract or $15,000 in the
aggregate for all contracts of such type;
(j) Any license or royalty contract providing for aggregate
future payments in excess of $5,000 in the case of any one contract or $15,000
in the aggregate for all contracts of such type;
(k) Any contract with any provider, independent contractor or
other agent having a remaining term in excess of one year and which by its terms
is not terminable without penalty on 90 calendar days' or less notice;
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(l) Any lease under which the Company (i) is a lessee of, or
holds or uses, any machinery, equipment, vehicle or other tangible personal
property owned by a third party or (ii) is a lessor of, or makes available for
use by any third party, any tangible personal property owned by the Company, in
either such case which lease requires aggregate annual payments in excess of
$15,000;
(m) Any contract with any provider, supplier or customer with
respect to discounts or allowances or extended payment terms, except for the
Company's standard discount terms;
(n) Any joint venture or partnership contract with any other
person;
(o) Any contract restricting the Company from conducting its
business;
(p) Any contract giving any party the right to renegotiate prices
or require a reduction in prices or the repayment of any amount previously paid
and involving potential payments in excess of $5,000 in the case of any one
contract or $15,000 in the aggregate for all such contracts;
(q) Any contract pursuant to which the Company has advanced or
loaned to any other person, or invested in any other person, amounts in the
aggregate (for any one person) exceeding $15,000 or contractually committed to
do so;
(r) Any guaranty of any obligation, other than endorsements made
for collection;
(s) Any minority or set-aside contract;
(t) Any grant of any right-of-first refusal or similar right in
favor of any third party with respect to any material portion of the assets of
the Company; and
(u) Any other contract which involves future payment or
performance valued at $15,000 or more.
True and complete copies of all the contracts required to be
listed on Schedule 2.16 or any other Schedule hereto have been furnished to the
Purchaser, other than purchase orders and service contracts entered into in the
ordinary course for less than $5,000 in the case of any one contract. Except as
set forth on Schedule 2.16, (i) the Company and (to the knowledge of the
Shareholders) the other parties thereto, have performed in all material respects
all obligations required to be performed by them to date under their contracts
(including without limitation those listed on Schedule 2.16 or on any other
Schedule hereto) and are not (with or without the lapse of time or the giving of
notice, or both) in breach or default in any respect thereunder, except for such
failures to perform, breaches and defaults which, individually or in the
aggregate, do not, and, insofar as reasonably can be foreseen, in the future
will not, have a Material Adverse Effect, and (ii) all contracts required to be
listed on Schedule 2.16 or on any other Schedule hereto are valid, in full force
and effect and enforceable in accordance with their respective terms, except
where the failure thereof to be valid, in full force and effect and enforceable
would not individually or in the aggregate have a Material Adverse Effect.
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2.17. Employee Contracts, Union Agreements and Benefit Plans.
(a) Except as set forth on Schedule 2.17(a), the Company has no
Employee Benefit Plans (as hereinafter defined) that cover employees of the
Company. Schedule 2.17(a) also sets forth a complete and accurate list of all
agreements or arrangements on behalf of any officers, directors or employees of
the Company providing for payment or other benefits to such person contingent
upon the execution of this Agreement or the consummation of the transactions
contemplated by this Agreement, setting forth in reasonable detail, the amount
of payments to be made to each such person or the basis on which such amounts
shall be computed. Except as described on Schedule 2.17(a), the transactions
contemplated by this Agreement will not result in any additional or accelerated
payments to, or increase the vested interest of, any current or former officer,
employee or director of the Company or their dependents under any Employee
Benefit Plan. Pursuant to Section 280G(b)(5)(A)(i) of the Code, the transactions
contemplated by this Agreement will not result in any payments to any current or
former officer, employee or director of the Company that will be subject to
Section 280G of the Code. Except as set forth on Schedule 2.17(a), all of the
Employee Benefit Plans that cover employees of the Company are currently in
effect. All Employee Benefit Plans that cover employees of the Company and that
are welfare plans providing or offering benefits to retirees or are retirement
plans intended to be qualified under Section 401(a) of the Code are identified
as such on Schedule 2.17(a). Neither the Company nor its ERISA Affiliates
maintains, contributes to, or participates in, or has ever maintained,
contributed to, or participated in a multiemployer plan within the meaning of
ERISA Section 4001(a)(3). To the Shareholders' knowledge, no fact exists that
could subject the Purchaser to any liability after the Closing under Title IV of
ERISA in connection with an Employee Benefit Plan. "ERISA" means the Employee
Retirement Income Security Act of 1974, as amended. "Employee Benefit Plans"
means any plans, programs, agreements, arrangements, commitments, policies or
understandings of any kind (whether written or oral) that relate to
compensation, remuneration or benefits of any kind or description whatsoever
(whether current or deferred and whether paid in cash or in kind) in any way,
including all employment, consulting or collective bargaining contracts, and
deferred compensation, pension (as defined in Section 3(2) of ERISA),
multiemployer (as defined in Section 3(37)(A) of ERISA), profit sharing, thrift,
stock ownership, severance, stock appreciation rights, bonus, stock option,
stock purchase or other nonqualified or compensation commitments, benefit plans,
arrangements or plans, including all welfare plans (as defined in Section 3(1)
of ERISA) of or pertaining to the present or former officers, directors or
employees (including retirees), or their dependents, of the Company and any
"ERISA Affiliate" (as hereinafter defined) or any predecessors in interest
thereto, that are currently in effect or as to which the Company, or any ERISA
Affiliate, has any ongoing liability or obligation whatsoever. "ERISA Affiliate"
means each trade or business (whether or not incorporated) that together with
the Company is treated as a single employer pursuant to Sections 414(b),(c),(m)
or (o) of the Code.
(b) Except as set forth on Schedule 2.17(b), (i) the Company and
all ERISA Affiliates and their predecessors in interest have complied in all
material respects with all of their respective obligations with respect to all
Employee Benefit Plans that cover employees of the Company, including the
payment of all contributions and expenses required or due to be paid, the
satisfaction of all reporting and disclosure requirements to federal, state and
local
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governments and governmental agencies and to all such Employee Benefit Plan
participants and beneficiaries, and the payment or accrual of all expenses for
all periods, including the period between the end of the previous plan year and
the Closing Date, and (ii) the Employee Benefit Plans that cover employees of
the Company have been maintained in compliance in all material respects with
their terms and all applicable laws and regulations.
(c) No action, suit, proceeding, hearing or investigation with
respect to the administration or the investment of assets of any Employee
Benefit Plan that covers employees of the Company (other than routine claims for
benefits) is pending or, to the Shareholders' knowledge, threatened, and no
audit or investigation by any domestic or foreign governmental or law
enforcement agency is pending or has been proposed with respect to any Employee
Benefit Plan that covers employees of the Company.
2.18. Labor Relations.
(a) Except as set forth on Schedule 2.18, (i) the employees of
the Company have not been and are not represented by a labor organization which
was either National Labor Relations Board ("NLRB") certified or voluntarily
recognized; (ii) the Company has not been and is not a signatory to a collective
bargaining agreement with any labor organization that relates in any way to the
business of the Company; (iii) no representation election petition has been
filed by employees of the Company or is pending with the NLRB and, to the
Shareholders' knowledge, no union organizing campaign involving employees of the
Company has occurred or is in progress; (iv) no NLRB unfair labor practice
claims relating to the Company have been filed and/or are presently pending
against the Company or any labor organization representing the employees of the
Company; (v) no grievance or arbitration demand, whether or not filed pursuant
to a collective bargaining agreement, is pending against the Company with
respect to the employees of the Company; (vi) to the Shareholders' knowledge, no
hand billing, picketing, work stoppage (sympathetic or otherwise), or other
"concerted action" involving the employees of the Company has occurred or is in
progress; (vii) no breach of contract and/or denial of fair representation claim
relating to the Company is pending against the Company and/or any labor
organization representing the employees of the Company; (viii) no claim for
unpaid wages or overtime or for child labor or record keeping violations is
pending under the Fair Labor Standards Act, Xxxxx-Xxxxx Act, Xxxxx-Xxxxxx Act or
Service Contract Act or any other federal, state, local or foreign law,
regulation or ordinance with respect to the business of the Company; (ix) no
discrimination and/or retaliation claim has been filed or is pending against the
Company under the 1866 or 1964 Civil Rights Acts, the Equal Pay Act, the Age
Discrimination in Employment Act, as amended, the Americans with Disabilities
Act, the Family and Medical Leave Act ("FMLA"), the Fair Labor Standards Act,
ERISA or any other federal law or any comparable state fair employment practices
act or foreign law regulating discrimination in the workplace with respect to
the business of the Company; (x) if the Company is a federal or state contractor
obligated to develop and maintain an affirmative action plan, no discrimination
claim, show cause notice, conciliation proceeding, sanctions or debarment
proceeding has been filed or is pending with Office of Federal Contract
Compliance Programs or any other federal agency or any comparable state or
foreign agency or court and no desk audit or on-site review is in progress with
respect to the business of the Company; (xi) no citation has been issued by the
Occupational Safety and Health Administration ("OSHA") against the Company with
respect to the Company's business and no notice of contest or OSHA
administrative enforcement
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proceeding involving the Company is pending with respect to the Company's
business; (xii) no workers' compensation or retaliation claim has been filed or
is pending against the Company with respect to the Company's business; (xiii) no
citation of the Company has occurred and no enforcement proceeding has been
initiated or is pending under federal or foreign immigration law with respect to
the Company's business; and (xiv) the Company has not taken any action that
would constitute a "mass layoff" or "plant closing" within the meaning of the
Worker Adjustment and Retraining Notification Act (the "WARN Act") or otherwise
trigger notice requirements or liability under any local or state plant closing
notice law. The Company is in compliance in all material respects with all
federal, state and local laws respecting employment and employment practices,
terms and conditions of employment, wages and hours, and is not engaged in any
unfair labor or unlawful employment practice.
(b) The Company has made all filings required by the Occupational
Safety and Health Act, Executive Order 11246 and other similar federal, state
and local laws, regulations and orders, including all filings with the Equal
Employment Opportunity Commission and any other filings relating to affirmative
action or similar programs with respect to the business of the Company. The
Company has previously delivered to the Purchaser all material reports and
filings made or filed by it with respect to such matters.
2.19. Personnel. Schedule 2.19 sets forth the names, locations of
service, salary or rate of pay and classification of all personnel employed by
the Company or providing services as an independent contractor to the Company as
of the date of this Agreement. The status of each such person as an employee or
independent contractor is correctly indicated on Schedule 2.19. The Company has
received no claim from any Governmental Agency to the effect that the Company
has improperly classified as an independent contractor any person listed on
Schedule 2.19 or any similarity situated person. Schedule 2.19 sets forth the
date of the last salary or rate of pay increase for each such person whose 1999
annual compensation exceeded $25,000.
2.20. Environmental Protection.
(a) Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
"Environmental Laws" means federal, state and local statutes,
ordinances, regulations and codes, and other applicable laws
relating to pollution, protection of the environment or public
health and safety, as amended or reauthorized, including without
limitation, the Comprehensive Environmental Response Compensation
and Liability Act of 1980, as amended (42 U.S.C. ss. 9601 et
seq.), the Resource Conservation and Recovery Act, as amended (42
U.S.C. ss. 6901 et seq.), and the Toxic Substances Control Act,
as amended (15 U.S.C. ss. 2601 et seq.).
"Hazardous Substances" means, without limitation, any
explosive or radioactive material, asbestos, wastewater and
sludges derived from wastewater, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum
based products, methane, hazardous waste, biomedical or
biohazardous waste, toxic or hazardous substances or related
materials, as defined in the Environmental Laws.
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(b) Except as set forth on Schedule 2.20:
(i) The Company is in compliance in all material
respects with all applicable Environmental Laws with respect
to its properties, assets and operations comprising the
business of the Company.
(ii) The Company has obtained and adhered, in all
material respects, to all necessary permits and other
approvals, necessary to conduct the business as presently
conducted and to store, dispose of and otherwise handle
Hazardous Substances and has reported, to the extent required
by Environmental Laws, all past and present sites owned,
leased or operated by it where Hazardous Substances have been
treated, stored or disposed.
(iii) Except in accordance with applicable
Environmental Laws: (i) no Hazardous Substance has been
released (as that term is defined in the applicable
Environmental Laws) by the Company at or on any of the
property owned, leased or operated by the Company during the
period in which the Company has owned, leased or operated
such property, and (ii) to the knowledge of the Shareholders,
no Hazardous Substance has ever been released at or on any of
the property owned, leased or operated by the Company.
(iv) The Company has not received any written notice,
claim or request for information relating to any on-site or
off-site locations to which it has transported Hazardous
Substances or arranged for the transportation of Hazardous
Substances, alleging that it is liable for any clean-up cost,
remedial work, damage to natural resources or personal
injury.
(v) There is no claim for violation of any
Environmental Law pending or, to the knowledge of the
Shareholders, threatened against the Company.
(vi) The Company has made available to the Purchaser
accurate and complete copies of all documents in its
possession or under its control pertaining to all of the
matters described in paragraphs (i) through (v) of this
Section 2.20(b), including all environmental audits or
assessments prepared by and for the Company or, to the
knowledge of the Shareholders, any governmental authority or
any third party (including any financial institution).
2.21. Tax Matters.
(a) For purposes of this Agreement, (i) "Taxes" shall mean all
taxes (including any taxes attributable to the Company ceasing to be a member of
an affiliated group
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as defined in Section 1504(a) of the Code), assessments, charges, duties, fees,
levies or other governmental charges (including interest, penalties or additions
associated therewith), including federal, state, city, county, foreign or other
income, franchise, capital stock, real property, personal property, tangible,
withholding, FICA, unemployment compensation, disability, transfer, sales, use,
excise, gross receipts and all other taxes of any kind for which the Company may
have any liability imposed by the United States or any state, county, city,
country or foreign government or subdivision or agency thereof, whether disputed
or not, and any charges, interest or penalties imposed by any taxing authority
as the result of the failure to file any Tax Returns; and (ii) Tax Returns shall
mean any report, return, declaration or other information required to be
supplied to a taxing authority, including estimated returns and reports of every
kind, in connection with Taxes.
(b) Except as otherwise disclosed on Schedule 2.21(b), (i) all
Tax Returns required to be filed by the Company have been timely and properly
filed in accordance with any applicable law or any applicable extensions, and
all such Tax Returns were correct and complete in all respects, (ii) all Taxes,
deposits or other payments for which the Company may have any liability through
December 31, 1999 (whether or not shown on any Tax Return), have been paid in
full or are accrued as liabilities for such Taxes on the Audited Balance Sheet
(excluding any part of such accrual established to reflect timing differences
between book and tax income); (iii) the amounts so paid on or before December
31, 1999, together with any amounts accrued as liabilities for such Taxes
(whether accrued as currently payable or deferred Taxes but excluding any part
of any such accrual established to reflect timing differences between book and
tax income) on the Audited Balance Sheet will be adequate to satisfy all
liabilities for such Taxes of the Company through December 31, 1999, including
Taxes accruable upon income earned through December 31, 1999; (iv) there are not
now any extensions of time in effect with respect to the dates on which any
returns or reports of such Taxes were or are due to be filed; (v) all
deficiencies asserted as a result of any examination of any Tax Return have been
paid in full, accrued on the Audited Balance Sheet or finally settled, and no
issue has been raised in any such examination that, by application of the same
or similar principles, reasonably could be expected to result in a proposed
deficiency for any other period not so examined; (vi) no claims have been
asserted and, no proposals or deficiencies for any such Taxes are being
asserted, proposed or threatened, and no audit or investigation of any Tax
Return is currently underway, pending or, threatened; (vii) there are no
outstanding waivers or agreements by the Company for the extension of time for
the assessment of any Taxes or deficiency thereof, nor are there any requests
for rulings, outstanding subpoenas or requests for information, notice of
proposed reassessment of any property owned or leased by the Company or any
other matter pending between the Company or any taxing authority; (viii) there
are no Liens for any Taxes upon the assets of the Company, except Liens for
current Taxes not yet due, nor are there any Liens which, to the knowledge of
the Shareholders, are pending or threatened; and (ix) to the knowledge of the
Shareholders, there are no facts which exist or have existed which would
constitute meritorious grounds for the assessment of any Taxes with respect to
the periods which have not been audited by the relevant taxing authorities.
(c) The Company has delivered to the Purchaser true and complete
copies of all income Tax Returns for the three most recent years for which Tax
Returns are due to have been filed.
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(d) Neither the Shareholders nor the Company has filed a consent
pursuant to Section 341(f) of the Internal Revenue Code of 1986, as amended (the
"Code").
(e) No assets of the Company or of any "Related Person," as that
term is defined in Section 144(a)(3) of the Code (or Section 103(b)(6)(c) of the
Internal Revenue Code of 1954, as amended (the "1954 Code")), whether owned or
leased pursuant to a capital lease, have been financed by private activity bonds
within the meaning of Section 141 of the Code (or industrial development bonds
within the meaning of Section 103(b) of the 1954 Code), and neither the Company
nor any Related Person is a "principal user," as that term is used in the
context of Section 144(a) of the 1986 Code (or Section 103(b) of the 1954 Code)
of any building which has been so financed.
(f) The Company is not a party to any written agreement providing
for the allocation or sharing of Taxes.
(g) Since 1995, the Company has not filed or been included in any
combined or consolidated Tax Return with any Person or been a member of an
affiliated group, within the meaning of Section 1504 of the Code, filing a
consolidated federal income Tax Return.
(h) The Company does not have any liability for the Taxes of any
person (other than the Company under Treasury Regulations Section 1.1502-6 (or
any similar provisions of state, local or foreign law)).
2.22. Accounts Receivable.
(a) There are no accounts receivable of the Company owing by any
director, officer, Shareholder, employee, manager or similar agent or
representative of the Company or any relative of any Affiliate of any such
person.
(b) All accounts receivable of the Company which are reflected on
the balance sheet included in the Unaudited Financial Statements (i) are valid,
existing and, to the knowledge of the Shareholders, collectible in the ordinary
course of the Company's business, subject to normal bad debt reserves and
experience, (ii) represent monies due for goods sold and delivered or services
rendered in the ordinary course of business or valid claims for expense
reimbursement and (iii) are not subject to any refunds or adjustments or any
defenses, rights of setoff, assignment, restrictions, security interests or
other encumbrances other than in the ordinary course of business consistent with
prior practices. Except as set forth on Schedule 2.22, all such accounts
receivable are current, and the Shareholders are not aware of any dispute
regarding the collectibility of any such account receivable.
2.23. Broker's and Finders' Fees. Neither the Company nor anyone acting
on behalf of the Company, has done anything to cause or incur any liability to
any party for any brokers' or finders' fees or the like in connection with this
Agreement or any transaction contemplated hereby.
2.24. Permits. The permits listed on Schedule 2.24 constitute all
permits and licenses which are necessary to the conduct of the business of the
Company or the lack of which would
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individually or in the aggregate have a Material Adverse Effect, and each of
such permits is in full force and effect.
2.25. Books and Records. The Company's books, records and accounts are
in all material respects true and complete, are maintained in all material
respects in accordance with all laws applicable to the Company, and accurately
present and reflect in all material respects the transactions of the Company and
the dispositions of the assets of the Company.
2.26. Major Suppliers and Providers. Schedule 2.26 sets forth a list of
each supplier of goods or provider of services to the Company to whom the
Company paid in the aggregate more than $10,000 during the year ended December
31, 1999, together with, in each case, the amount paid during such period.
Except as set forth on Schedule 2.26, the Company has not suffered any change in
its relationship with any of such suppliers or providers which could reasonably
be expected to have a Material Adverse Effect. Except as set forth on Schedule
2.26, the Shareholders have no knowledge that the consummation of the
transactions contemplated hereunder will have any adverse effect on the
Company's business relationship with any such supplier or provider. Except as
set forth on Schedule 2.26, none of the officers or directors of the Company,
nor, to the Shareholders' knowledge, any Related Person (as hereinafter
defined), has any material financial interest in any supplier or provider to the
Company. "Related Person" means, with respect to any director or officer of the
Company, a lineal ancestor or descendant of such director or officer, the spouse
of such director or officer and any entity, partnership or joint venture in
which such director or officer, or any of the other persons referred to in this
sentence, owns 10% or more of the equity interests.
2.27. Medicare and Medicaid. The Company does not participate in either
the Medicare or Medicaid programs, as those programs are defined in the Medicare
Act and the Medicaid Act, respectively, and does not receive any payments or
funds therefrom.
2.28. Untrue Statements and Omissions. The representations and
warranties of the Shareholders set forth in this Agreement or in the Ancillary
Documents to which the Shareholders are a party and the Schedules to this
Agreement provided by the Shareholders do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements contained herein or therein not misleading.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
In order to induce the Shareholders to enter into the
Agreement, and to consummate the transactions contemplated hereby, the Purchaser
represents and warrants to the Shareholders as follows:
3.1. Corporate Organization. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority and possesses all
material permits necessary to own, lease or otherwise hold its properties and
assets and to carry on its business as presently being conducted. The Purchaser
is duly qualified or licensed and in good standing to do business in each
jurisdiction in which the property or assets owned, leased or operated by the
Purchaser or the nature of the business conducted by the Purchaser makes such
qualification necessary, except
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where the failure to be so duly qualified or licensed and in good standing would
not individually or in the aggregate have a Material Adverse Effect with respect
to the Purchaser. The Purchaser will, at or before the Closing, deliver to the
Shareholders complete and correct copies of (i) the Purchaser's Amended and
Restated Certificate of Incorporation and all amendments thereto (certified by
the Secretary or Assistant Secretary of the Purchaser) and (ii) its Amended and
Restated By-Laws and all amendments thereto (certified by the Secretary or an
Assistant Secretary of the Purchaser).
3.2. Authorization And Effect Of Agreement. The Purchaser has all
requisite corporate power and authority to execute and deliver this Agreement
and the Ancillary Documents to which it is or will be a party and to consummate
the transactions contemplated hereby and thereby. The execution and delivery by
the Purchaser of this Agreement and the Ancillary Documents to which it is or
will be a party and the consummation by the Purchaser of the transactions
contemplated hereby and thereby to be consummated by it have been duly
authorized by all necessary corporate action on the part of the Purchaser and on
the part of ASG. Without limiting the generality of the foregoing, the Board of
Directors of ASG has duly approved the execution and delivery by the Purchaser
of this Agreement and the Ancillary Documents to which it is or will be a party
and the consummation by the Purchaser of the transactions contemplated hereby
and thereby to be consummated by it. Furthermore, the Board of Directors of ASG
has duly approved the execution and delivery by ASG of the Guaranty and the
performance by ASG of its obligations thereunder. This Agreement and the
Ancillary Documents to which the Purchaser is or will be a party have been or
will be, as the case may be, duly executed and delivered by the Purchaser and
constitute valid and binding obligations of the Purchaser, enforceable in
accordance with their respective terms, except as enforceability may be limited
by bankruptcy, insolvency or other similar laws of general application affecting
the enforcement of creditors' rights or by general principles of equity limiting
the availability of equitable remedies (whether applied in a proceeding in
equity or at law).
3.3. No Restrictions Against Purchase Of The Shares. Except as set
forth in Schedule 3.3, the execution and delivery by the Purchaser of this
Agreement and the Ancillary Documents to which the Purchaser is or will be a
party do not, and the performance by the Purchaser of the transactions
contemplated hereby and thereby to be performed by it will not, conflict with,
or result in any violation of, or constitute a default (with or without notice
or lapse of time, or both) under, any provision of the Amended and Restated
Certificate of Incorporation or Amended and Restated By-Laws of the Purchaser or
any contract, permit or law applicable to the Purchaser or its assets, other
than any such conflicts, violations or defaults which individually or in the
aggregate do not have a Material Adverse Effect on the business, financial
condition or results of operations of Purchaser. Except for compliance with the
applicable requirements of the HSR Act, no material consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Agency is required to be obtained or made by or with respect to the Purchaser in
connection with the execution and delivery of this Agreement or the consummation
by it of the transactions contemplated hereby and thereby to be consummated by
it.
3.4. Litigation. There is no claim, action, suit, proceeding or
governmental investigation pending or, to the knowledge of the Purchaser,
threatened against the Purchaser, by or before any court, governmental or
regulatory authority or by any third party which challenges
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the validity of this Agreement or which would be reasonably likely to adversely
affect or restrict the Purchaser's ability to consummate the transactions
contemplated hereby.
3.5. Certain Fees. Neither the Purchaser nor any of its Affiliates has
employed any financial advisor or finder or incurred any liability for any
financial advisory or finders' fees in connection with this Agreement or the
transactions contemplated herein.
3.6. Investment Representations. The Purchaser is acquiring the Shares
solely for the purpose of investment and not with a view to, or for offer or
sale in connection with, any distribution thereof. The Purchaser represents that
it is an "accredited investor" as defined in Rule 501 promulgated pursuant to
the Securities Exchange Act of 1934, as amended.
3.7. Untrue Statements and Omissions. The representations and
warranties of the Purchaser set forth in this Agreement or in the Ancillary
Documents to which the Purchaser is a party and the Schedules to this Agreement
provided by the Purchaser do not contain any untrue statement of a material fact
or omit to state any material fact necessary to make the statements contained
herein or therein not misleading.
4. PRE-CLOSING COVENANTS
4.1. Press Releases. Prior to the Closing, no party hereto shall issue
or cause publication of any press release or other announcement or public
communication with respect to this Agreement or the transactions contemplated
hereby, without the prior consent of the other parties hereto, except that any
party may make any disclosure required to be made under applicable law or stock
exchange rule if such party determines in good faith that it is necessary to do
so and gives prior notice to the other party.
4.2. Regulatory Filings. Each of the parties will use its respective
best efforts to obtain, and to cooperate with the others in obtaining, all
authorizations, consents, orders and approvals of Governmental Agencies that may
be or become necessary in connection with the consummation of the transactions
contemplated by this Agreement prior to or after the Closing, and to take all
reasonable actions to avoid the entry of any order or decree by any Governmental
Agency prohibiting the consummation of the transactions contemplated hereby.
4.3. Injunctions. Without limiting the generality or effect of any
provision of Articles 5 and 8, if any United States, state or foreign court
having jurisdiction over any party issues or otherwise promulgates any
injunction, decree or similar order prior to the Closing which prohibits the
consummation of the transactions contemplated hereby, the parties will use their
respective reasonable efforts to have such injunction dissolved or otherwise
eliminated as promptly as possible and, prior to or after the Closing, to pursue
the underlying litigation diligently and in good faith.
4.4. Investigation By Purchaser. Prior to the Closing, upon reasonable
notice from the Purchaser to the Shareholders given in accordance with this
Agreement, the Shareholders will cause the Company to afford to the officers,
attorneys, accountants or other authorized representatives of the Purchaser
reasonable access during normal business hours to all the books, records,
contracts, accounts, personnel records, communications with regulatory
authorities and all other documents of the Company which are relevant to the
business operations of the
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Company, and to all personnel of the Company so as to afford the Purchaser full
opportunity to make such review, examination and investigation of the Company as
the Purchaser may desire to make. The Purchaser will be permitted to make
extracts from or to make copies of such books and records as may be reasonably
necessary. Prior to the Closing, the Shareholders will cause the Company to
furnish or cause to be furnished such financial and operating data and other
information as to the business of the Company as the Purchaser may reasonably
request; provided, however, that nothing herein will obligate the Shareholders
to cause the Company to take actions that would unreasonably disrupt the normal
course of its business, or violate the terms of any contract to which it is a
party or to which it or any of its assets is subject. No investigation by the
Purchaser of the Shareholders' representations and warranties contained herein
or in any Ancillary Documents shall limit the Shareholders' liability for any
breach thereof.
4.5. Confidential Nature of Information. The parties agree that, unless
and until the Closing occurs, that certain letter agreement dated February 18,
1998 between the Company and the Purchaser (said agreement, as the same may be
amended from time to time, being herein referred to as the "Confidentiality
Agreement"), shall remain in full force and effect in accordance with its terms.
4.6. Operation of the Business.
(a) Conduct of Business. During the period from the date hereof to
the Closing Date, and subject to the provisions of this Agreement, the
Shareholders shall cause the Company to (a) continue to conduct business in the
usual and ordinary course of business and in substantially the same manner as
previously conducted, (b) maintain, or cause to be maintained in full force and
effect, all licenses, permits and approvals and insurance policies currently
held or maintained by it, (c) pay its accounts payable when due (except accounts
payable being disputed in good faith) that relate to the business and that are
owed to vendors, suppliers or providers that will continue to supply goods or
services to the Company following the Closing Date and (d) use reasonable
efforts to keep the business substantially intact, including its present
operations, physical facilities and relationships with providers, suppliers,
customers and employees, in a manner consistent with the conduct of business in
the ordinary course. The Shareholders shall, during the period referred to in
the preceding sentence, cause the Company to promptly notify the Purchaser of
any material change in the normal course of the operation of the business or of
the occurrence or impending occurrence of any event or circumstance relating to
the business that (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect, (ii) would cause or constitute a material
breach of any of their representations or warranties hereunder or (iii) is
reasonably likely to result in the Shareholders' inability to perform their
obligations pursuant to this Agreement. The Shareholders will cause the Company
to keep Purchaser fully informed with respect to any such events.
(b) Pre-Closing Activities. Except as otherwise required or
permitted by this Agreement, or as agreed to by the Purchaser in writing, which
agreement shall not be unreasonably withheld, or as set forth on Schedule 4.6(b)
hereto, from the date hereof and prior to the Closing Date, the Shareholders
shall not permit the Company to:
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(1) cause or, if preventable, fail to take reasonable action
to prevent any material damage, destruction or other casualty loss (whether or
not covered by insurance) to or affecting the Company;
(2) sell, lease, assign, transfer or otherwise dispose of any
property or asset, other than in the ordinary course of business consistent with
its prior practice;
(3) change in any material respect the accounting methods or
practices followed by the Company, including any change in any assumption
underlying, or method of calculating, any bad debt, contingency or other
reserve;
(4) acquire or agree to acquire by merging or consolidating
with, or by purchasing any portion of the capital stock, partnership interests,
limited liability company member interests or assets of, or by any other manner,
any business or any corporation, limited liability company, partnership,
association or other business organization or division thereof;
(5) reclassify, combine, split, subdivide or redeem or
otherwise repurchase any capital stock of the Company, or create, authorize,
issue, sell, deliver, pledge or encumber any additional capital stock (whether
authorized but unissued or held in treasury) or other securities equivalent to
or exchangeable for capital stock, or grant or otherwise issue any options,
warrants or other rights with respect thereto;
(6) make any loan or advance (whether in cash or other
property), or make any investment in or capital contribution to, or extend any
credit to, any person other than in the ordinary course of business consistent
with its prior practice, except short-term investments pursuant to customary
cash management policies;
(7) enter into any agreement with any labor union or
association representing any employee of the Company or, other than in the
ordinary course of business consistent with the past practices, make any wage or
salary increase or bonus, agree to the payment of severance to any employee of
the Company, or increase any other direct or indirect compensation, for or to
any of its officers, directors or employees of the Company other than in the
ordinary course of business consistent with prior practices;
(8) enter into, amend, terminate or fail to renew any contract
disclosed on Schedule 2.16, except in the ordinary course of business consistent
with its prior practices;
(9) fail to perform in any material respect all of its
obligations under all contracts disclosed on Schedule 2.16,
(10) fail to use all commercially reasonable efforts to
maintain in full force and effect and in the same amounts policies of insurance
comparable in amount and scope of coverage to that now maintained by the
Company;
(11) fail to prepare and file all Tax Returns or extensions
required to be filed by it;
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(12) institute or amend any employee benefit plan except as
may be required by law, or enter into or modify any written employment
arrangement with any individual;
(13) make any tax election or settle or compromise any tax
liability other than in the ordinary course of business, consistent with its
prior practices;
(14) fail to use all commercially reasonable efforts to
continue to collect its accounts receivable in the ordinary course of business
and consistent with its prior practice;
(15) declare or pay any dividend on other distribution on or
with respect to any shares of its capital stock;
(16) create, incur or assume any indebtedness for borrowed
money, assume or become subject to, whether directly or indirectly, by way of
guaranty or otherwise, any obligation or liability (whether absolute, accrued,
contingent or otherwise and whether due or to become due) other than in the
ordinary course of business consistent with past practices;
(17) amend or modify in any way its Amended and Restated
Certificate of Incorporation or By-laws; or
(18) enter into any agreement or commitment to do any of the
foregoing.
4.7. Purchaser's Supplemental Schedules. The Purchaser shall, from time
to time prior to the Closing, by notice in accordance with this Agreement,
supplement or amend any Schedule to correct any matter which would constitute a
breach of any of its representations and warranties herein contained. No such
supplemental or amended Schedule shall be deemed to cure any breach of such
representation or warranty for purposes of Section 5.2 or Article 8, or for any
other purpose if the Closing does not occur, and the Shareholders shall continue
to have all of their rights and remedies hereunder. If, however, the Closing
occurs, any such supplement or amendment of any Schedule will be effective to
cure and correct for all purposes any breach of any representation or warranty
which would have existed by a reason of the Purchaser's not having made such
supplement or amendment, other than any willful breaches by the Purchaser of any
representation or warranty.
4.8. Shareholders' Supplemental Schedules. The Shareholders shall, from
time to time prior to the Closing, by notice in accordance with this Agreement,
supplement or amend any Schedule to correct any matter which would constitute a
breach of any of their representations and warranties herein contained. No such
supplemental or amended Schedule shall be deemed to cure any breach of such
representation or warranty for purposes of Section 5.1 or Article 8, or for any
other purpose if the Closing does not occur, and the Purchaser shall continue to
have all of its rights and remedies hereunder. If, however, the Closing occurs,
any such supplement or amendment of any Schedule will be effective to cure and
correct for all purposes any breach of any representation or warranty which
would have existed by a reason of the Shareholders' not having made such
supplement or amendment, other than any willful breaches by the Shareholders of
any representation or warranty.
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4.9. No Shop. From the date of this Agreement until the earlier of (i)
the Closing Date or (ii) the termination of this Agreement, the Shareholders
shall not, and shall cause the Company, its officers, directors, employees,
affiliates, managers and similar agents and representatives not to, directly or
indirectly, (i) negotiate or discuss with any other person or entity (other than
with the Purchaser) any transaction involving a sale of the Company's capital
stock, a merger of the Company, the sale of all or substantially all of the
assets or any other business combination involving the Company or (ii) take any
action to solicit, initiate or encourage any offer or proposal or indication of
interest in a sale, merger, consolidation or other business combination
involving the Company or a substantial portion of the assets of the Company,
other than in connection with the transactions contemplated by this Agreement.
The Shareholders shall cause the Company promptly to advise the Purchaser of the
terms of any written offer, proposal or indication of interest that it receives
or of which it otherwise becomes aware after the date of this Agreement. If the
Shareholders or the Company or its officers, directors, employees, affiliates,
managers or similar agents or representatives violate any of the provisions of
this Section 4.9, and the transactions contemplated by this Agreement do not
close as a result of such violation, in addition to other remedies available to
the Purchaser, the Shareholders shall promptly, on demand, pay and reimburse the
Purchaser for all reasonable out-of-pocket and professional fees and expenses
incurred by the Purchaser or any of its affiliates in connection with this
Agreement or any of the transactions contemplated hereby.
4.10. Satisfaction Of Conditions. Without limiting the generality or
effect of any provision of Articles 5 or 6, prior to the Closing, each of the
parties hereto will use reasonable efforts with due diligence and in good faith
to satisfy promptly all conditions required hereby to be satisfied by such party
in order to expedite the consummation of the transactions contemplated hereby.
4.11. Customer Visits. Between the date of this Agreement and the
Closing Date, and subject to such reasonable limitations as the Company shall
deem necessary, the Company shall permit the Purchaser to discuss and meet, and
shall cooperate in such discussions and meetings, with any client of the Company
that the Purchaser so requests. Xx. Xxxxxx Xxxxxx, or another individual
acceptable to the Purchaser, shall participate in all such discussions and
meetings.
4.12. Pre-Closing Redemption. Prior to the Closing, the Shareholders
shall cause the Company to distribute the marketable securities owned by the
Company and the cash owned by the Company in excess of the amount described in
Section 5.1.17 to the Shareholders in partial redemption of the Shares. The
redemption shall be effected on a pro rata basis. The percentage of the Shares
to be redeemed from each Shareholder shall equal the percentage determined by
dividing (i) the fair market value of the marketable securities and cash
distributed to the Shareholders pursuant to this Section by (ii) the sum of (a)
the Purchase Price plus (b) the fair market value of the marketable securities
and cash distributed to the Shareholders.
5. CONDITIONS PRECEDENT TO THE CLOSING
5.1. Conditions Precedent To Obligations Of Purchaser. The obligations
of the Purchaser under this Agreement to consummate the transactions
contemplated hereby will be subject to the satisfaction, at or prior to the
Closing, of all of the following conditions, any one or more of which may be
waived at the option of the Purchaser:
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5.1.1. No Misrepresentation Or Breach Of Covenants And Warranties.
There shall have been no material breach by the Shareholders in the performance
of any of their covenants herein to be performed by them in whole or in part
prior to the Closing and the representations and warranties of the Shareholders
contained in this Agreement or in any Ancillary Document shall have been true
and correct in all material respects on the date of this Agreement and shall be
true and correct in all material respects on the Closing Date as if made as of
the Closing (except, in either case, for representations or warranties made as
of a specified date, which shall continue on the Closing Date to be true and
correct in all material respects as of the specified date, and except for
representations and warranties qualified by a "materiality" standard, which
shall continue on the Closing Date to be true and correct giving effect to the
applicable materiality standard), and the Shareholders shall have delivered to
the Purchaser a certificate certifying each of the foregoing, dated the Closing
Date.
5.1.2. Shareholder Deliveries. The Shareholders shall have
delivered to the Purchaser those items set forth in Section 1.5 hereof.
5.1.3. No Legal Obstruction. On the Closing Date (i) there shall
be no injunction, restraining order or order of any nature issued by any court
of competent jurisdiction or Government Agency which directs that the
transactions contemplated by this Agreement and the Ancillary Documents shall
not be consummated as herein provided or compels or would result in a material
adverse change in the business, assets, results of operations, financial
condition or prospects of the Company; (ii) there shall be no suit, action or
other proceeding by any Governmental Agency or non-governmental, self-regulatory
organization, pending or threatened (pursuant to a written notification),
wherein such complaint seeks the restraint or prohibition of the consummation of
the transactions contemplated by this Agreement and the Ancillary Documents or
asserts the illegality of any material transaction contemplated by this
Agreement and the Ancillary Documents; (iii) no law shall be enacted,
promulgated or deemed applicable to the transactions contemplated by this
Agreement and the Ancillary Documents, by any Governmental Agency which would
render consummation of such transactions illegal; and (iv) there shall be no
suit, action or other proceeding by a private party pending before any court or
Governmental Agency or non-governmental, self-regulatory organization, or
threatened (pursuant to a written notification), which is likely to result in
the restraint or prohibition of the consummation of the transactions
contemplated by this Agreement and the Ancillary Documents or the obtaining of
an amount in payment of material damages from, or other material relief against,
the Purchaser or against any of its directors or officers, in connection with
the consummation of the transactions contemplated by this Agreement and the
Ancillary Documents.
5.1.4. Certificates. The Purchaser shall have received certified
evidence of corporate actions taken in connection with the execution, delivery
and performance by the Shareholders that are corporations of this Agreement and
the Ancillary Documents to which the Shareholders are party.
5.1.5. Opinion of Counsel For The Shareholders. The Purchaser
shall have received an opinion, dated the Closing Date, of Schwartz, Tobia,
Xxxxxxxxx, Xxxxxxxxxx & Xxxxxx, counsel for the Shareholders (or of any other
counsel for the Shareholders reasonably satisfactory to the Purchaser in respect
of matters of local law), as to matters customary for
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transactions of this type, which opinion shall be in form and substance
reasonably satisfactory to the Purchaser.
5.1.6. Consents Under Key Agreements. The Shareholders shall have
obtained, on terms and conditions satisfactory to the Purchaser, all consents,
approvals, novations, authorizations, exemptions or waivers from parties to the
contracts and permits listed on Schedule 5.1.6 (as the same shall be amended at
the Purchaser's request to reflect contracts and permits disclosed on any
supplemental Schedule delivered pursuant to Section 4.8) (collectively, the "Key
Agreements") to the extent required for the consummation of the transactions
contemplated hereunder without any violation or breach thereof or default,
termination or acceleration occurring thereunder.
5.1.7. No Material Adverse Change. The Company shall not have
suffered any material adverse change since December 31, 1999 in its business,
prospects, customer contracts, financial condition or results of operations.
5.1.8. Termination Statements. The Shareholders shall have
delivered to the Purchaser UCC-3 Termination Statements, or other appropriate
instruments of termination, in form and substance satisfactory to the Purchaser,
with respect to each UCC financing statement or other lien or encumbrance
referred to on Schedule 5.1.8.
5.1.9. Resignation of Officers and Directors. The Shareholders
shall have delivered to the Purchaser such evidence of the resignation of the
officers and directors of the Company as the Purchaser may request.
5.1.10. Employment and Non-Competition Agreements. Xx. Xxxxxx X.
Xxxxxx and Xx. Xxxxxxx X. Xxxxxxx shall have entered into Employment and
Non-Competition Agreements in favor of the Purchaser in substantially the forms
set forth in Schedules 5.1.10(a), (b), (c) and (d).
5.1.11. Financing. The Purchaser, or an Affiliate, shall have
received financing, on terms reasonably satisfactory to the Purchaser or such
Affiliate, sufficient to permit the Purchaser to pay the Purchase Price.
5.1.12. Additional Deliveries. The Purchaser shall have received
summaries of the information regarding the Companies' customer contracts set
forth on Schedule 5.1.12(a). The Purchaser shall have received copies of the
licenses and permits or copies of the applications for the licenses and permits
set forth on Schedule 5.1.12(b).
5.1.13. No Undisclosed Liabilities. The Company shall not have
incurred since the date of the Audited Balance Sheet any material liability or
obligations (whether absolute, accrued, contingent or otherwise) other than
liabilities incurred in the ordinary course of business that are not,
individually or in the aggregate, material.
5.1.14. Escrow Agreement. The Purchaser and the Shareholders shall
have entered into the Escrow Agreement.
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5.1.15. HSR Act. The applicable waiting periods shall have expired
or been terminated early under the HSR Act.
5.1.16. Customer Visits. Following the conclusion of the customer
visits referred to in Section 4.11, the Purchaser shall not have determined, in
its sole discretion, that the consummation of the transactions contemplated
hereunder will have any adverse effect on the Company's business relationship
with any customers.
5.1.17. Cash Balance. The Company shall have cash or cash
equivalents in an amount at least equal to the current liabilities of the
Company on the last day of the month preceding the Closing Date.
5.1.18. Termination of 401(k) Plan. The Company shall have taken
whatever action is necessary to cause employees of the Company who are
participants in the Company's 401(k) Plan to terminate their active
participation in such 401(k) Plan, and to cause such 401(k) Plan to permit a
distribution to participants of their vested account balances in accordance with
Section 401(k)(10)(A)(iii) of the Code in connection with the transactions
contemplated by this Agreement (subject to the repayment of any loans from such
plans to any such participants to the extent required to be repaid under the
terms of such 401(k) Plan).
5.1.19. Termination of Employment Agreements. The employment
agreements between the Company and Xx. Xxxxxx X. Xxxxxxxxx and Xx. Xxxxxxxxx
Xxxxxxxxx shall have been terminated on terms satisfactory to the Purchaser.
5.1.20. Employment Practices Insurance. The Purchaser shall have
received evidence satisfactory to it that the Company has acquired for the
benefit of the Purchaser and ASG, and shall have paid the applicable premium
therefor, employment practices insurance covering claims for conditions or
actions that arise out of or relate to events that occurred in connection with
the operations of the Company on or prior to the Closing Date on an occurrence
basis with a deductible of $5,000 per claim and an aggregate of $500,000 per
claim.
5.1.21. Loss Runs. Within ten (10) days of execution of this
Agreement, the Shareholders shall cause the Company to deliver to the Purchaser
current loss runs for the insurance years ended December 31, 1998, 1997, 1996
and 1995 and Purchaser shall have determined that such end of year loss runs are
acceptable to its reasonable satisfaction.
5.2. Conditions Precedent To Obligations Of The Shareholders. The
obligations of the Shareholders under this Agreement to consummate the
transactions contemplated hereby will be subject to the satisfaction, at or
prior to the Closing, of all of the following conditions, any one or more of
which may be waived at the option of the Shareholders:
5.2.1. No Misrepresentation Or Breach Of Covenants And Warranties.
There shall have been no material breach by the Purchaser in the performance of
any of its covenants herein to be performed by it, in whole or in part prior to
the Closing, and the representations and warranties of the Purchaser contained
in this Agreement or in any Ancillary Document shall have been true and correct
in all material respects on the date of this Agreement and shall be true and
correct in all material respects on the Closing Date as if made as of the
Closing (except, in either case, for representations and warranties made as of a
specified date, which shall continue on the Closing Date to be true and correct
in all material respects as of the specified date and except for representations
and warranties qualified by a "materiality" standard, which shall continue on
the
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Closing Date to be true and correct giving effect to the applicable materiality
standard), and the Purchaser shall have delivered to the Shareholders a
certificate certifying each of the foregoing, dated the Closing Date and signed
by one of its executive officers on its behalf.
5.2.2. Purchase Price. The Purchaser shall have delivered to the
Shareholders the Purchase Price in the manner specified in Section 1.4 and those
items set forth in Section 1.6 hereof.
5.2.3. No Legal Obstruction On the Closing Date (i) there shall be
no injunction, restraining order or order of any nature issued by any court of
competent jurisdiction or Government Agency which directs that the transactions
contemplated by this Agreement and the Ancillary Documents shall not be
consummated as herein provided; (ii) there shall be no suit, action or other
proceeding by any Governmental Agency or non-governmental, self-regulatory
organization, pending or threatened (pursuant to a written notification),
wherein such complaint seeks the restraint or prohibition of the consummation of
the transactions contemplated by this Agreement and the Ancillary Documents or
asserts the illegality of any material transaction contemplated by this
Agreement and the Ancillary Documents; (iii) no law shall be enacted,
promulgated or deemed applicable to the transactions contemplated by this
Agreement and the Ancillary Documents, by any Governmental Agency which would
render consummation of such transactions illegal; and (iv) there shall be no
suit, action or other proceeding by a private party pending before any court or
Governmental Agency or non-governmental, self-regulatory organization, or
threatened (pursuant to a written notification), which is likely to result in
the restraint or prohibition of the consummation of the transactions
contemplated by this Agreement and the Ancillary Documents or the obtaining of
an amount in payment of material damages from, or other material relief against
the Purchaser or the Company or against any of their respective directors or
officers, in connection with the consummation of the transactions contemplated
by this Agreement and the Ancillary Documents.
5.2.4. Certificates. The Shareholders shall have received
certified evidence of corporate actions taken in connection with the execution,
delivery and performance by the Purchaser of this Agreement and the Ancillary
Documents to which the Purchaser is or will be a party and an incumbency
certificate of the Purchaser.
5.2.5. Opinion of Counsel For Purchaser. The Shareholders shall
have received an opinion, dated the Closing Date, of King & Spalding, counsel
for the Purchaser (or of any other counsel for the Purchaser reasonably
satisfactory to the Company in respect of matters of local law), as to matters
customary for transactions of this type, which opinion shall be in form and
substance reasonably satisfactory to the Shareholders.
5.2.6. Escrow Agreement. The Purchaser and the Shareholders shall
have entered into the Escrow Agreement.
5.2.7. HSR Act. The applicable waiting periods shall have expired
or been terminated early under the HSR Act.
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6. THE CLOSING
6.1. The Closing. Subject to the fulfillment of the conditions
precedent specified in Article 5, the consummation of the purchase and sale of
the Shares contemplated hereby (the "Closing") will take place on May 31, 2000,
or such other date (but not later than August 31, 2000) and time as the parties
may mutually agree (the "Closing Date"). The Closing shall be effective as of
11:59 p.m. on the Closing Date. The Closing will take place at the offices of
King & Xxxxxxxx, 0000 Avenue of the Americas, Xxx Xxxx, Xxx Xxxx 00000-0000, or
at such other place as the parties mutually agree.
6.2. Extension of Closing. If the Closing shall not have occurred by
May 31, 2000, solely because of the inability of the Shareholders or the
Purchaser, as the case may be, to have satisfied (after good faith efforts) the
conditions set forth in Section 5.1.3, 5.1.6, 5.1.11, 5.1.15, 5.2.3 or 5.2.7,
then the Closing Date will be extended to the earlier of (i) the first business
day after such conditions have been satisfied and (ii) such other date on or
prior to August 31, 2000 to which the Purchaser and the Shareholders mutually
agree.
6.3. Shareholder Obligations. At the Closing, the Shareholders will
deliver to the Purchaser the following in proper form for recording when
appropriate:
6.3.1. Shareholder Deliveries. To the extent not previously
delivered under Section 1.5, those items listed in Section 1.5 hereof;
6.3.2. Receipts. Appropriate receipts;
6.3.3. Escrow Agreement. The Escrow Agreement; and
6.3.4. Other. All other documents and papers required to be
delivered by the Shareholders pursuant to Section 5.1 as conditions to the
Closing.
6.4. Purchaser's Obligations. At the Closing, the Purchaser will
deliver to the Shareholders the following:
6.4.1. Purchase Price. The Purchase Price, in the manner specified
in Section 1.4;
6.4.2. Purchaser Deliveries. To the extent not previously
delivered under Section 1.6, those items set forth in Section 1.6 hereof;
6.4.3. Escrow Agreement. The Escrow Agreement; and
6.4.4. Other. All other documents and papers required to be
delivered by Purchaser pursuant to Section 5.2 as conditions to the Closing.
7. SURVIVAL AND INDEMNIFICATION
7.1. Survival.
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7.1.1. Survival of Representations And Warranties. Each of the
representations and warranties contained herein or in any Ancillary Document
(except as otherwise specifically provided in such Ancillary Document) will
survive and remain in full force and effect until the second anniversary of the
Closing Date, except for (i) representations and warranties made in Sections
2.17 [Employee Contracts, Union Agreements and Benefit Plans]; 2.18 [Labor
Relations]; 2.20 [Environmental Protection]; and 2.21 [Tax Matters]; which shall
remain in effect for the applicable statute of limitations period and (ii) the
Excluded Representations (as hereinafter defined), which shall survive the
Closing and remain in effect indefinitely. The term "Excluded Representations"
shall mean and include the representations and warranties of the Shareholders
made in Sections 2.2 [Articles and Bylaws; Corporate Records]; 2.4
[Authorization and Effect of Agreement]; 2.5 [Capital Stock]; 2.6 [Ownership of
the Company]; and 2.22 [Brokers' and Finders' Fees]. A claim for indemnification
pursuant to this Article shall not be permitted to the extent that it is
asserted after the date on which the representations and warranties on which it
is based cease to survive.
7.1.2. Survival of Indemnification Obligation. The indemnification
obligations of the parties contained in this Article 7 will survive the Closing
and remain in effect indefinitely.
7.2. Limitations On Indemnification; Right of Offset.
7.2.1. With Respect To Certain Representations And Warranties. No
Indemnitee (as hereinafter defined) will be entitled to make a claim against an
Indemnifying Party (as hereinafter defined) pursuant to Section 7.3.1(i) or (ii)
or 7.3.2(i) or (ii) unless and until the aggregate amount of claims which may be
asserted for Indemnifiable Losses (as hereinafter defined) pursuant to such
Sections exceeds $170,000; when such amount is exceeded the Indemnitee shall be
entitled to recover the full amount of such claims; provided, however, that the
foregoing limitation shall not apply to (i) claims made with respect to the
Excluded Representations; or (ii) claims made with respect to inaccuracies in
the Shareholders' representations and warranties of which any Shareholder had
knowledge at any time prior to the date on which such representation and
warranty is made or any intentional breach by or any Shareholder of any covenant
set forth in this Agreement or any Ancillary Document.
7.2.2. With Respect To Shareholders' Obligations. Notwithstanding
any other provision of this Agreement, the indemnification obligations of the
Shareholders under Section 7.3.1(i) shall not exceed $4,000,000; provided,
however, that the limitation on the Shareholders' liability for Indemnifiable
Losses (x) shall be the Purchase Price if resulting from the inaccuracy of an
Excluded Representation and (y) shall be unlimited if resulting from any
Shareholders' fraud or willful breach. For the avoidance of doubt, the Purchaser
and the Shareholders acknowledge and agree (x) that the foregoing limitation on
the indemnification obligation of the Shareholders does not apply to claims for
Indemnifiable Losses asserted pursuant to clauses (ii), (iii), (iv) or (v) of
Section 7.3.1 and (y) that the liability of the Shareholders to indemnify the
Purchaser pursuant to Section 7.3.1 shall not be reduced by the amount of any
payment made to the Purchaser pursuant to subsection (ii) or (iv) of Section 3.2
of the Escrow Agreement.
7.2.3. Right of Offset. The Purchaser shall have the right, in
addition to its right to seek indemnity from the Shareholders pursuant to this
Article 7 and any other remedy
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available to it, to set off against the amount of any payment due to the
Shareholders pursuant to Section 1.3 or pursuant to the Escrow Agreement, the
amount of any Indemnifiable Loss for which the Purchaser is entitled to
indemnification pursuant to this Article 7.
7.3. Indemnification.
7.3.1. Indemnification by the Shareholders. Subject to Sections
7.1, 7.2 and 7.4, each Shareholder will, in accordance with their Respective
Ownership Percentages, indemnify, defend and hold harmless the Purchaser, its
Affiliates and their respective directors, officers, employees, agents and
representatives from and against any and all claims, demands or suits (by any
person or entity, including without limitation any Governmental Agency), losses,
liabilities, actual or punitive damages, fines, penalties, obligations,
payments, costs and expenses, paid or incurred, whether or not relating to,
resulting from or arising out of any Third Party Claim (as hereinafter defined),
including without limitation the costs and expenses of any and all
investigations, actions, suits, proceedings, demands, assessments, judgments,
remediation, settlements and compromises relating thereto and reasonable fees
and expenses of attorneys and other experts in connection therewith
(individually and collectively, "Indemnifiable Losses") relating to, resulting
from or arising out of any of the following: (i) the inaccuracy of any of the
representations or warranties of the Shareholders contained in this Agreement or
any Ancillary Document; (ii) any breach by the Shareholders of any covenant of
the Shareholders contained in this Agreement or in any Ancillary Document; (iii)
any liabilities for Taxes of the Company and payable by the Company on or after
the Closing Date with respect to any taxable period existing on or prior to the
Closing Date (treating any taxable period that begins before and ends after the
Closing Date as if such taxable period had ended on the Closing Date), to the
extent such liabilities exceed any Tax liabilities accrued on the Final Closing
Balance Sheet; (iv) the cancellation of the warrants to purchase shares of the
Company's Common Stock issued to Xx. Xxxx X. Xxxxxx pursuant to his consulting
agreement with the Company; or (v) the negotiations between the Shareholders and
the Company or their respective Affiliates and any other entity relating to the
sale of the stock or assets of the Company to such other entity.
7.3.2. Indemnification By Purchaser. Subject to Sections 7.1, 7.2
and 7.4 the Purchaser will indemnify, defend and hold harmless each Shareholder,
each of their respective Affiliates and their respective directors, officers,
employees, agents and representatives from and against any and all Indemnifiable
Losses relating to resulting from or arising out of any of the following: (i)
the inaccuracy as of the Closing of any of the representations or warranties of
the Purchaser contained in this Agreement or any Ancillary Document or (ii) any
breach by the Purchaser of any covenant of the Purchaser contained in this
Agreement or in any Ancillary Document.
7.3.3. Cumulative Rights. The rights of the Purchaser under each
of the clauses of Section 7.3.1 and the rights of the Shareholders under each of
the clauses of Section 7.3.2 are not mutually exclusive.
7.3.4. Indemnity Payment; Indemnitee; Indemnifying Party. For
purposes of this Agreement, (i) "Indemnity Payment" means any amount of
Indemnifiable Losses required to be paid pursuant to this Section 7.3, (ii)
"Indemnitee" means any person or entity entitled to
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indemnification under this Agreement, and (iii) "Indemnifying Party" means any
person or entity that may be required to provide indemnification under this
Agreement.
7.3.5. Treatment of Indemnity Payments. The parties agree that any
Indemnity Payment made by the Shareholders to the Purchaser shall be deemed to
be a reduction of the Purchase Price. Each party agrees to treat its receipt or
payment of such an Indemnity Payment as a reduction of the Purchase Price on all
federal, state and local income tax returns filed by it.
7.4. Defense of Claims
7.4.1. Third Party Claims.
(a) If any Indemnitee receives notice of the assertion of any
claim or of the commencement of any action or proceeding by any entity who is
not a party to this Agreement or an Affiliate of such a party (a "Third Party
Claim") against such Indemnitee, against which an Indemnifying Party is
obligated to provide indemnification under this Agreement, the Indemnitee will
give such Indemnifying Party reasonably prompt written notice thereof, but in
any event in sufficient time to permit the Indemnifying Party to defend against
the Third Party Claim. Such notice will describe the Third Party Claim in
reasonable detail, and will indicate the estimated amount, if reasonably
practicable, of the Indemnifiable Loss that has been or may be sustained by the
Indemnitee. The Indemnifying Party will have the right to participate in or, by
giving written notice to the Indemnitee no later than 30 calendar days after
receipt of the above-described notice of such Third Party Claim, to elect to
assume the defense of any Third Party Claim at such Indemnifying Party's own
expense and by such Indemnifying Party's own counsel (reasonably satisfactory to
the Indemnitee), and the Indemnitee will cooperate in good faith in such
defense. If the Indemnifying Party elects to assume the defense, the Indemnitee
will have the right to participate in the defense of any Third Party Claim
assisted by counsel of its own choosing and at its expense, provided that, if
the named parties to any such proceeding (including any impleaded parties)
include both the Indemnifying Party and the Indemnitee and the Indemnifying
Party proposes that the same counsel represent both the Indemnitee and the
Indemnifying Party, the Indemnitee shall have the right to retain its own
counsel at the cost and expense of the Indemnifying Party, if representation of
both parties by the same counsel would be inappropriate due to actual or
potential conflicts of interest between them that are material. If the
Indemnitee has not received written notice within such 30 calendar day period
that the Indemnifying Party has elected to assume the defense of such Third
Party Claim, the Indemnitee may, at its option, elect to settle or assume such
defense, assisted by counsel of its own choosing, and the Indemnifying Party
will be liable for all costs, expenses, settlement amounts or other
Indemnifiable Losses paid or incurred in connection therewith. Notwithstanding
the preceding sentence, if the Indemnifying Party fails to respond to a request
for consent to any settlement within ten business days after such request is
given, the Indemnitee may proceed with such settlement without obtaining the
Indemnifying Party's consent.
(b) If, within the 30 calendar days set forth above, an Indemnitee
receives written notice from an Indemnifying Party that such Indemnifying Party
has elected to assume the defense of any Third Party Claim as provided in
Section 7.4.1(a), the Indemnifying Party will not be liable for any legal
expenses subsequently incurred by the Indemnitee in connection with the defense
thereof (except as provided in paragraph (a) above); provided, however, that if
the
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Indemnifying Party fails to take reasonable steps necessary to defend diligently
such Third Party Claim within 30 calendar days after receiving written notice
from the Indemnitee that the Indemnitee believes the Indemnifying Party has
failed to take such steps, the Indemnitee may, at its option, elect to settle or
assume its own defense, assisted by counsel of its own choosing, and the
Indemnifying Party will be liable for all costs, expenses, settlement amounts or
other Indemnifiable Losses paid or incurred in connection therewith.
(c) Without the prior written consent of the Indemnitee, the
Indemnifying Party will not enter into any settlement of any Third Party Claim
or cease to defend against such claim, if pursuant to or as a result of such
settlement or cessation, injunctive or other equitable relief would be imposed
against the Indemnitee. Without the prior written consent of the Indemnitee,
which will not be unreasonably withheld, the Indemnifying Party will not enter
into any settlement of any Third Party Claim or cease to defend against such
claim, if such settlement or cessation would lead to liability or create any
financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder or for which the
Indemnitee is not in fact indemnified. The Indemnifying Party shall not consent
to the 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 each
Indemnitee of a release from all liability in respect of such claim. The
Indemnifying Party shall not be entitled to control, and the Indemnitee shall be
entitled to have sole control over, the defense or settlement of any claim to
the extent that claim seeks an order, injunction or other equitable relief
against the Indemnitee which, if successful, could materially interfere with the
business, operations, assets, condition (financial or otherwise) or prospects of
the Indemnitee (and the cost of such defense shall constitute an amount for
which the Indemnitee is entitled to indemnification hereunder). Except under the
circumstances described above in this paragraph (c), the Indemnifying Party
shall have the right to control the defense and settlement of any claims the
defense of which it has assumed in accordance with this Section 7.4.1. If a firm
offer is made to settle a Third Party Claim which offer the Indemnifying Party
is permitted to settle under this Section 7.4.1(c), and the Indemnifying Party
desires to accept and agree to such offer, the Indemnifying Party will give
written notice to the Indemnitee to that effect. If the Indemnitee fails to
consent to such firm offer within 30 calendar days after its receipt of such
notice, the Indemnitee may continue to contest or defend such Third Party Claim
and, in such event, the maximum liability of the Indemnifying Party as to such
Third Party Claim will not exceed the amount of such settlement offer, plus
costs and expenses paid or incurred by the Indemnitee through the end of such
30-day period.
(d) The Indemnitee will cooperate fully with the Indemnifying
Party in the conduct of any proceeding as to which the Indemnifying Party
assumes the defense hereunder. Such cooperation shall include (a) providing the
Indemnifying Party and its counsel access to all books and records of the
Indemnitee to the extent reasonably related to such proceeding, (b) furnishing
information about the Indemnitee to the Indemnifying Party and its counsel, (c)
making employees of the Indemnitee available to the Indemnifying Party and its
counsel, and (d) preserving the existence of and maintaining all books and
records of the Indemnitee that may reasonably be deemed to be potentially
relevant to any such proceeding until the proceeding is finally concluded.
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7.4.2. Direct Claims. Any claim by an Indemnitee for
indemnification other than indemnification against a Third Party Claim (a
"Direct Claim") will be asserted by giving the Indemnifying Party reasonably
prompt written notice thereof, and the Indemnifying Party will have a period of
30 calendar days within which to respond in writing to such Direct Claim. If the
Indemnifying Party does not so respond within such 30 calendar day period, the
Indemnifying Party will be deemed to have rejected such claim, in which event
the Indemnitee will be free to pursue such remedies as may be available to the
Indemnitee under this Agreement.
7.4.3. Failure to Give Timely Notice. A failure to give timely
notice as provided in this Section 7.4 will not affect the rights or obligations
of any party hereunder except and only to the extent that, as a result of such
failure, any party which was entitled to receive such notice was deprived of its
right to recover any payment under its applicable insurance coverage or was
otherwise directly prejudiced as a result of such failure.
7.4.4. Subrogation. If the amount of any Indemnifiable Loss, at
any time subsequent to the making of an Indemnity Payment, is reduced by
recovery, settlement or otherwise under or pursuant to any insurance coverage,
or pursuant to any claim, recovery, settlement or payment by or against any
other entity, the amount of such reduction, less any costs, expenses or premiums
incurred in connection therewith, will promptly be repaid by the Indemnitee to
the Indemnifying Party. The Indemnifying Party will, to the extent of any
Indemnity made by it, be subrogated to all rights of the Indemnitee against any
third party that is not an Affiliate of the Indemnitee in respect of the
Indemnifiable Loss to which the Indemnity Payment relates. Without limiting the
generality or effect of any other provision hereof, each such Indemnitee and
Indemnifying Party will duly execute upon request all instruments reasonably
necessary to evidence and perfect the above-described subrogation rights.
7.4.5. Payment. With regard to Third Party Claims for which
indemnification is payable hereunder, such indemnification shall be paid by the
Indemnifying Party promptly upon (i) the entry of a judgment against the
Indemnitee and the expiration of any applicable appeal period or (ii) the entry
of an unappealable judgment or final appellate decision against the Indemnitee.
Notwithstanding the foregoing, provided that there is no dispute as to whether
Indemnitee is entitled to indemnification hereunder, expenses of the Indemnitee
for which the Indemnifying Party is responsible shall be reimbursed on a current
basis by the Indemnifying Party.
7.5. Indemnification in Case of Indemnitee Negligence. The rights of an
Indemnitee to indemnification under this Article 7 shall not be defeated by any
applicable statutory or case law which proscribes the right of a person who has
been negligent (solely or concurrently, ordinarily or grossly) or who is subject
to strict liability (solely or concurrently) from being indemnified.
7.6. Exclusive Remedy. The rights of the parties for indemnification
relating to this Agreement or the transactions contemplated hereby shall be
strictly limited to those contained in this Article 7, and such indemnification
rights shall be the exclusive remedies of the parties subsequent to the Closing
Date with respect to any matter in any way relating to this Agreement or arising
in connection herewith; provided, however, that the foregoing limitation shall
be inapplicable to any claim asserted by an Indemnitee with respect to any loss,
liability, fine,
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penalty, damages or the like to the extent that the same shall have been the
result of fraud or willful breach by any Shareholder.
8. TERMINATION
8.1. Termination. Notwithstanding anything contained in this Agreement
to the contrary, this Agreement may be terminated at any time prior to the
Closing:
(a) By the mutual written consent of the Purchaser and the
Shareholders;
(b) By either the Purchaser or the Shareholders, if the Closing
shall not have occurred on or before May 31, 2000, unless such date has been
extended pursuant to Section 6.2, in which case either the Purchaser or the
Shareholders may terminate this Agreement if the Closing shall not have occurred
on or before the date as extended pursuant to Section 6.2;
(c) By either the Purchaser or the Shareholders, if there shall
have been a breach by the other party of the other party's representations,
warranties, covenants or agreements contained herein which breach would entitle
the Purchaser or the Shareholders, as the case may be, to decline to consummate
the transactions contemplated hereby pursuant to Section 5.1 or 5.2, as the case
may be; and
(d) By either the Purchaser or the Shareholders, if there shall
have been entered a final, nonappealable order or injunction of any Governmental
Agency restraining or prohibiting the consummation of the transactions
contemplated hereby or any material part thereof.
8.2. Expenses In The Event Of Termination. In the event of termination
of this Agreement under Section 8.1 each party hereto will pay all of its own
fees and expenses, except as otherwise expressly provided in this Agreement.
There will be no further liability hereunder on the part of any party hereto if
this Agreement is so terminated, except that the provisions of Section 4.5
hereof shall remain in full force and effect, and except that no termination
shall relieve any breaching party from any liability to the other party hereto.
9. MISCELLANEOUS PROVISIONS
9.1. Notices. All notices and other communications required or
permitted hereunder will be in writing and, unless otherwise provided in this
Agreement, will be deemed to have been duly given when delivered in person or
when sent by facsimile (confirmed in writing by mail simultaneously dispatched)
if sent on a business day and otherwise on the next business day or one business
day after having been dispatched by a nationally recognized overnight courier
service to the appropriate party at the address specified below or three
business days after having been deposited in the United States mail, if sent by
certified or registered mail, return receipt requested, postage prepaid:
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(a) If to the Purchaser, to:
America Service Group Inc.
000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile Number: 615.376.1309
Attention: Mr. Xxxxxxx Xxxxxxxx
President and Chief Executive Officer
with a copy to:
Xx. Xxxx Xxxxxxx
General Counsel
with a copy to:
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Facsimile No.: 404.572.5147
Attention: Xxxxxx X. Xxxxxxxx, Esq.
(b) If to the Shareholders to:
Correctional Health Services, Inc.
00 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxx Xxxxxx 00000
Facsimile No.: 975.571.9747
Attention: Xx. Xxxxxx X. Xxxxxx
with a copy to:
Schwartz, Tobia, Xxxxxxxxx, Xxxxxxxxxx & Xxxxxx
00 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Facsimile No.: 000-000-0000
Attention: Xx. Xxxxxxx Xxxxxxxxx
or to such other address or addresses as any party may from time to time
designate as to itself by like notice.
9.2. Expenses. Except as otherwise expressly provided herein, whether
or not the Closing shall occur, each party shall bear its own expenses incurred
in connection with the consummation of the transactions contemplated by this
Agreement and the Ancillary Documents including but not limited to the fees,
costs and expenses of its financial advisors, accountants and counsel. The
Purchaser shall pay the filing fee required in complying with the HSR Act.
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9.3. Successors And Assigns. This Agreement will be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, but will not be assignable or delegable by any party without
the prior written consent of the other parties. Notwithstanding anything herein
to the contrary, in the event that the Purchaser sells the Company or all or
substantially all of its assets, the Purchaser may assign to the transferee all
or any rights which the Purchaser may have with respect to the Shareholders'
covenants which are contained herein or in any Ancillary Document and are to be
performed by the Shareholders after the Closing; provided, however, that such
assignment shall not relieve the Purchaser of any of its obligations or
liabilities hereunder or ASG of any of its obligations or liabilities under its
guaranty of the Purchaser's obligations hereunder; and provided, further,
however, that such transferee shall agree in writing to assume the Purchaser's
obligations hereunder and under any such Ancillary Document.
9.4. Waiver; Effect of Buyer's Investigation.
(a) The Purchaser and the Shareholders, by written notice to the
other, may (i) extend the time for performance of any of the obligations or
other actions of the other under this Agreement, (ii) waive any inaccuracies in
the representations or warranties of the other contained in this Agreement or in
any Ancillary Documents, (iii) waive compliance with any of the conditions or
covenants of the other contained in this Agreement, or (iv) waive or modify
performance of any of the obligations of the other under this Agreement;
provided, however, that no such party may, without the prior written consent of
such other party, make or grant such extension of time, waiver of inaccuracies
or compliance or waiver or modification of performance with respect to its own
obligations, representations, warranties, conditions or covenants hereunder and
provided, further, however, that the Closing shall be deemed to constitute the
waiver by the Purchaser and the Shareholders of the conditions to their
respective obligations to consummate the transactions contemplated by this
Agreement, which waiver shall be without prejudice to the right of the Purchaser
or the Shareholders to assert a claim against the other for any Indemnifiable
Loss. Except as provided in the immediately preceding sentence, no action taken
pursuant to this Agreement will be deemed to constitute a waiver of compliance
with any representations, warranties, covenants or agreements contained in this
Agreement. No waiver of any breach will operate or be construed as a waiver of
any subsequent breach, whether of a similar or dissimilar nature. No delay on
the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof.
(b) The right of indemnification, reimbursement or other remedy
based on the representations, warranties, covenants and obligations of a party
set forth in this Agreement or any Ancillary Document shall not be affected by
any investigation conducted by the other party with respect to, or any knowledge
acquired (or capable of being acquired) by the other party about, the accuracy
or inaccuracy of or compliance with, any such representation, warranty covenant
or obligation.
9.5. Entire Agreement. This Agreement (together with the Schedules
hereto) supersedes any other agreement, whether written or oral, that may have
been made or entered into by the Purchaser or the Shareholders (or by any
director, officer or representative thereof) relating to the matters
contemplated hereby, other than the Confidentiality Agreement (which will
survive the execution, delivery and/or termination of this Agreement unless and
until the
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Closing occurs). This Agreement (together with the Confidentiality Agreement and
the Schedules hereto) constitute the entire agreement by and among such parties
and their Affiliates except as expressly set forth herein.
9.6. Amendments, Supplements, Etc. This Agreement may be amended or
supplemented at any time by additional written agreements, as may mutually be
determined by the parties hereto.
9.7. Rights Of The Parties. Except as expressly provided in Sections
7.3 and 9.3, nothing expressed or implied in this Agreement is intended or will
be construed to confer upon or give any person or entity other than the parties
hereto and their respective Affiliates any rights or remedies under or by reason
of this Agreement or any transaction contemplated hereby.
9.8. Further Assurances. After the Closing, the Shareholders will from
time to time, at the Purchaser's request and without further cost to the
Purchaser, execute and deliver to the Purchaser such other instruments of
conveyance and transfer and take such other actions as the Purchaser may
reasonably request. In the event that the Shareholders fail to execute any such
document or take any such action, the Shareholders hereby appoint the Purchaser
as their lawful attorney-in-fact for purposes of executing such documents and
taking such actions. This appointment is irrevocable and coupled with an
interest.
9.9. Shareholders' Representative. Each Shareholder hereby agrees that
the Shareholders, as a group, shall deal with the Purchaser in connection with
all matters arising under this Agreement and the Ancillary Documents through Xx.
Xxxxxx X. Xxxxxx, who is hereby appointed by each of the Shareholders to act in
such capacity (the "Representative"). The Representative shall have the power to
act on behalf of all of the Shareholders for all purposes relevant to the
transactions contemplated by this Agreement and the Ancillary Documents. The
Purchaser shall be entitled to rely upon, and shall be fully protected in
relying upon, the power and authority of the Representative to act on behalf of
the Shareholders.
9.10. Governing Law. The validity, performance and enforcement of this
Agreement and all Ancillary Documents, unless expressly provided to the
contrary, shall be governed by the laws of the State of New Jersey, without
giving effect to the principles of conflicts of law thereof, except that with
respect to matters regarding the transfer of right, title to and interest in any
contract or permit, the laws governing such contract or permit shall govern,
without giving effect to the principles of conflicts of law thereof.
9.11. Execution In Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
9.12. Titles And Headings. Titles and headings to sections herein are
inserted for convenience of reference only, and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
9.13. Certain Interpretive Matters And Definitions.
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(a) Unless the context otherwise requires, (i) all references to
Sections, Articles or Schedules are to the Sections, Articles or Schedules of or
to this Agreement, (ii) each accounting term not otherwise defined in this
Agreement has the meaning assigned to it in accordance with GAAP, (iii) "or" is
disjunctive and (iv) words in the singular include the plural and vice versa.
(b) No provision of this Agreement will be interpreted in favor
of, or against, any of the parties hereto by reason of the extent to which any
such party or its counsel participated in the drafting thereof.
(c) As used in this Agreement, (i) the term "Subsidiary" has the
meaning given to that term in Rule 1-02 of Regulation S-X under the Securities
Act of 1933, as amended (the "Securities Act"); (ii) the term "Affiliate" has
the meaning given to the term in Rule 405 under the Securities Act, and will
include without limitation any Subsidiary; (iii) the term "Governmental Agency"
means the United States or any state, local or foreign government, or any
subdivision, agency or authority of any thereof; and (iv) the term "laws" means
all federal, state and local laws, codes, and ordinances and all rules and
regulations promulgated by any Governmental Agency thereunder.
(d) Notwithstanding anything to the contrary contained herein,
for purposes of this Agreement, the term "Knowledge" or variations thereof when
used with respect to the Shareholders shall mean the knowledge of Xx. Xxxxxx X.
Xxxxxx or Xx. Xxxxxxx X. Xxxxxxx, after due inquiry.
9.14. Cross-References. If a document or matter is disclosed in any
Schedule to this Agreement in connection with a representation or warranty made
herein, it shall be deemed to be disclosed with respect to the same matter
addressed elsewhere in this Agreement but only if the reference provides fair
disclosure of the matter in question.
9.15. Severability. If any provision of this Agreement or the
application of any such provision to any person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof.
9.16. Specific Performance. The Company acknowledges that the Purchaser
will be irreparably harmed and the Purchaser will have no adequate remedy at law
if the Shareholders fail to perform any of their obligations under this
Agreement. It is accordingly agreed that, in addition to any other remedies
which may be available to it, the Purchaser shall have the right to obtain
injunctive relief to restrain a breach or threatened or breach of, or otherwise
obtain specific performance of, the Shareholders' covenants and other agreements
contained in this Agreement.
9.17. Arbitration. Any controversy or claim arising out of or relating
to this Agreement or any Ancillary Document (other than a dispute that is
subject to Section 1.3 of this Agreement which shall be resolved in accordance
with Section 1.3) shall be settled by arbitration in accordance with the
following provisions:
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(a) Disputes Covered. The agreement of the parties to arbitrate
covers all disputes of every kind relating to or arising out of this Agreement,
any Ancillary Document or any of the transactions contemplated by this
Agreement. Disputes include actions for breach of contract with respect to this
Agreement or the Ancillary Document, as well as any claim based on tort or any
other causes or action relating to the transactions contemplated by this
Agreement such as claims based on an allegation of fraud or misrepresentation
and claims based on a federal or state statute. In addition, the arbitrators
selected according to procedures set forth below shall determine the
arbitrability of any matter brought to them, and their decision shall be final
and binding on the parties. Notwithstanding the foregoing, the Purchaser shall
be permitted to seek injunctive relief under the circumstances contemplated by
Section 9.16.
(b) Forum. The forum for the arbitration shall be New York, New
York.
(c) Law. The governing law for the arbitration shall be the law
of the State of New Jersey, without reference to its conflicts of laws
provisions.
(d) Selection. There shall be three arbitrators, unless the
parties are able to agree on a single arbitrator. In the absence of such
agreement within ten days after the initiation of an arbitration proceeding, the
Representative shall select one arbitrator and the Purchaser shall select one
arbitrator, and those two arbitrators shall then select within ten days a third
arbitrator. If those two arbitrators are unable to select a third arbitrator
within such ten day period, a third arbitrator shall be appointed by the
commercial panel of the American Arbitration Association. The decision in
writing of at least two of the three arbitrators shall be final and binding upon
the parties.
(e) Administration. The arbitration shall be administered by the
American Arbitration Association.
(f) Rules. The rules of arbitration shall be the Commercial
Arbitration Rules of the American Arbitration Association, as modified by any
other instructions that the parties may agree upon at the time, except that each
party shall have the right to conduct discovery in any manner and to the extent
authorized by the Federal Rules of Civil Procedure as interpreted by the federal
courts. In the event of any conflict between those rules and the provisions of
this Section, the provisions of this Section shall prevail.
(g) Substantive Law. The arbitrators shall be bound by and shall
strictly enforce the terms of this Agreement and may not limit, expand or
otherwise modify its terms. The arbitrators shall make a good faith effort to
apply substantive applicable law, but an arbitration decision shall not be
subject to review. The arbitrators shall be bound to honor claims of privilege
or work product doctrine recognized at law, but the arbitrators shall have the
discretion to determine whether any such claim of privilege or work product
doctrine applies.
(h) Decision. The arbitrators' decision shall provide a reasoned
basis for the resolution of each dispute and for any award. The arbitrators
shall not have power to award punitive damages, except in the case of fraud or
willful misconduct.
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(i) Expenses. Each party shall bear its own fees and expenses
with respect to the arbitration and any proceeding related thereto and the
parties shall share equally the fees and expenses of the American Arbitration
Association and the arbitrators.
(j) Remedies; Award. The arbitrators shall have power and
authority to award any remedy or judgment that could be awarded by a court of
law in the State of New Jersey. The award rendered by arbitration shall be final
and binding upon the parties, and judgment upon the award may be entered in any
court of competent jurisdiction in the United States.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
PRISON HEALTH SERVICES, INC.
("Purchaser")
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------------------
Xxxxxxx Xxxxxxxx
President and Chief Executive Officer
DREW ASSOCIATES INTERNATIONAL
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxx
--------------------------------
Title: President/COO
--------------------------------
/s/ Xxxxx Xxxxxxx Xxxxxx
-------------------------------------------
Xxxxx Xxxxxxx Xxxxxx as custodian for
Xxxxxx X. Xxxxxx under the New Jersey
Uniform Gifts to Minors Act
/s/ Xxxxx Xxxxxxx Xxxxxx
-------------------------------------------
Xxxxx Xxxxxxx Xxxxxx as custodian for
Xxx X. Xxxxxx under the New Jersey Uniform
Gifts to Minors Act
/s/ Xxxxxxx Xxxxxxx
-------------------------------------------
Xxxxxxx Xxxxxxx
RSJR ASSOCIATES, INC.
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxx
--------------------------------
Title: President
--------------------------------
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