EXHIBIT 10.3
EXTENSION
OF
ASSET PURCHASE AGREEMENT
THIS EXTENSION, made and entered into as of the 30th day of September,
1999, by and among INTERVENTIONS, an Illinois not-for-profit corporation
("Interventions"), IDDRS FOUNDATION, an Illinois not-for-profit corporation
("IDDRS"), and CORNELL CORRECTIONS, INC., a Delaware corporation ("Purchaser");
W I T N E S S E T H:
WHEREAS, Interventions and IDDRS (individually and collectively referred
to herein as "Seller") have entered into that certain Asset Purchase Agreement,
dated May 10, 1999, with Purchaser (the "Purchase Agreement"), whereby Purchaser
is to purchase and Seller is to sell certain assets of Seller not later than
September 30, 1999;
WHEREAS, although the Purchase Agreement is not conditioned on financing,
Purchaser has asked Seller to agree to extend such September 30 date to enable
Purchaser additional time to arrange financing;
WHEREAS, Seller is willing to agree to such extension on the terms and
conditions set forth below;
WHEREAS, Purchaser believes that the net income of Seller with respect to
certain of the Transferred Programs has decreased, although Seller believes this
is not the case; and
WHEREAS, the parties desire to amend the Purchase Agreement to reflect
certain developments which have occurred since its execution and to reflect
certain agreements concerning the closing;
NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. EXTENSION. SECTION 2.1 of the Purchase Agreement is hereby
amended to provide in its entirety as follows:
The closing of the purchase and sale provided for herein (the
"CLOSING") shall take place at the offices of Xxxxxxx & Xxxxxx in Chicago,
Illinois, on such date, not earlier than October 14, 1999 and not later
than
November 15, 1999, as may be designated by Seller by not less than two (2)
business days prior notice to Purchaser, or at such other place, or such
other time or date not later than November 15, 1999. For purposes of this
Agreement, the date on which the Closing actually occurs is referred to as
the "CLOSING DATE".
Paragraph (f) of SECTION 10.1 of the Purchase Agreement is hereby amended
to provide in its entirety as follows:
"(f) by Seller or Purchaser by written notice thereof to the other if the
transactions contemplated hereby shall not have been consummated by
November 15, 1999, PROVIDED, however, that the party giving such notice
has not caused the failure to close by that party's breach of this
Agreement.
SECTION 2. INCREASE IN XXXXXXX MONEY. The amount of the Xxxxxxx Money
referred to in the Purchase Agreement is hereby increased from $400,000 to One
Million Dollars ($1,000,000). Purchaser shall pay to Interventions in
immediately available funds on October 1, 1999, Six Hundred Thousand Dollars
($600,000), representing the balance of the Xxxxxxx Money as so increased over
the $400,000.
SECTION 3. CAPITAL EXPENDITURES AND OTHER DELAY EXPENSES. The number
"$100,000" contained in the fifth (5th) line of SECTION 3.3 of the Purchase
Agreement is hereby amended to be "three hundred thousand dollars ($300,000)",
and the second sentence in such Section 3.3 is amended to provide, "The capital
expenditures for each of the water connection at Wauconda, the sewer connection
at Wauconda, and the sewer connection at Maple Creek, each of which are expected
to require approximately $100,000, have been approved by Purchaser." Purchaser
will assume so much of the cost for these connections as has then not yet been
paid at closing. Purchaser will pay Seller at closing, in addition to paying the
purchase price otherwise payable, an amount equal to a pro-rated portion of the
pre-payment heretofore made with respect to the East St. Louis lease.
SECTION 4. ACCOUNTING MATTERS. (a) Purchaser or Assignee shall pay Seller
$5,562 on the Closing Date in addition to the purchase price payable under the
Asset Purchase Agreement. Such amount is equal to the aggregate theoretical
balance of cash and expense receipts contained in each of approximately 35 xxxxx
cash "boxes" maintained in connection with the assets transferred under the
Asset Purchase Agreement. Seller will transfer such xxxxx cash boxes and
contents to Purchaser or Assignee on the Closing Date. Purchaser or Assignee
shall promptly thereafter examine and count the contents of each xxxxx cash
"box," and
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deliver expense receipts contained therein which relate to periods ending prior
to the first day of the month in which the Closing Date occurs, separated by
program or xxxxx cash "box," to Seller's accounting department against payment
by Seller of an amount equal to the aggregate amount of such receipts.
(b) Seller and Assignee shall, as soon as reasonably practicable
after the Closing Date, examine the amount of "client funds" received by
Purchaser or Assignee in xxxxx cash boxes or otherwise and reconcile such amount
against the amount which Purchaser or Assignee should have received to exactly
equal the obligations for "client funds" assumed by Purchaser or Assignee.
Purchaser and Assignee shall pay Seller, or Seller shall pay Purchaser or
Assignee, the difference between the amount necessary to compensate Purchaser or
Assignee for the aggregate amount of all obligations to others for "client
funds" and the amount received by Purchaser or Assignee with respect to such
"client funds." From time to time after the Closing Date, Seller will pay
Purchaser or Assignee an amount equal to any "client funds" hereafter received
by Seller with respect to a program transferred under the Asset Purchase
Agreement and Purchaser and Assignee shall be deemed to have assumed Seller's
obligations to others with respect to such "client funds" to the extent of the
payments received. "Client funds" refer to deposits of money by clients or their
relatives for safekeeping while a client is engaged in a program and also to
client allowances which are payable under certain service contracts whereby the
service purchaser provides small amounts for the benefit and use of the client
and not the program service provider.
(c) Purchaser or Assignee shall, after the Closing Date, reimburse
Seller on demand for an amount equal to the excess of the charges of Seller's
outside auditor for examination and preparation of its audit report for the
period ended June 30, 2000, over such auditor's estimate of what such charges
would have been had the purchase under the Asset Purchase Agreement closed June
30, 1999 provided that such reimbursement amount shall not exceed $20,000.
Purchaser or Assignee shall also provide the services, without charge, of
Interventions' prior Controller or Senior Accountant or, if neither are still
employed by Purchaser or Assignee, a person of comparable skill, knowledge and
experience, to assist Interventions with preparation of its financial
statements, schedules and footnotes for the period ended June 30, 2000.
(d) Purchaser shall pay Seller interest at the prime rate as
published for the period in the Wall Street Journal on the purchase price
payable under the Purchase Agreement for the period beginning on the first day
of the month in which the Closing Date occurs and ending on the Closing Date, in
lieu of pro-rating or making daily calculations of profits or
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losses for the part of the calendar month immediately preceding the Closing
Date. The Transferred Assets shall be operated at the risk and for the account
of Purchaser for the calendar month in which the Closing Date occurs, and
Purchaser shall reimburse Seller for all expenses paid by Seller for that
calendar month within fourteen (14) days after the Closing Date. Seller will
promptly pay to Purchaser any amounts received by Seller as payment for services
(i) performed by Seller under the Contracts during the calendar month in which
the Closing Date occurs, and (ii) to be performed by Purchaser after Closing
under the Contracts. Purchaser will promptly pay to Seller any amounts received
by Purchaser as payment for services performed by Seller prior to the calendar
month in which the Closing Date occurs.
(e) The parties shall divide the real estate transfer taxes as
provided in the Purchase Agreement, PROVIDED, however, that Purchaser shall have
the unilateral right to determine in good faith the allocation of purchase price
to each real property for such purpose, and shall file the transfer tax
declarations and similar documents with the appropriate authorities.
SECTION 5. REASONABLE EFFORTS TO CLOSE. SECTIONS 8.1(d) and 8.2(b) of the
Purchase Agreement are hereby amended by adding "or 9.3" after "Section 9.1" and
"Section 9.2", respectively. Purchaser shall use commercially reasonable efforts
(i) in assisting Seller to procure all consents, novations, approvals or waivers
which may be necessary or desirable to assign the Contracts (as defined in the
Purchase Agreement) and any other Acquisition Assets (also as so defined) to
Purchaser, (ii) in assisting Seller to obtain all permits (also as so defined)
and licenses necessary for Purchaser to complete the purchase, and (iii) to
fulfill and to assist Seller in fulfilling each condition to Purchaser's
obligation to purchase and pay for the assets to be sold under the Purchase
Agreement and Purchaser will use its best efforts to obtain sufficient funds
timely to purchase such assets under the Purchase Agreement. Without limitation
of the generality of the foregoing, within three (3) business days after the
date hereof, Purchaser will furnish to the person requesting it, the following,
with a copy to Interventions:
a) to Interventions' vendors, the credit information and executed
documents requested by them to allow assignment and assumption of the
relevant contracts or equipment leases;
b) to customers and licensing authorities, all information heretofore
requested by any of them, including the
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certifications requested for purposes of Purchaser's applications for
child welfare licenses.
SECTION 6. STATUS OF CLOSING CONDITIONS AND COMPLIANCE. Purchaser waives
any right which it may now or might hereafter have to refuse to close the
purchase under the Purchase Agreement based on any adverse change heretofore
occurring in the business, financial condition, properties or results of
operations of Seller. SECTION 9.1 of the Purchase Agreement is hereby amended to
delete paragraphs (f) (adverse change), (h) (Maple Creek zoning), (i) (Southwood
special use assignability), (j) (Residential School zoning), (k) (surveys),
(n)(i) (surveys), (n)(ii) (real estate taxes), (n)(v) (underground storage
tank), and (q) (EBITDA). The Purchase Agreement is hereby amended to delete any
requirement or condition to Purchaser's obligation to purchase based on whether
or not consents to assignment have been received from the other parties to any
of the Supplier Contracts or Leases identified in Schedule 3.1(viii). The
Purchase Agreement is hereby amended to delete from paragraph (d) of SECTION 9.1
the phrase, "are or otherwise adversely affected. . .," and to delete the
reference to meetings with agencies from paragraph (a) of SECTION 9.3. The
Purchase Agreement is hereby amended to delete from the contracts to be
transferred the following: Xxxx County, Office of Chief Judge, Adult Probation
Department Services Doc. 00-00-000; School Association for Special Education in
Du Page County; and school nutrition program and to add Exhibit A of the
Purchase Agreement the new Juvenile Day Reporting Center Program with the
Department of Corrections. Paragraph (d) of Section 10.1 of the Purchase
Agreement is hereby amended to delete the reference to "Section 7.4" contained
in such paragraph (d). Purchaser acknowledges that the landlord consents
heretofore reviewed by Purchaser with respect to four real estate leases are
satisfactory in form and substance, that the surveys for all seven properties
heretofore reviewed by Purchaser are satisfactory in all respects, that the most
recent title insurance commitments heretofore prepared by Chicago Title
Insurance Company are satisfactory and that the condition of Title reflected
therein is satisfactory and acceptable to Purchaser; that the title exceptions
shown on Exhibit A hereto are "Permitted Encumbrances" as such term is defined
in the Purchase Agreement; that in view of the long lead time needed to read
water meters in the City of Chicago, Purchaser will accept title subject to such
imperfections as may relate to the absence of water meter readings, that
inasmuch as only one food service permit can be issued for a particular location
at one time, applications therefor which have been filed in the name of
Purchaser shall satisfy any requirement for such licenses under the Purchase
Agreement, and that the form of lease between Purchaser (or its subsidiary) and
The Women's Treatment Center, which was sent to Purchaser on September 22, 1999,
is acceptable to Purchaser. Purchaser consents to the transfer of a 1999
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Dodge Ram Van and a copier/fax machine, both purchased in June, 1999, to Central
Intake, one of the Retained Programs, and to their deletion from the property to
be sold if they otherwise would have been included in such property. Purchaser
promises to grant to Seller or either of them, on or after the closing and on
their request, a permanent recordable easement to use the existing driveway at
the "Du Page Adolescent" property which is to be acquired by Purchaser for
access to the adjacent "Du Page House" property which is not to be sold to
Purchaser.
SECTION 7. NO TRANSFER OF RIGHTS. Purchaser hereby represents and warrants
to Seller that it has not transferred or suffered to be transferred to or
acquired by any other person any of Purchaser's rights under or interest in the
Purchase Agreement.
SECTION 8. EFFECT OF EXTENSION. The Purchase Agreement as amended and
modified by this Extension remains in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Extension to be executed
by their respective officers duly authorized thereunto on the day first above
written.
CORNELL CORRECTIONS, INC. INTERVENTIONS
By:_________________________________ By:_________________________________
______________, its________________ _____________, its__________
IDDRS FOUNDATION
By:_________________________________
_____________, its__________
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