EXHIBIT 10.2
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ASSET PURCHASE AGREEMENT
by and among
INTERVENTIONS,
IDDRS FOUNDATION
and
CORNELL CORRECTIONS, INC.
Dated as of May 10, 1999
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS ..................................................... 1
SECTION 1.1 Accounting Terms ......................................... 1
SECTION 1.2 Defined Terms ............................................ 1
ARTICLE II CLOSING ........................................................ 2
SECTION 2.1 Closing .................................................. 2
ARTICLE III PRUCHASE, SALE, AND DELIVERY .................................. 2
SECTION 3.1 Acquisition Assets ....................................... 2
SECTION 3.2 Excluded Assets .......................................... 4
SECTION 3.3 Purchase Price ........................................... 5
ARTICLE IV LIABILITIES AND OBLIGATIONS .................................... 5
SECTION 4.1 Liabilities Not Assumed by Purchaser ..................... 5
SECTION 4.2 Assumed Liabilities ...................................... 7
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER ........................ 7
SECTION 5.1 Organization; Qualification .............................. 7
SECTION 5.2 Authority; Enforceability ................................ 7
SECTION 5.3 Subsidiaries; Affiliates ................................. 8
SECTION 5.4 Conflicting Agreements and Other Matters; Consents ....... 8
SECTION 5.5 No Default; Compliance With Laws and Regulations ......... 8
SECTION 5.6 Financial Statements ..................................... 9
SECTION 5.7 No Undisclosed Liabilities ............................... 9
SECTION 5.8 Absence of Certain Changes ............................... 9
SECTION 5.9 Contracts, Agreements, Plans and Commitments ............. 10
SECTION 5.10 Actions Pending ......................................... 11
SECTION 5.11 Environmental ........................................... 12
SECTION 5.12 Insurance ............................................... 14
SECTION 5.13 Title ................................................... 14
SECTION 5.14 Real Estate ............................................. 14
SECTION 5.15 Accounts Receivable ..................................... 15
SECTION 5.16 Taxes ................................................... 15
SECTION 5.17 Employee Benefits Plans ................................. 15
SECTION 5.18 Employees and Labor Matters ............................. 17
SECTION 5.19 Intellectual Property Rights ............................ 17
SECTION 5.20 Relationships ........................................... 18
SECTION 5.21 Certain Payments ........................................ 18
SECTION 5.22 Condition and Sufficiency of Assets ..................... 18
SECTION 5.23 Clients Accounts ........................................ 18
SECTION 5.24 Studies, Etc ............................................ 18
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ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER .................... 19
SECTION 6.1 Corporate Existence ...................................... 19
SECTION 6.2 Authority; Enforceability ................................ 19
SECTION 6.3 Conflicting Agreements and Other Matters; Consents ....... 19
SECTION 6.4 Pending Litigation ....................................... 19
ARTICLE VII CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES .......... 20
SECTION 7.1 Employees ................................................ 20
SECTION 7.2 Taxes .................................................... 21
SECTION 7.3 Consents ................................................. 21
SECTION 7.4 Title .................................................... 21
SECTION 7.5 Surveys .................................................. 22
SECTION 7.6 Environmental Due Dilegence .............................. 23
SECTION 7.7 Further Assurances ....................................... 23
SECTION 7.8 Mail Received After Closing .............................. 23
SECTION 7.9 Bills and Payments Received After Closing ................ 23
SECTION 7.10 Loss Due to Condemnation ................................ 24
SECTION 7.11 Loss due to Casualty .................................... 24
SECTION 7.12 Notice of Environmental Claims .......................... 24
SECTION 7.13 Bolingbrook and Joliet Programs ......................... 24
ARTICLE VIII CONVENANTS ................................................... 25
SECTION 8.1 Seller's Convenants ...................................... 25
SECTION 8.2 Purchaser's Convenants ................................... 27
ARTICLE IX CONDITIONS TO CLOSING .......................................... 28
SECTION 9.1 Conditions to Obligations of Purchaser ................... 28
SECTION 9.2 Conditions to Obligations of Seller ...................... 32
SECTION 9.3 Conditions to Obligations of Purchaser and Seller ........ 32
ARTICLE X TERMINATION ..................................................... 33
SECTION 10.1 Grounds for Termination ................................. 33
SECTION 10.2 Effect of Termination ................................... 34
ARTICLE XI IDEMNFICATION .................................................. 34
SECTION 11.1 Seller's Indemnity Obligations .......................... 34
SECTION 11.2 Purchaser's Indemnity Obligations ....................... 35
SECTION 11.3 Idemnification Procedures ............................... 35
SECTION 11.4 Determination of indemnified Amounts .................... 37
SECTION 11.5 Limitation of Seller's Liability ........................ 37
SECTION 11.6 Limitation of Purchaser's Liability ..................... 37
ARTICLE XII ............................................................... 38
SECTION 12.1 Commissions ............................................. 38
SECTION 12.2 Survival ................................................ 38
SECTION 12.3 Expenses ................................................ 38
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SECTION 12.4 Notices ................................................. 38
SECTION 12.5 Entire Agreement ........................................ 39
SECTION 12.6 Governing Law ........................................... 39
SECTION 12.7 Assignments and Third Parties ........................... 40
SECTION 12.8 Confidential Information ................................ 40
SECTION 12.9 Severability ............................................ 40
SECTION 12.10 Amendments; No Waivers ................................. 40
SECTION 12.11 No Third Party Beneficiaries ........................... 41
SECTION 12.12 Headings; Use of Certain Terms ......................... 41
SECTION 12.13 Counterparts ........................................... 41
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EXHIBITS
Exhibit A Included Projects
Exhibit B Excluded Projects
Exhibit 1.2 Definitions
Exhibit 4.2 Assumed Liabilities
Exhibit 9.1(e)(ii) Assignment of Lease
Exhibit 9.1(e)(iii) Xxxx of Sale
Exhibit 9.1(q) Annualized EBITDA
Exhibit 9.1(t) Opinion of Seller's Counsel
Exhibit 9.2(c) Noncompetition Agreements
Exhibit 9.2(f) Opinion of Purchaser's Counsel
SCHEDULES
Schedule 3.1(i) Acquired Property
Schedule 3.1(iv) Assumed Leases
Schedule 3.1(vi) Motor Vehicles
Schedule 3.1(viii) Contracts
Schedule 3.1 (x) Permits
Schedule 3.3(a) Excluded Debt
Schedule 4.2(c) Accrued Vacation
Schedule 5.3 Subsidiaries; Affiliates
Schedule 5.4 Conflicting Agreements and Other Matters; Consents
Schedule 5.5 No Default; Compliance with Laws and Regulations
Schedule 5.7 No Undisclosed Liabilities
Schedule 5.8 Absence of Certain Changes
Schedule 5.9 Contracts, Agreements, Plans and Commitments
Schedule 5.10 Actions Pending
Schedule 5.11 Environmental
Schedule 5.12 Insurance
Schedule 5.13 Title
Schedule 5.14 Real Estate
Schedule 5.17 Employee Benefit Plans
Schedule 5.18 Employees and Labor Matters
Schedule 5.20 Relationships
Schedule 5.22 Condition and Sufficiency of Assets
Schedule 5.23 Client Accounts
Schedule 6.3 Conflicting Agreements and Other Matters; Consents
Schedule 7.4 Encumbrances
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "AGREEMENT"), dated May 10, 1999, is
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").
"SELLER" as used in this Agreement shall refer to Interventions and IDDRS
individually and collectively.
WHEREAS, Interventions is in the business of providing treatment and
rehabilitative services at and operating behavioral health facilities and
juvenile correctional services, mental health group homes and related facilities
in Illinois with respect to the programs (the "TRANSFERRED Programs") listed on
EXHIBIT A to this Agreement entitled "Included Projects" (the "BUSINESS"); and
WHEREAS, IDDRS is in the business of owning and operating real property,
including but not limited to real property leased to Interventions for use in
the Business; and
WHEREAS, Purchaser wishes to purchase from Seller and Seller wishes to
sell, transfer, assign and deliver to Purchaser certain of the assets and
contract rights used by Seller in connection with the Transferred Programs on
the terms and subject to the conditions set forth herein;
WHEREAS, Purchaser wishes to assume Seller's obligations relating to
events occurring on or after the Closing Date (as defined below) under the
contracts transferred pursuant hereto; and
WHEREAS, each of Purchaser and each Seller is making certain
representations, warranties and indemnities herein, as an inducement to the
other to enter into this Agreement;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements stated herein, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
covenant and agree as follows:
ARTICLE I
DEFINITIONS
SECTION(degrEE)1.1 ACCOUNTING Terms. All accounting terms not specifically
dEfined herein shall be construed in accordance with generally accepted
accounting principles and on a basis not inconsistent with those applied in the
preparation of the financial statements referred to in SECTION 5.6 hereof.
SECTION(degrEE)1.2 DEFINEd Terms. As used in this Agreement, other words and
terms have the meanings specified in EXHIBIT 1.2. Other capitalized terms have
the meanings assigned to them elsewhere in this Agreement.
ARTICLE II
CLOSING
SECTION 2.1 Closing. 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 July 31, 1999, or at such other place, or such other time
or date not later than September 30, 1999 as may be agreed upon by the parties
hereto or as otherwise set forth in SECTION 10.1. For purposes of this
Agreement, the date on which the Closing actually occurs is referred to as the
"CLOSING DATE".
ARTICLE III
PURCHASE, SALE AND DELIVERY
SECTION 3.1 ACQUISITION Assets. Subject to the terms and conditions oF
this Agreement, and on the basis of the representations and warranties
hereinafter set forth, at the Closing, each Seller shall sell, transfer, convey,
assign and deliver to Purchaser, and Purchaser shall acquire and purchase from
such Seller, subject to SECTION 3.2 hereof, the following assets, properties and
rights of such Seller used in connection with the Transferred Programs:
(i) the fee simple interest in and to the Interventions' parcels
located at 0000 00xx Xxxxxx in Woodridge and at 00 X. 000 Xx. 00 in
unincorporated Hinsdale, and the IDDRS' parcels located at 4100 and 0000
Xxxx Xxxxx Xxxxxx, 0000 Xxxx Xxxxx Xxxxxx in Matteson; 0000 Xxxxx Xxxxx
Xxxxxx and 0000 Xxxxx Xxxx Xxxxxx in Chicago; and 00000 Xxxxxxxx Xxxx, as
all such parcels are more fully described on SCHEDULE 3.1(I) (the
"ACQUIRED PROPERTY" or "ACQUIRED PROPERTIES");
(ii) all buildings, structures, fixtures and other improvements
located on the Acquired Properties (the "IMPROVEMENTS");
(iii) all right, title and interest of Seller, if any, in and to (i)
all easements, tenements, hereditaments, privileges and appurtenances in
any way belonging to the Acquired Properties and the Improvements, (ii)
any land lying in the bed of any highway, street, road, avenue or access
way, open or proposed, in front of or abutting or adjoining the Acquired
Properties and the Improvements, (iii) the use of all strips and rights of
way, if any, abutting, adjacent, contiguous to or adjoining the Acquired
Properties and the Improvements, and (iv) all other rights and
appurtenances belonging or in any way pertaining thereto including,
without limitation, all water, wastewater and other utility rights and
capacities (the "APPURTENANCES");
(iv) the real property leases which are listed on SCHEDULE 3.1(IV)
hereto (the "ASSUMED LEASES");
(v) all machinery, equipment, trade fixtures, tools, furniture,
computers, appliances, implements, spare parts, supplies, leasehold
improvements, construction in progress and all other tangible personal
property owned by Seller, and which are located within the Acquisition
Assets or otherwise used solely in connection with the Transferred
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Programs including within any real property leases, on the Closing Date,
(collectively, the "EQUIPMENT");
(vi) all motor vehicles and rolling stock owned by Seller on the
Closing Date and listed on SCHEDULE 3.1(VI) hereto (collectively, the
"MOTOR VEHICLES");
(vii) all such office supplies, kitchen supplies, laundry supplies,
medical supplies, spare parts, safety equipment, maintenance supplies,
other supplies used or consumed in the Transferred Programs or that
otherwise relate to the Acquisition Assets (as hereinafter defined) and
other similar items which are on hand and owned by Seller and located at
the Acquired Properties on the Closing Date (collectively, the
"SUPPLIES");
(viii)all revenue-generating contracts and supplier contracts
(including, without limitation, all of the fee-for-service, operating and
other contracts), leases, agreements, equipment or other lease licenses,
government contract awards and building service agreements solely related
to the Transferred Programs to which Seller is a party on the Closing Date
and which are listed on SCHEDULE 3.1(VIII) hereto (collectively, the
"CONTRACTS");
(ix) all goodwill and going concern value relating to the
Transferred Programs;
(x) to the extent transferrable, all right, title and interest in
all licenses, permits, applications, registrations, exemptions, notices of
intent, franchises, consents, waivers, variances, authorizations,
approvals and orders issued by any federal, state, municipal or other
Governmental Authority (collectively, the "PERMITS") relating solely to
the Acquisition Assets or the Transferred Programs, including, without
limitation, those listed on SCHEDULE 3.1(X) hereto;
(xi) all cash or cash equivalents representing fund accounts of
Clients ("CLIENT ACCOUNTS");
(xii) all software, patents, processes, shop rights, formulas, brand
names, trade secrets, servicemarks, tradenames, trademarks, copyrights,
intellectual property, drawings, and any similar items and related rights
owned by or licensed to Seller, if any, solely related to the Acquisition
Assets or the Transferred Programs, together with any goodwill associated
therewith;
(xiii)such rights as Seller may have to the use of software, which
was installed in a personal computer which is part of the Equipment when
purchased, or thereafter by the user thereof.
(xiv) such rights to use the name "Interventions" and all
derivations thereof in Illinois as Seller may have and such rights as
Seller may have, if any, in tradenames and trademarks which are used by
Seller solely in connection with the Transferred Programs. The right to
the use of the name "Interventions" and derivatives thereof shall be
limited to the State of Illinois.
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(xv) all rights under express or implied warranties from the
suppliers of Seller with respect to the Acquisition Assets, to the extent
they are assignable;
(xvi) all books, records, papers and instruments of whatever nature
and wherever located that are in the possession or control of Seller, that
relate to the Transferred Programs or the Acquisition Assets or which are
required or necessary in order for Purchaser to conduct the Business from
and after the Closing Date in the manner in which it is presently being
conducted, including, without limitation, blueprints of the Improvements,
if any, copies of accounting and financial records relating to the
Contracts, maintenance records, environmental records, analytical data and
reports, correspondence with Governmental Authorities relating to the
Acquisition Assets or Transferred Programs, supplier lists and other
supplier data relating to the purchase of supplies, notices of claims or
demands by third parties, and confidential information relating to the
Acquisition Assets or Transferred Programs;
(xvii)copies of all personnel files and other materials relating to
employees of Seller who accepted employment by Purchaser as contemplated
by SECTION 7.1 hereof;
(xviii) all patient medical records, PROVIDED, however, that
Purchaser shall maintain such records for the longer of five years or the
conclusion of any audit or litigation concerning them (or otherwise return
them to Seller) if requested by Seller, and Purchaser shall allow Seller
reasonable access to and to make copies (at Seller's expense) of relevant
parts of such records from time to time.
Subject to SECTION 3.2 hereof, all of the assets referenced in this
SECTION 3.1 are collectively referred to as the "ACQUISITION ASSETS".
SECTION 3.2 EXCLUDED ASSETS. Notwithstanding SECTION 3.1 hereof,
SelLer is not selling and Purchaser is not purchasing pursuant to this Agreement
any of the following, all of which shall be retained by Seller (collectively,
the "EXCLUDED ASSETS"):
(a) all employee benefit plans (as defined in ERISA) and all other similar
benefit plans, programs, arrangements or commitments (whether written or oral)
of Seller;
(b) cash and cash equivalents, accounts receivable, contributions
receivable, any other current assets, investments, notes, bonds, stocks, any
other investments, bank and brokerage deposits and accounts, "net bond issue
costs," corporate records, accounting records, claims, any contract, lease or
other assets or property or right thereto directly related to a program listed
on EXHIBIT B hereto entitled "EXCLUDED PROJECTS";
(c) all insurance policies;
(d) all real estate and improvements owned by IDDRS, other than the
Acquired Properties, Improvements and Appurtenances; and
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(e) any other asset other than the Acquisition Assets.
SECTION 3.3 PURCHASE PRICE. The aggregate consideration (THE "PURcHase
Price") for the purchase of the Acquisition Assets and the execution and
delivery by the Seller of the Covenant Not to Compete Agreements (the
"NONCOMPETE AGREEMENT") to the Purchaser shall be $23,773,000, PLUS the amount
of capital expenditures made by Seller and approved by Purchaser since January
1, 1999, and incorporated into the Acquisition Assets in an amount not to exceed
$100,000. The capital expenditure for the water and sewer connection in Wauconda
has been approved by Purchaser. The Purchase Price shall be payable in
accordance with the following:
(a) Prior to the execution of this Agreement, Purchaser has delivered to
Seller the sum of $400,000, which amount serves as xxxxxxx money (together with
any interest thereon, the "XXXXXXX MONEY"). The Xxxxxxx Money shall be applied
against the Purchase Price at Closing. The refundability of the Xxxxxxx Money
shall be governed by the provisions of SECTION 10.2 of this Agreement.
(b) In the event Purchaser elects to pay, and Seller consents to permit
Purchaser to pay, at Closing directly to the applicable creditors the amount
necessary to release any unreleased Liens on the Acquisition Assets (the
"EXCLUDED DEBT") to the extent identified at Closing and which are listed on
SCHEDULE 3.3(A) of this Agreement, the entire amount of the Excluded Debt so
paid by Purchaser at Closing and described on SCHEDULE 3.3(A) shall be applied
against the Purchase Price at Closing.
(c) Upon the terms and subject to the conditions hereof, at the Closing
and in full satisfaction of the Purchase Price, Purchaser shall pay to
Interventions and IDDRS, by wire transfer of immediately available funds to an
account designated in writing by Interventions and IDDRS or certified cashier's
check as Interventions and IDDRS might request at Closing, an aggregate amount
equal to the Purchase Price LESS (i) the Xxxxxxx Money, (ii) the Excluded Debt
paid pursuant to SECTION 3.3(B) above, (iii) a working capital allowance in the
amount of $1,800,000, and (iv) an amount equal to the Seller's accrued vacation
pay assumed by Purchaser under SECTION 4.2(C).
ARTICLE IV
LIABILITIES AND OBLIGATIONS
SECTION4.1 LIABILITIES NOT ASSUMED BY PURCHASER. Except as othErwise
provided in SECTION 4.2 hereof, Purchaser does not assume or agree to pay,
perform or discharge, and shall not be responsible for, any commitments,
contracts, agreements or obligations or claims against, or liabilities of,
Seller whatsoever, including without limitation, the following (collectively,
the "EXCLUDED LIABILITIES"):
(a) except as set forth in SECTION 7.2(B), with respect to real estate
transfer taxes, any sales, use, income, franchise or other tax or charge, if
any, which may become payable by Seller by reason of the sale and transfer of
the Acquisition Assets under federal law or under the laws of any
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state, or may be imposed upon Seller by reason of receipt of the Purchase Price
or relief from any liability pursuant to this Agreement;
(b) any of the costs and expenses incurred in connection with the future
operations of Seller, and, except as expressly provided to the contrary in this
Agreement, the costs and expenses of Seller incurred in negotiating, entering
into and carrying out their obligations pursuant to this Agreement;
(c) the trade accounts payable, accrued liabilities and any other
liabilities of Seller incurred in the course of Seller's operations as of the
Closing Date, any indebtedness (whether short-term or long-term) for borrowed
money, together with all interest thereon, including but not limited to the
Excluded Debt;
(d) any commitments or liability related to events occurring prior to the
Closing Date pursuant to the Contracts, and any commitments or liability arising
before or after the Closing Date with respect to the Management Agreement dated
February 25, 1995, as amended, between the Interventions' contract manager and
Interventions (the "CONTRACT MANAGER AGREEMENT");
(e) any Taxes for which Seller is liable (taking into account the
provisions of SECTION 7.2(A) hereof);
(f) any prepayment penalties or other liabilities related to retiring or
extinguishing any indebtedness of Seller;
(g) any liabilities arising out of or in connection with periods or
activity prior to the Closing Date related to OSHA, EEOC or any other
Governmental Authority, or any violation of law;
(h) any liability or obligation (contingent or otherwise) of Seller
arising out of (i) any claim, litigation, or proceeding threatened or pending on
or before the Closing Date or (ii) any claim, litigation, or proceeding
threatened or initiated after the Closing Date to the extent based on an act or
omission of Seller or any current or former officer, director, employee, agent
or representative of Seller, or (iii) the operation of the Business and/or
Acquisition Assets occurring before the Closing Date, whether or not set forth
on SCHEDULE 5.10;
(i) any liability arising out of or in connection with Seller's defective
performance of any Contract or breach of any express or implied warranty with
respect to performance by Seller of any Contract prior to the Closing Date;
(j) any liability or obligation of Seller arising out of any employee
benefit plan (as defined in ERISA) and all other similar benefit plans,
programs, arrangements or commitments (whether written or oral) of Seller;
(k) any contingent or unknown liability of Seller; and
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(l) any liability or obligation of Seller to the extent it arises
exclusively under or in connection with or related to the Excluded Assets.
SECTION 4.2 ASSUMED LIABILITIES. The Purchaser, at the Closing, bY the
document attached hereto as EXHIBIT 4.2, will assume and agree to pay, perform
and discharge when due solely the following debts, liabilities, obligations and
contracts of the Seller (collectively, the "ASSUMED LIABILITIES");
(a) Seller's obligations relating to events occurring on or after the
Closing Date under the Contracts and the Assumed Leases;
(b) Seller's obligations to its Clients under the Client Accounts solely
to the extent of the cash received at Closing by Purchaser from Seller pursuant
to SECTION 3.1(XI) of this Agreement; and
(c) Seller's accrued vacation pay liability as of the Closing Date for
employees of Seller who are being employed by Purchaser solely to the extent
such liabilities and employees are expressly set forth on SCHEDULE 4.2(C) (which
will be prepared and mutually agreed to by the parties as of Closing) and are
credited against the Purchase Price pursuant to SECTION 3.3(C).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
Each of Interventions and IDDRS, severally with respect to itself, its own
properties, liabilities and activities and not jointly or with respect to the
other Seller or the other Seller's properties, liabilities or activities,
represents, warrants and agrees to and with Purchaser as follows:
SECTION 5.1 ORGANIZATION; QUALIFICATION. Seller is a not-for-Profit
corporation organized, validly existing and in good standing under the laws of
the State of Illinois. Seller has heretofore delivered to Purchaser true,
correct and complete copies of its articles of incorporation and bylaws, each as
amended or restated through the date of this Agreement. Seller has all requisite
corporate power and authority to own and operate its assets and properties and
to carry on its business and the Business as it is now being conducted. Seller
is not qualified to do business in any other state.
SECTION 5.2 AUTHORITY; ENFORCEABILITY. Seller has all requisite corPorate
power and authority to enter into this Agreement. All necessary corporate action
on the part of Seller has been taken to authorize the execution and delivery of
this Agreement, the performance of its obligations hereunder and the
consummation of the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Seller. This Agreement constitutes,
as of the date hereof, and this Agreement and all documents and instruments
required hereunder to be executed and delivered by Seller at or prior to CLOSING
will constitute, on the Closing Date, legal, valid and binding obligations of
Seller enforceable against Seller in accordance with their terms, subject to the
effect of any applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting creditors' rights generally.
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SECTION 5.3 SUBSIDIARIES; AFFiliates. Seller does not have any
SubsidiAries, nor does Seller hold any equity interest in or control nor is
Seller under common control with, (directly or indirectly, through the ownership
of securities, by contract, by proxy, alone or in combination with others) any
corporation, limited liability company, partnership, business organization or
other Person, except as shown on SCHEDULE 5.3.
SECTION 5.4 CONFLICTING AGREEMENTS AND OTHER MATTERS; Consents. Except as
set forth on SCHEDULE 5.4 hereto, the execution and delivery of this Agreement
by Seller does not, the fulfillment of or compliance by Seller with the terms
and provisions hereof will not, and the consummation by Seller of the
transactions contemplated hereby will not:
(a) violate or conflict with any provision of, or require any notice,
consent, authorization or approval under, the articles of incorporation or
bylaws of Seller;
(b) violate or conflict with any provision of, or require any filing,
consent, authorization or approval under, any law or administrative regulation
or any judicial, administrative or arbitration order, award, judgment, writ,
injunction or decree applicable to or binding upon Seller or to which Seller's
assets or properties are subject; or
(c) conflict with, result in a material breach of, constitute a material
default under (whether with notice or the lapse of time or both), accelerate or
permit the acceleration of the performance required by, or require any consent,
authorization or approval under, (i) any mortgage, indenture, deed of trust,
loan or credit agreement or any other agreement or instrument evidencing
indebtedness for money borrowed to which Seller is a party or by which Seller is
bound or to which Seller's properties are subject or (ii) any material lease,
license, contract or other agreement or instrument to which Seller is a party or
by which Seller is bound or to which Seller's assets or properties are subject.
SECTION 5.5 NO DEFAULT; COMPLIANCE WITH LAWS AND REGULATIONS.
(a) Except as set forth on SCHEDULE 5.5, Seller is not in material default
under, and no condition exists that with notice or lapse of time or both would
constitute a material default under, (i) any mortgage, indenture, deed of trust,
loan or credit agreement, or any other agreement or instrument evidencing
indebtedness or borrowed money to which Seller is a party or by which Seller or
any of its properties are bound, (ii) any judgment, order or injunction of any
court or Governmental Authority that is specific to Seller or (iii) any other
agreement, contract, lease or license, including but not limited to the
Contracts and the Assumed Leases.
(b) Except as set forth on SCHEDULE 5.5, Seller is not in violation of any
law, regulation, order, judgment or decree of any federal or state court or
Governmental Authority applicable to its business or operation, the violation of
which would have a material adverse effect on the Business, Transferred Programs
or the Acquisition Assets.
(c) Except as set forth on SCHEDULE 5.5, Seller holds all Permits as are
necessary to carry on its business and the Business as currently conducted in
compliance with all applicable laws, rules,
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regulations and decisions of Governmental Authorities having jurisdiction over
Seller, the Business, the Transferred Programs or the Acquisition Assets except
such as would not have a material adverse effect on the Business, Transferred
Programs or Acquisition Assets, if not obtained. All Permits held by the Seller
relating to the Business, Transferred Programs or Acquisition Assets are set
forth on SCHEDULE 5.5. Seller is not in material violation of any such Permit.
All such Permits are in full force and effect, and no written or oral notice of
suspension, revocation or cancellation thereof has been threatened. No permit is
transferable to Purchaser except as indicated on SCHEDULE 5.5.
SECTION 5.6 FINANCIAL STATEMENTS. Seller has heretofore furnished
PurChaser with the following financial statements: the Intervention Budget v.
Actual report by cost center for the Acquisition Assets for each month for the
period July 1997 through December 1998. Such financial statements fairly present
the revenues and expenses of the Acquisition Assets consistently reported.
Except for ordinary and customary liabilities that have arisen in the ordinary
course of business of Seller related to the Acquisition Assets since December
31, 1998, Seller does not have any liabilities or obligations of any nature
related to the Acquisition Assets (absolute, accrued or otherwise) that are not
reflected in the Balance Sheet.
SECTION 5.7 NO UNDISCLOSED LIABILITIES. Except as set foRTH ON SCHEDulE
5.7, there is no material existing, contingent or threatened liability,
obligation, lien or claim of any nature (absolute, accrued, contingent or
otherwise) that relates to the Business or the Transferred Programs to the
Knowledge of Seller or has been asserted or threatened to be asserted against
Seller with respect to the Acquisition Assets, other than liabilities arising
after the date of the Balance Sheet in the ordinary course of business
consistent with past practice.
SECTION 5.8 ABSENCE OF CERTAIN CHANGES. Except as discloSED ON SCHEDuLe
5.8 hereto, since the date of the Balance Sheet, with respect to the Business or
the Acquisition Assets, there has not been:
(a) any material adverse change in the business, financial condition,
properties or results of operations of Seller;
(b) any material damage, destruction or loss to the tangible property
included in the Acquisition Assets suffered by Seller, whether covered by
insurance or not;
(c) any change by Seller in tax methods, principles or elections or in
accounting methods or principles that would be required to be disclosed under
generally accepted accounting principles;
(d) any sale, lease or other disposition of Acquisition Assets of Seller,
other than those in the ordinary course of business consistent with past
practices;
(e) any merger or consolidation of Seller with any other Person or any
acquisition by Seller of the stock or business of another Person;
(f) any borrowing, agreement to borrow funds or guaranty by Seller or any
termination or amendment of any evidence of indebtedness, contract, agreement,
deed, mortgage, lease, license
9
or other instrument to which any of the Acquisition Assets is bound other than
in the ordinary course of business and consistent with past practices;
(g) any waiver of any claim or right of substantial value to Seller
relating to the Business or Acquisition Assets;
(h) any increase other than in the ordinary course of business consistent
with past practice and not to exceed 10% in the compensation payable or to
become payable by Seller to the directors, officers or employees of Seller, any
increase other than in the ordinary course of business consistent with past
practice and not to exceed 10% in benefits or benefit plan costs or any increase
in any bonus, insurance, compensation or other benefit plan made for or with or
covering any directors, officers or employees of Seller;
(i) any employment, consulting, severance or indemnification agreement
entered into or made by Seller with any of its employees, or any collective
bargaining agreement or other obligation to any labor organization incurred or
entered into by Seller;
(j) the creation or imposition of any lien, other than a Permitted
Encumbrance, on any of the Acquisition Assets;
(k) any reduction in accruals or reserves relating to the Acquisition
Assets, except to the extent of related cash payments or other reductions
consistent with past practice;
(l) any material write-up or write-down of the value of the Acquisition
Assets, except for write-ups or write-downs in accordance with generally
accepted accounting principles and in the ordinary course of business and
consistent with past practice;
(m) any amendment to the articles of incorporation or bylaws of Seller;
(n) any contract or commitment to do any of the foregoing;
(o) any imposition of any new or additional material restriction,
limitation, term or condition under any Permit.
SECTION 5.9 CONTRACTS, AGREEMENTS, PLANS AND COMMITMENTS. SCHEDUlE 5.9
hereto sets forth a complete list of the following contracts, agreements, plans
and commitments to which Seller is a party or by which Seller or any of its
properties is bound as of the date hereof:
(a) any contract, commitment or agreement that involves expenditures by
Seller of more than $20,000 in any one month or $50,000 in any twelve month
period.
(b) any contract or agreement (including any such contracts or agreements
entered into with any Governmental Authority) relating to the maintenance or
operation of the Business that involves expenditures by Seller of more than
$20,000 in any one month or $50,000 in any twelve month period;
10
(c) any indenture, loan agreement or note related to the Acquisition
Assets under which Seller has outstanding indebtedness, obligations or
liabilities for borrowed money;
(d) any lease or sublease for the use or occupancy of real property,
including but not limited to the Assumed Leases;
(e) any agreement related to the Acquisition Assets that restricts the
right of Seller related to the Acquisition Assets to engage in any type of
business;
(f) any guarantee, direct or indirect, by any Person of any contract,
lease or agreement entered into by Seller related to the Acquisition Assets;
(g) any partnership, joint venture or construction and operation agreement
related to the Acquisition Assets;
(h) any agreement of surety, guarantee or indemnification related to the
Acquisition Assets with respect to which Seller is the obligor, outside of the
ordinary course of business;
(i) any contract which is a "Contract" and which requires Seller to pay
for goods or services substantially in excess of its estimated needs for such
items or the fair market value of such items related to the Acquisition Assets;
(j) any contract, agreement, agreed order or consent agreement that
requires Seller to take any actions or incur expenses to remedy non-compliance
related to the Acquisition Assets with any Environmental Law; and
(k) any other contract material to the Business, the Transferred Programs
or the Acquisition Assets.
True, correct and complete copies of each of such contracts, agreements, plans
and commitments have been delivered to or made available for inspection by
Purchaser. All such contracts, agreements, plans and commitments (i) were duly
and validly executed and delivered by Seller and, to the Best Knowledge of
Seller, the other parties thereto, and (ii) are valid and in full force and
effect. Seller has fulfilled all material obligations required of Seller under
each such contract, agreement, plan or commitment to have been performed by it
prior to the date hereof, including timely paying all interest on its debt,
including but not limited to the Excluded Debt, as such interest has become due
and payable. There are no counterclaims or offsets under any of such contracts,
agreements, plans and commitments. Except as shown on SCHEDULE 5.9, the
assignment of the Contracts to Purchaser in connection with the transactions
contemplated herein will vest in Purchaser the right to operate the Business and
Transferred Programs under the terms of the Contracts and to use the Acquisition
Assets in the manner currently operated and used by Seller.
SECTION 5.10 ACTIONS PENDING. Except as set forth on schedule 5.10 hereto,
there is no action, claim, suit, investigation or proceeding pending or, to the
Best Knowledge of Seller,
11
threatened against Seller, the Acquisition Assets, Transferred Programs, the
Business or involving any properties or rights of Seller by or before any court,
arbitrator or Governmental Authority. There is no action, claim, suit,
investigation or proceeding pending or threatened, against Seller which purports
to affect the validity or enforceability of this Agreement or, to the Knowledge
of Seller, that seeks to prohibit, restrict or delay the consummation of the
transactions contemplated hereby. SCHEDULE 5.10 sets forth a summary description
of all current, threatened and prior lawsuits (which were filed or resolved
within the last three years) by or against Seller.
SECTION 5.11 ENVIRONMENTAL. Except as set forTH ON SCHEDULe 5.11 and
without in any manner limiting any other representations and warranties set
forth in this Agreement:
(a) To Seller's Knowledge after Reasonable Inquiry, neither Seller, nor
the Acquisition Assets is in violation of, or is in non-compliance with, any
Environmental Laws in connection with the ownership, use, maintenance, operation
of, or conduct of the Business, Transferred Programs or any Acquisition Asset.
(b) Without in any manner limiting the generality of (a) above:
(i) To Seller's Knowledge after Reasonable Inquiry, except in
compliance with Environmental Laws (including, without limitation, by
obtaining necessary Permits), no Materials of Environmental Concern have
been used, generated, extracted, mined, beneficiated, manufactured,
stored, treated, or disposed of, or in any other way released (and no
release is threatened), on, under or about any Acquisition Assets or
transferred or transported to or from any Acquisition Assets, and no
Materials of Environmental Concern have been generated, manufactured,
stored, treated or disposed of, or in any other way released (and no
release is threatened), on, under, about or from any property adjacent to
any Acquisition Assets;
(ii) To Seller's Knowledge after Reasonable Inquiry, Seller is not,
as a result of the operation or condition of the Business, the Transferred
Programs, the Acquisition Assets, subject to any: (a) contingent liability
in connection with any release or threatened release of any Materials of
Environmental Concern into the environment whether on or off any
Acquisition Assets; (b) reclamation, decontamination or remediation
requirements under Environmental Laws, or any reporting requirements
related thereto; or (c) consent order, compliance order or administrative
order relating to or issued under any Environmental Law;
(iii) To the Seller's Knowledge after Reasonable Inquiry, there are
no Environmental Claims pending or, threatened against Seller, the
Transferred Programs or any of the Acquisition Assets;
(iv) Seller and all of the Acquisition Assets have all Permits
necessary to comply with all Environmental Laws and have made all capital
improvements necessary for compliance with all Environmental Laws
(including, without limitation, for compliance with all Permits), and
operation of Seller's Business, the Transferred Programs and each
12
Acquisition Asset is in compliance in all material respects with all terms
and conditions of such required Permits;
(v) To Seller's Knowledge after Reasonable Inquiry, there are no,
nor have there ever been any, storage tanks or solid waste management
units (not exempt from permit requirements) located on or under any
Acquisition Assets of Seller, and there are no Materials of Environmental
Concern in, under or on any Acquisition Assets in an amount exceeding
naturally occurring background levels for such geographic area or which
would require reporting to any Governmental Authority or remediation to
comply with the most stringent applicable requirements of Environmental
Laws;
(vi) To Seller's Knowledge after Reasonable Inquiry, none of the
off-site locations where Materials of Environmental Concern generated from
any Acquisition Assets or for which Seller has arranged for treatment,
storage, or disposal has been nominated or identified as a facility
requiring remediation which is subject to an existing or potential claim
under Environmental Laws;
(vii) Seller has not been named as a potentially responsible party
under, and no Acquisition Asset, to Seller's Knowledge after Reasonable
Inquiry, has been nominated or identified as a facility which is subject
to an existing or potential claim under CERCLA or similar Environmental
Laws, and no Acquisition Asset is subject to any lien arising under
Environmental Laws;
(viii) Seller has not received any notice of any release or
threatened release of Materials of Environmental Concern, or of any
violation of, noncompliance with, or remedial obligation under,
Environmental Laws or Permits, relating to the ownership, use,
maintenance, operation of the Business, the Acquisition Assets or the
Transferred Programs, nor has Seller voluntarily undertaken remediation or
other decontamination or cleanup of any facility or site in the last five
(5) years or entered into any agreement for the payment of costs
associated with such activity;
(ix) Seller is not aware of any requirement of any Environmental
Laws that will require future compliance costs on the part of Seller in
excess of $10,000 above costs currently expended in the ordinary course of
business;
(x) Seller has filed all notices, notices of intent, notifications,
financial security, waste managements plans, waste generation reports,
Form R and chemical inventory reports, or other applications and documents
which are required to be obtained or filed by Seller for the lawful
operation of the Business or the Transferred Programs or the use or
operation of any Acquisition Asset; and
(xi) To Seller's Knowledge after Reasonable Inquiry, no current
Acquisition Asset contains any asbestos containing materials or
polychlorintated biphenyls in any form nor any wetland areas or other land
subject to restricted development under Environmental Laws.
13
(c) No improvements or alterations have been made to any Acquisition Asset
without a Permit where one was required, nor is there any unfulfilled order
directive of any applicable Governmental Authority or casualty insurance company
that any work of investigation, remediation, repair, maintenance or improvement
required to be performed on the Acquisition Asset;
(d) With regard to any Acquisition Asset, there is no unfulfilled
requirement that any environmental impact statement (or similar document) be
prepared by or filed with any Governmental Authority to evaluate its impact on
the environment; and
SECTION 5.12 INSURANCE. SCHEDULE 5.12 hereto sets forth a list Of all
insurance policies owned by Seller by which Seller or any of the Acquisition
Assets is covered against present losses, all of which are now in full force and
effect. No insurance has been refused with respect to any operations, properties
or assets of Seller nor has coverage of any insurance been limited by any
insurance carrier that has carried, or received any application for, any such
insurance during the last three years. No insurance carrier has denied any
claims made against any of the policies listed on SCHEDULE 5.12 hereto.
SECTION 5.13 Title. Except as shown in schedule 5.13, Seller haS good and
marketable title to all of the Acquisition Assets and, except as noted in
SCHEDULE 5.13, the Acquisition Assets are not subject to any Lien. Seller has
not received any written notice of any material adverse claim that has not been
satisfied with respect to its title to any material Permit, right-of-way,
easement or lease included in the Acquisition Assets. Seller enjoys peaceful and
undisturbed possession under all material Permits or leases included in the
Acquisition Assets under which it is operating, and all such Permits and leases
are valid, subsisting and in full force and effect with respect to the Seller
and to the Knowledge of Seller, with respect to the other parties thereto.
SECTION 5.14 Real Estate.
(a) SCHEDULE 5.14 hereto contains an accurate and complete list of all
real property owned in whole or in part by Seller as part of or related to the
Business and included in the Acquired Properties, and includes the name of the
record title holder thereof and a list of all indebtedness or other obligations
secured by any Lien thereon. None of the buildings, structures or appurtenances
(or any equipment therein) located on any such currently owned or operated real
property, nor the operation or maintenance thereof, violates in any respect any
restrictive covenant, or to the Knowledge of Seller, encroaches on any property
owned by others except as set forth on SCHEDULE 5.13 OR 5.14. No condemnation
proceeding is pending or, to the Knowledge of Seller, threatened which would
preclude or impair in any material respect the use of such real property by
Seller for the purpose for which it is currently, and proposed to be, used.
(b) SCHEDULE 5.14 hereto sets forth a list and summary description
(including property location, parties and annual rental payments) of all leases,
subleases, management agreements and other agreements as part of or related to
the Business or the Transferred Programs and under which Seller is lessor or
lessee of, or uses or occupies or allows the use or occupancy of, any real
property,
14
including but not limited to the Assumed Leases. All such leases, subleases and
other agreements are valid and subsisting and in full force and effect.
(c) Except as set forth on SCHEDULE 5.14, the real and leased property
listed on SCHEDULE 5.14 (i) is connected to and serviced by utilities and public
services all of which are adequate for the use of the real property listed
thereon as the Business is currently conducted, and (ii) is zoned and permitted
for use in the manner in which it is currently being used. Seller has not
experienced during the three years preceding the date hereof any material
interruption in the delivery of adequate quantities of any utilities (including,
without limitation, electricity, natural gas, potable water, water for cooling
or similar purposes and fuel oil) or other public services (including, without
limitation, sanitary and industrial sewer service) required in the operation of
the Business during such period and no such material interruption is, to the
Knowledge of Seller, threatened.
SECTION 5.15 ACCOUNTS RECEIVABLE. All accounts receivable reflecTed on the
Balance Sheet represent services actually performed in the ordinary course of
business and are collectible in the normal operations of the Acquisition Assets
except as reflected in the reserve for doubtful accounts in the Balance Sheet.
The reserve for doubtful accounts reflected in the Balance Sheet has been
determined in accordance with generally accepted accounting principles and on a
basis consistent with prior years.
SECTION 5.16 Taxes.
(a) Seller has caused to be duly filed in a timely manner with the
appropriate Governmental Authorities all Tax Returns required to be filed by or
with respect to the Business and the Acquisition Assets and has caused to be
paid or deposited all Taxes (including estimated Taxes) required with respect to
the periods covered by such Tax Returns or by any taxing authority. All Taxes
required to be collected or withheld with respect to the Business or the
Acquisition Assets have been duly collected or withheld, and all Taxes with
respect to the Business and the Acquisition Assets required under generally
accepted accounting principles to be accrued on the financial statements of
Seller have been so accrued.
(b) No Liens with respect to Taxes exist, and Seller has no reason to
expect that any Lien with respect to Taxes will arise, on or with respect to the
Transferred Programs or the Acquisition Assets, except for Liens imposed by law
and incurred in the ordinary course of business for obligations not yet due.
(c) There is no pending action, proceeding or investigation, and, no
action, proceeding or investigation has been threatened by any Governmental
Authority, for assessment or collection of Taxes with respect to the Transferred
Programs or the Acquisition Assets.
SECTION 5.17 Employee Benefit Plans.
(a) Each Plan and each Benefit Program (defined in SECTION 5.17(B)(IV)
below) is listed on SCHEDULE 5.17 hereto. No Plan or Benefit Program is or has
been (i) covered by Title IV of ERISA, (ii) subject to the minimum funding
requirements of Section 412 of the Code or (iii) a
15
"multi-employer plan" as defined in Section 3(37) of ERISA, nor has Seller
contributed to, or ever had any obligation to contribute to, any multi-employer
plan. Each Plan and Benefit Program intended to be qualified under Section
401(a) of the Code is designated as a tax-qualified plan on SCHEDULE 5.17 and is
so qualified. No Plan or Benefit Program provides for any retiree health
benefits for any employees or dependents of the Seller other than as required by
COBRA (as hereinafter defined). There are no claims pending with respect to, or
under, any Plan or any Benefit Program, other than routine claims for benefits,
and there are no disputes or litigation pending or, to the Knowledge of Seller,
threatened, with respect to any such Plans or Benefit Programs.
(b) Seller has heretofore delivered to Purchaser true and correct copies
of the following, if any:
(i) each Plan and each Benefit Program listed on SCHEDULE 5.18, all
amendments thereto as of the date hereof and all current summary plan
descriptions provided to employees regarding the Plans and Benefit
Programs;
(ii) each trust agreement and annuity contract (or any other funding
instruments) pertaining to any of the Plans or Benefit Programs, including
all amendments to such documents to the date hereof;
(iii) each management or employment contract or contract for
personal services and a completedescription of any understanding or
commitment between Seller and any officer, consultant, director, employee
or independent contractor of Seller; and
(iv) a complete description of each other plan, policy, contract,
program, commitment or arrangement providing for bonuses, deferred
compensation, retirement payments, profit sharing, incentive pay,
commissions, hospitalization or medical expenses or insurance or any other
benefits for any officer, consultant, director, annuitant, employee or
independent contractor of Seller as such or members of their families
(other than directors' and officers' liability policies), whether or not
insured (a "BENEFIT PROGRAM"). ---------------
(c) Each Plan and Benefit Program has been maintained and administered in
all material respects in compliance with its terms and all applicable laws,
rules and regulations. Seller has no commitment or obligation to establish or
adopt any new or additional Plans or Benefit Programs or to increase the
benefits under any existing Plan or Benefit Program.
(d) Except as set forth in SCHEDULE 5.17, neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby will (i) result in any payment to be made by Seller other
than severance, including, without limitation, unemployment compensation, golden
parachute (defined in Section 280G of the Code) or otherwise, becoming due to
any employee of Seller, or (ii) increase any benefits otherwise payable under
any Plan or any Benefit Program.
16
SECTION 5.18 Employees and Labor Matters.
(a) Seller has provided Purchaser with a true and complete list dated as
of December 31, 1998 (the "EMPLOYEE SCHEDULE ") of all employees of Seller
relating to the Acquisition Assets listing the title or position held, base
salary or wage rate and any bonuses, commissions, profit sharing, club
memberships or other compensation or material perquisites payable, all employee
benefits received by such employees and any other material terms of any written
agreement with Seller. As of the date of this Agreement, the combined projected
annual payroll for the calendar year ending December 31, 1998 of Seller required
to operate the Transferred Programs as now operated by Seller is not materially
different from that as listed on the Employee Schedule, and Seller has not
entered into any agreement or agreements pursuant to which the combined annual
payroll of Seller, including projected pay increases in the ordinary course of
business consistent with past practice in an amount not to exceed 10%, overtime
and fringe benefit costs, required to operate the Transferred Programs
(including all administrative and support personnel) would be greater than as
listed on the Employee Schedule. Set forth on SCHEDULE 5.18 is a detailed
description of all health, dental, life and disability insurance plans of
Seller.
(b) Except as set forth on SCHEDULE 5.18, Seller is not a party to or
bound by any written employment agreements or commitments, other than on an
at-will basis. Seller is in substantial compliance with all applicable laws
respecting the employment and employment practices, terms and conditions of
employment and wages and hours of its employees and is not engaged in any unfair
labor practice. To the Knowledge of Seller, all employees of Seller who work in
the United States are lawfully authorized to work in the United States according
to federal immigration laws. There is no labor strike or labor disturbance
pending or, to the Knowledge of Seller, threatened against Seller with respect
to the Transferred Programs and, during the past five years, Seller has not
experienced a work stoppage with respect to the Transferred Programs.
(c) Except as set forth on SCHEDULE 5.18, (i) Seller is not a party to or
bound by the terms of any collective bargaining agreement or other union
contract applicable to any employee of Seller and no such agreement or contract
has been requested by any employee or group of employees of Seller, nor has
there been any discussion with respect thereto by management of Seller with any
employees of Seller, (ii) Seller is not aware of any union organizing activities
or proceedings involving, or any pending petitions for recognition of, a labor
union or association as the exclusive bargaining agent for, or where the purpose
is to organize, any group or groups of employees of Seller, or (iii) there is
not currently pending, with regard to any of its facilities, any proceeding
before the National Labor Relations Board, wherein any labor organization is
seeking representation of any employees of Seller.
SECTION 5.19 INTELLECTUAL PROPERTY RIGHTS. Seller does not owN or, except
for certain software provided by its contract manager, use any patents,
trademarks (whether registered or not) trade names, computer software,
copyrights and patent or know-how licenses (as licensee or licensor) or my other
intellectual property ("INTELLECTUAL PROPERTY RIGHTS") in connection with
Seller's operation of the Business and Acquisition Assets, and Seller is not now
nor upon consummation of the transactions contemplated hereby will be in default
of any obligation with respect to any
17
agreement with others concerning Intellectual Property Rights, except as would
not have a material adverse effect on the Business, Transferred Programs or
Acquisition Assets.
SECTION 5.20 RELATIONSHIPS. Except as set forth on SCHEDULE 5.20, the
Seller has not received notice from any supplier to the Acquisition Assets who
now is such a supplier involving more than $20,000 any month or $50,000 annually
with Seller or from any party to any Contract (each a "CONTRACT Party"), during
the past two years, that such supplier or Contract Party intends to discontinue
doing or materially decrease the rate of business with Seller, and no such
supplier or Contract Party during the past two years has indicated any intention
(a) to terminate its existing business relationship with Seller or (b) not to
continue its business relationship with Seller, whether as a result of the
transactions contemplated hereby or otherwise. Seller has not entered into any
related party transaction during the past year.
SECTION 5.21 CERTAIN PAYMENTS. Neither Seller nor any officer, diRector
or, to the Best Knowledge of Seller, employee of Seller has paid or received or
caused to be paid or received, directly or indirectly, in connection with the
Acquisition Assets (a) any bribe, kickback or other similar payment to or from
any domestic or foreign government or agency thereof or any other Person or (b)
any contribution to any domestic or foreign political party or candidate (other
than from personal funds of such officer, director or employee not reimbursed by
Seller or as permitted by applicable law).
SECTION 5.22 CONDITION AND SUFFICIENCY OF ASSETS. Except as set forth on
SCHEDULE 5.22, the Improvements and Equipment are, to the Best Knowledge of
Seller, in good operating condition and repair (subject to normal wear and tear)
and are adequate for the uses to which they are being put, and Seller is not
aware that any of such Improvements or Equipment is in need of maintenance or
repairs except for ordinary, routine maintenance and repairs that are not
material in nature or cost. Except as set forth on SCHEDULE 5.22, the
Acquisition Assets related to the Transferred Programs constitute all of the
assets and assumed leases held for use or used in connection with the
Transferred Programs other than current assets. Seller has not transferred any
material assets from a Transferred Programs to an Excluded Program in
contemplation of the sale transaction that is the subject of this Agreement.
SECTION 5.23 CLIENT ACCOUNTS. SCHEDULE 5.23 lists each of the Client
Accounts. Each Client Bank Account will be reconciled as of Closing and the cash
in such accounts will be sufficient to satisfy all Client claims against such
accounts.
SECTION 5.24 STUDIES, Etc. Seller has provided to Purchaser all studies,
reports, plans, analyses or similar documents (including all drafts thereof and
whether prepared by Seller's employees or others) in their possession or control
relating to Materials of Environmental Concern and Environmental Laws or
relating to the Transferred Programs and the Acquisition Assets.
18
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller that:
SECTION 6.1 CORPORATE EXISTENCE. Purchaser is a corporation duly
orgaNized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified to transact business in all jurisdictions wherein
the nature of its business or ownership of its assets require such
qualification.
SECTION 6.2 AUTHORITY; ENFORCEABILITY. Purchaser has all requisite
corPorate power and authority to enter into this Agreement. All necessary
corporate action on the part of Purchaser has been taken to authorize the
execution and delivery of this Agreement, the performance of its obligations
hereunder and the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Purchaser. This
Agreement constitutes, as of the date hereof, and this Agreement and all
documents and instruments required hereunder to be executed and delivered by
Purchaser at or prior to Closing will constitute, on the Closing Date, legal,
valid and binding obligations of Purchaser enforceable against Purchaser in
accordance with their terms, subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting creditors'
rights generally.
SECTION 6.3 CONFLICTING AGREEMENTS AND OTHER MATTERS; Consents. Except as
set forth on SCHEDULE 6.3 hereto, the execution and delivery of this Agreement
by Purchaser does not, the fulfillment of or compliance by Purchaser with the
terms and provisions hereof will not, and the consummation by Purchaser of the
transactions contemplated hereby will not:
(a) violate or conflict with any provision of, or require any notice,
consent, authorization or approval under, the articles of incorporation or
bylaws of Purchaser;
(b) violate or conflict with any provision of, or require any filing,
consent, authorization or approval under, any law or administrative regulation
or any judicial, administrative or arbitration order, award, judgment, writ,
injunction or decree applicable to or binding upon Purchaser or to which
Purchaser's assets or properties are subject; or
(c) conflict with, result in a material breach of, constitute a material
default under (whether with notice or the lapse of time or both), accelerate or
permit the acceleration of the performance required by, or require any consent,
authorization or approval under, (i) any mortgage, indenture, deed of trust,
loan or credit agreement or any other agreement or instrument evidencing
indebtedness for money borrowed to which Purchaser is a party or by which
Purchaser is bound or to which Purchaser's properties are subject or (ii) any
material lease, license, contract or other agreement or instrument to which
Purchaser is a party or by which Purchaser is bound or to which Purchaser's
assets or properties are subject.
SECTION 6.4 PENDING LITIGATION. There is no action, claim, suit,
investigation or proceeding pending, or, to the best knowledge of Purchaser,
threatened against Purchaser which
19
purports to affect the validity or enforceability of this Agreement or that
seeks to prohibit, restrict, delay or enjoin the consummation of the
transactions contemplated hereby.
ARTICLE VII
CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES
SECTION 7.1 Employees.
(a) Purchaser may, but shall not be obligated to, offer employment to any
of the employees of the Seller. Seller will not discourage any such person from
accepting such employment with Purchaser. Seller has not made any
representations or promises, oral or written, to employees of Seller concerning
employment by Purchaser.
(b) Purchaser shall not be responsible for any costs, obligations or
liabilities which may result from the termination of employment by Seller of any
employee not hired by Purchaser as of the first payroll date after the Closing;
PROVIDED, HOWEVER, Purchaser shall be responsible for and shall assume any and
all costs, obligations or liabilities directly related to the termination by
Purchaser of any employee of the Business or Transferred Programs who is hired
by Purchaser on or after the Closing Date solely to the extent that such costs,
obligations or liabilities relate directly to the period beginning with the
hiring of such employee by Purchaser and ending with such termination by
Purchaser. Purchaser makes no representation with respect to the comparability
of Purchaser's employee benefits to those offered by Seller. Purchaser
specifically disclaims any obligation to remunerate employees of Seller who,
following the Closing Date, will be employed by Purchaser, at levels comparable
to the aggregate remuneration provided to such employees while employed by
Seller. Prior to the Closing Date, Purchaser and Seller shall have taken all
necessary actions to comply with the Worker Adjustment and Retraining
Notification Act (the "WARN ACT") to the extent it is subject to the WARN Act.
(c) Seller shall take such actions as it deems appropriate to terminate,
modify, alter or amend the existing Plans or Benefit Programs with respect to
employees of the Business due to the transactions contemplated by this
Agreement. Purchaser does not and shall not assume any of such Plans or Benefit
Programs, including, without limitation, any severance plans of Seller.
(d) Seller shall be solely responsible for and shall pay in full to all of
Seller's employees all compensation, bonuses and other payments, and all
vacation pay, and any other benefits otherwise payable under the Benefit
Programs, accrued to the Closing and which Seller is obligated on termination of
employment.
(e) Seller will retain responsibility for, and continue to pay, all
hospital, medical, life insurance, disability, supplemental unemployment and all
other welfare plan expenses and benefits for each Seller employee hired by
Purchaser (and covered dependents) with respect to claims incurred by such
employee or their covered dependents prior to the Closing. Seller will retain
responsibility for, and continue to pay, any life, health or other welfare
benefits payable to each former employee of Seller who terminated employment
with Seller (and their dependents) prior to the Closing in respect of claims
incurred on their behalf prior to the Closing. For purposes of this
20
paragraph, a claim is deemed incurred when the event that first gave rise to the
claim occurred, notwithstanding the fact that such benefits may be paid at a
subsequent date.
(f) Seller is responsible for any liabilities that may arise with respect
to application of Section 4980B of the Internal Revenue Code of 1986 or Part 6
of Subtitle B of Title I of ERISA ("COBRA") with respect to any of its employees
or covered dependents as a result of the transactions contemplated by this
Agreement, as well as for any prior COBRA violations which occurred prior to
Closing. Purchaser is not a successor employer for COBRA purposes.
(g) Purchaser is not, and shall not be deemed to be, a successor employer
to Seller with respect to any Plans or Benefit Programs; and no plan or other
program adopted or maintained by Purchaser after the Closing is or shall be
deemed to be a "successor plan", as such term is defined in ERISA or the Code,
of any such Plan or Benefit Program.
SECTION 7.2 Taxes.
(a) RIGHT TO REFUNDS. If Seller, on the one hand, or Purchaser, on the
other hand, receives a refund of any Taxes for which the other is liable, then
the party receiving such refund shall, within 10 days after its receipt, remit
it to the other party.
(b) TRANSFER TAXES. Seller and Purchaser shall split the real estate
transfer taxes and recording charges as is customary in the locale of each real
property sold.
(c) PURCHASER'S TAXES. Except as set forth in SECTION 7.2(B) with respect
to real estate transfer taxes, Purchaser shall retain and pay any sales, use,
income, franchise or other tax or charge, if any, which may become payable by
Purchaser by reason of the purchase of the Acquisition Assets under federal laws
or under the laws of any state.
SECTION 7.3 Consents. Seller shall use commercially reasonable eFforts (i)
to procure all consents, novations, approvals or waivers in a form reasonably
satisfactory to Purchaser which are necessary to assign the Contracts and
transfer any other Acquisition Assets to Purchaser and (ii) in cooperation with
Purchaser to assist Purchaser in obtaining all Permits and licenses necessary
for the Purchaser to conduct the Business after Closing.
SECTION 7.4 Title.
(a) Purchaser has caused Chicago Title Company (the "TITLE COMPANY"), to
furnish Purchaser a Commitment for Title Insurance (the "COMMITMENT") from the
Title Company addressed to Purchaser covering each Acquired Property and the
Improvements, pursuant to which the Title Company has offered to issue to
Purchaser an Owner's Policy of Title Insurance (the "TITLE POLICY"), together
with legible copies of all instruments described in the Commitment evidencing
defects in, exceptions or objections to or encumbrances upon title to each
Acquired Property and the Improvements. Seller shall bear all costs from the
Title Company associated with obtaining a standard ALTA Title Policy. All Liens
or other exceptions to or imperfections in title to the Acquired Properties
which are shown in the Commitments heretofore received by Purchaser are
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Permitted Encumbrances except for (i) those identified on SCHEDULE 7.4 hereto
and (ii) any which require the Surveys for the specification of location
including without limitation encroachments and matters disclosed by prior
surveys.
(b) Purchaser has ordered a report of searches made of the Uniform
Commercial Code Records in jurisdictions determined by Purchaser in the name of
Seller (the "UCC SEARCHES"), evidencing any Liens relating thereto granted by
Seller. Seller shall bear all costs from the search company associated with the
UCC Searches. Purchaser shall provide a copy of each UCC search report to Seller
promptly upon receipt thereof.
(c) Purchaser shall have 15 business days following receipt of the Survey
provided for in SECTION 7.5 hereof to deliver to Seller its written objections
to any matters reflected in the Commitment which require location from the
survey to evaluate, or the Survey (as defined below). Any such matters which are
not objected to by Purchaser within said 15 business days shall all be
considered Permitted Encumbrances. Seller shall use commercially reasonable
efforts to have the title and survey exceptions raised by Purchaser other than
Permitted Encumbrances cured or removed to the reasonable satisfaction of
Purchaser within 15 days after Purchaser notifies Seller in writing of such
exceptions or objections. If Seller fails to cure or satisfy such objections for
any reason within such time period, Purchaser may either (i) accept conveyance
of title to the Acquired Properties, the Improvements and the Assumed Leases
subject to such uncured matters and proceed with the Closing contemplated herein
(in which event all such matters shall be deemed Permitted Encumbrances), or
(ii) give written notice to Seller electing to terminate this Agreement pursuant
to ARTICLE X hereof.
SECTION 7.5 SURVEYS. Purchaser has ordered surveys (THE "Surveys") Of (i)
each of the Acquired Properties, and (ii) each of the Improvements to be made by
a licensed surveyor. The Surveys shall be prepared to such standards as may be
acceptable to Purchaser and the Title Company and shall contain a certification
in favor of Purchaser and the Title Company that the Surveys are correct and
accurate and that the Properties are free of encroachments, except as shown, the
form and content of which certification shall be approved by the Purchaser and
the Title Company. For purposes of the description of the land to be included in
the deeds to be delivered pursuant to SECTION 9.1(E) hereof, to the extent the
descriptions prepared by the surveyor do not match the relevant description in
SCHEDULE 3.1(I) or the Commitment or other evidence of title to the intended
properties, or to the extent that a description in SCHEDULE 3.1(I) does not,
after the Surveys are received, appear to accurately describe the real property
facility intended to be conveyed, the parties shall attempt in good faith to
agree upon the resolution of any such inconsistency and it shall be a condition
of each party's obligation to close that such agreement on such resolution shall
have been made. Purchaser shall bear all costs from the surveyor associated with
the Surveys.
SECTION 7.6 ENVIRONMENTAL DUE DILIGENCE Seller hereby grants to PurcHaser,
and its counsel, accountants, consultants and other representatives, such access
to its respective business facilities (whether owned, operated, or leased),
personnel and records (including without limitation for purposes of conducting
site inspections, asbestos surveys, or sampling and analyses of soil,
groundwater or other media) as Purchaser may reasonably request, including for
the purpose of
22
conducting an investigation of the (a) compliance of Seller and any of its
Business Properties with applicable Environmental Laws, and (b) the exposure to,
presence, release, or any aspect of management, handling, or use of Materials of
Environmental Concern at any such facility ("ENVIRONMENTAL DUE DILIGENCE"). If
the Closing under this Agreement does not occur, Seller shall cause, at its
expense, (x) any investigation-derived waste generated or created in connection
with performance of the Environmental Due Diligence (including without
limitation, drill cuttings, purged or developed water, or sample remnants) to be
disposed in compliance with applicable Environmental Laws, and (y) any xxxxx or
borings installed during the Environmental Due Diligence to be plugged and
abandoned. Seller shall be responsible for executing on its own behalf any and
all manifests, shipping documents, plugging and abandoning reports and similar
documents in connection with its obligations hereunder, and Seller agrees to
indemnify and hold Purchaser harmless from and against any and all claims,
liabilities, damages and causes of action arising out of its failure to fulfill
such obligations hereunder. Seller shall provide to Purchaser copies of all (a)
Permits, (b) reports or results of all inspections, audits, assessments, and
analytical data and (c) such other information as Purchaser may reasonably
request in the possession or control of Seller regarding any of Seller's current
or prior business facilities or operations and relating to (i) compliance with
applicable requirements of Environmental Laws or (ii) the exposure to, presence,
release, or any aspect of management, handling, or use of Materials of
Environmental Concern. Purchaser shall provide to Seller upon receipt thereof by
Purchaser copies of all such environmental reports.
SECTION 7.7 FURTHER ASSURANCES. Seller and Purchaser shall executE and
deliver to the other, at the Closing or thereafter, any other instrument which
may be requested by the other and which is reasonably appropriate to perfect or
evidence any of the sales, assignments, transfers or conveyances contemplated by
this Agreement or to transfer any Acquisition Assets identified after the
Closing or to obtain any consents or licenses necessary for Purchaser to operate
the Business and Transferred Programs in the manner operated by Seller prior to
Closing.
SECTION 7.8 MAIL RECEIVED AFTER CLOSING. Following the Closing, PurChaser
may receive and open all mail addressed to Seller and, to the extent that such
mail and the contents thereof relate to the Business and Transferred Programs or
the Acquisition Assets, deal with the contents thereof in its discretion.
Purchaser shall notify Seller of (and provide Seller copies of the relevant
portions of) any mail that obliges Seller to take any action or indicates that
action may be taken against Seller. To the extent that such mail and the
contents thereof do not relate to the Business and Transferred Programs or the
Acquisition Assets, such mail and the contents thereof shall be promptly
forwarded to Seller at Seller's address for notices set forth in SECTION 12.4,
or at such other address as may be designated in writing by Seller.
SECTION 7.9 BILLS AND PAYMENTS RECEIVED AFTER CLOSING. Purchaser shall
promptly send Seller any bills or other notices that payment is due that
Purchaser receives after Closing related to obligations of Seller not assumed by
Purchaser under this Agreement, and Seller shall timely pay such bills or other
debts on or before the date that such bills are due. Seller shall promptly send
Purchaser any bills or other notices that payment is due that Seller receives
after Closing related to obligations of Seller expressly assumed by Purchaser
under this Agreement, and Purchaser shall timely pay such bills or other debts
on or before the date that such bills are due. Seller and Purchaser
23
shall each promptly send to the other any payments received by them after
Closing that is an asset of the other.
SECTION 7.10 LOSS DUE TO CONDEMNATION. In the event of a condemNation
proceeding commenced on or before the Closing Date with respect to all or any
material portion of any of the Acquired Properties or the Improvements,
Purchaser may, upon written notice to Seller given within 10 days of receipt of
written notice of such event, terminate this Agreement pursuant to ARTICLE X of
this Agreement. In the event that Purchaser does not elect to terminate, then
this Agreement shall remain in full force and effect, and the transaction hereby
contemplated shall close in accordance with the terms and conditions of this
Agreement except that Seller shall assign to Purchaser at Closing all of
Seller's rights and interests in and to any condemnation awards which have been
paid or are or become payable to Seller.
SECTION 7.11 LOSS DUE TO CASUALTY. In the event of a Substantial LOss or
Damage (defined below) to any of the Acquired Properties or the Improvements by
fire or other casualty prior to the Closing Date, Purchaser may, upon written
notice to Seller within 10 days of receipt of written notice of such event,
terminate this Agreement pursuant to ARTICLE X of this Agreement. In the event
that Purchaser does not elect to terminate, then this Agreement shall remain in
full force and effect, and the transaction hereby contemplated shall close in
accordance with the terms and conditions of this Agreement except that Seller
may elect, with the consent of Purchaser, such consent not to be unreasonably
withheld, to repair the damaged property or improvement prior to Closing. In the
event Seller elects not to repair the property, Seller shall assign to Purchaser
at Closing all of Seller's rights and interests in and to any insurance proceeds
which have been or are or become payable to Seller as a result of such damage or
loss, less reasonable costs and attorneys fees of Seller in connection therewith
plus the amount of the deductible delivered to Purchaser in cash. "SUBSTANTIAL
LOSS OR DAMAGE" shall mean a loss or damage of 25% or more of the square footage
of the Improvement or material damage to a particular Acquired Property or
Improvement which results in the loss of the use thereof for a period exceeding
three months. In the event of a loss or damage arising prior to the Closing Date
that constitutes less than a Substantial Loss or Damage by fire or other
casualty, Purchaser shall not have the right to terminate this Agreement
pursuant to this SECTION 7.11; HOWEVER, Seller shall assign to Purchaser at
Closing all of Seller's rights and interests in and to any insurance proceeds
which have been or are or become payable to Seller as a result of such damage or
loss except such proceeds as may have been used or committed to repair such loss
or damage.
SECTION 7.12 NOTICE OF ENVIRONMENTAL CLAIMS. Seller shall give Prompt
written notice to Purchaser of the commencement of any Environmental Claim, or
inspection by any Governmental Authority with responsibility for enforcing or
implementing any applicable Environmental Laws, and provide to Purchaser such
information as Purchaser may reasonably request regarding such Environmental
Claim, any developments in connection therewith, and, as applicable, Seller's
anticipated or actual response thereto.
SECTION 7.13 BOLINGBROOK AND JOLIET PROGRAMS. Purchaser agrees to continue
the Bolingbrook and Joliet programs included within the Transferred Programs for
a period of at least two years after Closing.
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ARTICLE VIII COVENANTS
SECTION 8.1 SELLER'S COVENANTS. Seller covenants and agrees with PurChaser
as follows:
(a) CONDUCT OF BUSINESS. Except as permitted hereunder or contemplated
hereby or as consented to in writing by Purchaser, through the Closing Date
Seller will (i) conduct the Business in the usual and ordinary course thereof
except with respect to supplies; (ii) communicate regularly with Purchaser and
keep Purchaser closely advised of any material developments relating to the
Business and the Transferred Programs; (iii) permit Purchaser to have access at
reasonable times to the Seller's facilities and to review and copy the books and
records of the Business and the Transferred Programs; (iv) maintain and preserve
the assets of Seller in customary repair, order and condition, reasonable wear
and tear and loss by fire and casualty (which loss shall be governed by SECTION
7.11 hereof) excepted, and proceed with any improvements in progress at the
Improvements associated with the Business and the Transferred Programs subject
to SECTION 8.1(A)(VI) below; (v) use all commercially reasonable efforts to
preserve Seller's business organization intact, to retain the services of
Seller's officers and employees and to preserve Seller's relationships with its
suppliers and all Governmental Authorities with which Seller has engaged in
business related to the Business and the Transferred Programs, including but not
limited by paying suppliers and vendors in accordance with its usual business
practices in a timely fashion; (vi) not make any new commitments or capital
purchases in an amount greater than $25,000, without the prior written consent
of Purchaser which will not be unreasonably withheld; and (vii) not sell or
dispose of any of the Acquisition Assets other than in the ordinary course of
business.
(b) MAINTENANCE OF INSURANCE. Seller will maintain or cause to be
maintained the insurance policies or risk retention programs (or policies or
programs of substantially the same nature) of Seller in full force and effect at
all times until the Closing Date.
(c) INFORMATION AND ACCESS. At all times until the Closing, Seller will
afford representatives, agents and employees of Purchaser access on reasonable
notice and during normal business hours to its offices, senior personnel,
Improvements, equipment, books and records, offices and facilities, tangible
assets, agreements and licenses of Seller as relate to the Acquisition Assets,
the Business and the Transferred Programs in Purchaser's reasonable judgment,
for the purpose of conducting an investigation thereof provided, however, that
Seller may limit or restrict access to employees, officers and facilities to the
extent necessary to minimize disruption to their business. Seller will furnish
to Purchaser such additional financial and operating data and other information
as Purchaser may reasonably request; PROVIDED, HOWEVER, that the confidentiality
of any data or information so acquired shall be maintained by Purchaser and its
representatives in accordance with SECTION 8.2(A) hereof.
(d) COMMERCIALLY REASONABLE EFFORTS. Seller will use its commercially
reasonable efforts to obtain the satisfaction of the conditions to Closing set
forth in SECTION 9.1 hereof.
(e) PUBLIC ANNOUNCEMENTS AND DISCLOSURE OF COMPANY INFORMATION. Subject to
applicable law, at all times until the Closing, Seller will promptly advise, and
obtain the written
25
approval of Purchaser, which approval will not be unreasonably withheld, before
(i) issuing, or permitting any of Seller's directors, officers to issue, any
press release with respect to this Agreement or the transactions contemplated
hereby or (ii) disclosing, or permitting any of Seller's directors, officers,
employees, representatives or agents to disclose, to any Person (other than
Seller or Purchaser or their respective directors, officers, employees,
representatives or agents) nonpublic information regarding Purchaser, other than
disclosures required to obtain the approvals, licenses and consents for the
transactions contemplated hereby, disclosures to those professionals and
advisors who have a need to know, or any other disclosure required by applicable
law.
(f) Other Offers.
(i) Except in connection with the transactions contemplated by this
Agreement, from and after the date hereof and so long thereafter as this
Agreement has not been terminated pursuant to SECTION 10.1 below, neither
Seller nor any officer, director or employee of Seller or any other person
authorized to and acting on Seller's behalf, shall (l) solicit, initiate
or participate in any way in discussions or negotiations with, provide any
information or assistance to or enter into any agreement with, any person
or group of persons (other than Purchaser, its Affiliates or its
representatives) concerning (A) any acquisition of the Seller, any
interest in the Seller or any part of the Acquisition Assets or (B) any
merger, consolidation, or similar transaction involving the Seller, or (2)
assist, solicit or participate in any effort or attempt by any other
person to do or seek to do any of the foregoing (any such proposal or
offer received or made during such period of time being hereinafter
referred to as an "ALTERNATIVE PROPOSAL"). The Seller will promptly inform
Purchaser if Seller is approached with respect to, or otherwise made aware
of, any such solicitation, discussion or negotiation. Notwithstanding the
foregoing, the Seller may furnish information and access to, and may
participate in discussions and negotiate with, and may terminate this
Agreement and enter into an agreement for a sale of assets or a merger,
consolidation or similar transaction, with, any corporation, partnership,
person or other entity that has submitted a written Alternative Proposal
to the Seller if the Board of Directors of the Seller, following
consultation with its legal counsel relating thereto, determines in their
good faith judgment that failing to take such action would constitute a
breach of such Board of Directors' legal duties, including any fiduciary
duties (including any duties of loyalty and care), imposed by law.
(ii) In the event that Seller enters into an agreement at any time
within one year after the date hereof with someone who has submitted or
received from Seller an Alternative Proposal during the time period
referenced in the first sentence of Section 8.1(f) above (a "THIRD PARTY
AGREEMENT"), Seller shall be required to submit to Purchaser a copy of
such Third Party Agreement for its review. Without limiting the foregoing,
in the event that Seller executes a Third Party Agreement for a sale of
Acquisition Assets to or a merger or consolidation with such person and
Seller in fact consummates a sale of Acquisition Assets to or a merger or
consolidation with such person prior to the first anniversary of this
letter of intent, then Seller shall, at the time of closing of such
transaction, pay Purchaser, as a termination fee and as liquidated damages
and as full compensation for any damages
26
sustained or suffered by Purchaser because of any breach hereof by Seller,
cash in an amount equal to $400,000.
(iii) This section shall terminate and be of no further effect in
the event that Purchaser fails to close the purchase of the Acquisition
Assets under this Agreement other than because of Seller's breach of its
obligations in this Agreement.
(g) NOTIFICATION OF CERTAIN MATTERS. Seller and Purchaser shall give
prompt notice to the other of (i) the occurrence or nonoccurrence of any event
the occurrence or nonoccurrence of which would be likely to cause any
representation or warranty of such party contained in this Agreement to be
untrue or inaccurate in any material respect at or prior to the Closing Date
(ii) any material failure by Seller to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder; and
(iii) any investigation or testing by Seller to assess the need for remediation
or the breach or violation of any Environmental Laws; PROVIDED, that the
delivery of any notice pursuant to this SECTION 8.1(G) shall not limit or
otherwise affect the remedies available hereunder to Purchaser.
(h) HSR ACT. Seller will cooperate in good faith in obtaining all required
consents and approvals in making filings under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvement Act of 1976, as amended (the "HSR ACT").
SECTION 8.2 PURCHASER'S COVENANTS. Purchaser covenants and agrees with
Seller as follows:
(a) PUBLIC ANNOUNCEMENTS. Subject to applicable law, at all times until
the Closing, Purchaser will promptly advise, and obtain the written approval of
Seller, which approval will not be unreasonably withheld, before (i) issuing, or
permitting any of Purchaser's directors, officers to issue, any press release
with respect to this Agreement or the transactions contemplated hereby or (ii)
disclosing, or permitting any of Purchaser's directors, officers, employees,
representatives or agents to disclose, to any Person (other than Purchaser or
Seller or their respective directors, officers, employees, representatives or
agents) nonpublic information regarding Seller, other than disclosures required
to obtain the approvals, licenses and consents for the transactions contemplated
hereby, disclosures to those professionals and advisors who have a need to know,
or any other disclosure required by applicable law.
(b) COMMERCIALLY REASONABLE EFFORTS. Purchaser will use its commercially
reasonable efforts to cause the representations and warranties contained in
ARTICLE VI hereof to continue to be true and correct through the Closing Date
and to obtain the satisfaction of the conditions to Closing set forth in SECTION
9.2 hereof.
(c) HSR ACT. Purchaser will cooperate in good faith in obtaining all
required consents and approvals in making filings under the HSR Act.
27
ARTICLE IX
CONDITIONS TO CLOSING
SECTION 9.1 CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
Purchaser to consummate the transactions contemplated herein are subject, at the
option of Purchaser, to satisfaction or waiver of the following conditions:
(a) COMPLIANCE. Seller shall have complied in all material respects with
all of its covenants and agreements contained herein, and all of the
representations and warranties contained in ARTICLE V hereof shall be true and
correct in all material respects on the date hereof and as of the Closing Date.
(b) OFFICER'S CERTIFICATE. Purchaser shall have received a certificate
dated the Closing Date of an executive officer of Seller certifying as to the
matters specified in SECTION 9.1(A) hereof in a form satisfactory to Purchaser.
(c) SELLER'S RESOLUTIONS. Purchaser shall have received certified copies
of resolutions duly adopted by the board of directors of Seller, authorizing and
approving the execution and delivery of this Agreement, including the exhibits
and schedules hereto, and the consummation of the transactions contemplated
herein.
(d) NONCANCELLATION OF CONTRACTS. Subject to the provisions of this
SECTION 9.1, no Contract shall have been canceled, amended or renewed at reduced
per diem levels or otherwise adversely affected prior to Closing.
(e) TRANSFER DOCUMENTS. At Closing, Seller shall execute and deliver to
Purchaser such deeds, bills of sale and other instruments of sale, transfer,
conveyance, assignment and delivery covering the Acquisition Assets or any part
thereof, not inconsistent with this Agreement and containing no provisions or
warranties other than any expressly required by this Agreement, as Purchaser may
reasonably require to assure the full and effective sale, transfer, conveyance,
assignment and delivery to Purchaser of the Acquisition Assets free and clear of
any rights and claims of third parties other than Permitted Encumbrances and
Assumed Liabilities including, but not limited to, the following:
(i) a general warranty deed in a form acceptable to Purchaser, duly
executed by Seller, or its duly authorized agent, duly acknowledged and in
form for recording, conveying to Purchaser good and marketable fee simple
title to each Acquired Property and the Improvements thereon and all of
Seller's right, title and interest in and to the Appurtenances related
thereto free and clear of all liens, encumbrances, covenants, conditions,
restrictions, rights of way, easements, and other matters effecting the
title to the Acquired Property and the Improvements thereon other than
Permitted Encumbrances.
(ii) a general assignment, in the form attached hereto as EXHIBIT
9.1(e)(ii), duly executed by Seller, or its duly authorized agent, duly
acknowledged and in form for recording, conveying to Purchaser all of
Seller's right, title and interest in and to each of the
28
Assumed Leases, free and clear of all liens, encumbrances, covenants,
conditions, restrictions, rights-of-way, easements and other matters
affecting the title to the Assumed Leases.
(iii) a commitment marked by the Title Company to delete all but
Permitted Encumbrances from the standard form of Owner's Policy of Title
Insurance issued by the Title Company in the applicable jurisdiction,
insuring good and marketable fee simple title to the Acquired Property and
Improvements subject only to Permitted Encumbrances, with such
endorsements and/or deletions thereto as are acceptable to Purchaser.
(iv) a xxxx of sale, general assignment and conveyance by Seller
transferring to Purchaser good and marketable title to all of the
Acquisition Assets in the form set forth in EXHIBIT 9.1(E)(III) hereto.
(v) all documents in a form reasonably satisfactory to Purchaser
required for the assignment of Seller's rights under all registrations,
Permits and licenses (to the extent permitted by law), equipment or motor
vehicle leasing agreements, motor vehicle and rolling stock titles, rights
under sales and/or purchase orders and of Seller's rights under all other
Contracts (including the contracts of Seller listed on SCHEDULE 3.1(VIII)
hereto), in each case which constitute a part of the Acquisition Assets.
(vi) originals or copies of all of the Assumed Leases, contracts,
agreements, commitments, books, records, files and other data that (x) are
included in the Acquisition Assets or (y) relate to or affect the
Acquisition Assets and are reasonably necessary for the continued conduct
of the Business and Transferred Programs.
(vii) such other instruments of transfer and assignment in respect
of the Acquisition Assets as Purchaser shall reasonably require and as
shall be consistent with the terms and provisions of this Agreement.
(f) ABSENCE OF MATERIAL ADVERSE EFFECT OR CHANGE. No Material Adverse
Change in the Acquisition Assets or so much of Seller's business as relates to
the Acquisition Assets or Transferred Programs shall have occurred since the
date hereof or shall occur as a result of the consummation of the transactions
contemplated by this Agreement.
(g) PERMITS AND LICENSES. To the extent required under applicable law,
Purchaser shall have obtained or received a transfer of all required permits and
licenses allowing Purchaser to operate the Business and Transferred Programs at
the Acquired Property under the requirements of any applicable Governmental
Authority, or a letter from the appropriate Governmental Authority satisfactory
to Purchaser regarding the issuance of such required permits and licenses to
Purchaser subsequent to Closing.
(h) MAPLE CREEK GROUP HOME PERMIT. Purchaser shall have been issued and
received a special use permit or similar arrangement, in a form satisfactory to
Purchaser, allowing the continued
29
operations of the Maple Creek Group Home site and to allow the continuation and
expansion of the business related to such site.
(i) SOUTHWOOD PERMIT. Purchaser shall have been issued and received a
special use permit or similar arrangement or the existing special use permit
shall be transferred to Purchaser, in a form satisfactory to Purchaser, allowing
the continued operations of the Southwood site and to allow the continuation of
the business related to such site.
(j) RESIDENTIAL SCHOOL. Purchaser shall have received evidence
satisfactory to it that the Residential School at 4100 and 0000 Xxxx Xxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx, is in compliance with the applicable zoning laws.
(k) SURVEYS. Purchaser shall have received surveys required pursuant to
SECTION 7.5 hereto.
(l) ORDERS, ETC. No action, suit or proceeding shall have been commenced
or shall be pending or threatened, and no statute, rule, regulation or order
shall have been enacted, promulgated, issued or deemed applicable to the
Business, the Transferred Programs, the Acquisition Assets or the transactions
contemplated by this Agreement, by any Governmental Authority or court that
reasonably could be expected to (i) materially impair Purchaser's ownership or
operation (as currently conducted) of all or a material portion of the Business,
the Transferred Programs, or the Acquisition Assets, or compel Purchaser to
dispose of or hold separate all or a material portion of Purchaser's or Seller's
business or assets, as a result of the transactions contemplated by this
Agreement or (ii) prohibit consummation of the transactions contemplated by this
Agreement.
(m) REMOVAL OF LIENS. Seller shall have caused any and all Liens other
than Permitted Encumbrances on the Acquisition Assets to be released and shall
have provided Purchaser with real estate lien releases and UCC releases to such
effect.
(n) ADDITIONAL REAL PROPERTY MATTERS.
(i) Purchaser shall have timely received the Survey, each of the
items described in SECTION 7.4 hereof and any objections of Purchaser
thereto (other than with respect to Permitted Encumbrances) shall have
been addressed or waived pursuant to such Section and the parties shall
have resolved any inconsistencies regarding property descriptions as set
forth in SECTION 7.5;
(ii) Except as provided in SECTION 7.2(D) hereof, there shall be no
unpaid ad valorem taxes or assessments levied or assessed against the
Acquired Property for years prior to 1998, and the first installment of
1998 taxes is exempt and the second installment of 1998 taxes is exempt
and is not yet due and payable.
(iii) Each Assumed Leased shall be in full force and effect without
any uncured default and the Purchaser shall have received a consent and
estoppel certificate from the landlord in form and substance satisfactory
to Purchaser; and
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(iv) All leases regarding any of the Acquisition Assets between
Interventions and IDDRS shall have been terminated.
(v) Purchaser shall have received written evidence from applicable
governmental authorities demonstrating that no further action was
necessary under Environmental Laws after removal from service of the
underground storage tank at 0000 Xxxxx Xxxx, Xxxxxxx, Xxxxxxxx, pursuant
to Permit No. 102577 issued by the City of Chicago Department of
Environment.
(o) CONSENTS. All consents and approvals required in connection with (i)
the execution, delivery and performance of this Agreement and (ii) the
assignment of the Contracts and all other agreements necessary for Purchaser to
conduct the Business as it is currently being conducted by Seller, including,
without limitation, those consents listed on SCHEDULES 5.4 AND 5.9 hereto, shall
have been obtained in form satisfactory to Purchaser.
(p) OTHER DOCUMENTS; VERIFICATION BY INDEPENDENT AUDITOR. Seller shall
have delivered to Purchaser such other documents, instruments and certificates
as may be reasonably requested by Purchaser. Purchaser, at its sole cost and
expense, shall have the right to have an independent public auditing firm verify
the accuracy of Seller's representations and warranties and satisfaction of
conditions to Closings which relate the financial condition of the Business.
(q) EBITDA. There shall be no evidence that Seller's annualized EBITDA for
the Contracts (other than those Contracts on EXHIBIT A denoted with a "=") for
the 12-month period ended June 30, 1998 (adjusted as shown on EXHIBIT 9.1(Q) to
be $3,784,987) will fail to continue post-closing.
(r) UNIONS. Except as disclosed on SCHEDULE 5.18, the employees of Seller
shall not be unionized, nor shall there be any plans or other developments for
unionization.
(s) CERTAIN AGREEMENTS. The purchase of certain assets by Purchaser by and
among Seller's contract manager, Xxxxx Xxxxx, Xxxxx Xxxxx and Purchaser either
(i) shall have closed or (ii) shall not have failed to close because of
Purchaser's breach of any obligation of Purchaser to close the transactions
contemplated therein.
(t) OPINIONS OF COUNSEL. Purchaser shall have received the opinions of
counsel to Seller reasonably acceptable to Purchaser and its counsel as to the
matters set forth on, and in the form of, EXHIBIT 9.1(T) attached hereto.
SECTION 9.2 CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of Seller
to consummate the transactions contemplated herein are subject, at the option of
Seller, to satisfaction of the following conditions:
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(a) COMPLIANCE. Purchaser shall have complied in all material respects
with its covenants and agreements contained herein, and the representations and
warranties contained in ARTICLE VI hereof shall be true and correct in all
material respects on the date hereof and as of the Closing Date.
(b) OFFICER'S CERTIFICATE. Seller shall have received a certificate dated
the Closing Date of an executive officer of Purchaser certifying as to the
matters specified in SECTION 9.2(A) hereof in a form satisfactory to Seller.
(c) NON-COMPETITION AGREEMENTS. Any non-competition agreement which Xxxxx
X. Xxxxx or Xxxxx Xxxxx shall have entered into with Purchaser or any affiliate
thereof shall not restrict either party thereto from providing services to
Seller and its affiliates after the closing except to the extent set forth in
the relevant exhibit to the purchase agreement to which Purchaser and Xxxxx
Xxxxx and Xxxxx Xxxxx are parties.
(d) EMPLOYMENT ARRANGEMENTS. Seller and Purchaser shall have made
arrangements satisfactory to both to permit Seller to retain on a cost basis the
services of certain people who were employees of Seller's contract manager prior
to Closing and who become employees of Purchase after Closing.
(e) ORDERS, ETC. No action, suit or proceeding shall have been commenced
or shall be pending or, to the actual knowledge of the officers and directors of
Purchaser, threatened, and no statute, rule, regulation or order shall have been
enacted, promulgated, issued or deemed applicable to the Business, the
Acquisition Assets or the transactions contemplated by this Agreement, by any
Governmental Authority or court that reasonably may be expected to (i) prohibit
Purchaser's ownership or operation of all or a material portion of the Business
or the Acquisition Assets, or compel Purchaser to dispose of or hold separate
all or a material portion of Seller's business or assets, as a result of the
transactions contemplated by this Agreement or (ii) prohibit consummation of the
transactions contemplated by this Agreement.
(f) OPINIONS OF COUNSEL. Seller shall have received the opinions of
counsel of Purchaser reasonably acceptable to Seller and its counsel as to the
matters set forth on, and in the form of, EXHIBIT 9.2(F) attached hereto.
(g) PURCHASER'S RESOLUTIONS. Seller shall have received certified copies
of resolutions duly adopted by the board of directors of Purchaser, authorizing
and approving the execution and delivery of this Agreement, including the
exhibits and schedules hereto, and the consummation of the transactions
contemplated herein.
SECTION 9.3 CONDITIONS TO OBLIGATIONS OF PURCHASER AND SELLER. The
obligations of either Purchaser or Seller to consummate the transactions
contemplated herein are subject, at the option of Purchaser or Seller, to
satisfaction of the following conditions:
(a) ASSIGNMENT TO "FOR-PROFIT" COMPANY. Purchaser shall have held meetings
with, and obtained written consent from, all applicable agencies permitting the
assignment of all Contracts to Purchaser as a "for-profit" company.
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(b) TERMINATION OF CERTAIN AGREEMENTS. At Closing, (i) Seller's contract
manager shall have agreed to terminate its Seller's contract manager Management
Agreement with Seller, without penalty to Seller or Purchaser, and (ii) The
Women's Treatment Center ("TWTC") and Seller shall have terminated the
Transferred Programs portion of their lease, without penalty to Seller or
Purchaser. To the extent Seller is permitted to manage and control such moving
activities, Seller shall bear the reasonable and necessary cost of moving the
tangible property included in the Acquisition Assets that is located in the
Transferred Program portion of the TWTC leasehold to another building acquired
by Purchaser hereunder.
(c) GOVERNMENTAL CONSENT. All necessary Governmental and regulatory
consents and approvals shall have been obtained. All required filings under the
HSR Act shall have been made and all waiting periods with respect thereto shall
have expired. Purchaser shall pay any fees required in connection with the HSR
Act filings.
ARTICLE X
TERMINATION
SECTION 10.1 GROUNDS FOR TERMINATION. This Agreement may be termInated at
any time prior to the Closing Date:
(a) by the mutual written agreement of Seller and Purchaser;
(b) by Purchaser by written notice thereof to Seller if any of the
conditions set forth in SECTION 9.1 hereof shall have become incapable of
fulfillment by or before the Closing Date, and shall not have been waived by
Purchaser or upon the material breach of this Agreement by Seller;
(c) by Seller by written notice thereof to Purchaser if any of the
conditions set forth in SECTION 9.2 hereof shall have become incapable of
fulfillment by or before the Closing Date, and shall not have been waived by
Seller or upon the material breach of this Agreement by Purchaser;
(d) by Purchaser, as set forth in SECTIONS 7.4, 7.10 and 7.11 hereof;
(e) by Seller, as set forth in SECTION 8.1(F)(II); and
(f) by Seller or Purchaser by written notice thereof to the other if the
transactions contemplated hereby shall not have been consummated by July 31,
1999 or such other date as Seller and Purchaser shall agree upon in writing;
PROVIDED, HOWEVER, if the Closing is delayed due to delays in (i) obtaining the
written permission of assigning the Contracts and consents from the user
agencies or other applicable parties, (ii) obtaining all necessary governmental
approvals, (iii) obtaining other contractual consents, if any, (iv) satisfaction
of other conditions, or (v) or for any other matter or condition beyond the
reasonable control of Purchaser or Seller, the Closing Date may be extended by
either party to this Agreement to such period of time reasonably required to
satisfy the condition, but in no event shall the Closing Date be extended beyond
September 30, 1999.
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SECTION 10.2 EFFECT OF TERMINATION. The following provisions shall apply
in the event of a termination of this Agreement:
(a) Except as otherwise set forth in subsections (b) and (c) of this
SECTION 10.2, if this Agreement is terminated by Seller or by Purchaser as
permitted under SECTION 10.1 hereof, Seller shall refund the Xxxxxxx Money to
Purchaser within three business days after such termination of this Agreement
and there shall be no further obligations on the part of Seller or Purchaser or
their respective stockholders, directors, officers, employees, agents or
representatives (except as set forth in this SECTION 10.2, which shall survive
the termination in its entirety). Notwithstanding any other provision set forth
herein, nothing in this SECTION 10.2 shall relieve Seller or Purchaser from
liability for any breach of this Agreement.
(b) If this Agreement is terminated by Seller under SECTION 10.1(C) as a
result of the material breach by Purchaser of its obligations under this
Agreement, Seller shall retain all or a portion of the Xxxxxxx Money as
necessary against its actual damages if such termination of this Agreement by
Seller resulted from Purchaser's breach of this Agreement;
(c) If this Agreement is terminated by Purchaser as a result of the breach
by Seller of its obligations under this Agreement, Seller shall promptly refund
to Purchaser the Xxxxxxx Money. The parties hereto acknowledge and agree that
Purchaser, as a result of the actual damages Purchaser would sustain by reason
of such negligent or willful failure of Seller to perform its obligations
hereunder, could not be made whole by monetary damages, and it is accordingly
agreed that Purchaser shall have the right to elect, in addition to any and all
other remedies at law or in equity, to enforce specific performance under this
Agreement and Seller waive the defense in any such action for specific
performance that a remedy at law would be adequate; and
ARTICLE XI
INDEMNIFICATION
SECTION 11.1 SELLER'S INDEMNITY OBLIGATIONS. Each of InterventioNs and
IDDRS, severally and not jointly, shall indemnify and hold harmless Purchaser
and Purchaser's officers, directors, employees, and Purchaser's wholly-owned
subsidiaries that acquire any of the Acquisition Assets (each a "PURCHASER
INDEMNIFIED PARTY") from and against any and all claims, actions, causes of
action, arbitrations, proceedings, losses, Damages, remediations, liabilities,
strict liabilities, judgments, fines, penalties and expenses (including, without
limitation, reasonable attorneys' fees) (collectively, the "INDEMNIFIED
AMOUNTS") incurred by a Purchaser Indemnified Party or for which a Purchaser
Indemnified Party bears responsibility as a result of (a) any breach or
misrepresentation in any of the representations and warranties made by such
Seller in this Agreement or any certificate or conveyance instrument delivered
in connection with this Agreement, (b) any violation or breach by such Seller of
or default by Seller under the terms of this Agreement or any certificate or
conveyance instrument delivered in connection with this Agreement, or (c) the
Excluded Liabilities of such Seller.
Except for matters within the scope of SECTION 11.1(A) AND (B) of this
Agreement, nothing in SECTION 11.1(C) above shall otherwise require Seller to
indemnify Purchaser's Indemnified Parties
34
for the status of compliance of the Acquired Properties under the Environmental
Laws or the presence, release, use, or handling of, or exposure to, Materials of
Environmental Concern at, in, on, under, or emanating from any of the Acquired
Properties. Nothing in this Agreement, however, shall be construed to constitute
a waiver by Purchaser or any of the other Purchaser Indemnified Parties for any
claims, rights, or remedies they may have or may acquire under the Environmental
Laws, common law, or otherwise with respect to the status of compliance of the
Acquired Properties under the Environmental Laws or the presence, release, use,
or handling of, or exposure to, Materials of Environmental Concern at, in, on,
under, or emanating from any of the Acquired Properties, and Purchaser and the
other Purchaser Indemnified Parties expressly preserve and retain all such
claims, rights, and remedies.
SECTION 11.2 PURCHASER'S INDEMNITY OBLIGATIONS. Purchaser shall indemnify
and hold harmless Seller and Seller's officers, directors and employees (each a
"SELLER INDEMNIFIED PARTY") from and against any and all Indemnified Amounts
incurred by a Seller Indemnified Party as a result of (a) any breach or
misrepresentation in any of the representations and warranties made by Purchaser
in this Agreement or any certificate or instrument delivered in connection with
this Agreement, (b) any violation or breach by Purchaser of or default by
Purchaser under the terms of this Agreement or any certificate or instrument
delivered in connection with this Agreement or (c) the Assumed Liabilities.
SECTION 11.3 INDEMNIFICATION PROCEDURES. All claims for indemnifiCation
under this Agreement shall be asserted and resolved as follows:
(a) A party claiming indemnification under this Agreement (an "INDEMNIFIED
PARTY") shall with reasonable promptness (i) notify the party from whom
indemnification is sought (the "INDEMNIFYING PARTY") of any third-party claim or
claims asserted against the Indemnified Party ("THIRD PARTY CLAIM") for which
indemnification is sought and (ii) transmit to the Indemnifying Party a copy of
all papers served with respect to such claim (if any) and a written notice
("CLAIM NOTICE") containing a description in reasonable detail of the nature of
the Third Party Claim, an estimate of the amount of damages attributable to the
Third Party Claim to the extent feasible (which estimate shall not be conclusive
of the final amount of such claim) and the basis of the Indemnified Party's
request for indemnification under this Agreement.
Within 30 days after receipt of any Claim Notice (the "ELECTION PERIOD"),
the Indemnifying Party shall notify the Indemnified Party (i) whether the
Indemnifying Party disputes its potential liability to the Indemnified Party
with respect to such Third Party Claim and (ii) whether the Indemnifying Party
desires, at the sole cost and expense of the Indemnifying Party, to defend the
Indemnified Party against such Third Party Claim.
If the Indemnifying Party notifies the Indemnified Party within the
Election Period that the Indemnifying Party elects to assume the defense of the
Third Party Claim, then the Indemnifying Party shall have the right to defend,
at its sole cost and expense, such Third Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled at the discretion of the
Indemnifying Party in accordance with this SECTION 11.3(A). The Indemnifying
Party shall have full control of such defense and proceedings. The
35
Indemnified Party is hereby authorized, at the sole cost and expense of the
Indemnifying Party, to file, during the Election Period but prior to receipt of
notice of assumption of the defense from the Indemnifying Party, any motion,
answer or other pleadings that the Indemnified Party shall reasonably deem
necessary or appropriate to protect its interests. If requested by the
Indemnifying Party, the Indemnified Party agrees to cooperate with the
Indemnifying Party and its counsel in contesting any Third Party Claim that the
Indemnifying Party elects to contest, including, without limitation, the making
of any related counterclaim against the person asserting the Third Party Claim
or any cross-complaint against any person. Except as otherwise provided herein,
the Indemnified Party may participate in, but not control, any defense or
settlement of any Third Party claim controlled by the Indemnifying Party
pursuant to this SECTION 11.3 and shall bear its own costs and expenses with
respect to such participation.
If the Indemnifying Party fails to notify the Indemnified Party within the
Election Period that the Indemnifying Party elects to defend the Indemnified
Party pursuant to the preceding paragraph, or if the Indemnifying Party elects
to defend the Indemnified Party but fails to prosecute or settle the Third Party
Claim as herein provided or if the Indemnified Party reasonably objects to such
election on the grounds that counsel for such Indemnifying Party cannot
represent both the Indemnified Party and the Indemnifying Parties because such
representation would be reasonably likely to result in a conflict of interest,
then the Indemnified Party shall have the right to defend, at the sole cost and
expense of the Indemnifying Party, the Third Party Claim by all appropriate
proceedings, which proceedings shall be promptly and vigorously prosecuted by
the Indemnified Party to a final conclusion or settled. The Indemnified Party
shall have full control of such defense and proceedings. The Indemnifying Party
may participate in, but not control, any defense or settlement controlled by the
Indemnified Party pursuant to this SECTION 11.3, and the Indemnifying Party
shall bear its own costs and expenses with respect to such participation.
The Indemnifying Party shall not settle or compromise any Third Party
Claim unless (i) the terms of such compromise or settlement require no more than
the payment of money (i.e., such compromise or settlement does not require the
Indemnified Party to admit any wrongdoing or take or refrain from taking any
action), (ii) the full amount of such monetary compromise or settlement will be
paid by the Indemnifying Party, and (iii) the Indemnified Party receives as part
of such settlement a legal, binding and enforceable unconditional satisfaction
and/or release, in form and substance reasonably satisfactory to it, providing
that such Third Party Claim and any claimed lability of the Indemnified Party
with respect thereto is being fully satisfied by reason of such compromise or
settlement and that the Indemnified Party is being released from any and all
obligations or liabilities it may have with respect thereto. The Indemnified
Party shall not settle or admit liability to any Third Party Claim without the
prior written consent of the Indemnifying Party unless (x) the Indemnifying
Party has disputed its potential liability to the Indemnified Party, and such
dispute either has not been resolved or has been resolved in favor of the
Indemnifying Party or (y) the Indemnifying Party has failed to respond to the
Indemnified Party's Claim Notice.
(b) In the event any Indemnified Party should have a claim against any
Indemnifying Party hereunder that does not involve a Third Party Claim, the
Indemnified Party shall transmit to the Indemnifying Party a written notice (the
"INDEMNITY NOTICE") describing in reasonable detail the nature of the claim, an
estimate of the amount of damages attributable to such claim to the extent
36
feasible (which estimate shall not be conclusive of the final amount of such
claim) and the basis of the Indemnified Party's request for indemnification
under this Agreement.
SECTION 11.4 DETERMINATION OF INDEMNIFIED AMOUNTS. The IndemNified Amounts
payable by an Indemnifying Party hereunder shall be determined (i) by the
written agreement of the parties, (ii) by a final judgment or decree of any
court of competent jurisdiction, or (iii) by any other means agreed to in
writing by the parties. A judgment or decree of a court shall be deemed final
when the time for appeal, if any, shall have expired and no appeal shall have
been taken or when all appeals taken have been fully determined. In calculating
or determining the Indemnified Amounts, such calculation or determination shall
be reduced by any amounts received from any insurance company or other third
party and by amounts receivable from the Title Company.
SECTION 11.5 LIMITATION OF SELLER'S LIABILITY.
(a) Notwithstanding anything to the contrary contained in ARTICLE XI, the
aggregate liability of both Interventions and IDDRS together for any event or
occurrence and for all events and occurrences in the aggregate giving rise to
Seller being required to indemnify Purchaser Indemnified Parties pursuant to (i)
SECTIONS 11.1 (A) AND (B) of this Agreement shall be limited to $5,000,000,
except as set forth in subsection (ii) hereof, (II) SECTION 11.1(A) with respect
to a breach by Seller of any of Seller's representations or warranties set forth
in SECTIONS 5.2, 5.4(A), 5.13 or 5.21 shall be limited to the Purchase Price and
(iii) SECTION 11.1(C) of this Agreement shall be unlimited. Notwithstanding the
preceding sentence, the aggregate liability of Interventions and IDDRS to
Purchaser under SECTION 11.1(C) of this Agreement for the costs of changes to
the Acquired Properties, Improvements and Appurtenances in order to be in
compliance with zoning laws, building permit requirements, OSHA, Americans with
Disabilities Act or similar ordinances, laws or regulations governing the use,
occupancy or physical condition of any Acquired Property, Improvement or
Appurtenance as of Closing shall be limited to One Million Dollars ($1,000,000),
unless such noncompliance was specifically and expressly disclosed in SCHEDULES
5.5, 5.14 OR 5.22 of this Agreement (i.e., the representations and warranties
set forth in SECTIONS 5.5, 5.14 AND 5.22 with respect to such noncompliance are
accurate, the particular Acquired Property, Improvement or Appurtenance is
identified and the matter of noncompliance is specifically identified and
described), in which event neither Interventions nor IDDRS shall have any
obligation under SECTION 11.1(C) to Purchaser for Purchaser's costs of changes
to such Acquired Property, Improvements and Appurtenances at issue in order to
be in compliance for such matter.
(b) Purchaser Indemnified Parties are entitled to indemnification pursuant
to ARTICLE XI under this Agreement only to the extent that the amount of any
Indemnified Amount, individually or in the aggregate, exceeds a deductible of
$100,000.
SECTION 11.6 LIMITATION OF PURCHASER'S LIABILITY.
(a) Notwithstanding anything to the contrary contained in ARTICLE XI, the
aggregate liability of Purchaser for any event or occurrence and for all events
and occurrences in the aggregate giving rise to Purchaser being required to
indemnify Seller Indemnified Parties pursuant to
37
(I) SECTIONS 11.2(A) AND (B) shall be limited to $5,000,000 and (ii) pursuant to
SECTION 11.2(C) of this Agreement shall be unlimited.
(b) Seller Indemnified Parties are entitled to indemnification pursuant to
SECTION 11.2 only to the extent that the amount of any Indemnified Amount,
individually or in the aggregate, exceeds a deductible of $100,000.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 COMMISSIONS. Seller and Purchaser represent and warrAnt to
the other that it has done nothing to create any liability for the payment of
any commission or compensation in the nature of a finder's fee or similar fee to
any broker or any other Person in connection with this Agreement and the
transactions contemplated hereby.
SECTION 12.2 SURVIVAL. The representations and warranties set foRth in
this Agreement and in any certificate or instrument delivered in connection
herewith shall be continuing and shall survive the Closing for a period of two
years following the Closing Date; PROVIDED, HOWEVER, that in the case of all
representations and warranties, there shall be no such termination with respect
to any such representation or warranty as to which a bona fide claim has been
asserted by written notice of such claim delivered to the party or parties
making such representation or warranty prior to the expiration of the survival
period. The covenants and agreements, including but not limited to
indemnification obligations, set forth in this Agreement and in any certificate
or instrument delivered in connection herewith shall be continuing and survive
Closing; PROVIDED, HOWEVER, that the indemnification obligations of the parties
hereto (i) set forth in SECTIONS 11.1(A) and 11.2(A) with respect to a breach of
a representation or warranty shall terminate at the time such particular
representation or warranty shall terminate, and (ii) set forth in SECTIONS
11.1(B) and 11.2(B) shall terminate two years following the Closing Date. The
indemnification obligations of Seller and Purchaser set forth in SECTIONS
11.1(C) AND 11.2(C), respectively, shall survive the Closing indefinitely.
SECTION 12.3 EXPENSES. Except as otherwise provided herein, all costs and
expenses incurred by the Purchaser in connection with this Agreement and the
transactions contemplated hereby (including but not limited to its legal,
accounting, advisory, travel, finders and brokers and other professional fees
and expenses) shall be paid by the Purchaser and all such costs and expenses
incurred by the Seller shall be paid by the Seller.
SECTION 12.4 NOTICES. All notices and other communications herEunder shall
be in writing and shall be deemed to have been received only if and when (i)
personally delivered or (ii) on the third day after mailing, by United States
mail, first class, postage prepaid, by certified mail return receipt requested
addressed in each case as follows (or to such other address as may be specified
by like notice):
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If to Interventions and/or IDDRS to:
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Chairman of the Board
Telephone: 312/000-0000
Facsimile: 312/663-9059
With a copy (which shall not constitute notice) to:
Xxxxxxx & Xxxxxx
Three First Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx Xxxxx
Telephone: 312/000-0000
Facsimile: 312/558-6538
If to Purchaser, to:
Cornell Corrections, Inc.
0000 Xxxx Xxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxx Xxxxxxxx
Telephone: 713/000-0000
Facsimile: 713/623-2853
With a copy (which shall not constitute notice) to:
Xxxxx Liddell & Xxxx LLP
3400 Chase Tower
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone: 713/000-0000
Facsimile: 713/223-3717
SECTION 12.5 ENTIRE AGREEMENT. This Agreement, including all schEdules and
exhibits hereto, which schedules or exhibits are incorporated herein by
reference and deemed to be a part of this Agreement, constitutes the entire
agreement of the parties with respect to the subject matter hereof, and may not
be modified, amended or terminated except by a written instrument specifically
referring to this Agreement signed by all the parties hereto.
SECTION 12.6 GOVERNING LAW. This Agreement shall be governed, conStrued
and enforced in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of laws thereof.
39
SECTION 12.7 ASSIGNMENTS AND THIRD PARTIES. Except as otherwise prOvided
herein, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. No party hereto
shall assign this Agreement or any part hereof without the prior written consent
of the other party; PROVIDED, HOWEVER, that it is understood and agreed that
Purchaser may assign all or any portion of its rights and delegate all or any
portion of its duties hereunder to a wholly-owned subsidiary of Purchaser. No
assignment shall release a party of any of its obligations under this Agreement.
SECTION 12.8 CONFIDENTIAL INFORMATION. From and after the daTe of Closing,
each of Seller and Purchaser shall use reasonable efforts to maintain the
confidentiality of, and shall not disclose to others, and shall protect in
accordance with the Illinois Medical Records Act and any other statutory
requirements, any Confidential Information heretofore or hereafter furnished to
it and owned by the other in connection with the transactions contemplated by
this Agreement. "CONFIDENTIAL INFORMATION" means patient medical records,
employment records, and, if and only to the extent protected in fact by the
party furnishing the same as a trade secret of that party, client lists, pricing
policies, operational methods, marketing plans or strategies, and business
acquisition and expansion plans. Notwithstanding the foregoing, (i) Confidential
Information received from a party shall cease to be such when it becomes
publicly available other than by means of the receiving party's breach of this
paragraph, (ii) a receiving party may disclose such information to the extent
necessary to comply with disclosure requirements of law, regulation or legal
process, and (iii) Purchaser shall have no such duties or obligations with
respect to Confidential Information relating to the Business, as such
Confidential Information is included with the Acquisition Assets being purchased
by Purchaser under this Agreement.
SECTION 12.9 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any of the parties hereto. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible
SECTION 12.10 AMENDMENTS; NO WAIVERS. Any provision of this AgrEement may
be amended or waived prior to the Closing Date if, and only if, such amendment
or waiver is in writing and signed, in the case of an amendment, by all parties
hereto, or in the case of a waiver, by the party against whom the waiver is to
be effective. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
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SECTION 12.11 NO THIRD PARTY BENEFICIARIES. Nothing in this AgrEement
shall entitle any Person other than the parties hereto or their respective
successors and assigns permitted hereby to any claim, cause of action, remedy or
right of any kind.
SECTION 12.12 HEADINGS; USE OF CERTAIN TERMS. The headings and taBle of
contents herein are for convenience only and shall have no significance in the
interpretation hereof. Unless the context shall otherwise require, the singular
shall include the plural and vice versa, and each pronoun in any gender shall
include all other genders.
SECTION 12.13 COUNTERPARTS. This Agreement may be executed in any Number
of counterparts, each of which shall be deemed for all purposes to be an
original, but all of which together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first written above.
INTERVENTIONS, an Illinois not-for-profit
corporation
By:_______________________________________
Name:_____________________________________
Title:____________________________________
IDDRS FOUNDATION, an Illinois not-for-profit
corporation
By:_______________________________________
Name:_____________________________________
Title:____________________________________
CORNELL CORRECTIONS, INC.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
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