1
EXHIBIT 2.8
EXECUTION DRAFT
ASSET PURCHASE AGREEMENT
BETWEEN
PRISON HEALTH SERVICES, INC.,
CORRECTIONAL PHYSICIAN SERVICES, INC.,
KENAN UMAR,
AND
EMRE UMAR
DATED AS OF MARCH 29, 2000
2
TABLE OF CONTENTS
(Not a part of the Agreement)
1. PURCHASE AND SALE OF ASSETS ....................................................................... 1
1.1. Purchase And Sale Of Assets ....................................................................... 1
1.1.1. Leased Real Property ..................................................................... 2
1.1.2. Tangible Personal Property ............................................................... 2
1.1.3. Inventories And Supplies ................................................................. 2
1.1.4. Contract Rights .......................................................................... 2
1.1.5. Trade Name and other Intellectual Property ............................................... 2
1.1.6. Governmental Licenses, Permits and Approvals ............................................. 2
1.1.7. Computer Software ........................................................................ 3
1.1.8. Business Data ............................................................................ 3
1.1.9. Guaranties; Warranties; Indemnities ...................................................... 3
1.1.10. Surety, Payment and Performance Bonds .................................................... 3
1.1.11. Other Assets ............................................................................. 3
1.2. Excluded Assets ................................................................................... 3
1.2.1. Cash ..................................................................................... 3
1.2.2. Ordinary Course of Business Dispositions ................................................. 3
1.2.3. Nonassignable Permits .................................................................... 3
1.2.4. Rights Under This Agreement .............................................................. 3
1.2.5. Minute Books and Stock Ledger ............................................................ 3
1.2.6. Accounts Receivable ...................................................................... 4
1.2.7. Employee Benefit Plans ................................................................... 4
1.2.8. Excluded Contracts ....................................................................... 4
1.2.9. Vehicles ................................................................................. 4
1.2.10. Excess Pharmaceutical Inventory .......................................................... 4
1.2.11. Headquarters ............................................................................. 4
1.2.12. Other Excluded Assets .................................................................... 4
1.3. Conveyance ........................................................................................ 4
1.3. Conveyance ........................................................................................ 4
2. PURCHASE PRICE .................................................................................... 4
2.1. Purchase Price; Assumption of Liabilities ......................................................... 4
2.2. Initial Payment; Escrow ........................................................................... 5
2.3. Post-Closing Adjustment ........................................................................... 5
2.4. Method of Payment ................................................................................. 7
2.5. Allocation ........................................................................................ 7
3. ASSUMPTION OF LIABILITIES ......................................................................... 7
3.1. Assumed Liabilities ............................................................................... 7
3
3.2. Purchaser's Obligations ........................................................................... 7
3.4. Breach of Representations ......................................................................... 9
3.5. Insurance ......................................................................................... 9
3.6. Right of Enforcement and Settlement ............................................................... 9
4. REPRESENTATIONS AND WARRANTIES .................................................................... 9
4.1. Representations and Warranties of Seller .......................................................... 9
4.1.1. Corporate Organization ................................................................... 9
4.1.2. Authorization and Effect of Agreement .................................................... 9
4.1.3. No Restrictions Against Sale of the Assets ............................................... 10
4.1.4. Financial Information .................................................................... 10
4.1.5. No Material Adverse Change Relating to the Business ...................................... 10
4.1.6. Compliance with Laws ..................................................................... 11
4.1.7. Assets used in the Business .............................................................. 11
4.1.8. Assets other than Real Property .......................................................... 11
4.1.9. Real Property ............................................................................ 11
4.1.10. Insurance ................................................................................ 12
4.1.11. Intellectual Property .................................................................... 12
4.1.12. Litigation; Decrees ...................................................................... 13
4.1.13. Contract Rights .......................................................................... 13
4.1.14. Employee Contracts, Union Agreements and Benefit Plans ................................... 15
4.1.15. Labor Relations .......................................................................... 17
4.1.16. Personnel ................................................................................ 18
4.1.17. No Undisclosed Liabilities ............................................................... 18
4.1.18. Environmental Protection ................................................................. 18
4.1.19. Tax Matters .............................................................................. 19
4.1.20. Broker's and Finders' Fees ............................................................... 21
4.1.21. Permits .................................................................................. 21
4.1.22. Books and Records ........................................................................ 21
4.1.23. Shared Assets ............................................................................ 21
4.1.24. Major-Suppliers and Providers ............................................................ 21
4.1.25. Medicare and Medicaid .................................................................... 21
4.1.26. Solvency ................................................................................. 21
4.1.27. Untrue Statements and Omissions .......................................................... 22
4.2. Representations, Warranties And Certain Covenants of Purchaser .................................... 22
4.2.1. Corporate Organization ................................................................... 22
4.2.2. Authorization And Effect Of Agreement .................................................... 22
4.2.3. No Restrictions Against Purchase Of The Assets ........................................... 23
4.2.4. Untrue Statements and Omissions .......................................................... 23
5. PRE-CLOSING COVENANTS.............................................................................. 23
5.1. Press Releases .................................................................................... 23
5.2. Regulatory Filings ................................................................................ 23
5.3. Injunctions ....................................................................................... 23
ii
4
5.4. Investigation By Purchaser ........................................................................ 24
5.5. Confidential Nature of Information ................................................................ 24
5.6. Operation of the Business ......................................................................... 24
5.7. Purchaser's Supplemental Schedules ................................................................ 26
5.8. Seller's Supplemental Schedules ................................................................... 26
5.9. No Shop ........................................................................................... 26
5.10. Satisfaction Of Conditions ........................................................................ 26
6. CONDITIONS PRECEDENT TO THE CLOSING ............................................................... 27
6.1. Conditions Precedent To Obligations Of Purchaser .................................................. 27
6.1.1. No Misrepresentation Or Breach Of Covenants And Warranties ............................... 27
6.1.2. Transfer Documents ....................................................................... 27
6.1.3. No Legal Obstruction ..................................................................... 27
6.1.5. Opinion of Counsel For Seller ............................................................ 28
6.1.6. Consents Under Key Agreements ............................................................ 28
6.1.7. No Material Adverse Change ............................................................... 28
6.1.8. Termination Statements ................................................................... 28
6.1.9. Headquarters Sublease .................................................................... 28
6.1.10. Payments to Significant Vendors .......................................................... 28
6.1.11. Fairness Opinion ......................................................................... 28
6.1.12. Termination of Employment Agreement ...................................................... 28
6.1.13. Name Change .............................................................................. 29
6.1.14. Consulting and Non-Competition Agreements ................................................ 29
6.1.15. Financing ................................................................................ 29
6.1.16. Approval of Board of Directors ........................................................... 29
6.1.17. Insurance ................................................................................ 29
6.1.18. No Undisclosed Liabilities ............................................................... 29
6.1.19. Escrow Agreement ......................................................................... 29
6.2. Conditions Precedent To Obligations Of Seller ..................................................... 29
6.2.1. No Misrepresentation Or Breach Of Covenants And Warranties ............................... 29
6.2.2. Instruments Of Assumption ................................................................ 30
6.2.4. No Legal Obstruction ..................................................................... 30
6.2.5. Certificates ............................................................................. 30
6.2.6. Opinion of Counsel For Purchaser ......................................................... 30
6.2.7. Tradename License ........................................................................ 31
6.2.8. Escrow Agreement ......................................................................... 31
7. THE CLOSING ....................................................................................... 31
7.1. The Closing ....................................................................................... 31
7.3. Seller's Obligations ................................................. ............................ 31
7.3.1. Transfer Documents ....................................................................... 31
7.3.2. Receipts ................................................................................. 31
7.3.3. Escrow Agreement .......................................................................... 31
iii
5
7.3.4. Other .................................................................................... 31
7.4. Purchaser's Obligations ........................................................................... 31
7.4.1. Purchase Price ........................................................................... 31
7.4.2. Assumption Instruments ................................................................... 31
7.4.3. Escrow Agreement ......................................................................... 31
7.4.4. Other .................................................................................... 32
8. SURVIVAL AND INDEMNIFICATION ...................................................................... 32
8.1. Survival .......................................................................................... 32
8.1.1. Survival of Representations And Warranties ............................................... 32
8.1.2. Survival of Covenants .................................................................... 32
8.2. Limitations On Indemnification; Right of Offset ................................................... 32
8.2.1. With Respect To Certain Representations And Warranties ................................... 32
8.2.2. With Respect To Seller's Obligations ..................................................... 33
8.2.3. Right of Offset .......................................................................... 33
8.3. Indemnification ................................................................................... 33
8.3.1. Indemnification By Seller ................................................................ 33
8.3.2. Indemnification By Purchaser ............................................................. 34
8.3.3. Cumulative Rights ........................................................................ 34
8.3.4. Indemnity Payment; Indemnitee; Indemnifying Party ........................................ 34
8.4. Defense of Claims ................................................................................. 34
8.4.1. Third Party Claims ....................................................................... 34
8.4.2. Direct Claims ............................................................................ 36
8.4.3. Failure to Give Timely Notice ............................................................ 36
8.4.4. Subrogation .............................................................................. 36
8.4.5. Payment .................................................................................. 36
8.5. Indemnification in Case of Indemnitee Negligence .................................................. 36
9. OTHER POST-CLOSING COVENANTS ...................................................................... 36
9.1. Employees ......................................................................................... 36
9.1.1. Termination and Offers of Employment for Employees ....................................... 36
9.1.2. Seller's Post-Closing Operations ......................................................... 37
9.2. General Post-Closing Matters ...................................................................... 37
9.2.1. Post-Closing Notifications ............................................................... 37
9.2.2. Access ................................................................................... 37
9.2.3. Guarantees, Etc .......................................................................... 38
9.2.4. Rights of Endorsement .................................................................... 38
9.2.5. Apportionment and Adjustment ............................................................. 38
9.2.6. Payment of IBNR Invoices ................................................................. 38
9.3. Nonassignable Contracts ........................................................................... 39
9.3.1. Nonassignability ......................................................................... 39
9.3.2. Seller To Use Reasonable Efforts ......................................................... 39
9.3.3. If Waivers Or Consents Cannot Be Obtained ................................................ 39
9.3.4. Obligation of Purchaser To Perform ....................................................... 39
iv
6
9.4. Non-Competition ................................................................................... 40
9.5. Transfer Taxes .................................................................................... 40
9.6. Straddle Patients ................................................................................. 40
9.7. Support Services .................................................................................. 41
9.8. Audited Financial Statements ...................................................................... 41
9.9. Calculation NY Rebate ............................................................................. 42
10. TERMINATION ....................................................................................... 42
10.1. Termination ....................................................................................... 42
10.2. Expenses In The Event Of Termination .............................................................. 42
11. MISCELLANEOUS PROVISIONS .......................................................................... 42
11.1. Notices ........................................................................................... 42
11.2. Expenses .......................................................................................... 44
11.3. Successors And Assigns ............................................................................ 44
11.4. Waiver; Effect of Buyer's Investigation ........................................................... 44
11.5. Entire Agreement .................................................................................. 45
11.6. Amendments, Supplements, Etc. ..................................................................... 45
11.7. Rights Of The Parties ............................................................................. 45
11.8. Further Assurances ................................................................................ 45
11.9. Bulk Sales ........................................................................................ 45
11.10. Transfer .......................................................................................... 45
11.11. Governing Law ..................................................................................... 45
11.12. Execution In Counterparts ......................................................................... 46
11.14. Certain Interpretive Matters And Definitions ...................................................... 46
11.15. Cross-References .................................................................................. 46
11.16. Severability ...................................................................................... 46
11.17. Specific Performance .............................................................................. 46
11.18. Arbitration ....................................................................................... 47
v
7
TABLE OF SCHEDULES
(Not a part of the Agreement)
Schedule 1.1.1 Leased Real Property
Schedule 1.1.2 Tangible Personal Property
Schedule 1.1.5 Intellectual Property Rights
Schedule 1.1.6 Permits
Schedule 1.17A Computer Software
Schedule 1.17B Additional Computer Software
Schedule 1.1.10 Performance Bonds
Schedule 1.2.3 Nonassignable Permits
Schedule 1.2.12 Other Excluded Assets
Schedule 2.3 Escrow Agreement
Schedule 2.5 Purchase Price Allocation
Schedule 4.1.3 Conflicts, Defaults, Violations
Schedule 4.1.5 Material Adverse Changes
Schedule 4.1.6 Material Violations of Law
Schedule 4.1.7 Additional Excluded Assets
Schedule 4.1.8 Certain Liens on Tangible Personal Property
Schedule 4.1.10 Insurance
Schedule 4.1.12 Material Litigation or Violation Of Decree
Schedule 4.1.13 Material Contracts
Schedule 4.1.14(a) Employee Plans/ERISA
Schedule 4.1.14(b) Non-Compliance with Employee Plans
Schedule 4.1.15 Labor Matters
Schedule 4.1.16 Personnel of the Business
Schedule 4.1.18(b) Environmental Matters
Schedule 4.1.19(c) Tax Matters
Schedule 4.1.21 Permits
Schedule 4.1.23 Shared Assets
Schedule 4.1.24 Major Suppliers and Customers
Schedule 4.2.3 Purchaser's Permits and Consents
Schedule 5.6(b) Pre-Closing Activities
Schedule 6.1.2 Transfer Documents
Schedule 6.1.5 Opinion of Counsel for Seller
Schedule 6.1.6 Key Agreements
Schedule 6.1.8 Required Termination Statements
Schedule 6.1.10 Payments to Significant Vendors
Schedule 6.1.14(a) Non-Competition Agreement for Xx. Xxxxx Umar
Schedule 6.1.14(b) Non-Competition Agreement for Mr. Emre Umar
Schedule 6.1.14(c) Consulting Agreement for Xx. Xxxxx Umar
Schedule 6.1.14(d) Consulting Agreement for Mr. Emre Umar
Schedule 6.2.2 Assumption Instruments
Schedule 6.2.6 Opinion of Counsel for Purchaser
Schedule 6.2.7 Tradename License Agreement
Schedule 9.1 List of Employees
Schedule 9.2.3 Seller Guarantees
vi
8
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of the 29th day of March, 2000, between PRISON HEALTH SERVICES,
INC., a Delaware corporation ("Purchaser"); CORRECTIONAL PHYSICIAN SERVICES,
INC., a Pennsylvania corporation ("Seller"); KENAN UMAR, a resident of the
Commonwealth of Pennsylvania ("Dr. Umar"); and EMRE UMAR, a resident of the
Commonwealth of Pennsylvania ("Mr. Umar") (Dr. Umar and Mr. Umar and hereinafter
referred to collectively as the "Shareholders").
RECITALS
A. Seller presently conducts the business (the
"Business") of providing managed healthcare services (i) to the Pennsylvania
Department of Corrections with respect to inmates in the Eastern Region of
Pennsylvania pursuant to that certain Comprehensive Medical Services Agreement,
dated January 1, 1998, between Seller and the Commonwealth of Pennsylvania,
Department of Corrections, as amended (the "Pa Contract") and (ii) to the State
of New York, Department of Correctional Services pursuant to an undated Health
Services Agreement (#C160656) between Seller and the State of New York,
Department of Correctional Services effective as of June 1, 1998, as amended
(the "NY Contract").
B. On the date of this Agreement Seller conducts the
Business pursuant to the Pa Contract at the following facilities: Xxxxxxx, Coal
Township, Dallas, Frackville, Graterford, Mahanoy, Retreat & Waymart. On the
date of this Agreement, Seller conducts the Business pursuant to the NY Contract
at the following facilities: Xxxxxx Kill, Bayview, Beacon, Bedford Hills,
Downstate, Fishkill, Green Haven, Queensboro, Sing Sing, Taconic, Mid-Orange and
Otisville. The facilities named in this recital, together with any additional
facilities made a part of either the Pa Contract or the NY Contract between the
date of this Agreement and the Closing Date (as hereinafter defined) are
hereinafter referred to, collectively, as the "Sites."
C. Seller desires to sell and assign to Purchaser, and
Purchaser desires to purchase and assume from Seller, specified assets and
liabilities of the Business on the terms and subject to the conditions set forth
in this Agreement.
D. America Service Group Inc., a Delaware corporation
and the parent corporation of Purchaser ("ASG"), has guaranteed all obligations
of Purchaser pursuant to this Agreement.
E. The Shareholders own 100% of the issued and
outstanding shares of capital stock of Seller.
NOW, THEREFORE, the parties hereto agree as follows:
1. PURCHASE AND SALE OF ASSETS
1.1. Purchase And Sale Of Assets. On the terms and subject to the
conditions hereof, at the Closing (as hereinafter defined), Seller will sell,
transfer, convey, assign and deliver
9
("Transfer") to Purchaser, and Purchaser will purchase and accept from Seller,
all of Seller's right, title and interest in and to the assets and properties
described in this Section 1.1 (the "Assets"):
1.1.1. Leased Real Property Subject to Section 9.3, the
rights and incidents of interest of Seller in and to the real property leases
listed on Schedule 1.1.1 and certain of Seller's rights in and to the real
property leased by Seller pursuant thereto, including all buildings, structures,
fixtures and improvements located thereon to the extent subject to such leases,
together with such additions thereto as shall have been made prior to the
Closing (the "Leased Real Property").
1.1.2. Tangible Personal Property. All furniture, fixtures,
office equipment, telecommunications equipment, medical equipment, and other
tangible personal property (other than Inventory (as hereinafter defined)),
excluding (i) the telephone switch and handsets and data processing equipment
located in the Headquarters (as hereinafter defined) and (ii) the data
processing equipment located at the Sites, held or owned by Seller as of the
Closing which is used primarily in the Business, including, without limitation,
those items of tangible personal property described on Schedule 1.1.2
(collectively, the "Tangible Personal Property").
1.1.3. Inventories And Supplies. All office and medical
supplies and pharmaceuticals held or owned by Seller or held on consignment as
of the Closing on hand at the Sites on the day prior to the Closing Date to the
extent not in excess of normal quantities (collectively, "Inventory");
1.1.4. Contract Rights. Subject to Section 9.3, certain
rights and incidents of interest of Seller as of the Closing in and to (i) all
leases pertaining to Leased Real Property; (ii) those Contracts which are
listed on Schedule 1.1.1 or 4.1.13 (unless indicated to the contrary
thereon), or are of a type which would have been listed on Schedule 4.1.13
except that they provide for payments in an amount less than the applicable
amount set forth in Section 4.1.13 (collectively, the "Assumed Contracts"); and
(iii) all prepaid expenses and security deposits with respect to the Business;
provided that contracts for insurance referred to in Section 3.5 shall not be
included in the Assets;
1.1.5. Trade Name and other Intellectual Property. All
right, title and interest of Seller in and to the name "Correctional Physician
Services" and all other trademarks, trade names, service marks, copyrights, any
applications and registrations therefor, proprietary rights, trade secrets
(including supplier and provider lists), personnel and provider databases,
know-how, manuals, processes, techniques and all rights related thereto and all
right, title and interest of Seller in and to the Seller's web site
(collectively, "Intellectual Property Rights") of Seller used primarily in the
Business or which have in the past been used in the Business and are now
dormant, including without limitation, those listed or described on
Schedule 1.1.5;
1.1.6. Governmental Licenses, Permits and Approvals. All
rights and incidents of interest in and to all transferable licenses, permits
and approvals ("Permits") issued to Seller by any Governmental Agency (as
hereinafter defined) relating primarily to the Business and in effect as of the
Closing, including without limitation, those listed or described on Schedule
1.1.6;
2
10
1.1.7. Computer Software. All computer software programs
(other than off-the-shelf, shrink-wrapped software) used primarily in the
Business, including those items listed on Schedule 1.1.7A, and a license to use
all other computer software programs (other than off-the-shelf, shrink-wrapped
software) used by the Business, including those items listed on Schedule
1.1.7.B;
1.1.8. Business Data. The original documents representing
all current and historical information, files, correspondence, records,
marketing data and plans related to the Business, including, without limitation,
any lists of historical, current and potential personnel, providers and
suppliers of the Business (collectively, the "Business Data");
1.1.9. Guaranties; Warranties; Indemnities. To the extent
assignable, all guarantees, warranties, indemnities and similar rights in favor
of Seller that relate primarily to the Business;
1.1.10. Surety, Payment and Performance Bonds. To the extent
assignable, all surety, payment or performance bonds or similar insurance
contracts entered into by the Seller to the extent that the same relate
primarily to the Business, including those listed on Schedule 1.1.10; and
1.1.11. Other Assets. All other tangible or intangible
properties and assets that are carried on the books with the Seller or that are
owned or held by Seller wherever located that are used exclusively in the
Business as of the Closing, whether or not of a type falling within any of the
categories of assets or properties described in Subsections 1.1.1 to 1.1.10.
1.2. Excluded Assets. Notwithstanding anything contained in this
Agreement to the contrary, the following properties, assets and rights (the
"Excluded Assets") will not be included in the Assets:
1.2.1. Cash. All cash or cash equivalents of Seller wherever
located;
1.2.2. Ordinary Course of Business Dispositions. All of the
properties and assets which shall have been transferred or disposed of by
Seller prior to the Closing in the ordinary course of business without violation
of this Agreement, including Section 5.6;
1.2.3. Nonassignable Permits. Any Permits which are listed
on Schedule 1.2.3 and are incapable of being Transferred without the consent,
approval, novation or waiver of a third person or entity (including without
limitation of a Governmental Agency), if the Transfer or attempted Transfer of
such would constitute a breach of such Permit or a violation of any Law (as
hereinafter defined) and if such consent, approval, novation or waiver is not
obtained;
1.2.4. Rights Under This Agreement. All consideration
received and rights of Seller under this Agreement and other agreements between
the parties entered into in connection with the transactions contemplated
hereby;
1.2.5. Minute Books and Stock Ledger. The corporate minute
books and stock ledger records of Seller;
3
11
1.2.6. Accounts Receivable. Any right, title and interest of
Seller in and to any accounts and other receivables related to the Business, to
the extent attributable to services provided or expenses incurred prior to the
close of business on the day prior to the Closing Date;
1.2.7. Employee Benefit Plans. All Employee Benefit Plans
(as hereinafter defined), including, without limitation, any employment
agreements outstanding with Seller, and all assets held pursuant to such
Employee Benefit Plans;
1.2.8. Excluded Contracts. Any right, title and interest of
Seller in and to (i) Purchase Order No. P0001285, dated November 5, 1999, from
the Xxxxxx County (Florida) Board of County Commissioners; (ii) Purchase Order
No. 00-0000000, dated January 21, 1998, from the Hampton Roads (Virginia)
Regional Jail; (iii) Purchase Order No. 1999-0069, dated June 24, 1999, from the
County of Albemarle (Virginia); and (iv) RFP No. 7092 relating to the provision
of Medical Services for the City Jail of Chesapeake, Virginia (collectively,
the "Excluded Contracts");
1.2.9. Vehicles. Any vehicles owned or leased by Seller;
1.2.10. Excess Pharmaceutical Inventory. Any pharmaceuticals
not on hand at the Sites at the close of business on the day prior to the
Closing Date or pharmaceuticals on hand at the Sites in excess of normal
quantities.
1.2.11. Headquarters. The Headquarters (as hereinafter
defined) and the telecommunications and office equipment used in the Business at
the Headquarters; and
1.2.12. Other Excluded Assets. Any property, asset or right
which either (i) is listed or described on Schedule 1.2.12 or (ii) is not an
Asset as described in Section 1.1 and, in the case of clauses (i) and (ii) of
this Section 1.2.12, was not reflected as an asset (or netted against a
liability) in any Schedule to this Agreement.
1.3. Conveyance. Subject to the provisions of Article 6 and Section
9.3, at the Closing Seller will Transfer to Purchaser good and marketable title
to the Assets, in each case free and clear of any liens other than Permitted
Liens (as hereinafter defined).
1.4. Additional Assets. Seller desires to sell to Purchaser and
Purchaser desires to purchase from Seller, in addition to the Assets, certain
items of office equipment and furniture located at the Headquarters. Purchaser
and Seller will identify such additional assets and will negotiate a purchase
price, in addition to the Purchase Price (as hereinafter defined), for such
assets. Seller will convey such additional assets to Purchaser at the Closing
upon receipt of the negotiated purchase price pursuant to a xxxx of sale in form
acceptable to both parties.
2. PURCHASE PRICE
2.1. Purchase Price; Assumption of Liabilities. In consideration of
the Transfer of the Assets and the other undertakings of Seller hereunder and
subject to the provisions of Section 2.3 hereof, (i) Purchaser will pay
$14,000,000 U.S. Dollars (the "Purchase Price") for the Assets and (ii)
Purchaser will assume the Assumed Liabilities.
4
12
2.2. Initial Payment; Escrow.
(a) At the Closing, in consideration for the Assets,
Purchaser (i) shall pay to Seller an amount equal to $12,167,000 U.S. Dollars,
plus the amount of the Estimated Net Working Capital Surplus (as defined below)
or less the amount of the Estimated Net Working Capital Deficit (as defined
below), as the case may be, and (ii) shall deposit the amount of $1,833,000 U.S.
Dollars in escrow with Bank of America, N.A., as escrow agent (the "Escrow
Agent"), pursuant to an Escrow Agreement (the "Escrow Agreement") substantially
in the form attached hereto as Schedule 2.3. The amount referred to in clause
(i) of the preceding sentence shall be deposited into the bank account referred
to in Section 9.2.6.
(b) Not later than the close of business on the second
business day prior to the Closing Date, Purchaser and Seller shall agree upon
the estimated amount of the Adjusted Net Working Capital (as hereinafter
defined) as of the close of business on the day prior to the Closing Date. For
purposes of such estimate, it shall be assumed that the value of the office and
medical supplies and pharmaceuticals owned by Seller and on hand at the Sites on
such day is $170,000. The excess, if any, of the estimated adjusted current
assets over the estimated adjusted current liabilities is referred to as an
"Estimated Net Working Capital Surplus." The excess, if any, of the estimated
adjusted current liabilities over the estimated adjusted current assets is
referred to as an "Estimated Net Working Capital Deficit." If Purchaser and
Seller are unable to reach agreement regarding the estimated amount of the
Adjusted Net Working Capital prior to the Closing Date, the Closing shall
nevertheless occur and Purchaser shall deposit in escrow with the Escrow Agent
pursuant to the Escrow Agreement an amount of cash equal to the difference
between the estimated amount of the Adjusted Net Working Capital calculated by
Purchaser and the amount calculated by Seller. The cash portion of the Purchase
Price payable at the closing shall be increased or decreased, as the case may
be, by the Estimated Net Working Capital Surplus or Estimated Net Working
Capital Deficit as calculated by Seller.
2.3. Post-Closing Adjustment.
(a) As promptly as practicable following the Closing
Date, Purchaser will prepare a schedule (the "Preliminary Working Capital
Schedule") of balance sheet accounts with respect to the Business sufficient to
permit the calculation of the Adjusted Net Working Capital (as hereinafter
defined) with respect to the Business as of the close of business on the day
prior to the Closing Date. Purchaser shall deliver the Preliminary Working
Capital Schedule to Seller. "Adjusted Net Working Capital" means the current
assets less current liabilities of Seller, both with respect to the Business, as
such terms are defined in accordance with generally accepted accounting
principles, except that (i) Seller's cash and cash equivalents shall be excluded
from the computation; (ii) all assets and liabilities attributable to (x) the
accounts and notes receivable of Seller with respect to the Business as of the
close of business on the day prior to the Closing Date, (y) the Pre-Closing Date
IBNR (as hereinafter defined) with respect to the Business and (z) accounts
payable attributable to the Business as of the close of business on the day
prior to the Closing Date shall be excluded from the computation; (iii) current
assets shall not include any pharmaceuticals, inventory or supplies not on hand
at the Sites or on hand at the Sites in excess of normal quantities; (iv)
current assets shall include the unamortized amount of the 5-year payment and
performance bond obtained by Seller with respect to the Pa Contract; (v)
5
13
insofar as payroll and accrued vacation pay are concerned, current liabilities
shall include only payroll and accrued vacation pay attributable to any payroll
period ending after the Closing Date that relates to the operation of the
Business prior to and after the Closing Date; and (vi) current liabilities shall
exclude the accrued amount as of the close of business on the day prior to the
Closing Date of the NY Rebate (as hereinafter defined). For purposes of
computing Adjusted Net Working Capital, Purchaser and Seller agree that current
assets and current liabilities shall include amounts of Seller's corporate
assets or liabilities to the extent allocable to the Business in accordance with
generally accepted accounting principles on a basis consistently applied.
"Pre-Closing Date IBNR" means the liabilities (with respect to both providers
and third-party vendors) incurred by Seller related to the provision of medical
services to inmates covered by the Pa Contract or the NY Contract prior to the
Closing Date but not represented by accounts payable as of the Closing Date. "NY
Rebate means the amount, if any, that Seller is required to rebate to the State
of New York pursuant to Section 6.B. of the NY Contract for the contract year
ended on May 31, 2000.
(b) Seller shall have 30 calendar days following receipt
of the Preliminary Working Capital Schedule during which to notify Purchaser of
any dispute of any item contained in the Preliminary Working Capital Schedule,
which notice shall set forth in reasonable detail the basis for such dispute. If
Seller does not notify Purchaser of any dispute within such 30 calendar-day
period, the Preliminary Working Capital Schedule shall be deemed to be the
"Final Working Capital Schedule." Purchaser and Seller shall cooperate in good
faith to resolve any dispute as promptly as possible, and upon such resolution,
the Final Working Capital Schedule shall be prepared in accordance with the
agreement of Purchaser and Seller.
(c) If Purchaser and Seller are unable to resolve any
dispute regarding the Preliminary Working Capital Schedule within 15 calendar
days (or such longer period as Purchaser and Seller shall mutually agree in
writing) of notice of a dispute, Purchaser and Seller shall engage Xxxxxxx
Xxxxxxxxxx & Co. (or, if Xxxxxxx Xxxxxxxxxx & Co. is unwilling to serve, another
mutually agreeable independent accounting firm) to resolve all issues having a
bearing on such dispute and such resolution shall be final and binding on the
parties. Xxxxxxx Xxxxxxxxxx & Co. (or such other independent accounting firm)
shall use commercially reasonable efforts to complete its work within 30
calendar days of its engagement. The expenses of Xxxxxxx Xxxxxxxxxx & Co. (or
such other independent accounting firm) shall be shared equally by Purchaser and
Seller. The Final Working Capital Schedule and the calculation of Adjusted Net
Working Capital shall then be prepared by Purchaser and Seller based on the
determination of Xxxxxxx Xxxxxxxxxx & Co. (or such other independent accounting
firm).
(d) If the Adjusted Net Working Capital is a deficit, the
Purchase Price shall be reduced, on a dollar-for-dollar basis, by an amount
equal to the amount of the deficit (such amount being hereinafter referred to as
the "Deficit"). There shall be disbursed to Purchaser from the portion of the
Purchase Price held by the Escrow Agent, within 10 days after the final
determination of the Final Working Capital Schedule pursuant to Sections 2.3(b)
and (c), the amount of the Deficit, plus any Estimated Net Working Capital
Surplus or less any Estimated Net Working Capital Deficit, as the case may be.
To the extent that the portion of the Purchase Price held by the Escrow Agent is
insufficient to pay the Deficit (plus any Estimated Net Working Capital Surplus
or less any Estimated Net Working Capital Deficit, as the case may be), Seller
shall pay the balance of the Deficit (plus any Estimated Net Working Capital
Surplus)
6
14
from other funds. If the Estimated Net Working Capital Deficit exceeds the
amount of the Deficit, Purchaser shall pay to Seller within 10 days after the
final determination of the Final Working Capital Schedule the excess of the
Estimated Net Working Capital Deficit over the Deficit.
(e) If the Adjusted Net Working Capital is a surplus, the
Purchase Price shall be increased, on a dollar-for-dollar basis, by an amount
equal to the amount of the surplus (such amount being hereinafter referred to as
the "Surplus"). Within 10 days after the final determination of the Final
Working Capital Schedule pursuant to Sections 2.3(b) and (c), Purchaser shall
pay to Seller the amount of the Surplus, plus any Estimated Net Working Capital
Deficit or less any Estimated Net Working Capital Surplus, as the case may be.
If the Estimated Net Working Capital Surplus exceeds the Surplus, there shall be
disbursed to Purchaser from the portion of the Purchase Price held by the Escrow
Agent, within 10 days after the final determination of the Final Working Capital
Schedule pursuant to Section 2.3(b) and (c), an amount equal to the excess of
the Estimated Net Working Capital Surplus over the Surplus. To the extent that
the portion of the Purchase Price held by the Escrow Agent is insufficient to
pay the amount referred to in the preceding sentence, Seller shall pay the
balance of such amount from other funds.
2.4. Method of Payment. All payments from one party to another
under this Agreement shall be made by wire transfer of immediately available
federal funds to an account designated in writing by the person or entity to
receive such payment.
2.5. Allocation. For purposes of determining both Purchaser's basis
in the Assets and Seller's gain or loss with respect to the transactions
contemplated by this Agreement pursuant to Section 1060 of the Internal Revenue
Code of 1986, as amended from time to time (the "Code"), and the Treasury
Regulations promulgated thereunder, certain of the Assets will be valued in
accordance with Schedule 2.5. Purchaser and Seller will use such values (subject
to such changes as may be hereafter agreed to by Purchaser and Seller in
writing) in preparing and filing their respective Forms 8594 with the Internal
Revenue Service with respect to the transactions contemplated by this Agreement.
3. ASSUMPTION OF LIABILITIES
3.1. Assumed Liabilities. As partial consideration for the purchase
of the Assets, Purchaser hereby assumes the following liabilities (the "Assumed
Liabilities") of Seller (i) all liabilities of Seller with respect to the
Assumed Contracts to the extent arising after the Closing Date; (ii) all accrued
current liabilities of Seller as of the Closing Date with respect to the
Business with respect to payroll and accrued vacation pay to the extent
attributable to any payroll period ending after the Closing Date that relates to
the operation of the Business prior to and after the Closing Date or solely to
the operation of the Business after the Closing Date; (iii) all liabilities
arising after the Closing Date with respect to the provision of services to
inmates covered by the Pa Contract or the NY Contract; and (iv) any liability of
Seller for the NY Rebate, to the extent disclosed to Purchaser.
3.2. Purchaser's Obligations. Purchaser hereby assumes and agrees
to pay, discharge or perform, as appropriate, when due, the Assumed Liabilities
to the extent such obligations (i)
7
15
accrue after the Closing Date; (ii) are not required to be performed as a result
of Seller's breach or default with respect to any contract, Seller's wrongful
act or omission, Seller's negligent act or omission or Seller's violation of
Law, in each case occurring on or prior to the Closing Date; and (iii) with
respect to any written contracts, copies of which Seller is required to provide
to Purchaser hereunder, are disclosed on the face of such written contracts.
3.3. Excluded Liabilities. Except for the Assumed Liabilities, in
no event shall Purchaser assume, agree to pay, satisfy or discharge or otherwise
have any responsibility for any liabilities or obligations of Seller, and,
without limiting the generality of the foregoing, Assumed Liabilities shall not
include any liabilities or obligations in respect of the following: (i) Taxes
(as hereinafter defined) of Seller of any kind or for any period; (ii) any
liability or obligation of Seller whatsoever which accrued at any time on or
prior to the Closing Date, whether or not such liability or obligation arises
prior or subsequent to the Closing Date, including, without limitation, any
liabilities with respect to payroll and accrued vacation pay and employee claims
or benefits to the extent attributable to any payroll period ending prior to the
Closing Date or ending after the Closing Date that relates solely to the
operation of the Business prior to the Closing Date, distributions payable, debt
or notes payable (including, without limitation, bank overdrafts), insurance
related liabilities (whether known or unknown), including workers' compensation
claims (asserted or unasserted, whether or not reported and whether or not
reserved for, and including liability for the payment of deductible amounts),
and litigation or claims (including, without limitation, contract claims,
discrimination claims, EEOC claims and Medical Malpractice Claims (as
hereinafter defined)); (iii) any liability or obligation of Seller relating to
or arising from Seller's breach of, default under or failure to comply with, at
any time on or prior to the Closing Date, whether or not such liability or
obligation arises prior or subsequent to the Closing Date, any Assumed
Liability; (iv) any liability or obligation of Seller relating to or arising
from Seller's failure in a timely manner to pay or perform any other liability
or obligation which accrued at any time on or prior to the Closing Date, whether
or not such liability or obligation arises prior to or subsequent to the Closing
Date; (v) any liability or obligation of Seller arising out of or with respect
to any third party or governmental claim pending on the Closing Date or
thereafter initiated based on or arising out of the operation of Seller's
business on or prior to the Closing Date, whether or not such liability or
obligation arises prior to or subsequent to the Closing Date; (vi) any liability
or obligation of Seller relating to the breach of any Law (as hereinafter
defined) (including, without limitation, the WARN Act (as hereinafter defined)
and Environmental Laws (as hereinafter defined)); (vii) any liability or
obligation of Seller under or relating to any Employee Benefit Plan (as
hereinafter defined) (including, without limitation, any employment agreements
outstanding with Seller), whether or not such liability or obligation arises
prior to or subsequent to the Closing Date; (viii) any liability or obligation
of Seller arising out of or incurred in connection with the negotiation,
preparation and execution of this Agreement and the transactions contemplated
hereby and any fees and expenses of counsel, accountants, brokers, financial
advisors or other experts of Seller; and (ix) except for the Assumed
Liabilities, any other claim, loss, liability, obligation, damage, cost or
expense of Seller. Seller agrees to pay and settle all its liabilities and
obligations (other than the Assumed Liabilities) in a timely manner. Without
limiting the generality of the foregoing, Seller shall pay, in accordance with
its payroll policies in effect on the Closing Date, all payroll expenses that
are payable after the Closing Date but that relate solely to the operation of
the Business prior to the Closing Date.
8
16
3.4. Breach of Representations. Subject to Article 8, nothing in
Section 3.1 shall limit Purchaser's right to indemnification for the breach by
Seller of any of its representations and warranties contained herein.
3.5. Insurance. With respect to any loss, liability or damage
relating to, resulting from or arising out of the conduct of the Business of
Seller prior to the Closing Date for which Purchaser may be liable pursuant to
Section 3.1 and for which Seller would be entitled to assert, or cause any other
person or entity to assert, a claim for recovery under any policy of insurance
maintained by or for the benefit of Seller ("Insurance"), at the request of
Purchaser, Seller will use reasonable efforts to assert, or to assist Purchaser
to assert, one or more claims under such Insurance covering such loss, liability
or damage, provided that all of Seller's or any of its Affiliates' out-of-pocket
costs and expenses incurred in connection with the foregoing are promptly
reimbursed by Purchaser. Notwithstanding Section 3.1, Seller will be deemed,
solely for the purpose of asserting claims for Insurance pursuant to the
immediately preceding sentence, to have retained liability for such loss,
liability or damage to the extent of the policy limits of the applicable policy
of Insurance.
3.6. Right of Enforcement and Settlement. Immediately after the
Closing, Purchaser shall have complete control over the payment, settlement or
other disposition of the Assumed Liabilities and the right to commence, conduct
and control all negotiations and proceedings with respect thereto. Seller shall
notify Purchaser promptly of any claim made with respect to any Assumed
Liabilities or Assets and shall not, except with the latter's prior written
consent, voluntarily make any payment of, settlement or offer to settle, or
consent to any compromise or admit liability with respect to, any Assumed
Liabilities or Assets. Seller shall cooperate (at Purchaser's expense solely
with respect to out-of-pocket disbursements) with Purchaser in any reasonable
manner requested by Purchaser in connection with any negotiations or proceedings
involving any Assumed Liabilities or Assets.
4. REPRESENTATIONS AND WARRANTIES
4.1. Representations and Warranties of Seller. Seller and each
Shareholder, jointly and severally, represent and warrant to Purchaser as
follows:
4.1.1. Corporate Organization. Seller is a corporation duly
organized, validly existing and in good standing under the Laws of the
Commonwealth of Pennsylvania and has all requisite corporate power and authority
and all Permits necessary to own, lease or otherwise hold the Assets and to
carry on the Business as presently conducted. Seller has delivered to Purchaser
complete and correct copies of (i) Seller's Certificate of Incorporation and all
amendments thereto (certified by the Secretary or an Assistant Secretary of
Seller), and (ii) its By-Laws and all amendments thereto (certified by the
Secretary or an Assistant Secretary of Seller). The Shareholders own all of the
issued and outstanding capital stock of Seller.
4.1.2. Authorization and Effect of Agreement. Seller has all
requisite corporate power and authority to execute and deliver this Agreement
and all of the other agreements, certificates and other documents delivered or
to be delivered on or after the date hereof and at or prior to the Closing in
connection with the transactions contemplated hereby (the "Ancillary Documents")
to which it is or will be a party, and to consummate the transactions
contemplated
9
17
hereby and thereby. The execution and delivery by Seller of this Agreement and
the Ancillary Documents to which it is or will be a party and the consummation
by Seller of the transactions contemplated hereby and thereby to be consummated
by it have been duly authorized by all necessary corporate action on the part of
Seller, including, without limitation, all requisite approval by the
Shareholders pursuant to the Certificate of Incorporation or By-Laws of Seller
or otherwise. This Agreement and the Ancillary Documents to which Seller is or
will be a party have been or will be, as the case may be, duly executed and
delivered by Seller and constitute or will constitute, as the case may be, valid
and binding obligations of Seller, enforceable in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency or other similar Laws of general application affecting the
enforcement of creditors' rights or by general principles of equity limiting the
availability of equitable remedies (whether applied in a proceeding at law or
equity).
4.1.3. No Restrictions Against Sale of the Assets. The
execution and delivery by Seller of this Agreement and the Ancillary Documents
to which Seller is or will be a party do not, and the performance by Seller of
the transactions contemplated hereby and thereby to be performed by it will not,
conflict with, or result in any violation of, or constitute a default (with or
without notice or lapse of time, or both) under, any provision of the
Certificate of Incorporation or By-Laws of Seller or any Contract, Permit or Law
applicable to the Business or the Assets, or give rise to any right by any third
party to terminate or accelerate the performance or payment under any Contract,
other than any such conflicts, violations, defaults or rights (i) which are
listed or described on Schedule 4.1.3 or (ii) which individually or in the
aggregate do not have a material adverse effect on the business, financial
condition or results of operations of the Business. Except as listed or
described on Schedule 4.1.3, no material consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Agency is required to be obtained or made by or with respect to Seller in
connection with the execution and delivery by Seller of this Agreement or the
Ancillary Documents to which Seller is or will be a party or the consummation by
it of the transactions contemplated hereby and thereby to be consummated by it.
4.1.4. Financial Information. The information provided by
Seller to Ernst & Young LLP in connection with such firm's performance of
specific procedures on behalf of Purchaser in connection with the transaction
contemplated by this Agreement was true, correct and complete and did not
contain any untrue statement of a material fact and did not omit to state any
material fact necessary to make the statements contained therein not misleading.
4.1.5. No Material Adverse Change Relating to the Business.
Except as described on Schedule 4.1.5, since December 31, 1999, the Business has
been conducted in the ordinary course and Seller has not (a) suffered,
individually or in the aggregate, any material adverse change in the business,
financial condition or results of operations of the Business; (b) received any
notice terminating or purporting to terminate the Pa Contract or the NY
Contract; (c) suffered any damage, destruction or casualty loss which
individually or in the aggregate materially and adversely affects the business,
financial condition or results of operation of the Business; (d) incurred or
discharged any material obligation or liability except in the ordinary course of
business; (e) entered into any material transaction or made any material
expenditures or commitments not in the ordinary course of its business
consistent with past practice except, in any such case, as specified in or
contemplated by other sections of this Agreement; (f)
10
18
mortgaged, pledged or subjected to any Lien (as hereinafter defined) any of the
Assets other than with respect to liabilities incurred since December 31, 1999
in the ordinary course of business that, individually and in the aggregate are
not material; (g) sold or transferred any of the Assets material to the
Business, canceled any material debts or claims or waived any material rights,
except in the ordinary course of business; or (h) granted any general or uniform
increase in the rates of pay of employees or any material increase in salary
payable or to become payable by Seller to any officer or employee, consultant or
agent (other than normal increases consistent with past practices), or by means
of any bonus or pension plan, contract or other commitment, increased in a
material respect the compensation of any officer, employee, consultant or agent,
except in the ordinary course of business.
4.1.6. Compliance with Laws. Except as listed or described
on Schedule 4.1.6, the Business is not being conducted in violation of, and
neither Seller nor any of its Affiliates has received any notice of any current
violation of, any applicable Law, other than violations which do not,
individually or in the aggregate, have a material adverse effect on the
business, financial condition or results of operations of the Business.
4.1.7. Assets used in the Business. Except for the Excluded
Assets, the Assets constitute all of the assets and properties used primarily in
the conduct of the Business as presently conducted. Except for the Headquarters
and the telecommunications and office equipment used in the Business at the
Headquarters, which are Excluded Assets, there are no assets or properties which
are used in the conduct of the Business as presently conducted which,
individually or in the aggregate, are material to the conduct of the Business,
or necessary for its operation, or customarily used in the Business, and are not
included in the Assets. Except for the Headquarters, the telecommunications and
office equipment referred to in the previous sentence and the Excluded Assets
and except as set forth on Schedule 4.1.7, the Assets include all assets and
properties from which any income of the Business was derived for the year ended
December 31, 1999, other than assets and properties disposed of by Seller or any
Affiliate of Seller since December 31, 1999 in the ordinary course of business
without violation of this Agreement, including Section 5.6.
4.1.8. Assets other than Real Property. Seller has good and
marketable title to the Assets free and clear of all mortgages, liens, security
interests, imperfections of title or other encumbrances (collectively, "Liens"),
except for (a) Liens that are listed or described on Schedule 4.1.8, (b)
mechanics', carriers', workmen's, repairmen's or other like Liens arising or
incurred in the ordinary course of business and (c) Liens for real estate taxes,
assessments and other similar governmental charges which are not currently due
and payable or which may thereafter be paid without penalty or which are being
contested in good faith. The Liens referred to in clauses (b) and (c) of the
exception in the immediately preceding sentence are hereinafter referred to as
"Permitted Liens". Except as set forth on Schedule 4.1.8, all Tangible Personal
Property is in good operating condition, having been maintained in accordance
with the practices followed by comparable businesses, and is reasonably adequate
for the operation of the Business as presently conducted.
4.1.9. Real Property. Except for the Leased Real Property
and the corporate headquarters facility located in Blue Xxxx, Pennsylvania (the
"Headquarters"), Seller does not own any fee or leasehold or other interests in
any real property used in the conduct of the
11
19
Business or necessary for the continued conduct of the Business as presently
conducted. Seller has a good, marketable and insurable leasehold interest in the
Headquarters. To Seller's knowledge there are no legal restrictions on Seller's
use of the Headquarters that would prevent Purchaser from using space therein
leased from Seller to conduct the Business. Schedule 1.1.1 lists the present
lessor and lessee under each lease of the Leased Real Property. True and correct
copies of each lease with respect to the Leased Real Property have been made
available to Purchaser. Such leases are valid, binding and enforceable in
accordance with their respective terms, and Seller has not given nor received
written notice of any default under any such lease. The condition of the Leased
Real Property and the Headquarters is such that it will not materially adversely
affect the operations of the Business on or from such Leased Real Property. All
of the improvements on land intended to be included in the Assets are in good
operating condition, having been maintained in accordance with the practices
followed by comparable businesses, in view of the purpose for which such
improvements are being used, free of any material structural or engineering
defects known to Seller.
4.1.10. Insurance. Schedule 4.1.10 sets forth a list and
description, including policy numbers, names and addresses of insurers and
expiration dates, of all material policies of fire, liability and other forms of
insurance in effect as of the date hereof maintained by Seller or any of its
Affiliates with respect to the Business or the Assets (all of which (or similar
policies) will be maintained in effect until the Closing). All such policies are
in full force and effect and all premiums due and payable in respect thereof
have been paid. Since the respective dates of such policies, no notice of
cancellation or non-renewal with respect to any such policy has been received by
Seller. Schedule 4.1.10 sets forth a list of all pending claims and the status
as of the date of this Agreement of all deductibles with respect to all such
policies, and loss runs for the previous five years, as of the date of this
Agreement, with respect to such policies. No insurance coverage or insurance
policy, or any interest therein, relating to the Business or the Assets will be
conveyed by Seller to Purchaser in connection with the consummation of the
transactions contemplated by this Agreement.
4.1.11. Intellectual Property.
(a) Schedule 1.1.5 sets forth a complete and correct list
of each United States and foreign patent, trademark, trade name, service xxxx,
copyright and application therefor (hereinafter the "Patent and Trademark
Rights") owned by Seller and used primarily in the Business. To the knowledge of
Seller, the Business as now conducted does not conflict with and has not been
alleged to conflict with any patents, trademarks, trade names, service marks or
copyrights of others. Seller does not know of any use by others of any of the
Patent and Trademark Rights that would be material to the Business as presently
conducted.
(b) Schedules 1.1.7A and 1.1.7B set forth a complete and
correct list of (i) all computer software programs that are proprietary to
Seller (the "Proprietary Software") and used primarily in the Business; (ii) all
computer software programs licensed to Seller that are material to the conduct
of the Business (other than "off-the-shelf" software owned by or licensed to
Seller) (the "Licensed Software" and together with the Proprietary Software,
collectively, the "Software"); (iii) all agreements relating to Licensed
Software; and (iv) all agreements relating to the use by third parties of any
Software. Seller owns or possesses valid license rights to all Software. There
are no infringement suits, actions or proceedings pending or, to the knowledge
12
20
of Seller, threatened against Seller with respect to any Software. To the
knowledge of Seller, there are no infringement suits, actions or proceedings
pending or threatened against the owner of any Licensed Software. To the
knowledge of Seller, Seller's license, sublicense, agreement or permission
covering the Licensed Software is (i) legal, valid, binding and enforceable and
is in full force and effect and (ii) has not been breached by Seller or the
third-party. Subject to receipt of any consents described in Section 4.1.3 that
are applicable to the Licensed Software, the consummation of the transactions
contemplated hereby will not result in the loss or impairment of Seller's right
to use any Licensed Software that is material to the operations of the Business
following the Closing.
4.1.12. Litigation; Decrees. There is no claim, action, suit,
proceeding or governmental investigation, including, without limitation, any
such claim, action, suit, proceeding or investigation relating to this Agreement
or the transaction contemplated by this Agreement, pending or, to the knowledge
of Seller, threatened against Seller by or before any court, governmental or
regulatory authority or by any third party. Except as listed or described on
Schedule 4.1.12, there are no lawsuits, claims, administrative or other
proceedings and investigations pending or, to the knowledge of Seller,
threatened by, against or affecting Seller or any of its Affiliates, arising out
of or relating to the conduct of the Business or otherwise which, if determined
adversely, could, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the business, financial condition or results
of operations of the Business and Seller is not aware of any facts or
circumstances that could be reasonably expected to give rise to any such suits,
claims, investigations or proceedings; provided, however, that the inclusion of
any matter on Schedule 4.1.12 will not be deemed an admission by Seller that
such listed matter would have such a material adverse effect. Except as set
forth on Schedule 4.1.12, Seller is not in default under any judgment, order or
decree of any Governmental Agency to which Seller is a party, or that, to
Seller's knowledge, is applicable to the conduct of the Business or the Assets
except for such defaults which, individually or in the aggregate, do not, and,
insofar as reasonably can be foreseen, in the future will not, have a material
adverse effect on the business, financial condition or results of operations of
the Business; provided, however, that the inclusion of any matter on Schedule
4.1.12 will not be deemed an admission by Seller that such listed matter would
have such a material adverse effect. There is no material condemnation
proceeding pending or, to the knowledge of Seller, threatened against any of the
Real Property.
4.1.13. Contract Rights. Except as listed or described on
Schedule 1.1.1, 4.1.13, or 4.1.14, Seller is not a party to or bound by any
Contract relating to the Business that is of a type described below:
(a) Any employment or consulting Contract (other than an
Employee Plan) with an employee that is not terminable at will by Seller and
that will require aggregate future payments in excess of $25,000 in the case of
any one Contract or $50,000 in the aggregate for all Contracts of such type;
(b) Any collective bargaining or other Contract with any
labor union;
13
21
(c) Any Contract for capital expenditures or the
acquisition, construction or modification of fixed assets which requires
aggregate future payments of $25,000 or more in the case of any one Contract or
$50,000 or more in the aggregate for all Contracts of such type;
(d) Any Contract (other than a Contract of the type
referred to in clause (a) or (c) of this Section 4.1.13 or a purchase order
issued in the ordinary course of business) for the purchase, maintenance or
acquisition of materials, supplies, merchandise, equipment or other property or
services (including consulting services) which is not terminable at will and
requires aggregate future payments or expenses in excess of $25,000;
(e) Any Contract (other than a service contract issued in
the ordinary course of business) for the furnishing of services of the Business
(i) entered into in the ordinary course and for an amount of $25,000 or more,
(ii) not entered into in the ordinary course of business or (iii) which is for a
term of 12 months or more;
(f) Any purchase order not terminable at will by Seller
and requiring aggregate future payments of $25,000 or more;
(g) Any service contract not terminable at will by Seller
and for an amount of $25,000 or more;
(h) Any Contract relating to (i) clean-up, abatement or
other actions in connection with the remediation of any existing environmental
liabilities or relating to the performance of any environmental audit or study
or (ii) disposal of hazardous or biomedical wastes;
(i) Any Contract not terminable at will by Seller and
granting to any person a right at such person's option to purchase or acquire
any asset or property of the Business (or any interest therein) with a value in
excess of $25,000 in the case of any one Contract or $50,000 in the aggregate
for all Contracts of such type;
(j) Any license or royalty Contract providing for
aggregate future payments in excess of $25,000 in the case of any one Contract
or $50,000 in the aggregate for all Contracts of such type;
(k) Any Contract with any provider, independent
contractor or other agent having a remaining term in excess of one year and
which by its terms is not terminable without penalty on 90 calendar days' or
less notice;
(l) Any lease under which Seller (i) is a lessee of, or
holds or uses, any machinery, equipment, vehicle or other tangible personal
property owned by a third party or (ii) is a lessor of, or makes available for
use by any third party, any tangible personal property owned by Seller, in
either such case which lease requires aggregate annual payments in excess of
$25,000;
(m) Any Contract with any provider, supplier or customer
with respect to discounts or allowances or extended payment terms, except for
Seller's standard discount terms;
14
22
(n) Any joint venture or partnership Contract with any
other person;
(o) Any Contract restricting Seller from conducting the
Business;
(p) Any Contract giving any party the right to
renegotiate prices or require a reduction in prices or the repayment of any
amount previously paid and involving potential payments in excess of $25,000 in
the case of any one Contract or $50,000 in the aggregate for all such Contracts;
(q) Any Contract pursuant to which Seller has advanced or
loaned to any other person, or invested in any other person, amounts in the
aggregate (for any one person) exceeding $25,000 or contractually committed to
do so;
(r) Any guaranty of any obligation, other than
endorsements made for collection;
(s) Any minority or set-aside Contract (other than the Pa
Contract or the NY Contract);
(t) Any grant of any right-of-first refusal or similar
right in form of any third party with respect to any material parties of the
Assets; and
(u) Any other Contract which involves future payment or
performance valued at $25,000 or more.
True and complete copies of all the Contracts required to be
listed on Schedule 4.1.13 or any other Schedule hereto (including, without
limitation, Schedule 1.1.1) have been furnished to Purchaser, other than
purchase orders and service contracts entered into in the ordinary course for
less than $25,000 in the case of any one Contract. Except as set forth on
Schedule 1.1.1 or 4.1.13, (i) Seller and (to the knowledge of Seller) the
other parties thereto, have performed in all material respects all obligations
required to be performed by them to date under their Contracts (including
without limitation those listed on Schedule 1.1.1, Schedule 4.1.13 or on any
other Schedule hereto) and are not (with or without the lapse of time or the
giving of notice, or both) in breach or default in any respect thereunder,
except for such failures to perform, breaches and defaults which, individually
or in the aggregate, do not, and, insofar as reasonably can be foreseen, in the
future will not, have a material adverse effect on the business; financial
condition or results of operations of the Business, and (ii) all Contracts
required to be listed on Schedule 4.1.13 or on any other Schedule hereto
(including, without limitation, Schedule 1.1.1) are valid, in full force and
effect and enforceable in accordance with their respective terms, except where
the failure thereof does not individually or in the aggregate have a material
adverse effect on the business, financial condition or results of operations of
the Business.
4.1.14. Employee Contracts, Union Agreements and Benefit
Plans.
(a) Except as set forth on Schedule 4.1.14(a), Seller has
no Employee Benefit Plans (as hereinafter defined) that cover employees of the
Business. Schedule 4.1.14(a) also sets forth a complete and accurate list of all
agreements or arrangements on behalf of any officers,
15
23
directors or employees of the Business providing for payment or other benefits
to such person contingent upon the execution of this Agreement or the
consummation of the transactions contemplated by this Agreement, setting forth
in reasonable detail, the amount of payments to be made to each such person or
the basis on which such amounts shall be computed. Except as described on
Schedule 4.1.14(a), the transactions contemplated by this Agreement will not
result in any additional or accelerated payments to, or increase the vested
interest of, any current or former officer, employee or director of the Business
or their dependents under any Employee Benefit Plan. Pursuant to Section
28OG(b)(5)(A)(i) of the Code, the transactions contemplated by this Agreement
will not result in any payments to any current or former officer, employee or
director of Seller that will be subject to Section 28OG of the Code. Except as
set forth on Schedule 4.1.14(a), all of the Employee Benefit Plans that cover
employees of the Business are currently in effect. All Employee Benefit Plans
that cover employees of the Business and that are welfare plans providing or
offering benefits to retirees or are retirement plans intended to be qualified
under Section 401(a) of the Code are identified as such on Schedule 4.1.14(a).
Neither Seller nor its ERISA Affiliates maintains, contributes to, or
participates in, or has ever maintained, contributed to, or participated in a
multiemployer plan within the meaning of ERISA Section 4001(a)(3). To Seller's
knowledge, no fact exists that could subject Purchaser to any liability after
the Closing under Title IV of ERISA in connection with an Employee Benefit Plan.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"Employee Benefit Plans" means any plans, programs, agreements, arrangements,
commitments, policies or understandings of any kind (whether written or oral)
that relate to compensation, remuneration or benefits of any kind or description
whatsoever (whether current or deferred and whether paid in cash or in kind) in
any way, including all employment, consulting or collective bargaining
contracts, and deferred compensation, pension (as defined in Section 3(2) of
ERISA (as hereinafter defined)), multiemployer (as defined in Section 3(37)(A)
of ERISA), profit sharing, thrift, stock ownership, severance, stock
appreciation rights, bonus, stock option, stock purchase or other nonqualified
or compensation commitments, benefit plans, arrangements or plans, including all
welfare plans (as defined in Section 3(l) of ERISA) of or pertaining to the
present or former officers, directors or employees (including retirees), or
their dependents, of Seller and any "ERISA Affiliate" (as hereinafter defined)
or any predecessors in interest thereto, that are currently in effect or as to
which Seller, or any ERISA Affiliate, has any ongoing liability or obligation
whatsoever. "ERISA Affiliate" means each trade or business (whether or not
incorporated) that together with Seller is treated as a single employer pursuant
to Sections 414(b),(c),(m) or (o) of the Code.
(b) Except as set forth on Schedule 4.1.14(b), (i) Seller
and all ERISA Affiliates and their predecessors in interest have complied in all
material respects with all of their respective obligations with respect to all
Employee Benefit Plans that cover employees of the Business, including the
payment of all contributions and expenses required or due to be paid, the
satisfaction of all reporting and disclosure requirements to federal, state and
local governments and governmental agencies and to all such Employee Benefit
Plan participants and beneficiaries, and the payment or accrual of all expenses
for all periods, including the period between the end of the previous plan year
and the Effective Date, and (ii) the Employee Benefit Plans that cover employees
of the Business have been maintained in compliance in all material respects with
their terms and all applicable laws and regulations.
16
24
(c) No action, suit, proceeding, hearing or investigation
with respect to the administration or the investment of assets of any Employee
Benefit Plan that covers employees of the Business (other than routine claims
for benefits) is pending or, to Seller's knowledge, threatened, and no audit or
investigation by any domestic or foreign governmental or law enforcement agency
is pending or has been proposed with respect to any Employee Benefit Plan that
covers employees of the Business.
4.1.15. Labor Relations.
(a) Except as set forth on Schedule 4.1.15, (i) the
employees of the Business have not been and are not represented by a labor
organization which was either National Labor Relations Board ("NLRB") certified
or voluntarily recognized; (ii) Seller has not been and is not a signatory to a
collective bargaining agreement with any labor organization that relates in any
way to the Business; (iii) no representation election petition has been filed by
employees of the Business or is pending with the NLRB and, to Seller's
knowledge, no union organizing campaign involving employees of the Business has
occurred or is in progress; (iv) no NLRB unfair labor practice claims relating
to the Business have been filed and/or are presently pending against Seller or
any labor organization representing the employees of the Business; (v) no
grievance or arbitration demand, whether or not filed pursuant to a collective
bargaining agreement, is pending against Seller with respect to the employees of
the Business; (vi) to Seller's knowledge, no hand billing, picketing, work
stoppage (sympathetic or otherwise), or other "concerted action" involving the
employees of the Business has occurred or is in progress; (vii) no breach of
contract and/or denial of fair representation claim relating to the Business is
pending against Seller and/or any labor organization representing the employees
of the Business; (viii) no claim for unpaid wages or overtime or for child labor
or record keeping violations is pending under the Fair Labor Standards Act,
Xxxxx-Xxxxx Act, Xxxxx-Xxxxxx Act or Service Contract Act or any other federal,
state, local or foreign law, regulation or ordinance with respect to the
Business; (ix) no discrimination and/or retaliation claim has been filed or is
pending against Seller under the 1866 or 1964 Civil Rights Acts, the Equal Pay
Act, the Age Discrimination in Employment Act, as amended, the Americans with
Disabilities Act, the Family and Medical Leave Act ("FMLA"), the Fair Labor
Standards Act, ERISA or any other federal law or any comparable state fair
employment practices act or foreign law regulating discrimination in the
workplace with respect to the Business; (x) if Seller is a federal or state
contractor obligated to develop and maintain an affirmative action plan, no
discrimination claim, show cause notice, conciliation proceeding, sanctions or
debarment proceeding has been filed or is pending with Office of Federal
Contract Compliance Programs or any other federal agency or any comparable state
or foreign agency or court and no desk audit or on-site review is in progress
with respect to the Business; (xi) no citation has been issued by the
Occupational Safety and Health Administration ("OSHA") against Seller with
respect to the Business and no notice of contest or OSHA administrative
enforcement proceeding involving Seller is pending with respect to the Business;
(xii) no workers' compensation or retaliation claim has been filed or is pending
against Seller with respect to the Business; (xiii) no citation of Seller has
occurred and no enforcement proceeding has been initiated or is pending under
federal or foreign immigration law with respect to the Business; and (xiv)
except for the transactions contemplated by this Agreement, Seller has not taken
any action that would constitute a "mass layoff" or "plant closing" within the
meaning of the Worker Adjustment and Retraining Notification Act (the "WARN
Act") or otherwise trigger notice requirements or liability under any local or
state plant
17
25
closing notice law. Seller is in compliance in all material respects with all
federal, state and local laws respecting employment and employment practices,
terms and conditions of employment, wages and hours, and is not engaged in any
unfair labor or unlawful employment practice.
(b) Seller has made all filings required by the
Occupational Safety and Health Act, Executive Order 11246 and other similar
federal, state and local laws, regulations and orders, including all filings
with the Equal Employment Opportunity Commission and any other filings relating
to affirmative action or similar programs with respect to the Business. Seller
has previously delivered to Purchaser all material reports and filings made or
filed by them with respect to such matters.
4.1.16. Personnel; Payroll Periods. Schedule 4.1.16 sets
forth the names, locations of service, salary or rate of pay and classification
of all personnel employed with respect to the Business or providing services as
an independent contractor to Seller respect to the Business as of the date of
this Agreement. The status of each such person as an employee or independent
contractor is correctly indicated on Schedule 4.1.16. Seller has received no
claim from any Governmental Agency to the effect that Seller has improperly
classified as an independent contractor any person listed on Schedule 4.1.16 or
any similarity situated person. Schedule 4.1.16 sets forth the date and amount
of the last salary or rate of pay increase for each such person whose 1999
annual compensation exceeded $25,000. Seller pays its hourly employees on a
biweekly basis. Hourly employees are paid on each pay date for hours worked
during the biweekly period ending on the last day of the second week preceding
the applicable pay date.
4.1.17. No Undisclosed Liabilities. To Seller's knowledge,
neither Seller nor any of its Affiliates has any liability, obligation or
commitment of any nature (absolute, accrued, contingent or otherwise) in respect
of the Assets or the Business except (i) liabilities that individually and in
the aggregate are not material to the Business, (ii) a liability which has been
incurred in the ordinary course of business consistent with past practice and
without violation of this Agreement, including Section 5.6, since the date of
this Agreement and (iii) a liability which is disclosed in a Schedule hereto.
The terms "liability," "obligation" and "commitment" as used in this Section
4.1.17 shall have the meanings accorded to them by generally accepted accounting
principles.
4.1.18. Environmental Protection.
(a) Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
"Environmental Laws" means federal, state and local
statutes, ordinances, regulations and codes, and other
applicable Laws relating to pollution, protection of the
environment or public health and safety, as amended or
reauthorized, including without limitation, the Comprehensive
Environmental Response Compensation and Liability Act of 1980,
as amended (42 U.S.C. ss. 9601 et seq.), the Resource
Conservation and Recovery Act, as amended (42 U.S.C. ss. 6901
et seq.), and the Toxic Substances Control Act, as amended
(15 U.S.C. ss. 2601 et seq.).
18
26
"Hazardous Substances" means, without limitation, any
explosive or radioactive material, asbestos, wastewater and
sludges derived from wastewater, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum
based products, methane, hazardous waste, toxic or hazardous
substances or related materials, as defined in the
Environmental Laws.
(b) Except as set forth on Schedule 4.1.18(b):
(i) Seller is in compliance in all material
respects with all applicable Environmental Laws with
respect to its properties, assets (including the
Assets) and operations comprising the Business.
(ii) Seller has obtained and adhered, in all
material respects, to all necessary permits and other
approvals, necessary to conduct the Business as
presently conducted and to store, dispose of and
otherwise handle Hazardous Substances and has
reported, to the extent required by Environmental
Laws, all past and present sites owned, leased or
operated by it where Hazardous Substances have been
treated, stored or disposed.
(iii) Except in accordance with applicable
Environmental Laws: (i) no Hazardous Substance has
been released (as that term is defined in the
applicable Environmental Laws) by Seller at or on any
of the property owned, leased or operated by Seller
in the Business during the period in which Seller has
owned, leased or operated such property, and (ii) to
the knowledge of Seller, no Hazardous Substance has
ever been released at or on any of the property
owned, leased or operated in the Business by Seller.
(iv) Seller has not received any written
notice, claim or request for information relating to
any on-site or off-site locations to which it has
transported Hazardous Substances or arranged for the
transportation of Hazardous Substances, alleging that
it is liable for any clean-up cost, remedial work,
damage to natural resources or personal injury.
(v) There is no claim for violation of any
Environmental Law pending or, to the knowledge of
Seller, threatened against Seller with respect to the
Business.
(vi) Seller has made available to Purchaser
accurate and complete copies of all documents in its
possession or under its control pertaining to all of
the matters described in paragraphs (i) through (v)
of this Section 4.1.18(b), including all
environmental audits or assessments prepared by and
for Seller or, to its knowledge, any governmental
authority or any third party (including any financial
institution).
4.1.19. Tax Matters.
19
27
(a) For purposes of this Agreement, "Taxes" shall mean
all taxes (including any taxes attributable to Seller ceasing to be a member of
an affiliated group as defined in Section 1504(a) of the Code), assessments,
charges, duties, fees, levies or other governmental charges (including interest,
penalties or additions associated therewith) including federal, state, city,
county, foreign or other income, franchise, capital stock, real property,
personal property, tangible, withholding, FICA, unemployment compensation,
disability, transfer, sales, use, excise, gross receipts and all other taxes of
any kind for which Seller may have any liability imposed by the United States or
any state, county, city, country or foreign government or subdivision or agency
thereof, whether disputed or not.
(b) Seller has made a valid election under Section 1362
of the Code to be an S corporation and has made similar elections under all
state and local laws that permit such elections and that are applicable to
Seller. Seller is currently an S corporation under Section 1362 of the Code and
under all such states and local laws.
(c) Except as otherwise disclosed on Schedule 4.1.19(c),
(i) all returns, including estimated returns and reports of every kind with
respect to Taxes to the extent imposed on Seller with respect to the Business by
the Commonwealth of Pennsylvania or the State of New York, which are due to have
been filed in accordance with any applicable law, have been duly filed or
extensions have been duly granted therefor, (ii) all such Taxes, deposits or
other payments for which Seller may have any liability through the Closing Date,
have been paid in full or are accrued as liabilities for such Taxes on the books
and records of Seller (excluding any part of such accrual established to reflect
timing differences between book and tax income); (iii) the amounts so paid on or
before the Closing Date, together with any amounts accrued as liabilities for
such Taxes (whether accrued as currently payable or deferred Taxes but excluding
any part of any such accrual established to reflect timing differences between
book and tax income) on the books of Seller will be adequate to satisfy all
liabilities for such Taxes of Seller through the Closing Date, including such
Taxes accruable upon income earned through the Closing Date; (iv) there are not
now any extensions of time in effect with respect to the dates on which any
returns or reports of such Taxes were or are due to be filed; (v) all
deficiencies asserted as a result of any examination of any return or report of
such Taxes have been paid in full, accrued on the books of Seller or finally
settled, and no issue has been raised in any such examination which, by
application of the same or similar principles, reasonably could be expected to
result in a proposed deficiency for any other period not so examined; (vi) no
claims have been asserted and, to the knowledge of Seller, no proposals or
deficiencies for any such Taxes are being asserted, proposed or threatened, and
no audit or investigation of any return or report of such Taxes is currently
underway, pending or, to the knowledge of Seller, threatened; (vii) there are no
outstanding waivers or agreements by Seller for the extension of time for the
assessment of such Taxes or deficiency thereof, nor are there any requests for
rulings, outstanding subpoenas or requests for information, notice of proposed
reassessment of any property owned or leased by Seller or any other matter
pending between Seller or any taxing authority of the Commonwealth of
Pennsylvania; (viii) there are no Liens for such Taxes upon the Assets, except
Liens for current such Taxes not yet due, nor are there any Liens which, to the
knowledge of Seller, are pending or threatened; and (ix) to the knowledge of
Seller, there are no facts which exist or have existed which would constitute
meritorious grounds for the assessment of any such Taxes with respect to the
periods which have not been audited by the relevant taxing authorities of the
Commonwealth of Pennsylvania or the State of New York.
20
28
4.1.20. Broker's and Finders' Fees. Neither Seller nor anyone
acting on behalf of Seller, has done anything to cause or incur any liability to
any party for any brokers' or finders' fees or the like in connection with this
Agreement or any transaction contemplated hereby.
4.1.21. Permits. The Permits listed on Schedule 4.1.21
constitute all permits and licenses which are necessary to the conduct of the
Business or the lack of which would individually or in the aggregate have a
material adverse effect on the business, financial condition or results of
operations of the Business, and each of such Permits is in full force and
effect.
4.1.22. Books and Records. All the books, records and
accounts included in the Assets are in all material respects true and complete,
are maintained in all material respects in accordance with all Laws applicable
to the Business, and accurately present and reflect in all material respects the
transactions of the Business and the dispositions of the assets of the Business.
4.1.23. Shared Assets. Schedule 4.1.23 hereto sets forth all
assets, facilities and services used in both the Business and the operations of
Seller other than the Business.
4.1.24. Major Suppliers and Providers. Schedule 4.1.24 sets
forth a list of each supplier of goods or provider of services to the Business
to whom Seller paid in the aggregate more than $25,000 during the year ended
December 31, 1999, together with, in each case, the amount paid during such
period. Except as set forth on Schedule 4.1.24, Seller has not, to Seller's
knowledge, suffered any change in its relationship with any of such suppliers
or providers which could reasonably be expected to have a material adverse
effect on the business financial condition or results of operations of the
Business. Except as set forth on Schedule 4.1.24, Seller has no knowledge that
the consummation of the transactions contemplated hereunder will have any
adverse effect on its business relationship with any such supplier or provider.
Except as set forth on Schedule 4.1.24, none of the officers or directors of
Seller, nor, to Seller's knowledge, any Related Person (as hereinafter defined),
has any material financial interest in any supplier or provider to the Business.
"Related Person" means, with respect to any director or officer of Seller, a
lineal ancestor or descendant of such director or officer, the spouse of such
director or officer and any entity, partnership or joint venture in which such
director or officer, or any of the other persons referred to in this sentence,
owns 10% or more of the equity interests.
4.1.25. Medicare and Medicaid. Seller does not participate in
either the Medicare or Medicaid programs, as those programs are defined in the
Medicare Act and the Medicaid Act, respectively, and does not receive any
payments or funds therefrom.
4.1.26. Solvency.
(a) Seller is not now insolvent, and will not be rendered
insolvent by consummation of the transaction contemplated by this Agreement. As
used in this Section, "insolvent" means that the sum of the present fair
saleable value of Seller's assets does not and will not exceed its debts and
other probable liabilities.
21
29
(b) Immediately after giving effect to the consummation
of the transaction contemplated by this Agreement, (i) Seller will be able to
pay its liabilities as they become due in the usual course of business, (ii)
Seller will not have unreasonably small capital with which to conduct its
present or proposed business, (iii) Seller will have assets (calculated at fair
market value) that exceed its liabilities and (iv) taking into account all
pending and threatened litigation, final judgments against Seller in actions for
money damages are not reasonably anticipated to be rendered at a time when, or
in amounts such that, Seller will be unable to satisfy any such judgments
promptly in accordance with their terms (taking into account the maximum
probable amount of such judgments in any such actions and the earliest
reasonable time at which such judgments might be rendered) as well as all other
obligations of Seller. The cash available to Seller, after taking into account
all other anticipated uses of the cash, will be sufficient to pay all such debts
and judgments promptly in accordance with their terms.
4.1.27. Untrue Statements and Omissions. Warranties of Seller
set forth in this Agreement or in the Ancillary Documents to which Seller is a
party and the Schedules to this Agreement provided by Seller do not contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements contained herein or therein not misleading.
4.2. Representations, Warranties And Certain Covenants of
Purchaser. Purchaser represents and warrants to and covenants with Seller as
follows:
4.2.1. Corporate Organization. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority and
possesses all material Permits necessary to own, lease or otherwise hold its
properties and assets and to carry on its business as presently being conducted.
Purchaser has all requisite corporate power and authority (i) to purchase, own,
hold or lease the Assets it is purchasing, (ii) to assume, pay and satisfy the
Assumed Liabilities and (iii) to carry on the Business upon the consummation of
the transactions contemplated hereby. Purchaser will, at or before the Closing,
deliver to Seller complete and correct copies of (i) Purchaser's Amended and
Restated Certificate of Incorporation and all amendments thereto (certified by
the Secretary or Assistant Secretary of Purchaser) and (ii) its Amended and
Restated By-Laws and all amendments thereto (certified by the Secretary or an
Assistant Secretary of Purchaser).
4.2.2. Authorization And Effect Of Agreement. Purchaser has
all requisite corporate power and authority to execute and deliver this
Agreement and the Ancillary Documents to which it is or will be a party and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery by Purchaser of this Agreement and the Ancillary Documents to which it
is or will be a party and the consummation by Purchaser of the transactions
contemplated hereby and thereby to be consummated by it have been duly
authorized by all necessary corporate action on the part of Purchaser. This
Agreement and the Ancillary Documents to which Purchaser is or will be a party
have been or will be, as the case may be, duly executed and delivered by
Purchaser and constitute valid and binding obligations of Purchaser, enforceable
in accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency or other similar Laws of general application
affecting the
22
30
enforcement of creditors' rights or by general principles of equity limiting the
availability of equitable remedies (whether applied in a proceeding in equity or
at law).
4.2.3. No Restrictions Against Purchase Of The Assets.
Except as set forth in Schedule 4.2.3, the execution and delivery by Purchaser
of this Agreement and the Ancillary Documents to which Purchaser is or will be a
party do not, and the performance by Purchaser of the transactions contemplated
hereby and thereby to be performed by it will not, conflict with, or result in
any violation of, or constitute a default (with or without notice or lapse of
time, or both) under, any provision of the Amended and Restated Certificate of
Incorporation or Amended and Restated By-Laws of Purchaser or any Contract,
Permit or Law applicable to Purchaser or its assets, other than any such
conflicts, violations or defaults which individually or in the aggregate do not
have a material adverse effect on the business, financial condition or results
of operations of Purchaser. Except as set forth in Schedule 4.2.3, no material
consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Agency is required to be obtained or made by or
with respect to Purchaser in connection with the execution and delivery of this
Agreement or the consummation by it or the transactions contemplated hereby and
thereby to be consummated by it.
4.2.4. Untrue Statements and Omissions. The representations
and warranties of Purchaser set forth in this Agreement or in the Ancillary
Documents to which Purchaser is a party and the Schedules to this Agreement
provided by Purchaser do not contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements contained
herein or therein not misleading.
5. PRE-CLOSING COVENANTS
5.1. Press Releases. Prior to the Closing, no party hereto shall
issue or cause publication of any press release or other announcement or public
communication with respect to this Agreement or the transactions contemplated
hereby, without the prior consent of the other parties hereto, except that any
party may make any disclosure required to be made under applicable law or stock
exchange rule if such party determines in good faith that it is necessary to do
so and gives prior notice to the other party.
5.2. Regulatory Filings. Each of the parties will use its
respective best efforts to obtain, and to cooperate with the others in
obtaining, all authorizations, consents, orders and approvals of Governmental
Agencies that may be or become necessary in connection with the consummation of
the transactions contemplated by this Agreement prior to or after the Closing,
and to take all reasonable actions to avoid the entry of any order or decree by
any Governmental Agency prohibiting the consummation of the transactions
contemplated hereby.
5.3. Injunctions. Without limiting the generality or effect of any
provision of Articles 6 and 8, if any United States, state or foreign court
having jurisdiction over any party issues or otherwise promulgates any
injunction, decree or similar order prior to the Closing which prohibits the
consummation of the transactions contemplated hereby, the parties will use their
respective reasonable efforts to have such injunction dissolved or otherwise
eliminated as promptly as possible and, prior to or after the Closing, to pursue
the underlying litigation diligently and in good faith.
23
31
5.4. Investigation By Purchaser. Prior to the Closing, upon
reasonable notice from Purchaser to Seller given in accordance with this
Agreement, Seller will afford to the officers, attorneys, accountants or other
authorized representatives of Purchaser reasonable access during normal
business hours to the Assets and books and records of Seller and its Affiliates
relating to the Business so as to afford Purchaser full opportunity to make
such review, examination and investigation of the Business as Purchaser may
desire to make. Purchaser will be permitted to make extracts from or to make
copies of such books and records as may be reasonably necessary. Prior to the
Closing, Seller will furnish or cause to be furnished such financial and
operating data and other information as to the Business as Purchaser may
reasonably request; provided, however, that nothing herein will obligate Seller
to take actions that would unreasonably disrupt the normal course of its
business, or violate the terms of any Contract to which it is a parry or to
which it or any of its assets is subject. No investigation by Purchaser of
Seller's representations and warranties contained herein or in any Ancillary
Documents shall limit Seller's liability for any breach thereof.
5.5. Confidential Nature of Information. The parties agree that,
unless and until the Closing occurs, that certain letter agreement dated
December 2, 1999 between Seller and Purchaser (said agreement, as the same may
be amended from time to time, being herein referred to as the "Confidentiality
Agreement"), shall remain in full force and effect in accordance with its
terms.
5.6. Operation of the Business.
(a) Conduct of Business. During the period from the date
hereof to the Closing Date, and subject to the provisions of this Agreement,
Seller shall (a) continue to conduct the Business in the usual and ordinary
course of business and in substantially the same manner as previously
conducted, (b) maintain, or cause to be maintained in full force and effect,
all of Permits and insurance policies currently held or maintained by it, (c)
pay its accounts payable when due (except accounts payable being disputed in
good faith) that relate to the Business and that are owed to vendors, suppliers
or providers that will continue to supply goods or services to the Business
following the Closing Date and (d) use reasonable efforts to keep the Business
and the Assets substantially intact, including its present operations, physical
facilities and relationships with providers, suppliers, customers and
employees, in a manner consistent with the conduct of business in the ordinary
course. Seller shall, during the period referred to in the preceding sentence,
promptly notify Purchaser of any material change in the normal course of the
operation of the Business or of the occurrence or impending occurrence of any
event or circumstance relating to the Business that (i) is reasonably likely to
have, individually or in the aggregate, a material adverse effect on the Assets
or the Business, (ii) would cause or constitute a material breach of any of its
representation or warranties hereunder or (iii) is reasonably likely to result
in Seller's inability to perform its obligations pursuant to this Agreement.
Seller will keep Purchaser fully informed with respect to any such events.
(b) Pre-Closing Activities. Except as otherwise required
or permitted by this Agreement, or as agreed to by Purchaser in writing, which
agreement shall not be unreasonably withheld, or as set forth on Schedule
5.6(b) hereto, from the date hereof and prior to the Closing Date, Seller shall
not:
24
32
(1) cause or, if preventable, fail to take
reasonable action to prevent any material damage, destruction or other casualty
loss (whether or not covered by insurance) to or affecting the Business or the
Assets;
(2) sell, lease, assign, transfer or otherwise
dispose of any Asset, other than in the ordinary course of business consistent
with its prior practice;
(3) change in any material respect the
accounting methods or practices followed by the Seller with respect to the
Business;
(4) acquire or agree to acquire by merging or
consolidating with, or by purchasing any portion of the capital stock,
partnership interests, limited liability company member interests or assets of,
or by any other manner, any business or any corporation, limited liability
company, partnership, association or other business organization or division
thereof;
(5) make any loan or advance (whether in cash
or other property), or make any investment in or capital contribution to, or
extend any credit to, any Person other than in the ordinary course of business
consistent with its prior practice, except short-term investments pursuant to
customary cash management policies;
(6) enter into any agreement with any labor
union or association representing any employee of the Business or, other than
in the ordinary course consistent with the past practices, make any wage or
salary increase or bonus, agree to the payment of severance to any employee of
the Business, or increase in any other direct or indirect compensation, for or
to any of its officers, directors or employees of the Business other than in
the ordinary course of business consistent with prior practices;
(7) enter into, amend, terminate or fail to
renew any Contract disclosed on Schedule 4.1.13, except in the ordinary course
of business consistent with its prior practices;
(8) fail to perform in any material respect all
of its obligations under all Contracts disclosed on Schedule 4.1.13;
(9) fail to use all commercially reasonable
efforts to maintain in full force and effect and in the same amounts policies
of insurance comparable in amount and scope of coverage to that now maintained
by Seller with respect to the Business;
(10) fail to prepare and file all sales and use
Tax Returns or extensions required to be filed by it;
(11) institute or amend any employee benefit
plan except as may be required by Law, or enter into or modify any written
employment arrangement with any individual; or
(12) enter into any agreement or commitment to
do any of the foregoing.
25
33
5.7. Purchaser's Supplemental Schedules. Purchaser shall, from
time to time prior to the Closing, by notice in accordance with this Agreement,
supplement or amend any Schedule to correct any matter which would constitute a
breach of any of its representations and warranties herein contained. No such
supplemental or amended Schedule shall be deemed to cure any breach of such
representation or warranty for purposes of Section 6.2 or 10, or for any other
purpose if the Closing does not occur, and Seller shall continue to have all of
its rights and remedies hereunder. If, however, the Closing occurs, any such
supplement or amendment of any Schedule will be effective to cure and correct
for all purposes any breach of any representation or warranty which would have
existed by a reason of Purchaser's not having made such supplement or
amendment, other than any willful breaches by Purchaser of any representation
or warranty.
5.8. Seller's Supplemental Schedules. Seller shall, from time to
time prior to the Closing, by notice in accordance with this Agreement,
supplement or amend any Schedule to correct any matter which would constitute a
breach of any of its representations and warranties herein contained. No such
supplemental or amended Schedule shall be deemed to cure any breach of such
representation or warranty for purposes of Section 6.1 or 10, or for any other
purpose if the Closing does not occur, and Purchaser shall continue to have all
of its rights and remedies hereunder. If, however, the Closing occurs, any such
supplement or amendment of any Schedule will be effective to cure and correct
for all purposes any breach of any representation or warranty which would have
existed by a reason of Seller's not having made such supplement or amendment,
other than any willful breaches by Seller of any representation or warranty.
5.9. No Shop. From the date of this Agreement until the earlier of
(i) the Closing Date or (ii) the termination of this Agreement, Seller shall
not, and shall cause the Seller, its officers, directors, employees,
affiliates, managers and similar agents and representatives not to, directly or
indirectly, (i) negotiate or discuss with any other person or entity (other
than with Purchaser) any transaction involving a merger of the Seller, the sale
of all or substantially all of the Assets or any other business combination
involving Seller or (ii) take any action to solicit, initiate or encourage any
offer or proposal or indication of interest in a sale, merger, consolidation or
other business combination involving Seller or all or substantially all of the
Assets, other than in connection with the transactions contemplated by this
Agreement or the sale of other assets to Purchaser. Seller shall promptly
advise Purchaser of the terms of any written offer, proposal or indication of
interest that it receives or of which it otherwise becomes aware after the date
of this Agreement. If Seller or its officers, directors, employees, affiliates,
managers or similar agents or representatives violate any of the provisions of
this Section 5.9, and the transactions contemplated by this Agreement do not
close as a result of such violation, in addition to other remedies available to
Purchaser, Seller shall promptly, on demand, pay and reimburse Purchaser for
all out-of-pocket and professional fees and expenses incurred by Purchaser or
any of its affiliates in connection with this Agreement or any of the
transactions contemplated hereby.
5.10. Satisfaction Of Conditions. Without limiting the generality
or effect of any provision of Articles 6 or 7, prior to the Closing, each of
the parties hereto will use reasonable efforts with due diligence and in good
faith to satisfy promptly all conditions required hereby to be satisfied by
such party in order to expedite the consummation of the transactions
contemplated hereby. Without limiting the generality of the foregoing,
Purchaser shall use its best efforts to cause the Board of Directors of ASG to
approve its Agreement and the transactions contemplated hereby as contemplated
by Section 6.1.17.
26
34
6. CONDITIONS PRECEDENT TO THE CLOSING
6.1. Conditions Precedent To Obligations Of Purchaser. The
obligations of Purchaser under this Agreement to consummate the transactions
contemplated hereby will be subject to the satisfaction, at or prior to the
Closing, of all of the following conditions, any one or more of which may be
waived at the option of Purchaser:
6.1.1. No Misrepresentation Or Breach Of Covenants And
Warranties. There shall have been no material breach by Seller in the
performance of any of its covenants herein to be performed by it in whole or in
part prior to the Closing and the representations and warranties of Seller
contained in this Agreement or in any Ancillary Document shall have been true
and correct in all material respects on the date of this Agreement and shall be
true and correct in all material respects on the Closing Date as if made as of
the Closing (except, in either case, for representations or warranties made as
of a specified date, which shall continue on the Closing Date to be true and
correct in all material respects as of the specified date, and except for
representations and warranties qualified by a "materiality" standard, which
shall continue on the Closing Date to be true and correct giving effect to the
applicable materiality standard), and Seller shall have delivered to Purchaser a
certificate certifying each of the foregoing, dated the Closing Date and signed
by one of its executive officers on its behalf.
6.1.2. Transfer Documents. Seller shall have delivered to
Purchaser the bills of sale, assignments, deeds and other instruments of
transfer (the "Transfer Documents") in substantially the form set forth in
Schedule 6.1.2, relating to the Assets, which (as to the Leased Real Property
and the leases relating thereto, and any trademarks and patents included in the
Assets) shall be in recordable form to the extent that recordation thereof is
necessary or desirable, in Purchaser's judgment, to effect the Transfer of such
Assets, Transferring to Purchaser good and marketable title to the Assets, in
each case free of any Liens other than Permitted Liens.
6.1.3. No Legal Obstruction. On the Closing Date (i) there
shall be no injunction, restraining order or order of any nature issued by any
court of competent jurisdiction or Government Agency which directs that the
transactions contemplated by this Agreement and the Ancillary Documents shall
not be consummated as herein provided or compels or would result in a material
adverse change in the business, assets, results of operations, financial
conditions or prospects of Seller with respect to the Business; (ii) there
shall be no suit, action or other proceeding by any Governmental Agency or
non-governmental, self-regulatory organization, pending or threatened (pursuant
to a written notification), wherein such complaint seeks the restraint or
prohibition of the consummation of the transactions contemplated by this
Agreement and the Ancillary Documents or asserts the illegality of any material
transaction contemplated by this Agreement and the Ancillary Documents; (iii)
no Law shall be enacted, promulgated or deemed applicable to the transactions
contemplated by this Agreement and the Ancillary Documents, by any Governmental
Agency which would render consummation of such transactions illegal; and (iv)
there shall be no suit, action or other proceeding by a private party pending
before any court or Governmental Agency or non-governmental, self-regulatory
organization, or threatened (pursuant to a written notification), which is
likely to result in the restraint or prohibition of the consummation of the
transactions contemplated by this Agreement and the Ancillary Documents or the
obtaining of an amount in payment of material damages
27
35
from, or other material relief against, Purchaser or against any of its
directors or officers, in connection with the consummation of the transactions
contemplated by this Agreement and the Ancillary Documents.
6.1.4. Certificates. Purchaser shall have received
certified evidence of corporate actions taken in connection with the execution,
delivery and performance by Seller of this Agreement and the Ancillary
Documents to which Seller is a party and an incumbency certificate of Seller.
6.1.5. Opinion of Counsel For Seller. Purchaser shall have
received an opinion, dated the Closing Date, of Xxxxxxx Xxxxxxxxxxx, Esq.,
counsel for Seller (or of any other counsel for Seller reasonably satisfactory
to Purchaser in respect of matters of local Law), in substantially the form set
forth in Schedule 6.1.5.
6.1.6. Consents Under Key Agreements. Seller shall have
obtained, on terms and conditions satisfactory to Purchaser, all consents,
approvals, novations, authorizations, exemptions or waivers from parties to the
Contracts and Permits listed on Schedule 6.1.6 (as the same shall be amended at
Purchaser's request to reflect Contracts and Permits disclosed on any
supplemental Schedule delivered pursuant to Section 5.8) (collectively, the
"Key Agreements") to the extent required for the consummation of the
transactions contemplated hereunder without any violation or breach thereof or
default, termination or acceleration occurring thereunder.
6.1.7. No Material Adverse Change. The Business shall not
have suffered any material adverse change since December 31, 1999 in its
business, prospects, customer contracts, financial condition or results of
operations. Without limiting the generality of the foregoing, Seller shall not
have received any notice terminating or purporting to terminate the Pa Contract
or the NY Contract.
6.1.8. Termination Statements. Seller shall have delivered
to Purchaser UCC-3 Termination Statements, or other appropriate instruments of
termination, in form and substance satisfactory to Purchaser, with respect to
each UCC financing statement or other lien or encumbrance referred to on
Schedule 6.1.8.
6.1.9. Headquarters Sublease. Seller shall have entered
into a sublease with respect to approximately 2,500 square feet of space in the
Headquarters, which space shall be selected by mutual agreement of Purchaser
and Seller and which sublease shall be in form and substance reasonably
satisfactory to Purchaser and Seller.
6.1.10. Payments to Significant Vendors. Seller shall have
paid, or made provision for payment satisfactory to Purchaser, the invoices to
the Seller Vendors described on Schedule 6.1.10.
6.1.11. Fairness Opinion. Purchaser shall have received the
opinion of Xxxxxx Xxxxxx & Company, in form and substance satisfactory to
Purchaser, to the effect that the terms of this Agreement are fair, from a
financial point of view, to Purchaser.
6.1.12. Termination of Employment Agreement. Purchaser shall
have received from Seller a copy of an agreement between Seller and Xx. Xxxxxxx
X. Xxxxxxx, pursuant to
28
36
which Xx. Xxxxxxx agrees to the termination of his employment agreement with
Seller effective no later than the Closing Date, such agreement shall remain in
full force and effect and Seller shall have paid all amounts owing to Xx.
Xxxxxxx pursuant to such Agreement as of the Closing Date.
6.1.13. Name Change. Seller shall have duly executed and
filed with the Secretary of State of the Commonwealth of Pennsylvania an
amendment to its Certificate of Incorporation sufficient to change Seller's
name to a name not including the words "Correctional Physician Services" and
Purchaser shall have received a certified copy of such amendment.
6.1.14. Consulting and Non-Competition Agreements. Xx. Xxxxx
Umar and Mr. Emre Umar shall have entered into non-competition agreements and
consulting agreements in favor of Purchaser in substantially the forms set
forth in Schedules 6.1.14(a), (b), (c) and (d).
6.1.15. Financing. Purchaser, or an affiliate, shall have
received financing, on terms reasonably satisfactory to Purchaser or such
affiliate, pursuant to the Credit Agreement in an amount sufficient to permit
Purchaser to pay the Purchase Price.
6.1.16. Approval of Board of Directors. The Board of
Directors of ASG shall have approved the terms of this Agreement and the
transactions contemplated hereby.
6.1.17. Insurance. Purchaser shall have received evidence
satisfactory to it that Seller has in place, with premium paid to date of
Closing, on the Business, occurrence form, first dollar coverage, (i) medical
professional liability coverage in amounts not less than $1,000,000/$3,000,000
covering all claims of healthcare provision or denial, including civil rights
claims, (ii) commercial general liability coverage and (iii) employment
practice liability coverage (with a run off provision), in each case for
conditions, claims or actions which arise out of or relate to events that
occurred in connection with the operation of the Business on or prior to the
Closing Date. Such coverage shall include any indemnification provisions for
which Seller shall be liable pursuant to Law or the terms of any Contract
between Seller and a third party.
6.1.18. No Undisclosed Liabilities. Seller shall not have
incurred any material liability or obligations (whether absolute, accrued,
contingent or otherwise) with respect to the Business other than liabilities
incurred in the ordinary course of business that are not, individually or in
the aggregate, material.
6.1.19. Escrow Agreement. Purchaser and Seller shall have
entered into the Escrow Agreement.
6.2. Conditions Precedent To Obligations Of Seller. The
obligations of Seller under this Agreement to consummate the transactions
contemplated hereby will be subject to the satisfaction, at or prior to the
Closing, of all of the following conditions, any one or more of which may be
waived at the option of Seller:
6.2.1. No Misrepresentation Or Breach Of Covenants And
Warranties. There shall have been no material breach by Purchaser in the
performance of any of its covenants herein to be performed by it, in whole or
in part prior to the Closing, and the representations and warranties of
Purchaser contained in this Agreement or in any Ancillary Document shall have
29
37
been true and correct in all material respects on the date of this Agreement
and shall be true and correct in all material respects on the Closing Date as
if made as of the Closing (except, in either case, for representations and
warranties made as of a specified date, which shall continue on the Closing
Date to be true and correct in all material respects as of the specified date
and except for representations and warranties qualified by a "materiality"
standard, which shall continue on the Closing Date to be true and correct
giving effect to the applicable materiality standard), and Purchaser shall have
delivered to Seller a certificate certifying each of the foregoing, dated the
Closing Date and signed by one of its executive officers on its behalf.
6.2.2. Instruments Of Assumption. There shall have been
delivered to Seller by Purchaser the instruments of assumption (the "Assumption
Instruments") in substantially the form set forth in Schedule 6.2.2.
6.2.3. Purchase Price. Purchaser shall have delivered to
Seller the Purchase Price in the manner specified in Section 2.4.
6.2.4. No Legal Obstruction. On the Closing Date (i) there
shall injunction, restraining order or order of any nature issued by any court
of competent jurisdiction or Government Agency which directs that the
transactions contemplated by this Agreement and the Ancillary Documents shall
not be consummated as herein provided; (ii) there shall be no suit, action or
other proceeding by any Governmental Agency or non-governmental,
self-regulatory organization, pending or threatened (pursuant to a written
notification), wherein such complaint seeks the restraint or prohibition of the
consummation of the transactions contemplated by this Agreement and the
Ancillary Documents or asserts the illegality of any material transaction
contemplated by this Agreement and the Ancillary Documents; (iii) no Law shall
be enacted, promulgated or deemed applicable to the transactions contemplated
by this Agreement and the Ancillary Documents, by any Governmental Agency which
would render consummation of such transactions illegal; and (iv) there shall be
no suit, action or other proceeding by a private party pending before any court
or Governmental Agency or non-governmental, self-regulatory organization, or
threatened (pursuant to a written notification), which is likely to result in
the restraint or prohibition of the consummation of the transactions
contemplated by this Agreement and the Ancillary Documents or the obtaining of
an amount in payment of material damages from, or other material relief
against, Seller or against any of its directors or officers, in connection with
the consummation of the transactions contemplated by this Agreement and the
Ancillary Documents.
6.2.5. Certificates. Seller shall have received certified
evidence of corporate actions taken in connection with the execution, delivery
and performance by Purchaser of this Agreement and the Ancillary Documents to
which Purchaser is or will be a party and an incumbency certificate of
Purchaser.
6.2.6. Opinion of Counsel For Purchaser. Seller shall have
received an opinion, dated the Closing Date, of King & Spalding, counsel for
Purchaser (or of any other counsel for Purchaser reasonably satisfactory to
Seller in respect of matters of local Law), substantially in the form set forth
in Schedule 6.2.6.
30
38
6.2.7. Tradename License. Purchaser and Seller shall have
duly executed and delivered a Tradename License Agreement substantially in the
form set forth in Schedule 6.2.7.
6.2.8. Escrow Agreement. Purchaser and Seller shall have
entered into the Escrow Agreement.
7. THE CLOSING
7.1. The Closing. Subject to the fulfillment of the conditions
precedent specified in Article 6, the consummation of the purchase and sale of
the Assets and the assumption of the Assumed Liabilities contemplated hereby
(the "Closing") will take place on March 1, 2000, or such other date (but not
later than April 30, 2000) and time as the parties may mutually agree (the
"Closing Date"). The Closing shall be effective as of 12:00 a.m. on the Closing
Date. The Closing will take place at the offices of McTighe, Weiss, X'Xxxxxx,
Xxxxxx & Xxxxxxxxxxx, 00 Xxxx Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000.
7.2. Extension of Closing. If the Closing shall not have occurred
by March 1, 2000, solely because of the inability of Seller or Purchaser, as
the case may be, to have satisfied (after good faith efforts) the conditions
set forth in Section 6.1.3, 6.1.6 or 6.2.4, then the Closing Date will be
extended to the earlier of (i) the first business day after such conditions
have been satisfied and (ii) such other date on or prior to April 30, 2000 to
which Purchaser and Seller mutually agree.
7.3. Seller's Obligations. Subject to Section 9.3, at the Closing,
Seller will deliver to Purchaser the following in proper form for recording
when appropriate:
7.3.1. Transfer Documents. To the extent not previously
delivered under Section 6.1.2, the Transfer Documents, duly executed and
acknowledged in accordance with Section 6.1.2;
7.3.2. Receipts. Appropriate receipts;
7.3.3. Escrow Agreement. The Escrow Agreement; and
7.3.4. Other. All other documents and papers required to be
delivered by Seller pursuant to Section 6.1 as conditions to the Closing.
7.4. Purchaser's Obligations. At the Closing, Purchaser will
deliver to Seller the following:
7.4.1. Purchase Price. The Purchase Price, in the manner
specified in Section 2.3;
7.4.2. Assumption Instruments. To the extent not previously
delivered under Section 6.2.2, the Assumption Instruments, duly executed in
accordance with Section 6.2.2;
7.4.3. Escrow Agreement. The Escrow Agreement; and
31
39
7.4.4. Other. All other documents and papers required to be
delivered by Purchaser pursuant to Section 6.2 as conditions to the Closing.
8. SURVIVAL AND INDEMNIFICATION
8.1. Survival.
8.1.1. Survival of Representations And Warranties.
(a) Each of the representations and warranties contained
herein or in any Ancillary Document (except as otherwise specifically provided
in such Ancillary Document) will survive and remain in full force and effect
until the third anniversary of the Closing Date, except for (i) representations
and warranties made in Sections 4.1.14 [Employee Contracts, Union Agreements
and Benefit Plans]; 4.1.15 [Labor Relations]; 4.1.18 [Environmental
Protection]; and 4.1.20 [Tax Matters]; which shall remain in effect for the
applicable statute of limitations period and (ii) the Excluded Representation
(as hereinafter defined), which shall survive the Closing and remain in effect
indefinitely. The term "Excluded Representations" shall mean and include the
representations and warranties of Seller made in Sections 4.1.1 [Corporate
Organization]; 4.1.2 [Authorization and Effect of Agreement]; 4.1.3 [No
Restrictions Against Sale of the Assets]; 4.1.7 [Assets Used in the Business];
4.1.8 [Assets other than Real Property]; 4.1.21 [Brokers' and Finders' Fees];
and 4.1.26 [Solvency].
(b) Purchaser has assumed the liabilities and
obligations of Seller and its Affiliates in respect of the Business as
specified in Section 3.1 in consideration of its ability to assert a claim
against Seller if any such liability or obligation was not disclosed in this
Agreement or in a Schedule hereto as required by this Agreement. Accordingly,
Seller agrees that if a claim is asserted against Purchaser to pay or otherwise
satisfy any Assumed Liability (an "Assumed Liability Claim") and Purchaser
would have a claim against Seller, by reason of such Assumed Liability Claim,
for breach of a representation or warranty but for the provisions of paragraph
(a) of this Section 8.1.1, Purchaser shall be entitled to assert such claim
against Seller and the provisions of paragraph (a) of this Section 8.1.1 shall
not be applicable. Any such claim shall be considered a Direct Claim (as
hereinafter defined).
8.1.2. Survival of Covenants. Unless a specified period is
set forth in this Agreement (in which event such specified period will
control), all covenants contained in this Agreement will survive the Closing
and remain in effect indefinitely.
8.2. Limitations On Indemnification; Right of Offset.
8.2.1. With Respect To Certain Representations And
Warranties. No Indemnitee (as hereinafter defined) will be entitled to make a
claim against an Indemnifying Party (as hereinafter defined) pursuant to
Section 8.3.1(i) or (ii) or 8.3.2(i) or (ii) unless and until the aggregate
amount of claims which may be asserted for Indemnifiable Losses (as hereinafter
defined) pursuant to such Sections exceeds $25,000; when such amount is
exceeded the Indemnitee shall be entitled to recover the full amount of such
claims; provided, however, that the foregoing limitation shall not apply to (i)
claims made with respect to the Excluded Representations; (ii) Assumed
Liability Claims; (iii) claims by Purchaser related to Seller's
32
40
breach of its covenant set forth in the last sentence of Section 3.3; (iv)
claims by Seller related to Purchaser's breach of its covenant set forth in
Section 3.2; (v) claims made with respect to inaccuracies in Seller's
representations and warranties of which Seller or either Shareholder had
knowledge at any time prior to the date on which such representation and
warranty is made or any intentional breach by Seller or either Shareholder of
any covenant set forth in this Agreement or any Ancillary Document; or (iv) any
claim asserted by Xx. Xxxxxxx X. Xxxxxxx arising out his employment agreement
with Seller or the release or termination thereof.
8.2.2. With Respect To Seller's Obligations.
Notwithstanding any other provision of this Agreement, the indemnification
obligations of Seller and the Shareholders under Section 8.3.1(i), other than
indemnification obligations arising by reason of Assumed Liability Claims, or
Seller's breach of its covenant set forth in the last sentence of Section 3.3,
shall not exceed the Purchase Price; provided, however, that such limitation on
Seller's or Shareholder's liability shall not apply to Indemnifiable Losses
resulting from Seller's or either Shareholder's fraud or willful breach.
8.2.3. Right of Offset. Purchaser shall have the right, in
addition to its right to seek indemnity from Seller and the Shareholders
pursuant to this Article 8 and any other remedy available to it, to set off
against the amount of any payment due to Seller pursuant to Section 2.3 or
pursuant to the Escrow Agreement, the amount of any Indemnifiable Loss (as
hereinafter defined) for which Purchaser is entitled to indemnification
pursuant to this Article 8.
8.3. Indemnification.
8.3.1. Indemnification By Seller. Subject to Sections 8.1,
8.2 and 8.4, Seller and each Shareholder will, jointly and severally,
indemnify, defend and hold harmless Purchaser, its Affiliates and their
respective directors, officers, employees, agents and representatives from and
against any and all claims, demands or suits (by any person or entity,
including without limitation any Governmental Agency), losses, liabilities,
actual or punitive damages, fines, penalties, obligations, payments, costs and
expenses, paid or incurred, whether or not relating to resulting from or
arising out of any Third Party Claim (as hereinafter defined), including
without limitation the costs and expenses of any and all investigations,
actions, suits, proceedings demands; assessments, judgments, remediation,
settlements and compromises relating thereto and reasonable fees and expenses
of attorneys and other experts in connection therewith (individually and
collectively, "Indemnifiable Losses") relating to, resulting from or arising
out of any of the following: (i) the inaccuracy, jointly and severally, of any
of the representations or warranties of Seller contained in this Agreement or
any Ancillary Document; (ii) any breach by Seller of any covenant of Seller
contained in this Agreement or in any Ancillary Document; (iii) any liability
of the Business other than an Assumed Liability, including, without limitation,
Seller's failure or alleged failure to pay or satisfy any liability other than
an Assumed Liability; (iv) any non-compliance by Seller with any bulk sale Law
or any fraudulent conveyance Law in respect of the transactions contemplated by
this Agreement; (v) any liability under the WARN Act or any similar state or
local law that may result from an "Employment Loss," as defined in 29 U.S.C.
ss. 2101(a)(b), caused by any actions of Seller prior to Closing or by
Purchaser's decision not to hire previous employees of Seller; or (v) any
Employee Benefit Plan established or maintained by Seller; or (vi) any claim
asserted by Xx. Xxxxxxx X. Xxxxxxx arising out of his employment agreement with
Seller or the release or termination thereof.
33
41
8.3.2. Indemnification By Purchaser. Subject to Sections
8.1, 8.2 and 8.4, Purchaser will indemnify, defend and hold harmless Seller,
each of its Affiliates and their respective directors, officers, employees,
agents and representatives from and against any and all Indemnifiable Losses
relating to resulting from or arising out of any of the following: (i) the
inaccuracy as of the Closing of any of the representations or warranties of
Purchaser contained in this Agreement or any Ancillary Document; (ii) any
breach by Purchaser of any covenant of Purchaser contained in this Agreement or
in any Ancillary Document; and (iii) any Assumed Liability, including, without
limitation, Purchaser's failure or alleged failure to pay or satisfy any
Assumed Liability.
8.3.3. Cumulative Rights. The rights of Purchaser under
each of the clauses of Section 8.3.1 and the rights of Seller under each of the
clauses of Section 8.3.2 are not mutually exclusive.
8.3.4. Indemnity Payment; Indemnitee; Indemnifying Party.
For purposes of this Agreement, (i) "Indemnity Payment" means any amount of
Indemnifiable Losses required to be paid pursuant to this Section 8.3, (ii)
"Indemnitee" means any person or entity entitled to indemnification under this
Agreement, and (iii) "Indemnifying Party" means any person or entity that may be
required to provide indemnification under this Agreement.
8.4. Defense of Claims.
8.4.1. Third Party Claims.
(a) If any Indemnitee receives notice of the assertion
of any claim or of the commencement of any action or proceeding by any entity
who is not a party to this Agreement or an Affiliate of such a party (a "Third
Party Claim") against such Indemnitee, against which an Indemnifying Party is
obligated to provide indemnification under this Agreement, the Indemnitee will
give such Indemnifying Party reasonably prompt written notice thereof, but in
any event in sufficient time to permit the Indemnifying Party to defend against
the Third Party Claim. Such notice will describe the Third Party Claim in
reasonable detail, and will indicate the estimated amount, if reasonably
practicable, of the Indemnifiable Loss that has been or may be sustained by the
Indemnitee. The Indemnifying Party will have the right to participate in or, by
giving written notice to the Indemnitee no later than 30 calendar days after
receipt of the above-described notice of such Third Party Claim, to elect to
assume the defense of any Third Party Claim at such Indemnifying Party's own
expense and by such Indemnifying Party's own counsel (reasonably satisfactory
to the Indemnitee), and the Indemnitee will cooperate in good faith in such
defense. If the Indemnifying Party elects to assume the defense, the Indemnitee
will have the right to participate in the defense of any Third Party Claim
assisted by counsel of its own choosing and at its expense, provided that, if
the named parties to any such proceeding (including any impleaded parties)
include both the Indemnifying Party and the Indemnitee and the Indemnifying
Party proposes that the same counsel represent both the Indemnitee and the
Indemnifying Party, the Indemnitee shall have the right to retain its own
counsel at the cost and expense of the Indemnifying Party, if representation of
both parties by the same counsel would be inappropriate due to actual or
potential conflicts of interest between them that are material. If the
Indemnitee has not received written notice within such 30 calendar day period
that the Indemnifying Party has elected to assume the defense of such Third
Party Claim, the Indemnitee
34
42
may, at its option, elect to settle or assume such defense, assisted by counsel
of its own choosing, and the Indemnifying Party will be liable for all costs,
expenses, settlement amounts or other Indemnifiable Losses paid or incurred in
connection therewith. Notwithstanding the preceding sentence, if the
Indemnifying Party fails to respond to a request for consent to any settlement
within ten business days after such request is given, the Indemnitee may
proceed with such settlement without obtaining the Indemnifying Party's
consent.
(b) If, within the 30 calendar days set forth above, an
Indemnitee receives written notice from an Indemnifying Party that such
Indemnifying Party has elected to assume the defense of any Third Party Claim
as provided in Section 8.4.1 (a), the Indemnifying Party will not be liable
for any legal expenses subsequently incurred by the Indemnitee in connection
with the defense thereof (except as provided in paragraph (a) above); provided,
however, that if the Indemnifying Party fails to take reasonable steps
necessary to defend diligently such Third Party Claim within 30 calendar days
after receiving written notice from the Indemnitee that the Indemnitee believes
the Indemnifying Party has failed to take such steps, the Indemnitee may, at
its option, elect to settle or assume its own defense, assisted by counsel of
its own choosing, and the Indemnifying Party will be liable for all costs,
expenses, settlement amounts or other Indemnifiable Losses paid or incurred in
connection therewith.
(c) Without the prior written consent of the Indemnitee,
the Indemnifying Party will not enter into any settlement of any Third Party
Claim or cease to defend against such claim, if pursuant to or as a result of
such settlement or cessation, injunctive or other equitable relief would be
imposed against the Indemnitee. Without the prior written consent of the
Indemnitee, which will not be unreasonably withheld, the Indemnifying Party
will not enter into any settlement of any Third Party Claim or cease to defend
against such claim, if such settlement or cessation would lead to liability or
create any financial or other obligation on the part of the Indemnitee for
which the Indemnitee is not entitled to indemnification hereunder or for which
the Indemnitee is not in fact indemnified. The Indemnifying Party shall not
consent to the entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to each Indemnitee of a release from all liability in respect of such
claim. The Indemnifying Party shall not be entitled to control, and the
Indemnitee shall be entitled to have sole control over, the defense or
settlement of any claim to the extent that claim seeks an order, injunction or
other equitable relief against the Indemnitee which, if successful, could
materially interfere with the business, operations, assets, condition
(financial or otherwise) or prospects of the Indemnitee (and the cost of such
defense shall constitute an amount for which the Indemnitee is entitled to
indemnification hereunder). Except under the circumstances described above in
this paragraph (c), the Indemnifying Party shall have the right to control the
defense and settlement of any claims the defense of which it has assumed in
accordance with this Section 8.4.1. If a firm offer is made to settle a Third
Party Claim which offer the Indemnifying Party is permitted to settle under
this Section 8.4.1(c), and the Indemnifying Party desires to accept and agree
to such offer, the Indemnifying Party will give written notice to the
Indemnitee to that effect. If the Indemnitee fails to consent to such firm
offer within 30 calendar days after its receipt of such notice, the Indemnitee
may continue to contest or defend such Third Party Claim and, in such event,
the maximum liability of the Indemnifying Party as to such Third Party Claim
will not exceed the amount of such settlement offer, plus costs and expenses
paid or incurred by the Indemnitee through the end of such 30-day period.
35
43
8.4.2. Direct Claims. Any claim by an Indemnitee for
indemnification other than indemnification against a Third Party Claim (a
"Direct Claim") will be asserted by giving the Indemnifying Party reasonably
prompt written notice thereof, and the Indemnifying Party will have a period of
30 calendar days within which to respond in writing to such Direct Claim. If
the Indemnifying Party does not so respond within such 30 calendar day period,
the Indemnifying Party will be deemed to have rejected such claim, in which
event the Indemnitee will be free to pursue such remedies as may be available
to the Indemnitee under this Agreement.
8.4.3. Failure to Give Timely Notice. A failure to give
timely notice as provided in this Section 8.4 will not affect the rights or
obligations of any party hereunder except and only to the extent that, as a
result of such failure, any party which was entitled to receive such notice was
deprived of its right to recover any payment under its applicable insurance
coverage or was otherwise directly and materially prejudiced as a result of
such failure.
8.4.4. Subrogation. If the amount of any Indemnifiable
Loss, at any time subsequent to the making of an Indemnity Payment, is reduced
by recovery, settlement or otherwise under or pursuant to any insurance
coverage, or pursuant to any claim, recovery, settlement or payment by or
against any other entity, the amount of such reduction, less any costs,
expenses or premiums incurred in connection therewith, will promptly be repaid
by the Indemnitee to the Indemnifying Party. The Indemnifying Party will, to
the extent of any Indemnity made by it, be subrogated to all rights of the
Indemnitee against any third party that is not an Affiliate of the Indemnitee
in respect of the Indemnifiable Loss to which the Indemnity Payment relates.
Without limiting the generality or effect of any other provision hereof, each
such Indemnitee and Indemnifying Party will duly execute upon request all
instruments reasonably necessary to evidence and perfect the above-described
subrogation rights.
8.4.5. Payment. With regard to Third Party Claims for which
indemnification is payable hereunder, such indemnification shall be paid by the
Indemnifying Party promptly upon (i) the entry of a judgment against the
Indemnitee and the expiration of any applicable appeal period or (ii) the entry
of an unappealable judgment or final appellate decision against the Indemnitee.
Notwithstanding the foregoing, provided that there is no dispute as to whether
Indemnitee is entitled to indemnification hereunder, expenses of the Indemnitee
for which the Indemnifying Party is responsible shall be reimbursed on a
current basis by the Indemnifying Party.
8.5. Indemnification in Case of Indemnitee Negligence. The
indemnification provided in this Article 8 shall be applicable whether or not
the sole or concurrent negligence or gross negligence of the Indemnified Party,
or the sole or concurrent strict liability imposed on the Indemnified Party, or
the sole or concurrent liability imposed vicariously on the Indemnified Party,
is alleged or proven.
9. OTHER POST-CLOSING COVENANTS
9.1. Employees.
9.1.1. Termination and Offers of Employment for Employees.
On the Closing Date, Seller shall terminate all of the employees of the
Business listed on Schedule 9.1 (the
36
44
"Employees"). Seller shall be responsible for paying, subject to Schedule 3.1,
all claims of any kind or description whatsoever arising under the Employee
Benefit Plans or relating to employment, prior to the Closing Date of the
Employees. Commencing on the Closing Date, Purchaser shall offer employment, on
an at-will basis, to the Employees at the same or greater base hourly rate of
pay or base salary as identified on Schedule 4.1.16. Purchaser shall be
responsible for any obligations which may arise after the Closing Date under
the WARN Act for the Employees in connection with the transactions contemplated
by this Agreement. Seller shall assume full responsibility and liability for
offering and providing "continuation coverage" to any "qualified beneficiary"
who is covered by a "group health plan" sponsored or contributed to by Seller
and who has experienced a "qualifying event" or is receiving "continuation
coverage" on or prior to the Closing Date or who experiences a "qualifying
event" on the Closing Date, as a result of his or her termination on the
Closing Date pursuant to this Agreement, as such terms are defined above.
9.1.2. Seller's Post-Closing Operations. Seller shall, for
a period of six months following the Closing, operate in compliance with the
WARN Act and any other applicable similar state or local law concerning plant
closings. If Seller's actions should trigger any notice requirement under the
WARN Act or any other applicable similar state or local law concerning plant
closings during the 90 days following the Closing Date, Seller shall be solely
responsible for providing appropriate notice under such plant closing law.
9.2. General Post-Closing Matters.
9.2.1. Post-Closing Notifications. Purchaser and Seller
will, and will cause their respective Affiliates to, comply with any applicable
post-Closing notification or other requirements of any Law of any Governmental
Agency having jurisdiction over the Business.
9.2.2. Access. On the Closing Date, Seller will deliver or
cause to be delivered to Purchaser all original agreements, documents, books,
records and files in the possession of Seller and its Affiliates relating to
the Business or the Assets (collectively, "Records"), or any other asset or
property included in the Assets, to the extent not then located in the
Headquarters or the Leased Real Property, subject to the following exception:
Purchaser recognizes that certain Records may contain only incidental
information relating to the Business or may primarily relate to Seller or the
businesses of Seller other than the Business or may be required by Law to be
retained by Seller and that Seller and its Affiliates may retain such Records
and instead deliver copies of the Records required to be retained by Law and
appropriately excised copies of the other Records.
(a) After the Closing, upon reasonable notice given in
accordance with this Agreement, Purchaser and Seller will give, or cause to be
given, to the representatives, employees, counsel and accountants of the other
access, during normal business hours, to Records relating to periods prior to
the Closing, and will permit such persons to examine and copy such Records to
the extent reasonably requested by the other party in connection with the
preparation of Tax and financial reporting matters (including without
limitation any return or report relating to state or local real property
transfer or gains taxes), audits, legal proceedings, governmental
investigations and other business purposes; provided, however, that nothing
herein will obligate any party to take actions that would unreasonably disrupt
the normal course of its
37
45
business, violate the terms of any Contract to which it is a party or to which
it has released any of its proprietary, confidential or classified information.
Purchaser will use reasonable efforts to ensure that such information and
assistance can be provided to Seller in the event that Purchaser disposes of
any portion of the Business.
9.2.3. Guarantees, Etc. Schedule 9.2.3 sets forth a list of
guarantees, bid bonds, performance bonds, letters of credits and other
agreements guaranteeing or securing liabilities and obligations relating to the
Business under which Seller or any of its Affiliates has any liability and
which constitute Assumed Liabilities (collectively, the "Seller Guarantees").
Purchaser will cooperate with Seller (each Party acting at its own expense) to
obtain and have issued replacements for each of the Seller Guarantees and to
obtain any amendments, novations, releases, waivers, consents or approvals
necessary to release Seller and each of its Affiliates from all liability
thereunder, in each case as promptly as practicable.
9.2.4. Rights of Endorsement. After the Closing Date,
Purchaser shall have the right and authority to endorse, without recourse, the
name of Seller on any check or any other evidence of indebtedness received by
Purchaser on account of any Assets transferred by Seller pursuant hereto, and
Seller shall deliver to Purchaser at the Closing letters of instruction
sufficient to permit Purchaser to deposit such checks or other evidence of
indebtedness in bank accounts in the name of Purchaser. In addition, any
payment received by Seller or any of its Affiliates in respect of the Assets
shall be remitted to Purchaser within 15 days of receipt by Seller and any
payment received by Purchaser in respect of Excluded Assets shall be remitted
to Seller within 15 days of receipt by Purchaser.
9.2.5. Apportionment and Adjustment. Real property taxes
and assessments; leases with respect to leased personal property, service and
maintenance contracts and other leases and contracts included in the Assets;
utilities in respect of the Leased Real Property; and personal property taxes
will be apportioned on a pro rata basis to the Effective Date. As soon as
practicable after the Closing Date, representatives of Seller and Purchaser
will examine all relevant books and records as of the Effective Date in order
to make the determination of the apportionments and adjustments referred to
in this Section 9.2.5. Payments in respect thereof shall be made by check
within ten days after such determination, except that payments for real and
personal property taxes shall initially be determined based on the previous
year's taxes and shall be later adjusted to reflect the current year's taxes
when the tax bills are finally rendered.
9.2.6. Payment of IBNR Invoices. Seller shall deposit the
portion of the Purchase Price referred to in clause (i) of the first sentence
of Section 2.2(a) into a bank account to be established prior to the Closing
Date. Disbursements from such bank account shall be made only in accordance
with the procedures specified in the letter agreement between Seller, the
Umar's and the Seller's secured lender. Seller shall use amounts on deposit in
such account to pay (i) distributions to Seller's shareholders in aggregate
amounts not in excess of $1,000,000; (ii) distributions to Seller's
shareholders in addition to the amounts described in clause (i) as shall be
sufficient to permit them to pay their respective shares of Seller's state and
federal income tax liability for periods prior to the Closing Date; (iii)
professional fees owed by Seller; (iv) Pre-Closing Date IBNR; (v) amounts owed
to Seller's secured lender; and (vi) other corporate obligations of Seller not
described in the preceding clauses of this sentence; provided, however, that
Seller shall not use in excess of $2,520,000 of the proceeds deposited in such
38
46
account for the purposes described in this clause (vi). Seller shall provide to
Purchaser monthly reports regarding its receipt of invoices for Pre-Closing
Date IBNR and its disbursements of funds from such account. The first such
report shall be submitted to Purchaser on or before the fifteenth day of the
second month following the Closing Date. Seller shall pay or otherwise
discharge all amounts due with respect to the Pre-Closing Date IBNR (except
amounts being disputed in good faith) within 150 days following the Closing.
9.3. Nonassignable Contracts.
9.3.1. Nonassignability. Without limiting the generality or
effect of any provision of Articles 6, 8 or 9, to the extent that any Contract
to be Transferred pursuant to the terms of Section 1.1.4 is not capable of
being Transferred without the consent, approval, novation or waiver
(collectively, the "Consents") of a third person or entity (including without
limitation a Governmental Agency), or if such Transfer or attempted Transfer
would constitute a breach thereof or a violation of any Law, nothing in this
Agreement will constitute a Transfer or an attempted Transfer thereof.
9.3.2. Seller To Use Reasonable Efforts. Notwithstanding
anything contained in this Agreement to the contrary, but without limiting the
generality or effect of Articles 6, 8 or 9, Seller will not be obligated to
Transfer to Purchaser any of its rights and obligations in and to any of the
Contracts referred to in Section 9.3.1 without first having obtained all of the
Consents necessary for such Transfers.
9.3.3. If Waivers Or Consents Cannot Be Obtained. To the
extent that the Consents referred to in Section 9.3.2 are not obtained by
Seller, Seller will, during the one-year period commencing with the Closing
Date or such longer period as Purchaser may desire (but, as to any particular
Contract, not longer than the term thereof), (a) use reasonable efforts, with
costs and expenses of Seller related thereto (other than the obligations of
Seller under the Contract required to be paid by Purchaser pursuant to Section
9.3.4) to be borne by Seller, to provide to Purchaser the benefits (and the
burdens) of any Contract to the extent relating to the Business, (b) cooperate
in any reasonable and lawful arrangement designed to provide such benefits (and
burdens) to Purchaser, without incurring any obligation to any other person or
entity other than to provide such benefits to Purchaser, and (c) enforce, at
the request of Purchaser, for the account of Purchaser, any rights of Seller
arising from any such Contract (including without limitation the right to elect
to terminate in accordance with the terms thereof upon the advice of
Purchaser). Purchaser agrees to cooperate with Seller in connection with the
foregoing. At the end of such one-year period (or such longer period as
Purchaser may desire), Seller will have no further obligations hereunder with
respect to any such Contract and the failure to obtain any necessary Consent
with respect thereto will not be a breach of this Agreement; provided that
nothing contained in this Section 9.3 shall affect the liability of Seller, if
any, pursuant to this Agreement if it has failed to disclose the need for such
Consent or to use its reasonable efforts in accordance with the provisions
hereof to obtain such Consent.
9.3.4. Obligation of Purchaser To Perform. Provided (and
for so long as) Seller obtains the benefits of such Contract for Purchaser,
Purchaser will perform the obligations of Seller under or in connection with
any Contract referred to in Section 9.3 (to the extent permitted thereunder) for
the benefit of the other party or parties thereto.
39
47
9.4. Non-Competition. Until the fifth anniversary of the Closing
Date, Seller will not, directly or indirectly, Compete with the Business (as
hereinafter defined) anywhere within the United States of America.
Notwithstanding the foregoing, Seller may continue to perform its obligations
under the Excluded Contracts for the current terms thereof and any renewal term
thereof. As used in this Section 9.4, the term "Compete with the Business" shall
mean, directly or indirectly, as an employee of any person or entity,
proprietor, partner, stockholder, officer, director, consultant, joint venturer,
investor, lender or in any other capacity or any substantially similar activity,
to provide, or to furnish aid or assistance to another person or entity in
connection with the provision of Company Activities (as hereinafter defined).
"Company Activities" shall mean (i) all activities of the type previously
conducted by Seller as part of the Restricted Business (as hereinafter defined)
and (ii) all activities of the type hereafter conducted by Purchaser, and any
successor thereto or affiliate thereof, with respect to the Restricted Business
during the period commencing on the Closing Date and ending of the fifth
anniversary of the Closing Date. "Restricted Business" shall mean the provision
of healthcare services to inmates of correctional facilities.
9.5. Transfer Taxes. Seller shall pay all sales, use, transfer,
stamp, conveyance, recording, value added or other similar taxes, duties, excise
or governmental charges and all recording or filing fees, notarial fees and
other similar costs of Closing with respect to the Transfer of the Assets or
otherwise on account of this Agreement or the transactions contemplated hereby,
whether incurred before or after the Closing.
9.6. Straddle Patients. Following the Closing Date, Purchaser
shall, on behalf of Seller, perform the duties set forth in the following
sentence with respect to invoices received after the Closing Date and related to
the provision of medical services to Straddle Patients (as hereinafter defined)
prior to the Closing Date. "Straddle Patient' means a patient who is admitted to
a healthcare facility pursuant to the Pa Contract or the NY Contract on or
before the Closing Date and who is discharged from such facility after the
Closing Date. Purchaser shall review, verify and pay the accounts payable and
invoices related to the Straddle Patients using the same standards and degree of
care that Purchaser uses in performing such functions for itself. Purchaser
shall submit to Seller monthly reports indicating its disposition of such
accounts payable and invoices and the amount paid by Purchaser with respect to
such accounts payable and invoices. Each monthly report shall be accompanied by
sufficient documentation to permit Seller to verify that the amounts paid by
Purchaser as disclosed in such report related to the provision of medical
services to Straddle Patients prior to the Closing Date. Seller shall notify
Purchaser within seven business days of receipt of any monthly report if Seller
disputes that any amount disclosed in such report related to the provision of
medical services to Straddle Patients prior to the Closing Date. Seller and
Purchaser shall promptly resolve any dispute regarding any amount disclosed in
such report. If Seller and Purchaser are unable to resolve any dispute within 15
calendar days, the dispute will be referred to the Presidents and Chief
Executive Officers of Purchaser and Seller, who shall conduct a meeting or
conference call to resolve the dispute within seven business days of the
referral of the dispute to them. If such officers are unable to resolve the
dispute during such meeting or conference call, it will be resolved by
arbitration in accordance with the provisions of this Agreement. On or before
the later of (i) the first business day of the ninth month following the month
in which the Closing occurs or (ii) the resolution of any arbitration regarding
the amount of payments made by Purchaser on behalf of Seller with respect to
Straddle Patients, Purchaser and Seller shall take such actions as may be
required
40
48
pursuant to the Escrow Agreement to cause the Escrow Agent to disburse to
Purchaser from the Escrow Fund (as defined in the Escrow Agreement) an amount
equal to such payments, together with interest thereon at the rate from
time-to-time applicable to borrowings under Purchaser's senior secured credit
agreement, the amount of which shall be calculated and certified by the agent
bank under such credit agreement.
9.7. Support Services.
(a) Following the Closing, (i) Seller shall permit
Purchaser to use the telephone switch and handsets and office equipment (other
than data processing equipment) in the Headquarters so long as Seller maintains
such equipment in the Headquarters during the term of Purchaser's sublease of
space in the Headquarters and (ii) Seller shall give Purchaser access to
financial data maintained on any information systems not included in the Assets
and to Seller's accounting personnel to the extent necessary to permit Purchaser
to prepare financial statements for the Business for a reasonable period
following the Closing Date. Nothing contained in this Section 9.7(a) shall
obligate Seller to maintain any equipment in the Headquarters after the time
that Seller has ceased to require the equipment in the operation of its
business. Purchaser and Seller agree that neither of them shall compensate the
other for the services described above, the value of the services to be rendered
to the other being approximately equal in value to the services to be received
by it. Purchaser shall reimburse Seller for Purchaser's pro rata portion (on a
square-foot-occupied basis) for any utility charges incurred by Seller at the
Headquarters.
(b) As promptly as practicable following the Closing,
Purchaser and Seller shall cause the telephone service at the Headquarters,
including all telephone numbers, to be transferred to Purchaser. After the
transfer, Seller shall reimburse Purchaser for five percent of the monthly local
telephone charges incurred by Purchaser and for the long-distance telephone
charges incurred by Seller. Seller shall reimburse Purchaser for such telephone
expenses promptly following Purchaser's submission of itemized statements to
Seller.
(c) Purchaser and Seller acknowledge and agree that the
personnel hired by Purchaser will be made available to Seller on an occasional
basis during the 180 days following the Closing to assist Seller with the
administration of the Excluded Contracts and processing the Pre-Closing Date
IBNR. Purchaser shall have no obligation to make any personnel available to
Seller after such period, it being understood that Seller will accomplish the
winding-up of its business no later than 180 days following the Closing.
9.8. Audited Financial Statements. Seller shall, upon Purchaser's
request, render such assistance as shall be reasonably requested by Purchaser
and afford such access to Seller's books, records and personnel as shall be
reasonably requested by Purchaser as shall be necessary
41
49
rules and regulations of the Securities and Exchange Commission. Purchaser shall
pay or reimburse Seller for the expenses incurred by Seller in complying with
Purchaser's request.
9.9. Calculation NY Rebate. Purchaser and Seller shall co-operate
in good faith to calculate the NY Rebate in accordance with the terms of the NY
Contract. Without limiting the generality of the foregoing, Purchaser and Seller
shall afford one another such reasonable access to their respective books,
records and financial information as shall be required to permit the calculation
of the NY Rebate. Promptly following the final determination of the NY Rebate,
Purchaser and Seller shall take all actions as shall be required by the Escrow
Agreement to cause the Escrow Agent to disburse to Purchaser an amount equal to
the product of the NY Rebate multiplied by a fraction the numerator of which is
the number of days in the period from June 1, 1999 through the day prior to the
Closing Date and the denominator of which is 366.
10. TERMINATION
10.1. Termination. Notwithstanding anything contained in this
Agreement to the contrary, this Agreement may be terminated at any time prior to
the Closing:
(a) By the mutual written consent of Purchaser and
Seller;
(b) By either Purchaser or Seller, if the Closing shall
not have occurred on or before March 1, 2000, unless such date has been extended
pursuant to Section 7.2, in which case either Purchaser or Seller may terminate
this Agreement if the Closing shall not have occurred on or before the date as
extended pursuant to Section 7.2;
(c) By either Purchaser or Seller, if there shall have
been a breach by the other party of the other party's representations,
warranties, covenants or agreements contained herein which breach would entitle
Purchaser or Seller, as the case may be, to decline to consummate the
transactions contemplated hereby pursuant to Section 6.1 or 6.2, as the case may
be; and
(d) By either Purchaser or Seller, if there shall have
been entered a final, nonappealable order or injunction of any Governmental
Agency restraining or prohibiting the consummation of the transactions
contemplated hereby or any material part thereof.
10.2. Expenses In The Event Of Termination. In the event of
termination of this Agreement under Section 10.1 each party hereto will pay all
of its own fees and expenses, except as otherwise expressly provided in this
Agreement. There will be no further liability hereunder on the part of any party
hereto if this Agreement is so terminated, except that the provisions of Section
5.5 hereof shall remain in full force and effect, and except that no termination
shall relieve any breaching party from any liability to the other party hereto.
11. MISCELLANEOUS PROVISIONS
11.1. Notices. All notices and other communications required or
permitted hereunder will be in writing and, unless otherwise provided in this
Agreement, will be deemed to have been duly given when delivered in person or
when sent by facsimile (confirmed in writing by mail simultaneously dispatched)
if sent on a business day and otherwise on the next business day or one business
day after having been dispatched by a nationally recognized overnight courier
42
50
service to the appropriate party at the address specified below or three
business days after having been deposited in the United States mail, if sent by
certified or registered mail, return receipt requested, postage prepaid:
(a) If to Purchaser, to:
America Service Group Inc.
000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile Number: 615.376.1309
Attention: Xx. Xxxxx Xxxx
Chief Financial Officer
Xx. Xxxx Xxxxxxx
General Counsel
with a copy to:
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Facsimile No.: 404.572.5147
Attention: Xxxxxx X. Xxxxxxxx, Esq.
(b) If to Seller to:
Correctional Physician Services, Inc.
0000 Xxxxxxx Xxxxxxx
Xxxxxxxx 00, Xxxxx 000
Blue Xxxx, Pennsylvania 19422
Facsimile No.: 215.654.7461
Attention: Xx. Xxxxx Umar
Mr. Emre Umar
with a copy to:
McTighe, Weiss, X'Xxxxxx, Xxxxxx & Xxxxxxxxxxx
00 Xxxx Xxxx Xxxxxx
P. O. Xxx 000
Xxxxxxxxxx, XX 00000
Facsimile No.: 610.272.5325
Attention: Xx. Xxxxxxx Xxxxxxxxxxx
or to such other address or addresses as any party may from time to time
designate as to itself by like notice.
43
51
11.2. Expenses. Except as otherwise expressly provided herein,
whether or not a Closing shall occur, each party shall bear its own expenses
incurred in connection with the consummation of the transactions contemplated by
this Agreement and the Ancillary Documents or incident to the Transfer of the
Assets and the assumption of the Assumed Liabilities contemplated by this
Agreement, including without limitation all expenses required in connection with
the delivery of the Transfer Documents provided for in Section 6.1.2 and the
Assumption Instruments provided for in Section 6.2.2, and all expenses required
to comply with the procedures required by Section 9.1.
11.3. Successors And Assigns. This Agreement will be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns, but will not be assignable or delegable by any party
without the prior written consent of the other parties. Notwithstanding anything
herein to the contrary, in the event that Purchaser Transfers the Business,
Purchaser may assign to the transferee all or any rights which Purchaser may
have with respect to Seller's covenants which are contained herein or in any
Ancillary Document and are to be performed by Seller after the Closing;
provided, however, that such assignment shall not relieve Purchaser of any of
its obligations or liabilities hereunder or ASG of any of its obligations or
liabilities under its guaranty of Purchaser's obligations hereunder; and
provided, further, however, that such transferee shall agree in writing to
assume Purchaser's obligations hereunder and under any such Ancillary Document.
11.4. Waiver; Effect of Buyer's Investigation.
(a) Purchaser and Seller, by written notice to the other,
may (i) extend the time for performance of any of the obligations or other
actions of the other under this Agreement, (ii) waive any inaccuracies in the
representations or warranties of the other contained in this Agreement or in any
Ancillary Documents, (iii) waive compliance with any of the conditions or
covenants of the other contained in this Agreement, or (iv) waive or modify
performance of any of the obligations of the other under this Agreement;
provided, however, that no such party may, without the prior written consent of
such other party, make or grant such extension of time, waiver of inaccuracies
or compliance or waiver or modification of performance with respect to its own
obligations, representations, warranties, conditions or covenants hereunder and
provided, further, however, that the Closing shall be deemed to constitute the
waiver by the Purchaser and Seller of the conditions to their respective
obligations to consummate the transactions contemplated by this Agreement, which
waiver shall be without prejudice to the right of Purchaser or Seller to assert
a claim against the other for any Indemnifiable Loss. Except as provided in the
immediately preceding sentence, no action taken pursuant to this Agreement will
be deemed to constitute a waiver of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. No waiver of
any breach will operate or be construed as a waiver of any subsequent breach,
whether of a similar or dissimilar nature. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof.
(b) The right of indemnification, reimbursement or other
remedy based on the representations, warranties, covenants and obligations of a
party set forth in this Agreement or any Ancillary Document shall not be
affected by any investigation conducted by the other party with respect to, or
any knowledge acquired (or capable of being acquired) by the other party
44
52
about, the accuracy or inaccuracy of or compliance with, any such
representation, warranty covenant or obligation.
11.5. Entire Agreement. This Agreement (together with the Schedules
and Exhibits hereto) supersedes any other agreement, whether written or oral,
that may have been made or entered into by Purchaser or Seller (or by any
director, officer or representative thereof) relating to the matters
contemplated hereby, other than the Confidentiality Agreement (which will
survive the execution, delivery and/or termination of this Agreement unless and
until the Closing occurs). This Agreement (together with the Confidentiality
Agreement and the Exhibits and Schedules hereto) constitute the entire agreement
by and among such parties and their Affiliates except as expressly set forth
herein.
11.6. Amendments, Supplements, Etc. This Agreement may be amended or
supplemented at any time by additional written agreements, as may mutually be
determined by the parties hereto.
11.7. Rights Of The Parties. Except as expressly provided in
Sections 8.3 and 11.3, nothing expressed or implied in this Agreement is
intended or will be construed to confer upon or give any person or entity other
than the parties hereto and their respective Affiliates any rights or remedies
under or by reason of this Agreement or any transaction contemplated hereby.
11.8. Further Assurances.
(a) After the Closing, Seller will from time to time, at
Purchaser's request and without further cost to Purchaser, execute and deliver
to Purchaser such other instruments of conveyance and transfer and take such
other action as Purchaser may reasonably request so as more effectively to
transfer the Assets to Purchaser free of Liens other than Permitted Liens.
(b) After the Closing, Purchaser will from time to time,
at Seller's request and without further cost to Seller, execute and deliver to
Seller such other instruments of assumption and take such other action as Seller
may reasonably request so as more effectively to assume the Assumed Liabilities.
11.9. Bulk Sales. Purchaser waives compliance by Seller with the
provisions of the so-called bulk sales Law of any jurisdiction.
11.10. Transfer. Purchaser and Seller will cooperate and take such
action as may be reasonably requested by the other in order to effect an orderly
transfer of the Assets and the Business with a minimum of disruption to the
operations and employees of the Business and of the other businesses of Seller.
11.11. Governing Law. The validity, performance and enforcement of
this Agreement and all Ancillary Documents, unless expressly provided to the
contrary, shall be governed by the Laws of the Commonwealth of Pennsylvania,
without giving effect to the principles of conflicts of law thereof, except that
with respect to matters regarding the transfer of right, title to and interest
in any Contract or Permit, the Laws governing such Contract or Permit shall
govern, without giving effect to the principles of conflicts of law thereof.
45
53
11.12. Execution In Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
11.13. Titles And Heading. Titles and headings to sections herein are
inserted for convenience of reference only, and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
11.14. Certain Interpretive Matters And Definitions.
(a) Unless the context otherwise requires, (i) all
references to Sections, Articles, Exhibits or Schedules are to the Sections,
Articles, Exhibits or Schedules of or to this Agreement, (ii) each accounting
term not otherwise defined in this Agreement has the meaning assigned to it in
accordance with GAAP, (iii) "or" is disjunctive and (iv) words in the singular
include the plural and vice versa.
(b) No provision of this Agreement will be interpreted in
favor of, or against, any of the parties hereto by reason of the extent to which
any such party or its counsel participated in the drafting thereof.
(c) As used in this Agreement, (i) the term "Subsidiary"
has the meaning given to that term in Rule 1-02 of Regulation S-X under the
Securities Act of 1933, as amended (the "Securities Act"); (ii) the term
"Affiliate" has the meaning given to the term in Rule 405 under the Securities
Act, and will include without limitation any Subsidiary; (iii) the term
"Governmental Agency" means the United States or any state, local or foreign
government, or any subdivision, agency or authority of any thereof; and (iv) the
term "Laws" means all federal, state and local laws, codes, and ordinances and
all rules and regulations promulgated by any Governmental Agency thereunder.
(d) Notwithstanding anything to the contrary contained
herein, for purposes of this Agreement, the term "knowledge of Seller" or
variations thereof shall mean the actual knowledge of Xx. Xxxxx Umar, Xx. Xxxx
Xxxx, Xx. Xxxx Xxxxxx and Xx. Xxxxx Xxxxxxx.
11.15. Cross-References. If a document or matter is disclosed in any
Exhibit or Schedule to this Agreement in connection with a representation or
warranty made herein, it shall be deemed to be disclosed with respect to the
same matter addressed elsewhere in this Agreement but only if the reference
provides fair disclosure of the matter in question.
11.16. Severability. If any provision of this Agreement or the
application of any such provision to any person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof.
11.17. Specific Performance. Seller acknowledges that Purchaser will
be irreparably harmed and Purchaser will have no adequate remedy at Law if
Seller fails to perform any of its obligations under this Agreement. It is
accordingly agreed that, in addition to any other remedies which may be
available to it, Purchaser shall have the right to obtain injunctive relief to
restrain a
46
54
breach or threatened or breach of, or otherwise obtain specific performance of,
Seller's covenants and other agreements contained in this Agreement.
11.18. Arbitration. Any controversy or claim arising out of or
relating to this Agreement or any Ancillary Document (other than a dispute that
is subject to Section 2.3 of this Agreement which shall be resolved in
accordance with Section 2.3 or a dispute that is subject to Section 9.7, which
shall be resolved in accordance with Section 9.7) shall be settled by
arbitration in accordance with the following provisions:
(a) Disputes Covered. The agreement of the parties to
arbitrate covers all disputes of every kind relating to or arising out of this
Agreement, any Ancillary Document or any of the transactions contemplated by
this Agreement. Disputes include actions for breach of contract with respect to
this Agreement or the Ancillary Document, as well as any claim based on tort or
any other causes or action relating to the transactions contemplated by this
Agreement such as claims based on an allegation of fraud or misrepresentation
and claims based on a federal or state statute. In addition, the arbitrators
selected according to procedures set forth below shall determine the
arbitrability of any matter brought to them, and their decision shall be final
and binding on the parties. Notwithstanding the foregoing, Purchaser shall be
permitted to seek injunctive relief under the circumstances contemplated by
Section 11.17.
(b) Forum. The forum for the arbitration shall be
Atlanta, Georgia.
(c) Law. The governing law for the arbitration shall be
the law of the Commonwealth of Pennsylvania, without reference to its conflicts
of laws provisions.
(d) Selection. There shall be three arbitrators, unless
the parties are able to agree on a single arbitrator. In the absence of such
agreement within ten days after the initiation of an arbitration proceeding,
Seller shall select one arbitrator and Purchaser shall select one arbitrator,
and those two arbitrators shall then select within ten days a third arbitrator.
If those two arbitrators are unable to select a third arbitrator within such ten
day period, a third arbitrator shall be appointed by the commercial panel of the
American Arbitration Association. The decision in writing of at least two of the
three arbitrators shall be final and binding upon the parties.
(e) Administration. The arbitration shall be administered
by the American Arbitration Association.
(f) Rules. The rules of arbitration shall be the
Commercial Arbitration Rules of the American Arbitration Association, as
modified by any other instructions that the parties may agree upon at the time,
except that each party shall have the right to conduct discovery in any manner
and to the extent authorized by the Federal Rules of Civil Procedure as
interpreted by the federal courts. In the event of any conflict between those
rules and the provisions of this Section, the provisions of this Section shall
prevail.
(g) Substantive Law. The arbitrators shall be bound by
and shall strictly enforce the terms of this Agreement and may not limit, expand
or otherwise modify its terms. The arbitrators shall make a good faith effort to
apply substantive applicable law, but an arbitration decision shall not be
subject to review because of errors of law. The arbitrators shall
47
55
be bound to honor claims of privilege or work product doctrine recognized at
law, but the arbitrators shall have the discretion to determine whether any such
claim of privilege or work product doctrine applies.
(h) Decision. The arbitrators' decision shall provide a
reasoned basis for the resolution of each dispute and for any award. The
arbitrators shall not have power to award punitive damages, except in the case
of fraud or willful misconduct.
(i) Expenses. Each party shall bear its own fees and
expenses with respect to the arbitration and any proceeding related thereto and
the parties shall share equally the fees and expenses of the American
Arbitration Association and the arbitrators.
(j) Remedies; Award. The arbitrators shall have power and
authority to award any remedy or judgment that could be awarded by a court of
law in the Commonwealth of Pennsylvania. The award rendered by arbitration shall
be final and binding upon the parties, and judgment upon the award may be
entered in any court of competent jurisdiction in the United States.
48
56
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
PRISON HEALTH SERVICES, INC. CORRECTIONAL PHYSICIAN SERVICES,
INC.
("Purchaser") ("Seller")
By: /s/ Xxxxx X. Xxxx By: /s/ Emre Umar
--------------------------------- --------------------------------
Xxxxx X. Xxxx Name:
Executive Vice President and ------------------------------
Chief Financial Officer Title:
-----------------------------
KENAN UMAR EMRE UMAR
/s/ Kenan Umar (SEAL) /s/ Emre Umar (SEAL)
------------------------------- -----------------------------
49
57
AMENDMENT ONE TO ASSET PURCHASE AGREEMENT
This AMENDMENT ONE TO ASSET PURCHASE AGREEMENT (this
"Amendment") is made and entered into as of the 29th day of March, 2000, between
PRISON HEALTH SERVICES, INC., a Delaware corporation ("Purchaser"); CORRECTIONAL
PHYSICIAN SERVICES, INC., a Pennsylvania corporation ("Seller"); KENAN UMAR, a
resident of the Commonwealth of Pennsylvania ("Dr. Umar"); and EMRE UMAR, a
resident of the Commonwealth of Pennsylvania ("Mr. Umar") (Dr. Umar and Mr. Umar
and hereinafter referred to collectively as the "Shareholders").
RECITALS
A. The parties have entered into that certain Asset Purchase
Agreement dated the date hereof.
B. The parties desire to amend the Asset Purchase Agreement to
delay the effective date of the Closing, as described below.
Section 1. Definitions. All capitalized terms used herein without
definition shall have the meanings set forth in the Asset Purchase Agreement.
Section 2. Effective Date of the Closing. Notwithstanding anything to
the contrary set forth in the Asset Purchase Agreement, the parties agree that
the Closing shall be effective at 11:59 pm Eastern Standard Time on the date
hereof.
Section 3. Calculation of Amounts. Notwithstanding anything to the
contrary set forth in the Asset Purchase Agreement, the Adjusted Net Working
Capital and all other amounts having a bearing on the Purchase Price that were
required to be computed as of the close of business on the day prior to the
Closing Date shall be computed as of the close of business on the Closing Date.
Section 4. Emp1oyment of Seller Personnel. Notwithstanding anything to
the contrary set forth in the Asset Purchase Agreement, Purchaser shall employ
the Seller personnel that Purchaser has agreed to employ pursuant to Section 9.1
of the Asset Purchase Agreement effective as of March 30, 2000.
Section 5. Provision of Pharmaceuticals and Laboratory Services.
Seller will provide pharmaceuticals and laboratory services to Purchaser for
thirty days from the Closing Date. Seller will xxxx Purchaser for such
pharmaceuticals at acquisition cost plus $2.86h per prescription. Seller will
xxxx Purchaser for laboratory services at cost.
Section 6. Affirmation of Asset Purchase Agreement. Except as modified
as set forth above, the Asset Purchase Agreement is hereby ratified and
confirmed in all respects.
58
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
PRISON HEALTH SERVICES, INC. CORRECTIONAL PHYSICIAN
SERVICES, INC.
("Purchaser") ("Seller")
By: /s/ Xxxxx X. Xxxx By: /s/ Kenan Umar
------------------------------------ --------------------------------
Xxxxx X. Xxxx Name:
Executive Vice President and ---------------------------
Chief Financial Officer Title:
--------------------------
KENAN UMAR EMRE UMAR
/s/ Kenan Umar (SEAL) /s/ Emre Umar (SEAL)
--------------------------------- -----------------------------
2
