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EXHIBIT 2.1
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AGREEMENT FOR STATUTORY MERGER
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AMERIS ACQUISITION, INC.
KIDS HOLDINGS, INC.
AND
CHILDREN'S COMPREHENSIVE SERVICES, INC.
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AUGUST 8, 2001
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TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS..................................................................6
ARTICLE 2 MERGER.......................................................................8
2.1. Merger of Ameris into CCS........................................................8
2.2. Common Stock of CCS..............................................................9
2.3. Rights of CCS's Shareholders Pending and Upon Surrender of Shares...............10
2.4. Closing and Effective Date of Merger............................................11
2.5. Modification of Certain Related Party Leases....................................11
2.6. Non-Competition Agreements......................................................11
2.7. Agreements of Certain Shareholders of CCS to Vote in Favor of the Merger........11
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF CCS.......................................11
3.1. Organization, Corporate Power and Qualification.................................11
3.2. Capitalization of CCS...........................................................12
3.3. Subsidiaries....................................................................12
3.4. SEC Reports and Financial Statements............................................13
3.5. Absence of Undisclosed Liabilities..............................................13
3.6. Absence of Certain Recent Changes...............................................13
3.7. Contracts.......................................................................16
3.8. Absence of Related Party Transactions...........................................17
3.9. Defaults........................................................................18
3.10. Investments.....................................................................18
3.11. Receivables.....................................................................18
3.12. Powers of Attorney..............................................................18
3.13. Guarantees......................................................................18
3.14. Permits and Licenses............................................................18
3.15. Litigation, etc.................................................................19
3.16. Court Orders, Decrees and Laws..................................................19
3.17. Taxes...........................................................................19
3.18. Immigration Act.................................................................21
3.19. Program Compliance..............................................................21
3.20. Reimbursement Matters...........................................................21
3.21. Environmental Matters...........................................................21
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3.22. ERISA...........................................................................22
3.23. Pension Plans...................................................................23
3.24. Employee Matters................................................................23
3.25. Insurance; Malpractice..........................................................23
3.26. Labor Matters...................................................................23
3.27. Improper Payments...............................................................24
3.28. No Finders or Brokers...........................................................24
3.29. Authority; Binding Effect.......................................................24
3.30. Consents and Approvals of Governmental Authorities..............................24
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF AMERIS AND AMERIS HOLDINGS................25
4.1. Organization and Standing of Ameris and Ameris Holdings.........................25
4.2. Authority; Binding Effect.......................................................25
4.3. Financing.......................................................................25
4.4. Consents and Approvals of Governmental Authorities..............................26
4.5. Defaults........................................................................26
4.6. No Finders or Brokers...........................................................26
4.7. Legal Proceedings...............................................................26
ARTICLE 5 COVENANTS OF AMERIS AND AMERIS HOLDINGS.....................................26
5.1. Best Efforts to Secure Consents.................................................27
5.2. Financing Commitments...........................................................27
5.3. Information.....................................................................27
5.4. Compliance With Agreement.......................................................27
5.5. Proxy Material..................................................................28
5.6. Indemnification of Directors and Officers.......................................28
5.7. Confidentiality Agreement.......................................................28
5.8. Severance Arrangements..........................................................28
ARTICLE 6 COVENANTS OF CCS............................................................28
6.1. Access and Information..........................................................28
6.2. Conduct of Business.............................................................29
6.3. Personnel Matters...............................................................29
6.4. Compliance with Agreement.......................................................30
6.5. Best Efforts to Secure Consents.................................................30
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6.6. Assets Complete.................................................................30
6.7. Unusual Events..................................................................30
6.8. Interim Financial Statements....................................................31
6.9. Shareholders' Meeting and Proxy Material........................................31
6.10. Non-Solicitation "No-Shop" Covenant.............................................31
6.11. Maintain Insurance Coverage.....................................................33
6.12. Handling of Documents...........................................................33
ARTICLE 7 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF CCS..............................33
7.1. Representations and Warranties True.............................................33
7.2. Opinion of Counsel..............................................................34
7.3. Authority.......................................................................34
7.4. No Obstructive Proceeding.......................................................34
7.5. Delivery of Certain Certified Documents.........................................34
7.6. Approval by Shareholders of CCS.................................................34
7.7. Proceedings and Documents Satisfactory..........................................34
7.8. Casualty Prior to Closing.......................................................35
ARTICLE 8 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF AMERIS AND AMERIS HOLDINGS.......35
8.1. Representations and Warranties True.............................................35
8.2. No Obstructive Proceeding.......................................................35
8.3. Environmental Audit.............................................................36
8.4. Transfer of Licenses............................................................36
8.5. Title Insurance.................................................................36
8.6. Appraisals......................................................................36
8.7. Opinion of CCS Counsel..........................................................36
8.8. Consents and Approvals..........................................................36
8.9. No Adverse Change...............................................................37
8.10. Approval by Shareholders of CCS.................................................37
8.11. Senior Financing................................................................37
8.12. Delivery of Certain Documents...................................................37
ARTICLE 9 TERMINATION.................................................................37
9.1. Optional Termination............................................................37
9.2. Termination Fee.................................................................38
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9.3. Notice of Abandonment...........................................................38
9.4. Mandatory Termination...........................................................39
9.5. Termination.....................................................................39
ARTICLE 10 MISCELLANEOUS...............................................................39
10.1. Expenses........................................................................39
10.2. Cooperation by Ameris...........................................................39
10.3. Notices.........................................................................39
10.4. Entire Agreement................................................................40
10.5. Governing Law...................................................................40
10.6. Waiver Of Trial By Jury.........................................................40
10.7. CON Disclaimer..................................................................41
10.8. Time............................................................................41
10.9. Section Headings................................................................41
10.10. Waiver..........................................................................41
10.11. Exhibits........................................................................41
10.12. Assignment......................................................................41
10.13. Binding on Successors and Assigns...............................................41
10.14. Amendments......................................................................42
10.15. Drafting Party..................................................................42
10.16. Counterparts....................................................................42
10.17. Reproduction of Documents.......................................................42
10.18. Press Releases..................................................................42
10.19. Survival of Representations and Warranties......................................42
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AGREEMENT FOR STATUTORY MERGER
AGREEMENT FOR STATUTORY MERGER ("Agreement"), dated as of August 8,
2001, between KIDS HOLDINGS, INC., a Tennessee corporation ("Ameris Holdings"),
AMERIS ACQUISITION, INC., ("Ameris") , a Tennessee corporation which is wholly
owned by Ameris Holdings, and CHILDREN'S COMPREHENSIVE SERVICES, INC., a
Tennessee corporation ("CCS").
ARTICLE 1 DEFINITIONS
For the purposes of this Agreement, the following definitions shall
apply:
"2002 EBITDA" means earnings of CCS before interest, taxes, depreciation and
amortization for the period from July 1, 2001 through June 30, 2002.
"ADDITIONAL FINANCING COMMITMENT" means a financing commitment from a lender to
fund at least $12 million of the Cash Purchase Price for the CCS Common
Stock.
"AFFILIATE" means with respect to any Person, any Person which controls, is
controlled by, or is under common control with such Person all as more
fully set forth in the rules and regulations of the Securities and
Exchange Commission under the Securities Act.
"AMERIS" means Ameris Acquisition, Inc., a Tennessee corporation.
"BUSINESS DAY" means any day (other than a Saturday or Sunday or a public
holiday in the United States) on which banks in Nashville, Tennessee
are open for business.
"CCS" means Children's Comprehensive Services, Inc., a Tennessee corporation.
"CCS FINANCIAL STATEMENTS" is defined in ss.3.4.
"CLOSING" and "CLOSING DATE" are defined in ss.2.4.
"CODE" means the Internal Revenue Code of 1986, as amended.
"EFFECTIVE DATE" is defined in ss.2.4.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXHIBIT VOLUME" means the volume of Exhibits referred to in this Agreement
prepared and delivered by CCS.
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"FACILITY" OR "FACILITIES" means each of the programs or locations at which CCS
or its Subsidiaries operate their respective businesses, as such
Facilities are listed on Appendix 2.8 attached hereto.
"FINANCING COMMITMENT" means one or more financing commitments from ▇▇▇▇▇▇
Healthcare Finance, Inc. which, together with the Additional Financing
Commitment, are sufficient to fund the Cash Purchase Price for the
payment for the CCS Common Stock, copies of which have been provided by
Ameris to CCS.
"GAAP" means generally accepted accounting principles, consistently applied.
"KNOWLEDGE" means, with respect to any Person who is an individual, the actual
knowledge of such Person after commercially reasonable investigation
and inquiry, and with respect to Persons other than individuals, the
actual knowledge of such entity's executive officers after commercially
reasonable investigation and inquiry.
"MATERIAL ADVERSE EFFECT" means a material adverse change, effect, event or
condition with respect to the assets, liabilities, operations,
financial condition or business, including customer loyalty, reputation
and goodwill of CCS (other than any such change, effect, event or
condition that results or arises from changes in general economic
conditions or in a legal requirement, or as a result of the Merger or
taking any action required by this Agreement) that is reasonably likely
to result in a decrease in the 2002 EBITDA of CCS of greater than
$2,000,000.
"OPTIONS" is defined in ss.2.2(e).
"OWNED FACILITIES" means those Facilities which are owned in fee simple by CCS
or one of its Subsidiaries.
"PERMITTED LIENS" means (i) liens disclosed in the SEC Reports filed prior to
the date hereof, (ii) liens that would not, individually or in the
aggregate, result in a Material Adverse Effect, (iii) liens for current
taxes not yet due and payable and (iv) mechanics' or materialmens'
liens arising in the ordinary course of business with respect to
obligations that are not past due or which are being contested in good
faith.
"PERSON" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, or a government or political subdivision
thereof.
"SEC REPORTS" is defined in ss.3.4 hereof.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SUBSIDIARIES" means each of the corporate subsidiaries of CCS, each of which is
listed on Appendix 3.1 and each of which, if not otherwise noted, is
owned 100% by CCS.
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"SUPERIOR PROPOSAL" means any bona fide acquisition proposal on terms that the
Board of Directors of CCS determines in its good faith judgment (after
consultation with and taking into account the advice of a financial
advisor and taking into account all the terms and conditions of the
acquisition proposal, including any break-up fees, expense
reimbursement provisions and conditions to and timing of consummation)
are more favorable to the shareholders of CCS than this Agreement and
the Merger taken as a whole.
ARTICLE 2 MERGER
2.1. MERGER OF AMERIS INTO CCS.
Ameris shall be merged with and into CCS on the Effective Date (as
defined in ss.2.4 hereof) in accordance with the applicable laws of the State of
Tennessee (the "Merger") as provided in a Plan of Merger to be set forth in the
Articles of Merger in substantially the form of Appendix 2.1 attached hereto
which provides, among other matters, as follows:
(a) SURVIVING ENTITY. CCS shall be the surviving entity (the
"Surviving Entity") from and after the Effective Date, and
the name of the Surviving Entity shall be "Children's
Comprehensive Services, Inc.". Following the Merger, the
separate existence of Ameris shall cease, and the Surviving
Entity shall without other transfer succeed to all the
rights and property, subject to all debts and liabilities,
of Ameris in the same manner as if the Surviving Entity
itself had incurred them.
(b) CHARTER. From and after the Effective Date, the Charter of
Ameris shall be the Charter of the Surviving Entity, until
thereafter amended.
(c) BY-LAWS. From and after the Effective Date, the By-laws of
Ameris shall be the by-laws of the Surviving Entity, until
thereafter amended.
(d) DIRECTORS AND OFFICERS. The directors and officers of Ameris
immediately prior to the Effective Date shall be the
directors and officers, respectively, of the Surviving
Entity, to serve, in both cases, until their successors
shall have been elected and qualified or until otherwise
provided by law and the Charter and By-laws of the Surviving
Entity.
(e) COMMON STOCK OF AMERIS. By virtue of the Merger and without
any action of the holder thereof each share of common stock
of Ameris outstanding on the Effective Date shall remain
outstanding and unchanged as a share of the common stock of
the Surviving Entity.
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2.2. COMMON STOCK OF CCS. By virtue of the Merger and without any
action of the holder thereof, each holder of the shares of common stock of CCS
("CCS Common Stock") issued and outstanding immediately prior to the Effective
Date shall be entitled to receive, for each of its shares of CCS Common Stock,
an amount equal to $6.00 per share (the "Cash Purchase Price"), payable as
follows:
(a) By virtue of the Merger, on the Effective Date, each share
of CCS Common Stock shall cease to exist, all certificates
for such stock shall be canceled and no shares or membership
interest of the Surviving Entity shall be exchanged
therefor; provided, however, that the holder thereof shall
be entitled to the Cash Purchase Price.
(b) Prior to the Effective Date, Ameris shall designate, with
the consent of CCS which shall not be unreasonably withheld,
a bank or trust company to act as Exchange Agent in the
Merger (the "Exchange Agent"). At, or prior to, the
Effective Date, Ameris shall have deposited with the
Exchange Agent, in trust for the benefit of CCS's
shareholders, the aggregate amount of cash equal to the Cash
Purchase Price multiplied by the number of shares of CCS
Common Stock outstanding immediately prior to the Effective
Date. The Exchange Agent may invest any cash deposited with
it in obligations of or guaranteed by the United States of
America (collectively, "Permitted Investments") or in money
market funds which are invested solely in Permitted
Investments; provided, further, that the maturities of
Permitted Investments shall be such as to permit the
Exchange Agent to make prompt payment of the Cash Purchase
Price (as contemplated in ss.2.2(c) hereof) to shareholders
of CCS entitled thereto. Any net profit resulting from, or
interest or income produced by, Permitted Investments shall
be payable to Ameris, who shall replace any monies lost
through any investment made pursuant to this ss.2.2(b).
(c) Promptly after the Effective Date, the Exchange Agent shall
mail and otherwise make available to each record holder of
CCS Common Stock, as of the Effective Date, a letter of
transmittal and instructions for use in effecting the
surrender of each such share of CCS Common Stock for payment
hereunder. Upon surrender to the Exchange Agent of CCS
Common Stock, together with such letter of transmittal duly
executed, the holder of such CCS Common Stock shall be
entitled to receive in exchange therefor cash in an amount
equal to the product of the number of shares of CCS Common
Stock surrendered multiplied by the Cash Purchase Price. If
payment is to be made to a person other than the person in
whose name the shares of CCS Common Stock surrendered are
registered, it shall be a condition of payment that shares
so surrendered shall be properly endorsed or otherwise in
proper form for transfer and that the person requesting such
payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered
holder of the shares of CCS Common Stock surrendered or
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establish to the satisfaction of the Surviving Entity that
such tax has been paid or is not applicable.
(d) At any time following 365 days after the Effective Date, at
the option of Ameris, it may direct the Exchange Agent to
deliver to it any part or all of the consideration deposited
with the Exchange Agent for the benefit of holders of CCS
Common Stock which remains unclaimed, and any interest
earned on such consideration while on deposit, and
thereafter the Exchange Agent shall not be liable to any
person claiming the same. No interest shall accrue or be
payable to or for the benefit of such holders with respect
to any cash held by the Exchange Agent or Ameris. After the
return to Ameris by the Exchange Agent of unclaimed Cash
Purchase Price, Ameris shall, upon surrender to it of shares
of CCS Common Stock, pay to the holder of such shares the
Cash Purchase Price to which they are entitled.
(e) At or immediately prior to the Effective Date, each
outstanding stock option or warrant to purchase shares of
CCS Common Stock (the "Options") granted under CCS's stock
option plans, or otherwise, that has not been exercised
prior to the Effective Date shall vest and become fully
exercisable, each holder of an outstanding Option shall
exercise such Option or agree that such Option shall be
cashed out on the Effective Date, each Option shall be
canceled, and each such holder of any such Option shall be
paid for each such Option an amount determined by
multiplying (x) the excess, if any, of the Cash Purchase
Price over the applicable per share exercise price of such
Option by (y) the number of shares of CCS Common Stock such
holder could have purchased had such holder exercised such
Option in full immediately prior to the Effective Date. On
or prior to the Effective Date, CCS shall deposit, in trust
for the benefit of the holders of the Options, with a bank
or trust company designated by CCS, with the consent of
Ameris which shall not be unreasonably withheld (the "Paying
Agent"), the aggregate amount of cash to be paid to the
holders of Options pursuant to this ss.2.2(e). Immediately
following the Effective Date, the Paying Agent shall mail to
each holder of an Option the amount to be paid with respect
to his or her Options. Upon the Effective Date, all existing
CCS stock option plans shall be terminated by CCS.
2.3. RIGHTS OF CCS'S SHAREHOLDERS PENDING AND UPON SURRENDER OF SHARES.
After the Effective Date, there shall be no transfers on the stock
transfer books of CCS of any shares of CCS Common Stock which were outstanding
immediately prior to the Effective Date. If, after the Effective Date,
certificates representing shares of CCS Common Stock are presented to the
Surviving Entity or CCS's stock transfer agent, they shall be canceled and
exchanged for the Cash Purchase Price as provided for in this ARTICLE 2.
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2.4. CLOSING AND EFFECTIVE DATE OF MERGER.
The closing (the "Closing"), shall be held on the next Business Day
after the last to be fulfilled or waived of the conditions set forth in Articles
7 and 8 has been fulfilled or waived in accordance herewith (or at such later
date as shall be agreeable to CCS and Ameris but in no event later than December
31, 2001) (the "Closing Date") at the offices of Boult, Cummings, ▇▇▇▇▇▇▇ &
▇▇▇▇▇, PLC, in Nashville, Tennessee. In addition to other actions contemplated
hereunder, CCS and Ameris shall execute in accordance with the Tennessee
Business Corporation Act, and shall cause to be filed and recorded with the
appropriate offices under the laws of the State of Tennessee, copies of the
Articles of Merger. The Merger shall become effective upon the filing of the
Articles of Merger with the Secretary of State of the State of Tennessee or such
subsequent time as the parties shall specify in the Articles of Merger (the
"Effective Date").
2.5. MODIFICATION OF CERTAIN RELATED PARTY LEASES.
CCS shall have received prior to or contemporaneously with, the
execution of this Agreement, one or more leases for certain of CCS's Facilities
located in Barstow, California, San Bernardino, California, Banning, California,
and Ontario/Rancho Cucamonga, California in the forms attached hereto as
Appendix 2.5 executed by the owners of such properties.
2.6. NON-COMPETITION AGREEMENTS.
CCS shall have received prior to or contemporaneously with, the
execution of this Agreement, non-competition agreements executed by ▇▇▇ ▇.
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Ph.D., in the forms attached hereto as Appendix
2.6.
2.7. AGREEMENTS OF CERTAIN SHAREHOLDERS OF CCS TO VOTE IN FAVOR OF THE
MERGER.
CCS shall have received prior to, or contemporaneously with, the
execution of this Agreement, agreements and irrevocable proxies in the forms
attached hereto as Appendix 2.7 executed by each of the members of the Board of
Directors of CCS to vote their shares of CCS Common Stock in favor of the Merger
at the CCS Shareholders Meeting referred to in ss.6.9.
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF CCS
Except as set forth in the Exhibits to this Agreement, CCS hereby
represents and warrants to Ameris as follows:
3.1. ORGANIZATION, CORPORATE POWER AND QUALIFICATION.
CCS and each of its Subsidiaries listed on Appendix 3.1 is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation and has all requisite corporate power and
authority and all authorizations, licenses and permits necessary to own, lease
and operate its properties and assets and to carry on its business as and where
it is now being conducted, to enter into this Agreement, and to consummate the
transactions contemplated hereby. CCS and its Subsidiaries are each duly
qualified to do business and in good standing in each jurisdiction in which the
character of the properties owned
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or leased by it or the nature of the business transacted by it makes such
qualification necessary, except where the failure to be so qualified and in good
standing would constitute a Material Adverse Effect. CCS and each of its
Subsidiaries are qualified to do business in the states listed on Appendix 3.1.
No jurisdiction where CCS is not presently qualified as a foreign corporation
has, to the Knowledge of CCS, made any assertion that CCS's business or
ownership of property makes qualification as a foreign corporation in such
jurisdiction necessary. A copy of CCS's Charter and all amendments thereto as of
the date hereof and a copy of CCS's bylaws, as amended to the date hereof (both
certified by the Secretary of CCS), have previously been provided to Ameris and
are true, accurate and complete as of the date hereof, have not been amended
since the date they were so provided and shall not be amended prior to
completion of the Merger. CCS is not in default under or in violation of any
provision of its Charter or bylaws. CCS represents and warrants that it has no
Subsidiaries that are not shown on Appendix 3.1.
3.2. CAPITALIZATION OF CCS.
The authorized capital stock of CCS consists of (i) 50,000,000
shares of $0.01 par value common stock, of which as of the date hereof,
7,228,202 shares have been duly authorized by all necessary corporate action on
the part of CCS, are validly issued and outstanding, fully paid and
non-assessable, and (ii) 10,000,000 shares of $1.00 par value preferred stock of
which, as of the date hereof, no shares have been issued or are outstanding.
Except as set forth in Exhibit 3.2 of the Exhibit Volume, there are no other
authorized or outstanding equity securities of CCS of any class, kind or
character, and there are no outstanding rights, contracts, rights to subscribe,
conversion rights, exchange rights, warrants, options, calls, puts or other
agreements or commitments of any character relating to the capital stock of CCS
or any securities convertible or exchangeable or exercisable for any shares of
stock of any class of capital stock of CCS. CCS owns, directly or indirectly,
100% of the stock in each of the Subsidiaries. Except for the transactions
contemplated by this Agreement, there are no agreements or understandings among
CCS's shareholders with respect to the voting of shares of the CCS Common Stock
on any matter.
3.3. SUBSIDIARIES.
CCS has no direct or indirect ownership interest in, by way of
stock ownership or otherwise, any corporation, association or business
enterprise except for the Subsidiaries listed on Appendix 3.1 and further
described in Exhibit 3.3, all of which are wholly-owned direct or indirect
Subsidiaries. Copies of the Charters or Articles of Incorporation, as
applicable, and bylaws of each Subsidiary have previously been provided to
Ameris and are true, accurate and complete as of the date hereof and have not
been amended since the date they were so provided. CCS owns beneficially and of
record all shares of capital stock of each Subsidiary free and clear of all
claims, liens, charges and encumbrances of any nature whatsoever, and none of
such shares are subject to any covenant or other contractual restriction
preventing or limiting the right to transfer such shares. There are not any
agreements or understandings to which CCS or any Subsidiary is a party with
respect to the voting of shares of capital stock of any Subsidiary; and neither
CCS nor any of its Subsidiaries has outstanding any options, calls, rights of
conversion or other commitments to purchase or sell any authorized or issued
shares of capital stock of any Subsidiary.
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3.4. SEC REPORTS AND FINANCIAL STATEMENTS.
(a) CCS has filed with the Securities and Exchange Commission
(the "SEC") all forms, reports and documents required to be
filed with the SEC by it pursuant to the Securities Act and
the Exchange Act and the SEC rules and regulations
promulgated thereunder, all of which complied in all
material respects with all applicable requirements of the
Securities Act and the Exchange Act (the "SEC Reports").
None of the SEC Reports, including, without limitation, any
financial statements or schedules included therein, at the
time filed, contained any untrue statement of a material
fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading, except to the extent any such
statements have been modified or superceded by a later SEC
report filed prior to the date hereof.
(b) The consolidated balance sheets and the related statements
of income, shareholders' equity and cash flow (including the
related notes thereto) of CCS included in the SEC Reports
(collectively, the "CCS Financial Statements") comply as to
form in all material respects with applicable accounting
requirements and the published rules and regulations of the
SEC with respect thereto, have been prepared in accordance
with GAAP (except as otherwise noted therein), and present
fairly the consolidated financial position of CCS and its
Subsidiaries as of their respective dates, and the results
of its operations and their cash flow for the periods
presented therein (subject, in the case of the unaudited
interim financial statements, to the absence of notes and
normal year-end adjustments).
3.5. ABSENCE OF UNDISCLOSED LIABILITIES.
Except as and to the extent reflected or reserved against in
the CCS Financial Statements, except for commitments and obligations incurred in
the ordinary course of business accruing after March 31, 2001, except for
liabilities under this Agreement or incurred in connection with the transactions
contemplated hereby, and except for liabilities or obligations disclosed in this
Agreement, the Exhibits and Appendices hereto or in the SEC Reports, CCS and its
Subsidiaries have no liabilities, claims or obligations required to be disclosed
by GAAP (whether accrued, absolute, contingent, unliquidated or otherwise,
whether due to become payable and regardless of when or by whom asserted),
except any such liabilities, claims or obligations which would not have a
Material Adverse Effect.
3.6. ABSENCE OF CERTAIN RECENT CHANGES.
Except as expressly provided in this Agreement or as set forth
on Exhibit 3.6 or elsewhere in the Exhibit Volume, from March 31, 2001 through
the date of this Agreement, each of CCS and its Subsidiaries have not been, and
will not have from the date of this Agreement through the Closing:
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(a) except in the usual and ordinary course of its business,
consistent with past practice, and in an amount which is
usual and normal incurred any indebtedness or other
liabilities (whether accrued, absolute, contingent or
otherwise), guaranteed any indebtedness or sold any of its
assets;
(b) suffered any damage, destruction or loss, not covered by
insurance, in excess of $100,000;
(c) suffered the resignation or other termination of any
material management personnel of CCS, or the loss of or
other termination of a business relationship with any
material customers or suppliers not previously disclosed to
Ameris in writing;
(d) increased the regular rate of compensation payable by it to
any employee or any physician other than normal merit and
cost of living increases granted in the ordinary course of
business consistent with past practice; or increased such
compensation by bonus, percentage, compensation service
award or similar arrangement theretofore in effect for the
benefit of any of its employees, which increase is not
required by applicable law;
(e) established or agreed to establish, amended or terminated
any pension, retirement or welfare plan or arrangement for
the benefit of its employees not theretofore in effect;
(f) suffered any change in its financial condition, assets,
liabilities, operations, or business or suffered any other
event or condition of any character which individually or in
the aggregate has or would reasonably have a Material
Adverse Effect;
(g) had any change in its capitalization, including, without
limitation, the issuance of any shares of stock of any class
(other than shares issued upon exercise of Options or
pursuant to CCS's employee stock purchase plan), any
subscriptions, options, warrants, convertible securities,
rights, calls, agreements, commitments or rights affecting
or relating in any manner whatsoever to any equity interests
in CCS;
(h) declared or paid any dividend or other distribution on any
class of its capital stock or purchased or redeemed any of
its capital stock (other than shares acquired by CCS in
connection with the exercise of Options);
(i) made any direct or indirect purchase, redemption or other
acquisition by or made any commitment, plan or agreement to
purchase, redeem or otherwise acquire any shares of its
capital stock or other equity interests (other than shares
acquired by CCS in connection with the exercise of Options
and the amendments to outstanding Options contemplated by
Section 2.2(e));
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(j) experienced any labor organizational efforts, strikes or
complaints likely to result in a Material Adverse Effect,
other than grievance procedures in the ordinary course of
business, or entered into any collective bargaining
agreements with any union;
(k) made any single capital expenditure which exceeded $50,000
or made aggregate capital expenditures for items not
included in the capital budget which exceeded $250,000 other
than items included in the 2001 or 2002 capital budget of
CCS;
(l) except with respect to Permitted Liens, permitted or allowed
any of its assets (real, personal or mixed, tangible or
intangible) to be subjected to any mortgage, pledge, lien,
security interest, encumbrance, restriction or charge of any
kind (other than under current credit and loan agreements
previously disclosed to Ameris in writing);
(m) written down the value of any of its assets, or written off
as uncollectible any notes or accounts receivable, except
for year-end adjustments and except for write-downs and
write-offs in the ordinary course of business and consistent
with past practice, none of which are material, or revalued
any of its assets;
(n) paid, discharged or satisfied any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise)
other than in the usual and ordinary course of business,
consistent with past practice;
(o) suffered any extraordinary losses, canceled any debts or
waived any claims or rights of substantial value, whether or
not in the usual and ordinary course of business;
(p) paid, lent or advanced any amount to, or sold, transferred
or leased any properties or assets (real, personal or mixed,
tangible or intangible) to, or entered into any agreement or
arrangement with, any shareholder of CCS holding more than
5% of the Common Stock of CCS or any of the officers or
directors of CCS or any of its Subsidiaries or of any
Affiliate, except for reimbursement of ordinary and
reasonable business expenses related to its business and the
amendments to outstanding Options contemplated by Section
2.2(e);
(q) amended, terminated or otherwise altered (whether by action
or inaction) any contract, agreement or license having
unperformed commitments or obligations of more than $50,000
to which it is a party, except in the ordinary course of
business consistent with past practice and the amendments to
outstanding Options contemplated by Section 2.2(e);
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(r) entered into a material transaction other than in the
ordinary course of business or made any change in any method
of accounting or accounting practice;
(s) canceled, or failed to continue, insurance coverages; or
(t) agreed, whether in writing or otherwise, to take any action
described in this ss.3.6.
3.7. CONTRACTS.
Exhibit 3.7 of the Exhibit Volume contains a list of each
contract, lease, agreement and other instrument to which CCS or any of its
Subsidiaries is a party or is bound which involves an unperformed commitment or
obligation (contingent or otherwise) of more than $50,000 in the aggregate,
other than any contract with an individual student or resident. Except as noted
in such Exhibit, all such contracts, leases and agreements are in full force and
effect and there has been no threatened cancellation thereof provided in writing
to CCS or any Subsidiary, there are no outstanding material disputes thereunder,
each is with unrelated third parties, was entered into on an arms-length basis
in the ordinary course of business and will continue to be binding in accordance
with its terms after consummation of the transactions contemplated hereby.
Except as set forth in Exhibit 3.7, there are no employment agreements or other
agreements to which CCS or any of its Subsidiaries is a party or by which CCS or
any of its Subsidiaries is bound that contain any severance or termination pay
liabilities or obligations.
Except as described in Exhibit 3.7 or the other Exhibits or
Appendices contained in the Exhibit Volume (and except for purchase contracts
and orders for inventory in the ordinary course of business consistent with past
practice), neither CCS nor any of its Subsidiaries is, as of the date of this
Agreement, a party to or bound by any:
(a) material agreement or contract not made in the ordinary
course of business;
(b) employee collective bargaining agreement or other contract
with any labor union;
(c) covenant not to compete;
(d) lease or similar agreement under which CCS or any of its
Subsidiaries is a lessor or sublessor of any material real
property owned or leased by CCS or any of its Subsidiaries
or any portion of premises otherwise occupied by CCS or any
of its Subsidiaries (other than leases or agreements among
CCS and its Subsidiaries);
(e) (i) lease or similar agreement under which (A) CCS or any of
its subsidiaries is lessee of, or holds or uses, any
machinery, equipment, vehicle or other tangible personal
property owned by a third party or (B) CCS or any of its
subsidiaries is a lessor or sublessor of any tangible
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personal property owned by CCS or any of its subsidiaries,
(ii) continuing contract for the future purchase of
materials, supplies or equipment, or (iii) management,
service, consulting or other similar type of contract, in
any such case under this subsection (e), which has a future
liability in excess of $50,000, and which is not terminable
by CCS or its subsidiaries for a cost of less than $50,000;
(f) license or other agreement relating in whole or in part to,
trademarks (including, but not limited to, any license or
other agreement under which CCS or any of its Subsidiaries
has the right to use any of the same owned or held by a
third party);
(g) agreement or contract under which CCS or any of its
Subsidiaries has borrowed or lent any money or issued any
note, bond, indenture or other evidence of indebtedness or
directly or indirectly guaranteed indebtedness, liabilities
or obligations of others for an amount in excess of $50,000
(other than (i) endorsements for the purpose of collection
in the ordinary course of business, (ii) agreements or
contracts among CCS and its Subsidiaries or among CCS or any
of its Subsidiaries, and (iii) advances to employees of CCS
and its Subsidiaries in the ordinary course of business);
(h) mortgage, pledge, security agreement, deed of trust or other
document granting a lien (including liens upon properties
acquired under conditional sales, capital leases or other
title retention or security devices but excluding operating
leases) other than Permitted Liens;
(i) other agreement, contract, lease, license, commitment or
instrument to which CCS or any of its Subsidiaries is a
party or by which CCS or any of its Subsidiaries or any of
their assets or businesses are bound or subject, which is
not terminable by CCS or its Subsidiaries for a cost of less
than $10,000; or
(j) any agreement, contract, understanding or business venture
with any physician, other provider or any other Person which
violates the Medicare/Medicaid Fraud and Abuse amendments or
any regulations thereunder adopted by the U.S. Department of
Health and Human Services.
3.8. ABSENCE OF RELATED PARTY TRANSACTIONS.
Except as disclosed on Exhibit 3.8, neither CCS, nor any officer
or director of CCS, has any material direct or indirect financial or economic
interest in any competitor or supplier of CCS. Except as disclosed on Exhibit
3.8, all transactions involving CCS and its officers and directors and greater
than 5% shareholders have been disclosed in CCS's SEC Reports in accordance with
the rules and regulations promulgated under the Exchange Act, and said Exhibit
lists all such transactions.
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3.9. DEFAULTS.
Except as disclosed in Exhibit 3.9, neither CCS nor any of its
Subsidiaries is in default under, nor has any event occurred which, with the
lapse of time or action by a third party, could result in a default under any
material outstanding indenture, mortgage, contract, instrument or agreement to
which CCS or any of its Subsidiaries is a party or by which CCS or any of its
Subsidiaries may be bound or under any provision of the Charter or bylaws of CCS
or any of its Subsidiaries. Except as set forth in Exhibit 3.9, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated by this Agreement will not violate any provision of,
or result in the breach of, or constitute a default under, any law the violation
of which would result in a significant liability to CCS or any of its
Subsidiaries, or any order, writ, injunction or decree of any court,
governmental agency or arbitration tribunal; constitute a violation of or a
default under, or a conflict with, any term or provision of the Charter or
bylaws of CCS or any of its Subsidiaries or any material contract, commitment,
indenture, lease, instrument or other agreement, or any other material
restriction of any kind to which CCS or any of its Subsidiaries is a party or is
bound; or cause, or give any party grounds to cause (with or without notice, the
passage of time or both) the maturity of any liability or obligation of CCS or
any of its Subsidiaries, to be accelerated, or increase any such liability or
obligation, in each case, where such violation would have a Material Adverse
Effect.
3.10. INVESTMENTS.
Except as reflected in the CCS Financial Statements, neither CCS nor
any of its Subsidiaries have any investments in, or any outstanding material
advances to, any other Persons.
3.11. RECEIVABLES.
All notes and accounts receivable of CCS and its Subsidiaries shown on
the CCS Financial Statements and all those arising since the date of the balance
sheets presented in the CCS Financial Statements have arisen in the ordinary
course of business.
3.12. POWERS OF ATTORNEY.
Exhibit 3.12 lists any outstanding powers of attorney related to any of
CCS and its Subsidiaries and a summary statement of the terms thereof.
3.13. GUARANTEES.
Included as Exhibit 3.13 in the Exhibit Volume is a list and brief
description of all guarantees and any matters of suretyship of CCS and its
Subsidiaries.
3.14. PERMITS AND LICENSES.
Included as Exhibit 3.14 in the Exhibit Volume is a schedule of permits
and licenses, listing and briefly describing each permit, license or similar
authorization from each governmental authority issued with respect to the
operation or ownership of the Facilities by
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CCS and its Subsidiaries together with the designation of the respective
expiration dates of each, and also listing and briefly describing each
association in which CCS or any of its Subsidiaries is a member and each
association or governmental authority by which CCS or any of its Subsidiaries is
accredited, certified, or otherwise recognized. Neither CCS nor any of its
Subsidiaries is required under any applicable law or regulation to obtain any
additional material permits, licenses or similar authorizations (including,
without limitation, any additional certificates of need) from any governmental
authority for the proper conduct of its business or to become a member of or
accredited by any association or governmental authority other than those listed
on Exhibit 3.14 in the Exhibit Volume.
3.15. LITIGATION, ETC.
Except as set forth in Exhibit 3.15 of the Exhibit Volume, there
is no material litigation, arbitration, governmental claim, investigation or
proceeding pending or, to the Knowledge of CCS or any of its Subsidiaries,
threatened against CCS or any of its Subsidiaries at law or in equity, before
any court, arbitration tribunal or governmental agency. Except as set forth in
Exhibit 3.15, all claims and litigation against CCS or any of its Subsidiaries
are fully covered by insurance, after taking into account deductibles and
retentions. All claims listed on Exhibit 3.15 that are not covered by insurance
will not, individually or in the aggregate, result in a Material Adverse Effect.
3.16. COURT ORDERS, DECREES AND LAWS.
There is not outstanding or, to the Knowledge of CCS or any of
its Subsidiaries, threatened any order, writ, injunction or decree of any court,
governmental agency or arbitration tribunal against or affecting CCS or any of
its Subsidiaries or any of their assets which would significantly interfere with
their ability to conduct their businesses. CCS and its Subsidiaries are in
material compliance with all applicable federal, state and local laws,
regulations and administrative orders which are material to the business of CCS
and its Subsidiaries, and CCS and its Subsidiaries have received no notices of
alleged violations thereof except as disclosed in Exhibit 3.16 hereof. To the
Knowledge of CCS or any of its Subsidiaries, no governmental authorities are
presently conducting proceedings against CCS or any of its Subsidiaries and, to
the Knowledge of CCS or any of its Subsidiaries, no such investigation or
proceeding is pending or being threatened.
3.17. TAXES.
Copies of CCS's federal, state and local income tax returns for
the tax years ended June 30, 2000, June 30, 1999 and June 30, 1998 have
previously been provided or made available to Ameris. No waivers of any statute
of limitations relating to the payment of taxes have been given by CCS or any of
its Subsidiaries and no waivers therefor have been requested by the Internal
Revenue Service from CCS or any of its Subsidiaries. Except as set forth in
Exhibit 3.17, no extensions have been obtained to file any tax return which has
not heretofore been filed. CCS and its Subsidiaries have withheld from each
payment made to employees, independent contractors, creditors, shareholders or
other third parties the amount of all taxes (including, but not limited to,
federal, state and local income taxes and Federal Insurance Contribution Act
taxes) required to be withheld therefrom and all amounts customarily withheld
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therefrom, and have set aside all other employee contributions or
payments customarily set aside with respect to such wages and have paid or will
pay the same to, or have deposited or will deposit such payment with, the proper
tax receiving officers or other appropriate authorities. None of CCS and its
Subsidiaries will be required, as a result of a change in method of accounting
for a taxable period ending on or prior to the Closing Date, to include any
adjustment in taxable income for any taxable period (or portion thereof)
beginning after the Closing Date. None of CCS and its Subsidiaries has been a
member of an affiliated group (as defined in ss.1504(a) of the Code) other than
one of which CCS was the common parent, or has any liability for the taxes of
any Person (other than CCS or any of its Subsidiaries under Treasury Regulations
Section 1.1502-6 or any similar provision of state, local or foreign law as a
transferee or successor, by consent or otherwise). None of CCS and its
Subsidiaries is a party to or bound by any tax sharing agreement. None of CCS
and its Subsidiaries is and will not become obligated (under any contract
entered into on or before the Closing Date) to make any payments that will be
non-deductible under ss.280G of the Code. CCS and its Subsidiaries have not been
a "United States real property holding corporation" as defined in ss.897 of the
Code during the applicable period specified therein.
All federal, state and other tax returns of CCS and its
Subsidiaries required by law to be filed have been or will be timely filed, and
CCS and its Subsidiaries paid or provided for all taxes (including taxes on
properties, income, franchises, licenses, sales and payrolls) whether or not
shown on any return or which have become due pursuant to such returns or
pursuant to any assessment, except for any taxes and assessments of which the
amount, applicability or validity is currently being contested in good faith by
appropriate proceedings and with respect to which CCS or its Subsidiaries has
set aside on its books adequate reserves. All such tax returns have been or will
be prepared and filed as required by applicable laws and regulations and are
true and accurate in all material respects. The amounts set up as provisions for
taxes (including provision for deferred income taxes) on the CCS Financial
Statements are sufficient for the payment of all unpaid federal, state, county
and local taxes accrued for or applicable to all periods (or portions thereof)
ending on or before the Closing Date. There are no tax liens on any of the
property of CCS or any of its Subsidiaries except those with respect to taxes
not yet due and payable and except for any taxes and assessments of which the
amount, applicability or validity is currently being contested in good faith by
appropriate proceedings and with respect to which CCS or its Subsidiaries has
set aside on its books adequate reserves. There are no pending tax examinations
nor has CCS or any of its Subsidiaries received a revenue agent's report
asserting a tax deficiency. None of CCS or its Subsidiaries expects any taxing
authority to claim or assess any amount of additional taxes against it. No claim
has ever been made by a taxing authority in a jurisdiction where CCS or any of
its Subsidiaries does not file tax returns that CCS or any of its Subsidiaries
is or may be subject to taxes assessed by such jurisdiction. The Federal income
tax liability of CCS and its Subsidiaries has been examined and reported on by
the Internal Revenue Service (or closed by applicable statutes) and satisfied
for all fiscal years prior to and including the fiscal year ended June 30, 1997.
None of CCS or its Subsidiaries has filed a consent under ss. 341(f) of the Code
relating to collapsible corporations.
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3.18. IMMIGRATION ACT.
CCS is in compliance with the terms and provisions of the
Immigration Reform and Control Act of 1986, as amended (the "Immigration Act"),
in all material respects. To the Knowledge of CCS and its Subsidiaries, there
are no material violations or potential violations of the Immigration Act by CCS
or any of its Subsidiaries. Neither CCS nor any of its Subsidiaries has been
cited, fined, served with a Notice of Intent to Fine or with a Cease and Desist
Order, nor, to the Knowledge of CCS or any of its Subsidiaries, has any action
or administrative proceeding been initiated or threatened against CCS or any of
its Subsidiaries, by reason of any actual or alleged failure to comply with the
Immigration Act.
3.19. PROGRAM COMPLIANCE.
None of CCS or any of its Subsidiaries is a party to, or the
beneficiary of, any agreement, contract, understanding or business venture with
any provider or referral source which, in any material respects, violates the
Medicare/Medicaid Fraud and Abuse amendments or any regulations thereunder
adopted by the U.S. Department of Health and Human Services or any regulations
adopted by any other federal or state agency or which results in overutilization
of health care services by patients.
3.20. REIMBURSEMENT MATTERS.
All Medicare and Medicaid Cost Reports filed by CCS either not
audited by the fiscal intermediary or audited and not formally settled are
listed on Exhibit 3.20 of the Exhibit Volume, and copies of the same have been
made available to Ameris. A schedule setting forth the audit status of such
Medicare Cost Reports is set forth in Exhibit 3.20 of the Exhibit Volume. The
amounts set up as provisions for Medicare and Medicaid adjustments and
adjustments by any other third party payors on the CCS Financial Statements are
reasonable, good faith estimates of the amounts for which CCS or any of its
Subsidiaries may be liable. Neither CCS nor any of its Subsidiaries has any
Knowledge of any basis for any claims against CCS or any of its Subsidiaries by
any third party payors other than routine Medicare and Medicaid audit
adjustments.
3.21. ENVIRONMENTAL MATTERS.
Except as disclosed on Exhibit 3.21 or in the SEC Reports, (i)
all operations conducted by CCS and its Subsidiaries at the Facilities are in
material compliance with all Environmental Laws (as defined below); (ii) there
are no judicial or administrative actions, suits or proceedings pending or, to
the Knowledge of CCS or its Subsidiaries, threatened against CCS or its
Subsidiaries alleging the material violation of any Environmental Law and
neither CCS nor any Subsidiary has received written notice from any Person
alleging any material violation of or liability under any Environmental Laws, in
either case which would reasonably be expected to result in material
Environmental Costs and Liabilities; (iii) to the Knowledge of CCS or its
Subsidiaries, there are no facts, circumstances or conditions attributable to
CCS or any of its Subsidiaries that would reasonably be expected to result in
material Environmental Costs and Liabilities; and (iv) to the Knowledge of CCS
or its Subsidiaries, neither CCS nor any of its Subsidiaries has ever generated,
transported, treated, stored, handled or disposed of any
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Hazardous Material (as hereinafter defined) at any site, location or facility in
a manner that would reasonably be expected to result in any material
Environmental Costs and Liabilities under any Environmental Law; and to the
Knowledge of CCS or any of its Subsidiaries, no such Hazardous Material has been
or is currently present on, in, at or under any of the Facilities in a manner
that would reasonably be expected to result in any material Environmental Costs
and Liabilities (including without limitation, containment by means of any
underground or aboveground storage tank). For the purpose of this ss.3.21, the
following terms have the following definitions: (X) "Environmental Costs and
Liabilities" means any losses, liabilities, obligations, damages, fines,
penalties, judgments, actions, claims, costs and expenses (including, without
limitation, fees, disbursements and expenses of legal counsel, experts,
engineers and consultants and the costs of investigation and feasibility
studies, remedial or removal actions and cleanup activities) arising from or
under any Environmental Law; (Y) "Environmental Laws" means any applicable
federal, state or local law (including common law), statute, code, ordinance,
rule, regulation or other requirement relating to the environment, natural
resources, or public or employee health and safety; and (Z) "Hazardous Material"
means any substance, material or waste exposure to which is regulated by
federal, state or local government, including, without limitation, any
substance, material or waste which is defined as a "hazardous waste," "hazardous
material," "hazardous substance," "toxic waste" or "toxic substance" under any
provision of Environmental Law and including but not limited to petroleum and
petroleum products.
3.22. ERISA.
(a) Except as listed in Exhibit 3.22 of the Exhibit Volume,
CCS and its Subsidiaries have no "employee benefit
plans", as such term is defined under Section 3(3) of
the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or any other plan or similar
arrangement, written or otherwise, which provides any
type of pension or welfare benefit to any of their
directors, employees, or former employees.
(b) With respect to all of the plans listed in Exhibit 3.22,
CCS and its Subsidiaries delivered to Ameris true and
exact copies of all plan documents embodying the
provisions of such plans, together with all amendments
thereto, all summary plan descriptions and summaries of
material modifications pertaining thereto, copies of the
most recent Internal Revenue Service determination
letters, if any, relating to such plans, copies of the
last three (3) years' Annual Report (Form 5500 series),
as filed with respect to such plans with the Internal
Revenue Service, together with all Schedules and
attachments thereto, including, without limitation,
copies of the plan audits and/or actuarial valuations,
copies of all contract administration agreements between
CCS and its Subsidiaries and third party administrators,
copies of all participant-related forms currently in use
in connection with such plans including, without
limitation, salary reduction agreements and beneficiary
designations and participant-specific claims history for
any "welfare benefit plan" (within
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the meaning of Section 3(1) of ERISA) that has been in
existence during any part of the last three years.
(c) Except as set forth on Exhibit 3.22, no "prohibited
transaction", as such term is defined under Section
4975(c) of the Code or under Section 406 of ERISA, and
the respective regulations thereunder, has occurred or
is occurring with respect to any "employee benefit plan"
maintained by CCS and its Subsidiaries or with respect
to any trustee or administrator thereof.
3.23. PENSION PLANS. CCS has never maintained, and does not now
maintain, any "pension plan" as such term is defined in Section 3(2) of ERISA.
3.24. EMPLOYEE MATTERS.
Included as Exhibit 3.24A of the Exhibit Volume is a list of all
employees of CCS and its Subsidiaries whose total annual compensation (including
bonuses) in the last 12 months was in excess of $50,000. CCS has separately
furnished a true and correct schedule setting forth the annual rates of
compensation of such individuals. Except as set forth in Exhibit 3.24A, no
written employment agreement to which CCS or any of its Subsidiaries is a party
requires longer than a four-week notice before termination or agreement to lend
to or guarantee any loan to an employee or an agreement relating to a bonus,
severance pay or similar plan, agreement, arrangement or understanding. Exhibit
3.24B of the Exhibit Volume is a brief description of employee benefits of CCS.
Except as may be required by ss.4980B of the Code or applicable state health
care continuation coverage statutes, CCS has no liability under any plan or
arrangement which provides welfare benefits, including medical and life
insurance, to any current or future retiree or terminated employee.
3.25. INSURANCE; MALPRACTICE.
Exhibit 3.25 of the Exhibit Volume is a list and brief
description of all policies of fire, general liability, professional liability,
product liability, environmental impairment liability, worker's compensation,
health and other forms of insurance policies or binders currently in force
insuring against risks of CCS. All insurance policies or binders of CCS are
valid, outstanding and enforceable and will continue to be valid, binding and
enforceable following the consummation of the transactions contemplated by this
Agreement. Exhibit 3.25 of the Exhibit Volume contains a description of the past
malpractice liability insurance coverage and claims history of CCS for the past
two fiscal years.
3.26. LABOR MATTERS.
There are no collective bargaining agreements with any labor
union to which CCS or any of its Subsidiaries is a party or by which CCS or any
of its Subsidiaries is bound, and they are not currently negotiating with a
labor union, except as set forth on Exhibit 3.26. Except as set forth in Exhibit
3.26, no employees of CCS or any of its Subsidiaries have ever petitioned for a
representation election. CCS and its Subsidiaries are in compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in
compliance would not have a Material
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Adverse Effect, and are not engaged in any unfair labor practice. There is no
unfair labor practice complaint against CCS or any of its Subsidiaries pending
before the National Labor Relations Board. There is no labor strike, dispute,
slowdown or stoppage actually pending or, to the Knowledge of CCS or any of its
Subsidiaries, threatened against or affecting CCS or any of its Subsidiaries. No
grievance which might have a Material Adverse Effect nor any such arbitration
proceeding arising out of or under collective bargaining agreements is pending
and, to the Knowledge of CCS or any of its Subsidiaries, no claim therefor
exists. Neither CCS nor any of its Subsidiaries has experienced any employee
strikes during the last three years. CCS will advise Ameris of any such labor
dispute, petition for representative election or negotiations with any labor
union which shall arise before the Closing Date.
3.27. IMPROPER PAYMENTS.
Neither CCS nor any of its Subsidiaries nor any officer or, to
the Knowledge of CCS or any of its Subsidiaries, employee of CCS or any of its
Subsidiaries have made any bribes, kickbacks or other improper payments on
behalf of CCS or any of its Subsidiaries or received any such payments from
vendors, suppliers or other persons contracting with CCS or any of its
Subsidiaries.
3.28. NO FINDERS OR BROKERS.
Neither CCS or any of its Subsidiaries nor any officer or
director of CCS or any of its Subsidiaries has engaged any finder or broker in
connection with the transactions contemplated hereunder, except for McDonald
Investments, Inc.
3.29. AUTHORITY; BINDING EFFECT.
CCS has the requisite corporate power and corporate authority to
enter into this Agreement and, subject to the convening of a shareholders'
meeting and the approval of shareholders as required by Tennessee law, to carry
out the transactions contemplated hereby. The Board of Directors of CCS has
taken all actions required to be taken by it by law and by CCS's Charter and
bylaws, or otherwise, to authorize the execution and delivery of this Agreement
and the transactions contemplated hereby. The execution, delivery, and
performance of this Agreement constitutes the valid and binding agreement of CCS
enforceable in accordance with its terms (except as the same may be restricted,
limited or delayed by applicable bankruptcy or other laws affecting creditors'
rights generally and except as to the remedy of specific performance which may
not be available under the laws of various jurisdictions) assuming that this
Agreement has been duly authorized, delivered and executed by Ameris and Ameris
Holdings and constitutes the valid and binding obligation of Ameris and Ameris
Holdings enforceable against Ameris and Ameris Holdings in accordance with its
terms (except as enforceability against Ameris or Ameris Holdings may be
restricted, limited or delayed to the same extent as referred to in the
parenthetical phrase immediately above).
3.30. CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES.
No characteristic of CCS or any of its Subsidiaries or of the
nature of their businesses or operations requires any consent, approval or
authorization of, or declaration, filing
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or registration with any governmental or regulatory authority in connection with
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, except for filing and recording of appropriate
merger documents and the filing of proxy materials and other documents required
to be filed with the SEC and the National Association of Securities Dealers.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF AMERIS AND AMERIS HOLDINGS
Ameris and Ameris Holdings hereby represent and warrant as follows:
4.1. ORGANIZATION AND STANDING OF AMERIS AND AMERIS HOLDINGS.
Each of Ameris and Ameris Holdings is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Tennessee. Each of Ameris and Ameris Holdings has full power and authority to
own, lease and operate its properties and to conduct its business as now being
conducted, and is duly qualified to do business and is in good standing in each
jurisdiction in which the nature of the property owned or leased or the nature
of the business conducted by it requires such qualification.
4.2. AUTHORITY; BINDING EFFECT.
Each of Ameris and Ameris Holdings has the requisite power and
authority to execute and deliver this Agreement and consummate the transactions
contemplated hereby and has taken all action required by law, its Charter,
By-laws or otherwise to authorize such execution and delivery and the
consummation of the transactions contemplated hereby. The execution, delivery,
and performance of this Agreement constitutes the valid and binding agreements
of each of Ameris and Ameris Holdings enforceable in accordance with its terms
(except as the same may be restricted, limited or delayed by applicable
bankruptcy or other laws affecting creditors' rights generally and except as to
the remedy of specific performance which may not be available under the laws of
various jurisdictions) assuming that this Agreement has been duly authorized,
delivered and executed by CCS and constitutes the valid and binding obligation,
enforceable against CCS in accordance with its terms (except as enforceability
against CCS may be restricted, limited or delayed to the same extent as referred
to in the parenthetical phrase immediately above).
4.3. FINANCING.
True, correct and complete copies of the Financing Commitment
have been furnished to CCS. The funding to be provided by the Financing
Commitment, together with Additional Financing Commitment, is sufficient to
enable Ameris to fund the transactions contemplated by this Agreement. Ameris
has no Knowledge of any reason why the financings contemplated by the Financing
Commitment will not be consummated at the Closing.
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4.4. CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES.
No characteristic of Ameris or Ameris Holdings or of the nature
of either of their businesses or operations requires any consent, approval or
authorization of, or declaration, filing or registration with any governmental
or regulatory authority in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby except
for filing and recording of appropriate merger documents.
4.5. DEFAULTS.
Ameris and Ameris Holdings are not in default under, nor has any
event occurred which, with the lapse of time or action by a third party, could
result in a default under any outstanding indenture, mortgage, contract,
instrument or agreement to which Ameris or Ameris Holdings is a party or by
which Ameris or Ameris Holdings may be bound, unless such default would not have
a material adverse effect on Ameris or Ameris Holdings, or under any provision
of the Charter or By-laws of Ameris or Ameris Holdings. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated by this Agreement will not violate any provision of, or result in
the breach of, or constitute a default under, any law the violation of which
would result in a significant liability to Ameris or Ameris Holdings or any
order, writ, injunction or decree of any court, governmental agency or
arbitration tribunal; constitute a violation of or a default under, or a
conflict with, any term or provision of the Charter or By-laws of Ameris or
Ameris Holdings or any material contract, commitment, indenture, lease,
instrument or other agreement, or any other restriction of any kind to which
Ameris or Ameris Holdings is a party or is bound; or cause, or give any party
grounds to cause (with or without notice, the passage of time or both) the
maturity of any liability or obligation of Ameris or Ameris Holdings to be
accelerated, or increase any such liability or obligation, in each case, where
such violation would have a material adverse effect on Ameris or Ameris
Holdings.
4.6. NO FINDERS OR BROKERS.
Neither Ameris, Ameris Holdings nor any officer, director or
shareholder of Ameris or Ameris Holdings has engaged any finder or broker in
connection with the transactions contemplated hereunder.
4.7. LEGAL PROCEEDINGS.
No proceeding has been instituted against Ameris, Ameris
Holdings, or any of their Affiliates by any Person or governmental body, whether
seeking to restrain or prohibit the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereunder.
ARTICLE 5 COVENANTS OF AMERIS AND AMERIS HOLDINGS
Ameris and Ameris Holdings hereby covenant and agree as follows:
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5.1. BEST EFFORTS TO SECURE CONSENTS.
Each of Ameris and Ameris Holdings shall take the necessary
corporate and other action and shall use its reasonable best efforts to secure
before the Closing Date all necessary consents and approvals required to carry
out the transactions contemplated by the Agreement and to satisfy all other
conditions precedent to the obligations of Ameris, Ameris Holdings and CCS
pursuant to this Agreement.
5.2. FINANCING COMMITMENTS.
Each of Ameris and Ameris Holdings will use its reasonable best
efforts to obtain the Additional Financing Commitment and to cause the
conditions to the obligations of each of the lenders and equity participants as
set forth in the Financing Commitment and Additional Financing Commitment (and
the related documentation), to be satisfied as of the Closing Date. Ameris and
Ameris Holdings shall keep CCS reasonably informed of the current status of
negotiations with respect to the Financing Commitment, the Additional Financing
Commitment and the documentation relating thereto and shall promptly notify CCS
(a) of any adverse developments with respect to such negotiations including,
without limitation, any indication from any of such lenders or equity
participants that such lender or equity participant does not intend, or will not
be able, to provide the financing described in its Financing Commitment or
Additional Financing Commitment and (b) of any facts, circumstances or
conditions of which Ameris or Ameris Holdings is aware that present a
significant possibility that any conditions to the obligations of the lenders
and the equity participants set forth in the Financing Commitment or the
Additional Financing Commitment will not be satisfied on the Closing Date.
5.3. INFORMATION.
Ameris and Ameris Holdings shall promptly provide to CCS upon
reasonable request any information or documents reasonably necessary for CCS or
its shareholders to make an informed judgment as to the advisability of
consummating the transactions contemplated hereby or to verify the
representations and warranties of Ameris and Ameris Holdings herein, including,
but not limited to, notice of (i) any communication from any person alleging
that their consent is required in connection with the transactions contemplated
hereunder, (ii) any communication from any governmental authority in connection
with the transactions hereunder, (iii) any representation or warranty made
hereunder which becomes untrue in any material respect, (iv) the failure to
perform or comply with any covenant hereunder, (v) any action, suit, claim,
investigation or proceeding relating to the transactions contemplated hereunder
or (vi) any fact that caused or would be reasonably likely to cause the
Financing Commitment or the Additional Financing Commitment to be terminated or
ineffective or any of the conditions contained therein not to be met.
5.4. COMPLIANCE WITH AGREEMENT.
Ameris and Ameris Holdings shall not undertake any course of
action inconsistent with satisfaction of the conditions applicable to it set
forth in this Agreement, and shall do all such acts and take all such measures
as may be reasonably necessary to comply with the representations, agreements,
conditions and other provisions of this Agreement. Ameris and
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Ameris Holdings shall give CCS prompt written notice of any changes to any
information contained in the representations and warranties made in ARTICLE 4
hereof and on the Exhibits referred to therein (provided, however, that such
notice shall not limit CCS's rights under ss.9.1(b) hereof) and of any condition
or event which constitutes a default of any covenant or agreement made in
ARTICLE 5 or in any other section hereof.
5.5. PROXY MATERIAL.
Each of Ameris and Ameris Holdings will assist CCS in the
preparation of the proxy materials. All information relating to Ameris and
Ameris Holdings provided by Ameris and Ameris Holdings to CCS for inclusion in
its proxy materials will, at the date mailed to CCS's shareholders, not contain
any statement which, at the time and in the light of the circumstances under
which it is made, be false or misleading with respect to any material fact, or
omit to state any material fact necessary in order to make the statements
therein not false or misleading.
5.6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Each of Ameris and Ameris Holdings agrees that all rights to
indemnification for acts or omissions occurring at or prior to the Effective
Date existing in favor of the current or former directors, officers or employees
of CCS or any of its Subsidiaries, as provided in their respective governing
instruments or by contract, disclosed on Exhibit 5.6 shall be continued, without
further action, as of the Effective Date and shall survive the Merger and such
shall continue in full force and effect in accordance with their terms. Ameris
shall, or shall cause the Surviving Entity to, maintain in effect for not less
than three (3) years after the Effective Date the current policies of directors'
and officers' liability insurance maintained by CCS and its Subsidiaries on the
date hereof.
5.7. CONFIDENTIALITY AGREEMENT.
Ameris and CCS shall each continue to be bound by the terms of a
Confidentiality Agreement dated June 11, 2001 (the "Confidentiality Agreement").
5.8. SEVERANCE ARRANGEMENTS.
Ameris will honor and abide by all severance agreements and
obligations as set forth in Exhibit 5.8.
ARTICLE 6 COVENANTS OF CCS
CCS covenants as follows:
6.1. ACCESS AND INFORMATION.
During the period between the date of this Agreement and the
Effective Date CCS will: (i) provide to Ameris and its officers, attorneys,
accountants and other representatives, during normal business hours, reasonable
access to all of the properties, assets, agreements, commitments, books,
records, accounts, tax returns, and documents of CCS and its Subsidiaries and
permit them to make copies thereof; (ii) furnish Ameris and its representatives
with all
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material information concerning the business, properties and affairs of CCS and
its Subsidiaries as Ameris reasonably requests and certified by the officers, if
requested; (iii) cause the independent public accountants of CCS and its
Subsidiaries to make available to Ameris and its representatives all financial
information relating to CCS and its Subsidiaries reasonably requested, including
all working papers pertaining to audits and reviews made heretofore by such
auditors; (iv) furnish Ameris true and complete copies of all financial and
operating statements of CCS and its Subsidiaries; (v) permit access to customers
and suppliers for consultation or verification of any information obtained by
Ameris and use their best efforts to cause such customers and suppliers to
cooperate with Ameris in such consultation and in verifying such information;
and (vi) cause their employees, accountants and attorneys to make disclosure of
all material facts known to them affecting the financial condition and business
operations of CCS and its Subsidiaries and to cooperate fully with any audit,
review, investigation or examination made by Ameris and its representatives,
including, without limitation, with respect to:
(a) the books and records of CCS and its Subsidiaries;
(b) the reports of state and federal regulatory
examinations;
(c) leases, contracts and commitments between CCS or any of
its Subsidiaries and any other person;
(d) physical examination of the Real Property; and
(e) physical examination of the Equipment and Furnishings;
provided, however, that any such investigation shall be conducted in such a
manner as not to interfere unreasonably with the business and operations of CCS
and its Subsidiaries; provided, further that under clauses (v) and (vi) above,
CCS shall have the right to have a representative present during any such
meeting and the right to receive notice before such person is contacted.
Such information shall be held confidential subject to the Confidentiality
Agreement and ss.6.12 herein.
6.2. CONDUCT OF BUSINESS.
Between the date hereof and the Effective Date, except as
otherwise expressly approved in writing by Ameris or contemplated by this
Agreement, CCS and the Subsidiaries shall conduct their businesses only in the
ordinary course thereof consistent with past practice. CCS will, and will cause
the Subsidiaries to, consistent with conducting its business in accordance with
reasonable business judgment, use their respective reasonable best efforts to
preserve the business of CCS and its Subsidiaries intact, and use their
respective reasonable best efforts to preserve for Ameris the goodwill of the
suppliers, customers and others having business relations with CCS.
6.3. PERSONNEL MATTERS.
During the period from and after the date hereof and through the
Effective Date, CCS will, subject to the terms of the Confidentiality Agreement,
afford to the officers, attorneys,
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accountants and other authorized representatives of Ameris reasonable access to
all officers and employees of CCS for the purpose of interviewing, testing and
conducting such other evaluations as Ameris may reasonably require; provided,
that CCS shall have the right to have a representative present during any such
meeting and the right to receive notice before such person is contacted. Ameris
shall be permitted to negotiate employment agreements with such officers and
employees of CCS as it may determine, such employment agreements to be with
either Ameris or an Affiliate of Ameris as Ameris may elect; provided, however,
that no such employment agreement shall be effective until the Effective Date.
6.4. COMPLIANCE WITH AGREEMENT.
CCS shall not undertake any course of action inconsistent with
satisfaction of the conditions applicable to it set forth in this Agreement, and
shall do all such acts and take all such measures as may be reasonably necessary
to comply with the representations, agreements, conditions and other provisions
of this Agreement. CCS shall give Ameris prompt written notice of any change in
any information contained in the representations and warranties made in ARTICLE
3 hereof and on the Exhibits referred to therein (provided, however, that such
notice shall not limit Ameris's rights under ss.9.1(c) hereof) and of any
condition or event which constitutes a default of any covenant or agreement made
in ARTICLE 6 or in any other section hereof.
6.5. BEST EFFORTS TO SECURE CONSENTS.
CCS shall take the necessary corporate and other action and shall
use its reasonable best efforts to secure before the Closing Date all necessary
consents and approvals required to carry out the transactions contemplated by
the Agreement and to satisfy all other conditions precedent to the obligations
of Ameris and CCS.
6.6. ASSETS COMPLETE.
The assets of CCS and its Subsidiaries owned or leased as of the
Closing Date will include all the equipment, inventory and other assets being
presently used in the conduct of or related to the businesses of CCS and its
Subsidiaries except those sold or consumed after the date hereof in the ordinary
course of business.
6.7. UNUSUAL EVENTS.
Until the Effective Date, CCS shall supplement or amend all
relevant Exhibits in the Exhibit Volume with respect to any matter thereafter
arising or discovered which, if existing or known at the date of this Agreement,
would have been required to be set forth or described in such Exhibits;
provided, however, that for the purposes of the rights and obligations of the
parties hereunder, any such supplemental disclosure shall not be deemed to have
been disclosed as of the date CCS delivers to Ameris the Exhibit Volume pursuant
to ss.9.1 of this Agreement or any other date, and shall not be deemed to amend
or supplement any Exhibits or to prevent or cure any misrepresentation, breach
of warranty or breach of covenant, unless agreed to in writing by Ameris.
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6.8. INTERIM FINANCIAL STATEMENTS.
Within 30 days after the end of each calendar month subsequent to
the date of this Agreement and prior to the Effective Date, CCS shall deliver to
Ameris an unaudited consolidated balance sheet of CCS and its Subsidiaries as of
the end of such calendar month together with the related consolidated statement
of operations. All such financial statements shall fairly present the financial
position and results of operations during the periods indicated, in accordance
with GAAP, except that note information may be omitted in such statements,
subject to year-end audit adjustments, but only if such adjustments are of a
normal, recurring type and are not material in the aggregate.
6.9. SHAREHOLDERS' MEETING AND PROXY MATERIAL.
CCS shall cause a meeting of its shareholders (the "CCS
Shareholder Meeting") to be duly called and held as soon as reasonably
practicable (subject to the receipt of all necessary approvals) after the date
Ameris receives the Additional Financing Commitment for the purpose of voting on
the approval and adoption of this Agreement (the "CCS Shareholder Approval").
Except as provided in ss.6.10, the CCS Board shall recommend approval and
adoption of this Agreement by CCS's shareholders.
In connection with the CCS Shareholder Meeting, CCS shall, as
soon as reasonably practicable following the execution of this Agreement,
prepare and file with the SEC a preliminary Proxy Statement and use its
reasonable best efforts to respond to any comments of the SEC and to cause the
Proxy Statement to be mailed to its shareholders as promptly as reasonably
practicable after responding to all such comments to the satisfaction of the
SEC. Notwithstanding the foregoing, CCS shall not be required to cause the Proxy
Statement to be mailed to its shareholders until Ameris has received the
Additional Financing Commitment. CCS shall give Ameris and its counsel the
opportunity to review the Proxy Statement and all amendments and supplements
thereto prior to their being filed with the SEC. CCS will notify Ameris promptly
of the receipt of any comments from the SEC or its staff and of any request by
the SEC or its staff for amendments or supplements to the Proxy Statement or for
additional information and will supply Ameris with copies of all correspondence
between CCS or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement or the Merger. If
at any time prior to the CCS Shareholder Meeting there shall occur any event
that should be set forth in an amendment or supplement to the Proxy Statement,
CCS will promptly prepare and mail to its shareholders such an amendment or
supplement. Ameris shall cooperate with CCS in the preparation of the Proxy
Statement and in responding to comments of the SEC, and Ameris shall promptly
notify CCS if any information supplied by it for inclusion in the Proxy
Statement shall have become false or misleading, and shall cooperate with CCS in
disseminating the Proxy Statement, as so amended or supplemented, to correct any
such false or misleading information.
6.10. NON-SOLICITATION "NO-SHOP" COVENANT.
(a) From and after the date of this Agreement until the
Closing Date or the earlier termination of this
Agreement in accordance with its terms, except as
provided in ss.6.10(b), CCS will not, and will not
permit its directors,
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officers and investment bankers to, and will use their
reasonable best efforts to cause their respective
employees, representatives and other agents not to,
directly or indirectly, (i) solicit, initiate, or
encourage any inquiries or proposals that constitute, or
could reasonably be expected to lead to, any Acquisition
Proposal (as defined below), (ii) engage in negotiations
or discussions concerning, or provide any non-public
information to any Person relating to, any Acquisition
Proposal, or (iii) agree to, approve, recommend or
otherwise endorse or support any Acquisition Proposal.
As used herein, the term "Acquisition Proposal" shall
mean any proposed or actual (i) merger, consolidation or
similar transaction involving CCS or any of its
Subsidiaries, (ii) sale, lease or other disposition,
directly or indirectly, by merger, consolidation, share
exchange or otherwise, of any assets of CCS or its
Subsidiaries (other than non-material dispositions of
assets in the ordinary course of business), (iii)
transaction in which any Person shall acquire beneficial
ownership (as such term is defined in Rule 13d-3 under
the Exchange Act), or the right to acquire beneficial
ownership, or any "group" (as such term is defined under
the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial
ownership of, 20% or more of the outstanding CCS Common
Stock, (iv) liquidation, dissolution, or other similar
type of transaction with respect to CCS or any of its
Subsidiaries, or (v) transaction which is similar in
form, substance or purpose to any of the foregoing
transactions; provided, however, that the term
"Acquisition Proposal" shall not include the Merger and
the transactions contemplated thereby. CCS will
immediately cease any and all existing activities,
discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing.
(b) Notwithstanding the provisions of paragraph (a) above,
nothing contained in this Agreement shall prevent CCS or
its Board of Directors, directly or through
representatives or agents on behalf of the Board, from
furnishing non-public information to, or entering into
discussions or negotiations with any person or entity in
connection with an unsolicited bona fide written
Acquisition Proposal by such Person recommending such an
unsolicited bona fide written Acquisition Proposal to
the shareholders of CCS or withdrawing or modifying in a
manner adverse to Ameris its recommendation to CCS's
shareholders that they give the CCS Shareholder
Approval, if the Board of Directors of CCS determines in
good faith after consultation with its financial
advisors and legal advisors that (1) such Acquisition
Proposal constitutes, or could lead to, a Superior
Proposal, (2) CCS complies with the notice and
negotiation provisions concerning such Superior Proposal
set forth in ss.9.1(f) herein, and (3) the failure to
take such action would constitute a breach of the
fiduciary duties of CCS's Board of Directors to its
shareholders under Tennessee law. Notwithstanding
anything contained herein to the contrary, CCS and its
Board of Directors shall be entitled to take any action
it determines in
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good faith it is required to take with regard to an
Acquisition Proposal to comply with Rule 14e-2 or Rule
14d-9 under the Exchange Act.
(c) Except as set forth herein, neither the Board of
Directors of CCS nor any committee thereof shall (i)
withdraw or modify, or propose to withdraw or modify, in
a manner adverse to Ameris, the approval or
recommendation by the Board of Directors of CCS or such
committee of this Agreement or the Merger, (ii) approve
or recommend, or propose to approve or recommend, any
Acquisition Proposal, or (iii) enter into any agreement
with respect to any Acquisition Proposal.
6.11. MAINTAIN INSURANCE COVERAGE.
From the date hereof until the Closing, CCS shall maintain and
cause to be maintained in full force and effect the existing insurance on the
assets and the operations of CCS, and shall provide, upon request by Ameris,
evidence satisfactory to Ameris that such insurance continues to be in effect
and that all premiums due have been paid.
6.12. HANDLING OF DOCUMENTS.
With respect to information provided by Ameris and/or Ameris
Holdings pursuant to this Agreement prior to the Closing, CCS shall keep all
such information confidential which is not in the public domain, except to the
extent that such information becomes generally available to the public other
than as a result of a disclosure directly or indirectly by CCS, was known by CCS
on a non-confidential basis prior to disclosure to CCS by Ameris or Ameris
Holdings pursuant to this Agreement, becomes available to CCS on a
non-confidential basis from a source (other than Ameris or Ameris Holdings)
which is entitled to disclose the same or is required to be disclosed by law or
the rules of the National Association of Securities Dealers, and to exercise the
same care in handling such information as it would exercise with similar
information of its own.
ARTICLE 7 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF CCS
All obligations of CCS which are to be discharged under this
Agreement at the Closing are subject to the fulfillment at, or prior to, the
Closing, of each of the following conditions (unless expressly waived in writing
by CCS at any time at or prior to the Closing):
7.1. REPRESENTATIONS AND WARRANTIES TRUE.
All of the representations and warranties made by Ameris and
Ameris Holdings contained in ARTICLE 4 of this Agreement shall be true as of the
date of this Agreement, shall be deemed to have been made again at and as of the
date of Closing, and shall be true at and as of the date of Closing in all
material respects. Each of Ameris and Ameris Holdings shall have performed and
complied in all material respects with all covenants and conditions required by
this Agreement to be performed or complied with by them prior to or at the
Closing, and CCS shall have been furnished with a certificate of the President
or any Vice President of Ameris,
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dated the Closing Date, in such officer's capacity, certifying to the truth of
such representations and warranties as of the Closing and to the fulfillment of
such covenants and conditions.
7.2. OPINION OF COUNSEL.
CCS shall have been furnished with an opinion dated the Closing
Date of Boult, Cummings, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, PLC, counsel to Ameris and Ameris
Holdings, in form and substance satisfactory to CCS, to the effect set forth as
Appendix 7.2 attached hereto.
7.3. AUTHORITY.
All action required to be taken by or on the part of Ameris and
Ameris Holdings to authorize the execution, delivery and performance of this
Agreement by Ameris and Ameris Holdings and the Articles of Merger by Ameris and
the consummation of the transactions contemplated hereby shall have been duly
and validly taken by the Board of Directors of Ameris and the Board of Directors
of Ameris Holdings, as the case may be.
7.4. NO OBSTRUCTIVE PROCEEDING.
No action or proceedings shall have been instituted against, and
no order, decree or judgment of any court, agency, commission or governmental
authority shall be subsisting against CCS, or the officers or directors of CCS,
which seeks to, or would, render it unlawful as of the Closing to effect the
transactions contemplated hereby in accordance with the terms hereof, and no
such action shall seek damages in a material amount by reason of the
transactions contemplated hereby. Also, no substantive legal objection to the
transactions contemplated by this Agreement shall have been received from or
threatened by any governmental department or agency.
7.5. DELIVERY OF CERTAIN CERTIFIED DOCUMENTS.
At the Closing, each of Ameris and Ameris Holdings shall deliver
to CCS copies of its Charter certified (not more than 30 days prior to the
Closing Date) by the appropriate governmental authorities and copies of
resolutions of its Board of Directors certified by its secretary or assistant
secretary approving and authorizing the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby.
7.6. APPROVAL BY SHAREHOLDERS OF CCS.
The shareholders of CCS shall have approved the Merger in
accordance with the Tennessee Business Corporation Act.
7.7. PROCEEDINGS AND DOCUMENTS SATISFACTORY.
All proceedings in connection with the transactions contemplated
hereby and all certificates and documents delivered to CCS pursuant to this
Agreement shall be satisfactory in form and substance to CCS and its counsel
acting reasonably and in good faith.
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7.8. CASUALTY PRIOR TO CLOSING.
If at any time prior to the Closing Date any of the fixed assets
of CCS or its Subsidiaries are damaged or destroyed, any insurance proceeds
payable as a result thereby shall be either (i) used to repair or restore the
damaged or destroyed assets, or (ii) retained in a segregated account identified
with the Facility which suffered the loss, and shall not be utilized for any
other purposes prior to the Closing Date.
ARTICLE 8 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF AMERIS AND AMERIS HOLDINGS
All obligations of Ameris and Ameris Holdings which are to be
discharged under this Agreement at the Closing are subject to the fulfillment at
or prior to the Closing of each of the following conditions (unless expressly
waived in writing by Ameris or Ameris Holdings at any time at or prior to the
Closing):
8.1. REPRESENTATIONS AND WARRANTIES TRUE.
All of the representations and warranties of CCS contained in
ARTICLE 3 of this Agreement shall be deemed to have been made again at and as of
the Closing, and shall be true at and as of the date of Closing (other than
representations and warranties that address matters only as of a particular
date, which shall be true and correct as of such date) in all material respects
(without taking into account any disclosures made by CCS to Ameris or Ameris
Holdings pursuant to ss.6.7 hereof); CCS shall have performed or complied in all
material respects with all covenants required by this Agreement to be performed
or complied with by it prior to or at the Closing; and Ameris shall be furnished
with a certificate of the Chief Executive Officer, President or any Vice
President of CCS, dated the Closing Date, in such person's corporate capacity,
certifying to the truth of such representations and warranties as of the time of
the Closing and to the fulfillment of such covenants and conditions.
For the purposes of this ss.8.1 only, the representations and
warranties of CCS set forth in ARTICLE 3 of this Agreement shall be considered
true at and as of the date of Closing in all material respects and the covenants
to be performed or complied with by CCS shall be considered performed and
complied with in all material respects unless the aggregate effect of the
foregoing is reasonably likely to result in a decrease in 2002 EBITDA of greater
than $2,000,000.
8.2. NO OBSTRUCTIVE PROCEEDING.
No action or proceedings shall have been instituted against, and
no order, decree or judgment or injunction of any court, agency, commission or
governmental authority shall be subsisting against Ameris or Ameris Holdings, or
the officers or directors of Ameris or Ameris Holdings which seeks to, or would,
prohibit or enjoin the transactions contemplated hereby.
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8.3. ENVIRONMENTAL AUDIT.
Ameris shall have received updated Phase I Environmental
Assessments for all Owned Facilities showing no matters of concern (other than
those matters disclosed on Exhibit 3.21), or, in the alternative, showing
matters for which the commercially reasonable cost of cure or remediation is
less than $200,000 in the aggregate of all sites. Any such assessments or
reports shall be obtained at the expense of Ameris, except for the existing
reports furnished by CCS.
8.4. TRANSFER OF LICENSES.
Ameris shall have received all consents and approvals required
from governmental and regulatory agencies that issue all licenses and permits
for each of the Facilities, including, without limitation, certificates of need,
licenses for each of the services offered, school certifications, and any other
licenses or permits required by each of the Facilities for the operation of its
business unless the failure to obtain such consents or approvals would not have
a Material Adverse Effect.
8.5. TITLE INSURANCE.
Ameris shall have received title insurance commitments for each
of the Owned Facilities from companies satisfactory to Ameris undertaking to
insure the good and marketable fee simple title to each of the Owned Facilities
subject only to such imperfections of title and other encumbrances, if any,
which, in the reasonable judgment of Ameris and its counsel, do not in the
aggregate materially detract from the value or interfere with the use of their
properties or otherwise materially impair their business operations, and are in
form and substance satisfactory to Ameris' lender, ▇▇▇▇▇▇ Healthcare Finance,
Inc. Any such title insurance shall be obtained at the expense of Ameris.
8.6. APPRAISALS.
Ameris shall have received appraisals for each of the Owned
Facilities showing the value of the property, plant and equipment of such Owned
Facilities. The cost of such appraisals shall be borne by Ameris.
8.7. OPINION OF CCS COUNSEL.
CCS shall have delivered to Ameris at the Closing an opinion of
Bass, ▇▇▇▇▇ & ▇▇▇▇, PLC, counsel to CCS, dated the Closing Date, in form and
substance satisfactory to Ameris, to the effect set forth as Appendix 8.7
attached hereto.
8.8. CONSENTS AND APPROVALS.
Each of the parties to any lease, occupancy agreement,
right-to-occupy agreement, or instrument under which the transactions
contemplated hereby would constitute or result in a default or acceleration of
obligations shall have given such consent as may be necessary to permit the
consummation of the transactions contemplated hereby without constituting or
resulting in a default or acceleration under such agreement or instrument, and
any consents required from any public or regulatory agency or organization
having jurisdiction shall
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have been given, unless the failure to obtain such consents or approvals would
not have a Material Adverse Effect.
8.9. NO ADVERSE CHANGE.
From the date of this Agreement until the Closing, the operations
of CCS and its Subsidiaries shall have been conducted in the ordinary course of
business consistent with past practice and there shall not have been any
Material Adverse Effect, and no event shall have occurred or circumstances shall
exist that would reasonably be expected to have a Material Adverse Effect.
8.10. APPROVAL BY SHAREHOLDERS OF CCS.
The shareholders of CCS shall have approved the Merger in
accordance with the Tennessee Business Corporation Act.
8.11. SENIOR FINANCING.
Ameris shall have obtained the Additional Financing Commitment.
8.12. DELIVERY OF CERTAIN DOCUMENTS.
At the Closing, CCS shall have delivered to Ameris copies of the
Charter of CCS, certified (not more than 30 days prior to the Closing Date) by
the appropriate governmental authorities, a certificate of the Inspector of
Elections of the CCS Shareholder Meeting certifying that the CCS Shareholder
Approval has been obtained, and copies of resolutions of the Board of Directors
of CCS, certified by the secretary of CCS, approving and authorizing the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
ARTICLE 9 TERMINATION
9.1. OPTIONAL TERMINATION.
This Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Effective Date,
notwithstanding shareholder approval, as follows:
(a) By the mutual consent of Ameris and CCS; or
(b) By CCS, if any of the conditions set forth in ARTICLE 7
shall not have been met by December 31, 2001; provided
that CCS shall not be entitled to terminate this
Agreement pursuant to this ss.9.1(b) if CCS's willful
breach of this Agreement has prevented the consummation
of the transactions contemplated hereby; or
(c) By Ameris, if any of the conditions provided in ARTICLE
8 hereof have not been met by December 31, 2001 provided
that Ameris shall not be entitled to terminate this
Agreement pursuant to this ss.9.1(c) if Ameris's
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willful breach of this Agreement has prevented the
consummation of the transactions contemplated hereby;
or
(d) By Ameris or CCS if the Company Shareholder Approval
shall not have been obtained at a duly held meeting of
shareholders or any adjournment thereof; or
(e) by either CCS or Ameris (so long as such party has
complied in all material respects with its obligations
hereunder), if consummation of the Merger would be
prohibited by any law or regulation or if any
injunction, judgment, order or decree enjoining CCS or
Ameris from consummating the Merger is entered and such
injunction, judgment, order or decree shall become final
or nonappealable;
(f) by CCS, if the CCS Board of Directors shall have
received an Acquisition Proposal which the CCS Board of
Directors has determined is or could lead to a Superior
Proposal, provided (1) CCS shall have given Ameris at
least seventy-two hours' advance notice of any
termination pursuant to this ss.9.1(f), and (2) during
such seventy-two hour period CCS shall, and shall cause
its financial and legal advisors to, negotiate in good
faith with Ameris if Ameris so requests to make such
adjustments in the terms and conditions of this
Agreement as would enable CCS to proceed with the
transactions contemplated hereby, and (3) CCS shall have
made the payments required pursuant to ss.9.2 hereof; or
(g) By CCS, if the Financing Commitment or the Additional
Financing Commitment, once obtained, expire, are
withdrawn, or terminate without renewal prior to the
Effective Date.
9.2. TERMINATION FEE.
If CCS terminates this Agreement pursuant to ss.9.1(f), then CCS
shall pay to Ameris an amount equal to the lesser of (a) $1,000,000 or (b) 50%
of the product of (i) the aggregate number of shares of CCS Common Stock
outstanding at the time of termination of this Agreement and (ii) the difference
between (x) the consideration per share to be paid to the shareholders of CCS in
such transaction and (y) $6.00. The payment by CCS to Ameris pursuant to this
ss.9.2 shall represent the sole and exclusive remedy at law and in equity to
which Ameris and its Affiliates shall be entitled. Acceptance by Ameris of
payment hereunder shall be conclusive evidence of termination of this Agreement.
9.3. NOTICE OF ABANDONMENT.
In the event of such termination by either Ameris or CCS pursuant
to ss.9.1 above, written notice shall forthwith be given to the other party
hereto.
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9.4. MANDATORY TERMINATION.
If the Closing has not occurred by January 31, 2002, this
Agreement shall automatically terminate and no longer be of any force or effect.
9.5. TERMINATION.
In the event this Agreement is terminated as provided above,
Ameris shall deliver to CCS all documents (and copies thereof in its possession,
including electronic copies) concerning CCS and its Subsidiaries previously
delivered by CCS to Ameris; and none of the parties nor any of their respective
partners, shareholders, directors, or officers shall have any liability to the
other party for costs, expenses, loss of anticipated profits, consequential
damages, or otherwise, except for any deliberate breach of any of the provisions
of this Agreement.
ARTICLE 10 MISCELLANEOUS
10.1. EXPENSES.
All expenses of the preparation of this Agreement and of the
transactions contemplated hereby, including, without limitation, counsel fees,
accounting fees, investment adviser's fees and disbursements, shall be borne by
the respective parties incurring such expense, whether or not such transactions
are consummated; provided, that following Closing, neither Ameris, Ameris
Holdings nor the Surviving Entity shall seek to recover any such fees and
expenses from the shareholders of CCS.
10.2. COOPERATION BY AMERIS.
In the event CCS is required to defend against any action, suit
or proceeding arising out of a claim pertaining to the business or operations of
CCS or the transactions contemplated by this Agreement, Ameris and Ameris
Holdings shall provide such assistance and cooperation, including, without
limitation, witnesses and documentary or other evidence as may reasonably be
requested by CCS in connection with its defense. CCS shall reimburse Ameris
and/or Ameris Holdings, as the case may be, for its reasonable out-of-pocket
expenses incurred in providing such assistance and cooperation.
10.3. NOTICES.
All notices, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered in person or
mailed by certified mail or registered mail (postage prepaid), sent by reputable
overnight courier service (charges prepaid) or sent via facsimile:
To CCS: Children's Comprehensive Services, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
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With a copy to: Bass, ▇▇▇▇▇ & ▇▇▇▇ PLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
To Ameris or Ameris Holdings: Ameris Acquisition, Inc.
KIDS Holdings, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: Boult, Cummings, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, PLC
▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
or to such other address as either CCS or Ameris may designate by notice to the
other.
10.4. ENTIRE AGREEMENT.
This Agreement and the Appendices, Exhibits, schedules and
documents delivered pursuant hereto constitute the entire contract between the
parties hereto pertaining to the subject matter hereof and supersede all prior
and contemporaneous agreements (including the Exclusivity Agreement dated June
15, 2001, as amended), understandings, negotiations and discussions, whether
written or oral, of the parties, and there are no representations, warranties or
other agreements between the parties in connection with the subject matter
hereof, except as specifically set forth herein. Notwithstanding the foregoing,
the Confidentiality Agreement shall remain in full force and effect. No
supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by the parties to be bound thereby.
10.5. GOVERNING LAW.
The validity and construction of this agreement shall be governed
by the laws of the State of Tennessee.
10.6. WAIVER OF TRIAL BY JURY.
To the extent permitted by applicable law, each party hereby
irrevocably waives all right of jury in any action, proceeding or counterclaim
arising out of or in connection with this agreement or any matter arising
hereunder.
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10.7. CON DISCLAIMER.
This Agreement shall not be deemed to be an acquisition or
obligation of a capital expenditure or of funds within the meaning of the
certificate of need law of any state, until the appropriate governmental
agencies shall have granted a certificate of need or other appropriate approval
or ruled that no certificate of need or other appropriate approval is required.
10.8. TIME.
Time is of the essence for purposes of each and every provision
of this Agreement.
10.9. SECTION HEADINGS.
The Section headings are for reference only and shall not limit
or control the meaning of any provision of this Agreement.
10.10. WAIVER.
No delay or omission on the part of any party hereto in
exercising any right hereunder shall operate as a waiver of such right or any
other right under this Agreement.
10.11. EXHIBITS.
All Exhibits, Appendices, schedules and documents referred to in
or attached to this Agreement are integral parts of this Agreement as if fully
set forth herein. All items disclosed hereunder shall be deemed disclosed only
in connection with the specific representation to which they are explicitly
referenced.
10.12. ASSIGNMENT.
No party hereto shall assign this Agreement, by agreement or
operation of law, without first obtaining the written consent of the other
party.
10.13. BINDING ON SUCCESSORS AND ASSIGNS.
Subject to ss.10.12, this Agreement shall inure to the benefit of
and bind the respective heirs, administrators, successors and permitted assigns
of the parties hereto. Nothing expressed or referred to in this Agreement is
intended or shall be construed to give any person other than the parties to this
Agreement or their respective successors or permitted assigns any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein, it being the intention of the parties to this
Agreement that this Agreement shall be for the sole and exclusive benefit of
such parties or such successors and assigns and not for the benefit of any other
person.
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10.14. AMENDMENTS.
This Agreement may be amended, but only in writing, signed by the
parties hereto, at any time prior to the Closing, before or after approval
hereof by the shareholders of CCS, with respect to any of the terms contained
herein, but after such shareholder approval, no amendment shall be made which
reduces or changes the form of the consideration per share to be paid to each
such shareholder without the further approval of such shareholders.
10.15. DRAFTING PARTY.
The provisions of this Agreement, and the documents and
instruments referred to herein, have been examined, negotiated, drafted and
revised by counsel for each party hereto and no implication shall be drawn nor
made against any party hereto by virtue of the drafting of this Agreement.
10.16. COUNTERPARTS.
This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which together shall comprise one
and the same instrument.
10.17. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including
without limitation, consents, waivers and modifications which may hereafter be
executed, the Exhibits and documents delivered at the Closing, and financial
statements, certificates and other information previously or hereafter furnished
by one party hereto to the other party may be reproduced by the parties by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and the parties may destroy any original documents so
reproduced. The parties agree and stipulate that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
10.18. PRESS RELEASES.
Ameris and CCS shall cooperate with each other in releasing
information concerning this Agreement and the transactions contemplated hereby.
Each of the parties to this Agreement shall furnish to the others drafts of all
releases prior to publication. Nothing contained in this Agreement shall prevent
any party to this Agreement at any time from furnishing any information to any
governmental body or agency, or from making such disclosures as are required by
law.
10.19. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations, warranties, covenants and agreements
contained in this Agreement or in any instrument delivered pursuant to this
Agreement shall terminate and be extinguished at the
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Effective Date or the earlier date of termination of this Agreement pursuant to
Article 9, as the case may be, except that the agreements set forth in Article 2
and in ss.ss.5.7 and 5.9 will survive the Effective Date indefinitely and those
set forth in ss.ss.5.5, 5.8, 9.2 and 9.5 and this Article 10 will survive the
termination of this Agreement indefinitely.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
AMERIS ACQUISITION, INC.
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Its President
-----------------------------------
Name ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
KIDS HOLDINGS, INC.
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Its President
-----------------------------------
Name ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
CHILDREN'S COMPREHENSIVE SERVICES, INC.
By /s/ ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
------------------------------------
Its Chief Executive Officer
-----------------------------------
Name ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
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