EXHIBIT 10.4
================================================================================
ASSET PURCHASE AGREEMENT
by and among
BHS CONSULTING CORP.,
ITS SHAREHOLDERS
and
CORNELL CORRECTIONS, INC.
Dated as of May 10, 1999
================================================================================
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS........................................................1
SECTION 1.1 Accounting Terms...........................................1
SECTION 1.2 Defined Terms..............................................1
ARTICLE II CLOSING...........................................................2
SECTION 2.1 Closing....................................................2
ARTICLE III PURCHASE, SALE AND DELIVERY......................................2
SECTION 3.1 Acquisition Assets.........................................2
SECTION 3.2 Excluded Assets............................................3
SECTION 3.3 Purchase Price.............................................4
SECTION 3.4 Allocation Reporting.......................................4
ARTICLE IV LIABILITIES AND OBLIGATIONS.......................................5
SECTION 4.1 Liabilities Not Assumed by Purchaser.......................5
SECTION 4.2 Assumed Liabilities........................................6
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER AND THE SHAREHOLDERS......6
SECTION 5.1 Organization; Qualification................................6
SECTION 5.2 Capitalization.............................................7
SECTION 5.3 Authority; Enforceability..................................7
SECTION 5.4 Subsidiaries...............................................7
SECTION 5.5 Conflicting Agreements and Other Matters; Consents........7
SECTION 5.6 No Default; Compliance With Laws and Regulations...........8
SECTION 5.7 Schedule of Expenses.......................................9
SECTION 5.8 No Undisclosed Liabilities.................................9
SECTION 5.9 Absence of Certain Changes.................................9
SECTION 5.10 Contracts, Agreements, Plans and Commitments.............10
SECTION 5.11 Actions Pending..........................................11
SECTION 5.12 [intentionally omitted].................................11
SECTION 5.13 Insurance................................................11
SECTION 5.14 Title....................................................12
SECTION 5.15 Real Estate..............................................12
SECTION 5.16 Taxes....................................................12
SECTION 5.17 Employee Benefit Plans...................................13
SECTION 5.18 Employees and Labor Matters..............................14
SECTION 5.19 Intellectual Property Rights.............................15
SECTION 5.20 Relationships............................................15
SECTION 5.21 Certain Payments.........................................15
SECTION 5.22 Books and Records........................................15
SECTION 5.23 Condition and Sufficiency of Assets......................15
i
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER......................16
SECTION 6.1 Corporate Existence.......................................16
SECTION 6.2 Authority; No Conflicts...................................16
SECTION 6.3 Binding Agreement.........................................16
SECTION 6.4 Pending Litigation........................................16
ARTICLE VII CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES............17
SECTION 7.1 Employees.................................................17
SECTION 7.2 Taxes.....................................................18
SECTION 7.3 Consents..................................................18
SECTION 7.4 Title.....................................................19
SECTION 7.5 Environmental Due Diligence...............................19
SECTION 7.6 Further Assurances........................................19
SECTION 7.7 Mail Received After Closing...............................19
SECTION 7.8 Bills and Payments Received After Closing.................19
SECTION 7.9 Loss Due to Casualty......................................20
ARTICLE VIII COVENANTS......................................................20
SECTION 8.1 Seller's and Shareholders'Covenants.......................20
SECTION 8.2 Purchaser's Covenants.....................................22
ARTICLE IX CONDITIONS TO CLOSING............................................23
SECTION 9.1 Conditions to Obligations of Purchaser....................23
SECTION 9.2 Conditions to Obligations of Seller.......................25
ARTICLE X TERMINATION.......................................................25
SECTION 10.1 Grounds for Termination..................................26
SECTION 10.2 Effect of Termination....................................26
ARTICLE XI INDEMNIFICATION..................................................27
SECTION 11.1 Seller's and Shareholders'Indemnity Obligations..........27
SECTION 11.2 Purchaser's Indemnity Obligations........................27
SECTION 11.3 Environmental Laws and Claims............................27
SECTION 11.4 Indemnification Procedures...............................28
SECTION 11.5 Determination of Indemnified Amounts.....................29
SECTION 11.6 Limitation of Seller's and Shareholders'Liability........30
SECTION 11.7 Limitation of Purchaser's Liability......................30
ARTICLE XII MISCELLANEOUS...................................................30
SECTION 12.1 Commissions..............................................30
SECTION 12.2 Survival Period..........................................30
SECTION 12.3 Expenses.................................................31
SECTION 12.4 Notices..................................................31
SECTION 12.5 Entire Agreement.........................................32
SECTION 12.6 Governing Law............................................32
SECTION 12.7 Assignments and Third Parties............................32
ii
SECTION 12.8 Severability.............................................33
SECTION 12.9 Amendments; No Waivers...................................33
SECTION 12.10 No Third Party Beneficiaries............................33
SECTION 12.11 Headings; Use of Certain Terms..........................33
SECTION 12.12 Counterparts............................................33
iii
EXHIBITS
Exhibit 1.2 Definitions
Exhibit 8.1(c) Confidentiality Agreement
Exhibit 9.1(b) Certificate of Officer and Shareholders of Seller
Exhibit 9.1(e) ▇▇▇▇ of Sale
Exhibit 9.1(e)(ii) Assignment of Contracts and other Intangible Assets
Exhibit 9.1(p) Opinion of Seller's Counsel
Exhibit 9.2(c) Officer's Certificate of Purchaser
Exhibit 9.2(e) Opinion of Purchaser's Counsel
SCHEDULES
Schedule 3.1(i) Equipment
Schedule 3.1(vi) Off -the-Shelf Software
Schedule 3.1(vii) Contract Management and Corporate Tickler Software
Schedule 3.1(viii) CMHC Systems, Inc.
Schedule 3.4 Allocation Reporting
Schedule 4.2(b) Assumed Liabilities
Schedule 5.2 Capitalization
Schedule 5.5 Conflicting Agreements and Other Matters; Consents
Schedule 5.6(a) No Default; Compliance with Laws and Regulations
Schedule 5.6(c) Required Permits
Schedule 5.7 Schedule of Expenses
Schedule 5.8 No Undisclosed Liabilities
Schedule 5.9 Absence of Certain Changes
Schedule 5.10 Contracts, Agreements, Plans and Commitments
Schedule 5.11 Actions
Schedule 5.13 Insurance
Schedule 5.14 Title
Schedule 5.15 Real Estate
Schedule 5.16 Taxes
Schedule 5.17 Employee Benefit Plans
Schedule 5.20 Related Party Transactions
Schedule 5.23 Condition and Sufficiency of Assets
iv
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "AGREEMENT"), dated May 10, 1999, is
by and among BHS Consulting Corp., a Delaware corporation ("SELLER"), ▇▇▇▇▇ ▇.
▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇ (the "SHAREHOLDERS") and Cornell Corrections, Inc., a
Delaware corporation ("PURCHASER").
WHEREAS, Seller is in the business of providing management, administrative
and consulting services to entities that provide treatment and rehabilitative
services at and operate behavioral health facilities in Illinois, among other
states (the "BUSINESS"); and
WHEREAS, the Shareholders own all of the issued and outstanding shares of
capital stock of Seller.
WHEREAS, Purchaser wishes to purchase from Seller and Seller wishes to
sell, transfer, assign and deliver to Purchaser substantially all of the assets
and contract rights used by Seller in connection with the operation of that
portion of its Business which consists of providing certain management,
administrative and consulting services to Interventions, an Illinois
not-for-profit corporation ("INTERVENTIONS"), and IDDRS Foundation, an Illinois
not-for-profit foundation ("IDDRS") (collectively, the "ACQUIRED BUSINESS")
relating to the programs being transferred by Interventions to Purchaser on the
terms and subject to the conditions set forth herein.
WHEREAS, the Seller and the Shareholders are making certain
representations, warranties and indemnities herein, as an inducement to
Purchaser to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements stated herein, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
covenant and agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles and on a basis not inconsistent with those applied in the
preparation of the 1998 Expense Schedule referred to in SECTION 5.7 hereof.
SECTION 1.2 DEFINED TERMS. As used in this Agreement, other words and
terms have the meanings specified in EXHIBIT 1.2. Other capitalized terms have
the meanings assigned to them elsewhere in this Agreement.
ARTICLE II
CLOSING
SECTION 2.1 CLOSING. The closing of the purchase and sale provided for
herein (the "CLOSING") shall take place at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ in
Chicago, Illinois, on or before July 31, 1999, or at such other place or such
other time or date not later than September 30, 1999 as may be agreed upon by
the parties hereto or as otherwise set forth in SECTION 10.1. Except as
otherwise provided in SECTION 10, the failure to consummate the purchase and
sale provided for in this Agreement on the date and time and at the place
determined pursuant to this Section shall not result in the termination of this
Agreement and shall not relieve any party to this Agreement of any obligation
hereunder. For purposes of this Agreement, the date on which the Closing
actually occurs is referred to as the "CLOSING DATE".
ARTICLE III
PURCHASE, SALE AND DELIVERY
SECTION 3.1 ACQUISITION ASSETS. Subject to the terms and conditions of
this Agreement, and on the basis of the representations and warranties
hereinafter set forth, at the Closing, Seller shall sell, transfer, convey,
assign and deliver to Purchaser, and Purchaser shall acquire and purchase from
Seller the following assets, properties and rights of Seller:
(i) right, title and interest of Seller in and to the machinery,
equipment, tools, furniture, computers, appliances, implements, spare
parts, supplies, and other tangible personal property listed on SCHEDULE
3.1(I) hereto (collectively, the "EQUIPMENT");
(ii) all right, title and interest of Seller in and to all office
supplies, kitchen supplies, laundry supplies, medical supplies, safety
equipment, maintenance supplies, other supplies and similar items used or
consumed in the Acquired Business and which exist on the Closing Date
(collectively, the "SUPPLIES");
(iii) all right, title and interest of Seller in, to and under the
contracts listed on SCHEDULE 3.1(III) hereto (collectively, the
"CONTRACTS");
(iv) all right, title and interest of Seller in and to all goodwill
and going concern value of the Acquired Business;
(v) a nonexclusive perpetual license to use the systems ("SYSTEMS")
for accounts payable, payroll, billing, collection of accounts receivable,
patient services and records and other systems, policies and procedures
established by Seller and maintained in written and/or electronic form
pursuant to the Management Agreement between Interventions and the Seller
dated February 28, 1995, and as amended on October 5, 1995, and January
29, 1998 (the "INTERVENTIONS CONTRACT");
2
(vi) all right, title and interest of Seller in and to the software
described in Schedule 3.1(vi) hereto (the "OFF-THE-SHELF SOFTWARE");
(vii) a nonexclusive perpetual license in and to the software
described in SCHEDULE 3.1(VII) (the "CONTRACT MANAGEMENT AND CORPORATE
TICKLER Software");
(viii) a nonexclusive perpetual license in and to the software which
is the subject of the agreements described in SCHEDULE 3.1(VIII) (the
"CMHC SOFTWARE"), if permitted by CMHC, or all right, title and interest
of Seller in and to the CMHC Software, subject to the consent of CMHC and,
if permitted by CMHC, a nonexclusive perpetual license back to Seller;
(ix) such rights which Seller has to use the name "BHS Management
Corporation" and "BHS Consulting Corp." and all derivations thereof in
connection with Purchaser's future operation of the Acquired Business;
(x) all rights of Seller under any express or implied warranties
from the suppliers of Seller with respect to the Acquisition Assets, to
the extent they are assignable;
(xi) copies of the books, records and written information that
relate to the Acquired Business or the Acquisition Assets and which are
required or necessary in order for Purchaser to conduct the Acquired
Business from and after the Closing Date in the manner in which it is
presently being conducted (the "BOOKS AND RECORDS") and confidential
information relating to the Acquired Business; and
(xii) copies of the personnel files relating to employees of Seller
who accept the offered employment by Purchaser as contemplated by SECTION
7.1 hereof (the "TRANSFERRED EMPLOYEES").
Subject to SECTION 3.2 hereof, all of the assets referenced in this
SECTION 3.1 are collectively referred to as the "ACQUISITION ASSETS".
SECTION 3.2 EXCLUDED ASSETS. Notwithstanding SECTION 3.1 hereof, Seller is not
selling and Purchaser is not purchasing pursuant to this Agreement any of the
following, all of which shall be retained by Seller (collectively, the "EXCLUDED
ASSETS"):
(a) all accounts receivable of Seller and all other rights of Seller to
payment for services rendered (collectively, the "ACCOUNTS RECEIVABLE");
(b) all cash and other investments of Seller, such as by way of example,
accounts with banks and other financial institutions, certificates of deposit
and the like;
(c) all employee benefit plans (as defined in ERISA) and all other similar
benefit plans, programs, arrangements or commitments (whether written or oral)
of Seller;
3
(d) the following management contracts:
(i) Management Agreement by and between Seller and Interventions,
Inc., an Indiana not-for-profit corporation, dated as of February 28,
1995, as amended by that certain First Amendment to Management Agreement
dated as of October 5, 1995, and that certain Second Amendment to
Management Agreement dated as of January 29, 1998;
(ii) Management Agreement by and between Seller and Interventions,
Ltd., a Wisconsin not-for-profit corporation, dated as of August 14, 1995,
as amended by that certain First Amendment to Management Agreement dated
as of January 20, 1997 and by that certain Second Amendment to Management
Agreement dated as of February , 1998;
(iii) Consulting Agreement by and between Seller and IDDRS, dated as
of June 19, 1996 (the "IDDRS CONTRACT");
(iv) Management and Administrative Consulting Agreement by and
between Seller and The Women's Treatment Center, an Illinois
not-for-profit corporation, dated as of December 16, 1996; and
(v) Management and Administrative Consulting Agreement by and
between Seller and Breaking Free, Inc., an Illinois not-for-profit
corporation, dated as of April 3, 1996; and
(e) any other assets of Seller that are not Acquisition Assets.
SECTION 3.3 PURCHASE PRICE. The aggregate consideration for the purchase
of the Acquisition Assets and the execution and delivery by the Seller of the
Covenant Not to Compete Agreement to the Purchaser (the "Seller Noncompete
Agreement") shall be $1,900,000 LESS (i) a working capital allowance of $91,000,
and (ii) an amount equal to Seller's accrued vacation pay assumed by Purchaser
under SECTION 4.2(B) (the "PURCHASE PRICE"), payable to Seller at the Closing by
wire transfer of immediately available funds to an account designated in writing
by Seller.
SECTION 3.4 ALLOCATION REPORTING. Unless otherwise agreed in writing by
Purchaser and Seller, (i) SCHEDULE 3.4 hereto sets forth the allocations
established by Purchaser and Seller of the Purchase Price (and any other items
constituting consideration paid by Purchaser or received by Seller in connection
with the disposition of the Acquisition Assets) among the Acquisition Assets and
the Seller Noncompete Agreement; (ii) the allocations set forth on SCHEDULE 3.4
hereto will be used by Purchaser and Seller as the basis for reporting asset
values and other items for purposes of all required Tax Returns (including any
Tax Returns required to be filed under Section 1060(b) of the Code and the
Treasury regulations thereunder); and (iii) Purchaser and Seller shall not
assert, in connection with any audit or other proceeding with respect to Taxes,
any asset values or other items inconsistent with the allocations set forth on
SCHEDULE 3.4 hereto.
4
ARTICLE IV
LIABILITIES AND OBLIGATIONS
SECTION 4.1 LIABILITIES NOT ASSUMED BY PURCHASER. Except as otherwise
provided in SECTION 4.2 hereof, Purchaser does not assume or agree to pay,
perform or discharge, and shall not be responsible for, any commitments,
contracts, agreements or obligations or claims against, or liabilities of,
Seller or the Shareholders whatsoever, including without limitation, the
following (collectively, the "EXCLUDED LIABILITIES"):
(a) any sales, use, income, franchise or other tax or charge, if any,
which may become payable by Seller or the Shareholders by reason of the sale and
transfer of the Acquisition Assets under federal law or under the laws of any
state, or may be imposed upon Seller or the Shareholders by reason of receipt of
the Purchase Price or relief from any liability pursuant to this Agreement;
(b) any of the costs and expenses incurred in connection with the future
operations of Seller, and the costs and expenses of Seller and the Shareholders
incurred in negotiating, entering into and carrying out their obligations
pursuant to this Agreement;
(c) the trade accounts payable, accrued liabilities and any other
liabilities of Seller incurred in the course of Seller's operations as of the
Closing Date, any indebtedness (whether short-term or long-term) for borrowed
money, together with all interest thereon;
(d) any commitments related to events occurring prior to the Closing Date
pursuant to the Contracts;
(e) any Taxes for which Seller is liable (taking into account the
provisions of SECTION 7.2(A) hereof);
(f) any prepayment penalties or other liabilities related to retiring or
extinguishing any indebtedness of Seller;
(g) any liabilities arising out of the ownership of the Acquisition Assets
or the operation of the Business by Seller prior to the Closing Date related to
OSHA, EEOC, EPA or any other Governmental Authority, or any violation of law;
(h) any liability or obligation (contingent or otherwise) of Seller
arising out of (i) any claim, litigation, or proceeding threatened or pending on
or before the Closing Date, (ii) any claim, litigation, or proceeding threatened
or initiated after the Closing Date to the extent based on an act or omission of
Seller or any current or former officer, director, employee, agent or
representative of Seller occurring before the Closing Date and for which Seller
other than by reason of this Agreement has liability, or (iii) the operation of
the Business and/or Acquisition Assets before the Closing Date, whether or not
set forth on SCHEDULE 5.11.
5
(i) any Environmental Claim or any violation of Environmental Law, to the
extent such claim or violation arises out of the ownership of the Acquisition
Assets or the operation of the Business prior to the Closing Date;
(j) any liability arising out of or in connection with Seller's defective
performance of any Contract, the Interventions Contract or the IDDRS Contract or
the breach by Seller of any express or implied warranty with respect to
performance by Seller of any Contract, the Interventions Contract or the IDDRS
Contract prior to the Closing Date;
(k) any liability or obligation of Seller arising out of any employee
benefit plan (as defined in ERISA) and all other similar benefit plans,
programs, arrangements or commitments (whether written or oral) of Seller;
(l) any contingent or unknown liability of Seller and/or the Shareholders;
and
(m) any liability or obligation of Seller to the extent that it arises
exclusively under or in connection with the Excluded Assets.
SECTION 4.2 ASSUMED LIABILITIES. The Purchaser assumes and agrees to pay,
perform and discharge when due solely the following debts, liabilities,
obligations and contracts of the Seller (collectively, the "ASSUMED
LIABILITIES");
(a) all obligations relating to events occurring on or after the Closing
Date pursuant to the Contracts; and
(b) Seller's accrued vacation pay liability as of the Closing Date for the
Transferred Employees solely to the extent such liabilities and employees are
expressly set forth on SCHEDULE 4.2(B) (which the parties shall prepare and
mutually agree to prior to Closing) and are credited against the Purchase Price
pursuant to SECTION 3.3.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER AND THE SHAREHOLDERS
Seller and each of the Shareholders, jointly and severally, represent,
warrant and agree to and with Purchaser as follows:
SECTION 5.1 ORGANIZATION; QUALIFICATION. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Seller has heretofore delivered to Purchaser true, correct and
complete copies of its articles of incorporation and bylaws, each as amended or
restated through the date of this Agreement. Seller has all requisite power and
authority to own and operate its assets and properties and to carry on its
business and the Business as it is now being conducted. Seller is duly licensed
or qualified as a foreign entity to do business and is in good standing in
Illinois.
6
SECTION 5.2 Capitalization.
(a) The authorized capital stock of Seller consists of 1,000 shares of
Seller's common stock, $1.00 par value per share ("SELLER COMMON STOCK"). As of
the date of this Agreement, there are, and as of Closing there will be 1,000
shares of Seller Common Stock issued and outstanding. All of such issued and
outstanding shares of Seller Common Stock are validly issued and are fully paid,
nonassessable and free of preemptive rights and are owned beneficially and of
record as set forth on SCHEDULE 5.2. No Subsidiary of Seller holds any shares of
the capital stock of Seller.
(b) There are no outstanding (i) subscriptions, options, calls, contracts,
commitments, understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding security,
debenture, instrument or other agreement obligating the Seller or any
Shareholder to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of the capital stock of Seller or obligating Seller or any
Shareholder to grant, extend or enter into any such agreement or commitment, or
(ii) obligations of the Seller or any Shareholder to repurchase, redeem or
otherwise acquire any securities referred to in clause (i) above. There are no
voting trusts, proxies or other agreements or understandings to which the Seller
or any Shareholder is a party or is bound with respect to the voting of any
shares of capital stock of Seller.
SECTION 5.3 AUTHORITY; ENFORCEABILITY. Seller has all requisite corporate
power and authority to enter into this Agreement. All necessary action on the
part of Seller has been taken to authorize the execution and delivery of this
Agreement, the performance of its obligations hereunder and the consummation of
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Seller and the Shareholders. This Agreement
constitutes, as of the date hereof, and this Agreement and all documents and
instruments required hereunder to be executed and delivered by Seller and the
Shareholders at or prior to Closing will constitute, on the Closing Date, legal,
valid and binding obligations of Seller and the Shareholders enforceable against
Seller and the Shareholders in accordance with their terms, subject to the
effect of any applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting creditors' rights generally.
SECTION 5.4 SUBSIDIARIES. Seller does not have any Subsidiaries.
SECTION 5.5 CONFLICTING AGREEMENTS AND OTHER MATTERS; CONSENTS. The
execution and delivery of this Agreement by Seller and Shareholders does not,
the fulfillment of or compliance with the terms and provisions hereof will not,
and the consummation of the transactions contemplated hereby will not:
(a) violate or conflict with any provision of, or (except as set forth in
SCHEDULE 5.5) require any notice, consent, authorization or approval under, the
articles of incorporation or bylaws of Seller;
(b) to the Best Knowledge of Seller and the Best Knowledge of each
Shareholder, violate or conflict with any provision of, or require any filing,
consent, authorization or approval under, any
7
law or administrative regulation or any judicial, administrative or arbitration
order, award, judgment, writ, injunction or decree applicable to or binding upon
Seller or the Shareholders or to which the Acquisition Assets are subject,
except where such violation or conflict would not have a Material Adverse
Effect; or
(c) to the Best Knowledge of Seller and the Best Knowledge of each
Shareholder, conflict with, result in a material breach of, constitute a
material default under (whether with notice or the lapse of time or both),
accelerate or permit the acceleration of the performance required by, or (except
as set forth in SCHEDULE 5.5) require any consent, authorization or approval
under, (i) any mortgage, indenture, deed of trust, loan or credit agreement or
any other agreement or instrument evidencing indebtedness for money borrowed to
which Seller is a party or by which Seller is bound or to which Seller's
properties are subject or (ii) any material lease, license, contract or other
agreement or instrument to which Seller is a party or by which the Acquisition
Assets are subject.
SECTION 5.6 No Default; Compliance With Laws and Regulations.
(a) Except as set forth on SCHEDULE 5.6(A) or for defaults which would not
have a Material Adverse Effect, Seller is not in default under, and no condition
exists that with notice or lapse of time or both would constitute a default
under, (i) any mortgage, indenture, deed of trust, loan or credit agreement, or
any other agreement or instrument evidencing indebtedness or borrowed money to
which Seller is a party or by which Seller or any of the Acquisition Assets or
Leased Property (as defined below) are bound, (ii) any judgment, order or
injunction of any court or Governmental Authority or (iii) any other agreement,
contract, lease or license, including but not limited to the Contracts, the
Interventions Contract or the IDDRS Contract.
(b) Except for violations which would not have a Material Adverse Effect,
Seller is not in violation of any order, judgment or decree of any federal or
state court or Governmental Authority or, to the Best Knowledge of Seller and to
the Best Knowledge of each Shareholder, of any law or regulation applicable to
the Acquisition Assets or the Acquired Business; provided, that the Best
Knowledge qualification in this subparagraph (b) shall be applied to the
representation but not the warranty of Seller and the Shareholders.
(c) Except as set forth on SCHEDULE 5.6(C), Seller is not required to hold
any Permits relating to the Acquisition Assets or the Acquired Business.
SECTION 5.7 SCHEDULE OF EXPENSES. Seller has heretofore furnished
Purchaser with the schedule of expenses of Seller for the eleven month period
ended November 30, 1998 (the "1998 EXPENSE SCHEDULE") attached hereto as
Schedule 5.7. Such Expense Schedule is true, complete and correct, and fairly
presents the actual expenses (except state and federal income Taxes) of Seller
on an accrual basis for the periods indicated therein.
SECTION 5.8 NO UNDISCLOSED LIABILITIES. Except as set forth on SCHEDULE
5.7 OR 5.8, or for ordinary and customary liabilities that have arisen in the
ordinary course of Seller's business, or for liabilities that would not have a
Material Adverse Effect, there is no existing, contingent or, to
8
the Best Knowledge of Seller and the Best Knowledge of each Shareholder,
threatened liability, obligation, Lien or claim of any nature that relates to
the Acquisition Assets or Acquired Business.
SECTION 5.9 ABSENCE OF CERTAIN CHANGES. Except as disclosed on SCHEDULE
5.9 hereto, since November 30, 1998, there has not been:
(a) any material adverse change in the business, financial condition,
properties, expenses or results of operations of Seller that relates to the
Acquisition Assets or Acquired Business;
(b) any material damage, destruction or loss that relates to the
Acquisition Assets or Acquired Business, whether covered by insurance or not;
(c) any change by Seller in accounting methods or principles that would be
required to be disclosed under generally accepted accounting principles;
(d) any sale, lease or other disposition of Acquisition Assets, other than
those in the ordinary course of business consistent with past practices;
(e) any merger or consolidation of Seller with any other Person or any
acquisition by Seller of the stock or business of another Person;
(f) any borrowing, agreement to borrow funds or guaranty by Seller or any
termination or amendment of any evidence of indebtedness, contract, agreement,
deed, mortgage, lease, license or other instrument to which the Acquisition
Assets is bound other than in the ordinary course of business and consistent
with past practices;
(g) any increase in the compensation payable or to become payable by
Seller to the directors, officers or employees of Seller, any increase in
benefits or benefit plan costs or any increase in any bonus, insurance,
compensation or other benefit plan made for or with or covering any directors,
officers or employees of Seller, other than increases in the ordinary course of
business consistent with past practice in an amount not to exceed 10%;
(h) any employment, consulting, or indemnification agreement entered into
or made by Seller with any of its employees, or any collective bargaining
agreement or other obligation to any labor organization incurred or entered into
by Seller;
(i) the creation or imposition of any Lien on any of the Acquisition
Assets;
(j) any reduction in accruals or reserves, except reductions consistent
with past practice;
(k) any write-up or write-down of the value of the Acquisition Assets,
except for write-ups or write-downs in accordance with generally accepted
accounting principles and in the ordinary course of business and consistent with
past practice;
9
(l) any amendment to the articles of incorporation or bylaws of Seller;
(m) any contract or commitment to do any of the foregoing.
SECTION 5.10 CONTRACTS, AGREEMENTS, PLANS AND COMMITMENTS. SCHEDULE 5.10
hereto sets forth a complete list of the following contracts, agreements, plans
and commitments to which Seller is a party or by which Seller or any of the
Acquisition Assets is bound as of the date hereof:
(a) any contract, commitment or agreement that involves aggregate
expenditures by Seller of more than $10,000 per year;
(b) any contract or agreement (including any such contracts or agreements
entered into with any Governmental Authority) relating to the maintenance or
operation of the Acquired Business that involves aggregate expenditures by
Seller of more than $10,000;
(c) any indenture, loan agreement or note under which Seller has
outstanding indebtedness, obligations or liabilities for borrowed money;
(d) any lease or sublease for the use or occupancy of real property;
(e) any agreement that restricts the right of Seller to engage in any type
of business;
(f) any guarantee, direct or indirect, by any Person of any contract,
lease or agreement entered into by Seller;
(g) any partnership, joint venture or construction and operation
agreement;
(h) any agreement of surety, guarantee or indemnification with respect to
which Seller is the obligor, outside of the ordinary course of business;
(i) any contract that requires Seller to pay for goods or services
substantially in excess of its estimated needs for such items or the fair market
value of such items;
(j) all Seller and Shareholder contracts and agreements with Interventions
and IDDRS;
(k) any contract, agreement, agreed order or consent agreement that
requires Seller to take any actions or incur expenses to remedy non-compliance
with any Environmental Law; and
(l) any other contract material to the Acquired Business or Acquisition
Assets.
True, correct and complete copies of each of such contracts, agreements, plans
and commitments have been delivered to or made available for inspection by
Purchaser. All such contracts, agreements, plans and commitments (i) were duly
and validly executed and delivered by Seller and, (ii) (assuming due
authorization, execution and delivery thereof by each of the other parties
thereto)
10
are valid and in full force and effect. To the Best Knowledge of Seller
and the Best Knowledge of each Shareholder, Seller has fulfilled all material
obligations required of Seller under each such contract, agreement, plan or
commitment to have been performed by it prior to the date hereof. Except as set
forth on SCHEDULE 5.10 to the Best Knowledge of Seller and the Best Knowledge of
each of the Shareholders, there are no counterclaims or offsets under any of
such contracts, agreements, plans and commitments.
SECTION 5.11 ACTIONS PENDING. Except as set forth on SCHEDULE 5.11 hereto,
there is no action, claim, suit, investigation or proceeding pending or, to the
Best Knowledge of Seller and the Best Knowledge of each Shareholder, threatened
against Seller, the Acquisition Assets or the Acquired Business, by or before
any court, arbitrator or Governmental Authority. There is no action, claim,
suit, investigation or proceeding pending or to the Best Knowledge of Seller and
the Best Knowledge of each Shareholder, threatened against Seller which purports
to affect the validity or enforceability of this Agreement or that seeks to
prohibit, restrict or delay the consummation of the transactions contemplated
hereby. Schedule 5.11 sets forth a description of all current and prior lawsuits
(which were filed or resolved within the last three years) by or against Seller.
SECTION 5.12 [intentionally omitted]
SECTION 5.13 INSURANCE. SCHEDULE 5.13 hereto sets forth a list of all
insurance policies owned by Seller by which Seller or any of its properties or
assets is covered against present losses, all of which are now in full force and
effect. Except as set forth in SCHEDULE 5.13, no insurance has been refused with
respect to any operations, properties or assets of Seller nor has coverage of
any insurance been limited by any insurance carrier that has carried, or
received any application for, any such insurance during the last three years. No
insurance carrier has denied any claims made against any of the policies listed
on SCHEDULE 5.13 hereto.
SECTION 5.14 TITLE. Except for the Off-the-Shelf Software (as to which
Seller will transfer whatever rights it has by way of a quit claim of its
rights, if any, in and to the same, subject to the rights of all third parties)
and except as set forth in SCHEDULE 5.14, Seller has good and marketable title
to or a valid assignable license in all of the Acquisition Assets and, except as
noted in SCHEDULE 5.14, the Acquisition Assets are not subject to any Lien.
Other entities to whom Seller now provides or has provided service are using and
may have contributed to the development of, one or more of the Systems; however,
to the Best Knowledge of Seller and the Best Knowledge of each Shareholder,
Seller's use prior to Closing and Purchaser's use of such Systems after Closing
will not infringe on the rights of any third parties, except for infringements
which would not have a Material Adverse Effect.
SECTION 5.15 REAL ESTATE. .SCHEDULE 5.15 hereto sets forth a description
(including property location, parties and annual rental payments) of all leases,
related to the Acquired Business under which Seller is lessor or lessee of any
real property. All such leases are in full force and effect.
11
SECTION 5.16 TAXES.
(a) Except as described in SCHEDULE 5.16, Seller has caused to be duly
filed in a timely manner with the appropriate Governmental Authorities all Tax
Returns required to be filed by Seller by or with respect to the Business and
the Acquisition Assets and has caused to be paid or deposited all Taxes
(including estimated Taxes) required of Seller with respect to the periods
covered by such Tax Returns or by any taxing authority. Except as described in
SCHEDULE 5.16, all Taxes required to be collected or withheld by Seller with
respect to the Business or the Acquisition Assets have been duly collected or
withheld.
(b) Except as described in SCHEDULE 5.16, no Liens on the Acquisition
Assets with respect to Taxes exist, and Seller has no reason to expect that any
Lien on the Acquisition Assets with respect to Taxes will arise, on or with
respect to the Business or the Acquisition Assets, except for Liens imposed by
law and incurred in the ordinary course of business for obligations not yet due.
No extension of time is in effect with respect to the date on which any Tax
Return is to be filed by Seller with respect to the Business or the Acquisition
Assets. There are no outstanding agreements or waivers extending the period for
assessment or collection of any Taxes of Seller relating to the ownership or
operation of the Business or the Acquisition Assets.
(c) There is no pending action, proceeding or investigation, and to the
Best Knowledge of Seller and the Best Knowledge of each Shareholder, no action,
proceeding or investigation has been threatened by any Governmental Authority,
for assessment or collection of Taxes with respect to the Acquired Business or
the Acquisition Assets. No claim for assessment or collection of Taxes has been
asserted during the past five years and no actual or proposed assessment has
been made with respect to Taxes relating to the ownership or operation of the
Acquired Business or the Acquisition Assets.
SECTION 5.17 Employee Benefit Plans.
(a) Each Plan and each Benefit Program (defined in SECTION 5.17(B)(IV)
below) is listed on SCHEDULE 5.17 hereto. No Plan or Benefit Program is or has
been (i) covered by Title IV of ERISA, (ii) subject to the minimum funding
requirements of Section 412 of the Code or (iii) a "multi-employer plan" as
defined in Section 3(37) of ERISA, nor has Seller contributed to, or ever had
any obligation to contribute to, any multi-employer plan. Seller has received a
letter from the IRS designating its 401(k) plan as qualified under Section
401(a) of the Code and does not know of any circumstances which would have a
Material Adverse Effect in the event that such determination is withdrawn. No
Plan or Benefit Program provides for any retiree health benefits for any
employees or dependents of the Seller other than as required by COBRA (as
hereinafter defined). There are no claims pending with respect to, or under, any
Plan or any Benefit Program, other than routine claims for benefits, and there
are no disputes or litigation pending or, to the Best Knowledge of Seller,
threatened, with respect to any such Plans or Benefit Programs.
(b) Seller has heretofore delivered to Purchaser true and correct copies
of the following, if any exist:
12
(i) each Plan and each Benefit Program listed on SCHEDULE 5.17, all
amendments thereto as of the date hereof and all current summary plan
descriptions provided to employees regarding the Plans and Benefit
Programs;
(ii) each trust agreement and annuity contract (or any other funding
instruments) pertaining to any of the Plans or Benefit Programs, including
all amendments to such documents to the date hereof;
(iii) each employment contract and a description of any
understanding or commitment between Seller and any officer, director or
employee of Seller; and
(iv) a description of each other plan, policy, contract, program,
commitment or arrangement providing for bonuses, deferred compensation,
retirement payments, profit sharing, incentive pay, commissions,
hospitalization or medical expenses or insurance or any other benefits for
any officer, director or employee of Seller as such or members of their
families (other than directors' and officers' liability policies), whether
or not insured (a "BENEFIT PROGRAM").
(c) To the Best Knowledge of Seller and the Best Knowledge of each
Shareholder, each Plan and Benefit Program has been maintained and administered
in compliance with its terms and in accordance with all applicable laws, rules
and regulations, except where the failure to do so would not have a Material
Adverse Effect. Seller has no commitment or obligation to establish or adopt any
new or additional Plans or Benefit Programs or to increase the benefits under
any existing Plan or Benefit Program.
(d) Except as set forth in SCHEDULE 5.17, neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby will (i) result in any payment to be made by Seller other
than severance, including, without limitation, unemployment compensation, golden
parachute (defined in Section 280G of the Code) or otherwise, becoming due to
any employee of Seller, or (ii) increase any benefits otherwise payable under
any Plan or any Benefit Program.
SECTION 5.18 Employees and Labor Matters.
(a) Seller has provided Purchaser with a true and complete list dated as
of December 31, 1998 (the "EMPLOYEE SCHEDULE ") of all employees of Seller,
listing the title or position held, and (except as to certain managerial
employees) the base salary or wage rate and any bonuses, commissions, profit
sharing, Seller's vehicles, club memberships or other compensation or
perquisites payable, and all employee benefits received by such employees. As of
the date of this Agreement and as of the Closing Date, except for increases
resulting from raises given to employees in the ordinary course of business
consistent with past practice and in an amount not to exceed 10%, the combined
projected annual payroll for the calendar year ending December 31, 1999 of
Seller required to operate the Acquired Business is not materially different
from that as listed on the Employee Schedule, and Seller has not entered into
any agreement or agreements pursuant to which
13
the combined annual payroll of Seller, including projected pay increases,
overtime and fringe benefit costs, required to operate the Acquired Business
(including all administrative and support personnel) would be greater than as
listed on the Employee Schedule.
(b) Seller is not a party to or bound by any written employment agreements
or commitments, other than on an at-will basis. To the Best Knowledge of Seller
and the Best Knowledge of each Shareholder, Seller is in compliance with all
applicable laws respecting the employment and employment practices, terms and
conditions of employment and wages and hours of its employees and is not engaged
in any unfair labor practice, except where such non-compliance or practice would
not have a Material Adverse Effect. All employees of Seller who work in the
United States are lawfully authorized to work in the United States according to
federal immigration laws. There is no labor strike or labor disturbance pending
or, to the Best Knowledge of Seller and the Best Knowledge of each Shareholder,
threatened against Seller with respect to the Acquired Business and, during the
past five years, Seller has not experienced a work stoppage with respect to the
Acquired Business.
(c) Seller is not a party to or bound by the terms of any collective
bargaining agreement or other union contract applicable to any employee of
Seller and no such agreement or contract has been requested by any employee or
group of employees of Seller, nor has there been any discussion with respect
thereto by management of Seller with any employees of Seller. Seller is not
aware of any union organizing activities or proceedings involving, or any
pending petitions for recognition of, a labor union or association as the
exclusive bargaining agent for, or where the purpose is to organize, any group
or groups of employees of Seller and there is not currently pending any
proceeding before the National Labor Relations Board, wherein any labor
organization is seeking representation of any employees of Seller.
SECTION 5.19 INTELLECTUAL PROPERTY RIGHTS. To the Best Knowledge of Seller
and to the Best Knowledge of each Shareholder, all trade names, computer
software (wherein Seller is either licensee or licensor), copyrights and any
other intellectual property of Seller (the "INTELLECTUAL PROPERTY RIGHTS") are
lawfully owned, possessed or used by Seller, as the case may be, and Seller is
not now nor upon consummation of the transactions contemplated hereby will be in
default in any obligation with respect to any agreement with others concerning
the Intellectual Property Rights, except for defaults which would not have a
Material Adverse Effect. There is no pending judicial proceeding involving any
claim, and Seller has not received any notice or claim of any infringement,
misuse or misappropriation by Seller of any patent, trademark, trade name,
copyright, Intellectual Property Rights, license or similar right owned by any
third party during the past five years.
SECTION 5.20 RELATIONSHIPS. Seller has not received notice from any
supplier of an Acquisition Asset or of the Acquired Business or from any party
to any Contract involving more than $10,000 annually with Seller (each a
"CONTRACT PARTY"), during the past two years that such supplier or Contract
Party intends to discontinue doing business with Seller, and no supplier or
Contract Party during the past two years has indicated any intention (a) to
terminate its existing business relationship with Seller or (b) not to continue
its business relationship with Seller, whether as a result of the transactions
contemplated hereby or otherwise. Except as described in SCHEDULE 5.20, Seller
14
has not entered into any related party transaction during the past year with any
officer, director or shareholder of Seller.
SECTION 5.21 CERTAIN PAYMENTS. Neither Seller nor the Shareholders nor to
the Best Knowledge of Seller and to the Best Knowledge of each Shareholder, any
officer, director or employee of Seller has paid or received or caused to be
paid or received, directly or indirectly, in connection with the Acquired
Business (a) any bribe, kickback or other similar payment to or from any
domestic or foreign government or agency thereof or any other Person or (b) any
contribution to any domestic or foreign political party or candidate (other than
from personal funds of such officer, director or employee not reimbursed by
Seller or as permitted by applicable law).
SECTION 5.22 BOOKS AND RECORDS. To the extent that they exist, all
personnel files, reports, strategic planning documents, financial forecasts,
accounting and tax records and all other records of every type and description
that relate to the Acquired Business or the Acquisition Assets have been
prepared and the Books and Records have been maintained in accordance with good
business practices.
SECTION 5.23 CONDITION AND SUFFICIENCY OF ASSETS. To the Best Knowledge of
Seller and the Best Knowledge of each Shareholder, except as set forth on
SCHEDULE 5.23, the Equipment is in good operating condition and repair (subject
to normal wear and tear) and Seller is not aware that any of such Equipment is
in need of maintenance or repairs except for ordinary, routine maintenance and
repairs that are not material in nature or cost. Except as set forth on SCHEDULE
5.23, the Equipment constitutes all of the operating assets held for use or used
in connection with the Acquired Business other than those disposed of in the
ordinary course of business.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OFPURCHASER
Purchaser hereby represents and warrants to Seller that:
SECTION 6.1 CORPORATE EXISTENCE. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
SECTION 6.2 AUTHORITY; NO CONFLICTS. Purchaser has all requisite corporate
power to carry on its business as presently conducted, to enter into this
Agreement and to perform its other obligations under this Agreement. The
consummation of the transactions contemplated by this Agreement will not
violate, or be in conflict with, or require any filing, notice, consent,
authorization or approval under any provision of Purchaser's charter, bylaws,
any agreement or instrument to which Purchaser is a party or by which Purchaser
is bound or, to the Best Knowledge of Purchaser, any law applicable to Purchaser
or any judicial, administrative or arbitration order, award, judgment, writ,
injunction or decree applicable to or binding upon Purchaser or to which
Purchaser's assets or properties are subject. The execution, delivery and
performance of this Agreement and the transactions contemplated hereby have been
duly and validly authorized by all requisite corporate action on the part of
Purchaser. There is no action, claim, suit, arbitration, investigation or
15
proceeding pending or threatened against Purchaser which purports to affect the
validity or enforceability of this Agreement or that seeks to prohibit, restrict
or delay the consummation of the transactions contemplated hereby.
SECTION 6.3 BINDING AGREEMENT. This Agreement constitutes, as of the date
hereof, and this Agreement and all documents and instruments required hereunder
to be executed and delivered by Purchaser at Closing will constitute, on the
Closing Date, legal, valid and binding obligations of Purchaser enforceable
against Purchaser in accordance with their respective terms, subject to the
effect of any applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting creditors' rights generally.
SECTION 6.4 PENDING LITIGATION. There is no action, claim, suit,
investigation or proceeding pending, or, to the Best Knowledge of Purchaser,
threatened against Purchaser which purports to affect the validity or
enforceability of this Agreement or that seeks to prohibit, restrict, delay or
enjoin the consummation of or which would otherwise impair the transactions
contemplated hereby.
ARTICLE VII
CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES
SECTION 7.1 EMPLOYEES.
(a) Purchaser may, but shall not be obligated to, offer employment to any
of the employees of the Seller. Seller will not discourage any such person from
accepting such employment with Purchaser. Seller has not made any
representations or promises, oral or written, to employees of Seller concerning
employment by Purchaser.
(b) Purchaser shall not be responsible for any costs, obligations or
liabilities which may result from the termination of employment by Seller of any
employee of the Business not hired by Purchaser as of the first payroll date
after the Closing; PROVIDED, HOWEVER, Purchaser shall be responsible for and
shall assume any and all costs, obligations or liabilities directly related to
the termination by Purchaser of any of the Transferred Employees solely to the
extent that such costs, obligations or liabilities relate directly to the period
beginning with the hiring of such employee by Purchaser and ending with such
termination by Purchaser. Purchaser makes no representation with respect to the
comparability of Purchaser's employee benefits to those offered by Seller.
Purchaser specifically disclaims any obligation to remunerate employees of
Seller who, following the Closing Date, will be employed by Purchaser, at levels
comparable to the aggregate remuneration provided to such employees while
employed by Seller. Prior to the Closing Date, Purchaser and Seller shall take
all necessary actions to comply with the Worker Adjustment and Retraining
Notification Act (the "WARN ACT") to the extent they are subject to the WARN
Act.
(c) Seller shall take such actions as it deems appropriate to terminate,
modify, alter or amend the existing Plans or Benefit Programs with respect to
employees of the Business due to the
16
transactions contemplated by this Agreement. Purchaser does not and shall not
assume any of such Plans or Benefit Programs, including, without limitation, any
severance plans of Seller.
(d) Seller shall be solely responsible for and shall pay in full to all of
Seller's employees all compensation, bonuses and other payments, and all
vacation pay, and any other benefits otherwise payable under the Benefit
Programs, accrued to the Closing Date for which Seller is obligated thereunder
or by law, and Seller shall satisfy all such obligations to such employees.
(e) Seller will retain responsibility for, and continue to pay in
accordance with the terms of the respective Plans or Benefit Program, all
expenses and benefits due under or accrued up to the Closing Date with respect
to each Plan or Benefit Program for each Seller employee hired by Purchaser and
each former employee of Seller who terminated employment with Seller prior to
the Closing Date (and covered dependents of all such employees).
(f) Seller is responsible for any liabilities that may arise with respect
to application of Section 4980B of the Internal Revenue Code of 1986 or Part 6
of Subtitle B of Title I of ERISA ("COBRA") with respect to any of its employees
or covered dependents as a result of the transactions contemplated by this
Agreement, as well as for any prior COBRA violations which occurred prior to
Closing. Purchaser is not a successor employer for COBRA purposes.
(g) Purchaser is not, and shall not be deemed to be, a successor employer
to Seller with respect to any Plans or Benefit Programs; and no plan or other
program adopted or maintained by Purchaser after the Closing is or shall be
deemed to be a "successor plan", as such term is defined in ERISA or the Code,
of any such Plan or Benefit Program. Notwithstanding the foregoing, (i) each of
the Transferring Employees shall receive credit for the employee's most recent
period of continuous past service with Seller, or with any entity for which
Seller has provided consulting services to the extent Seller has given such
employees such credit during such employees' employment with Seller, in
determining entitlement under Purchaser's applicable vacation and sick leave
policies, (ii) Transferring Employees shall be eligible for participation in
Purchaser's current employee benefit and welfare plans as of the effective date
of their employment with Purchaser, but Purchaser shall give each Transferring
Employee credit (except with respect to any severance plans or policies of
Purchaser) for his or her most recent period of continuous past service with
Seller for purposes of determining eligibility to participate in the plan and
the vesting and computation of benefits thereunder.
(h) On the Closing Date, Seller and Purchaser will enter into a mutually
acceptable agreement respecting Seller's right to use the services of the
Transferred Employees after the Closing Date for a transition period to be
mutually agreed by the parties (the "EMPLOYEE ACCESS AGREEMENT").
SECTION 7.2 TAXES.
(a) LIABILITY FOR TAXES. Seller shall be liable for (i) all Taxes that are
imposed on or incurred by Seller and (ii) all Taxes that are imposed on or
incurred by Seller with respect to the
17
Acquisition Assets or the Business for any taxable period ending on or before
the Closing Date. Purchaser shall be liable for (i) all Taxes that are imposed
upon or incurred by Purchaser and (ii) all Taxes that are imposed on or incurred
by Purchaser with respect to the Acquisition Assets or the Acquired Business for
any taxable period beginning on or after the Closing Date.
(b) RIGHT TO REFUNDS. If Seller, on the one hand, or Purchaser, on the
other hand, receives a refund of any Taxes for which the other is liable, then
the party receiving such refund shall, within 10 days after its receipt, remit
it to the other party.
SECTION 7.3 CONSENTS. Seller and Purchaser shall use best efforts to
procure any consents, novations, approvals or waivers in a form reasonably
satisfactory to Purchaser which must be obtained by Seller or Purchaser pursuant
to this Agreement or which are necessary to assign the Contracts and transfer
any other Acquisition Assets to Purchaser. At the Closing, Purchaser may, but
shall not be obligated to, elect to close the transactions contemplated hereby,
notwithstanding the fact that Seller or Purchaser may have failed to obtain
consents to the transfer.
SECTION 7.4 TITLE. Purchaser shall bear the costs from any search company
with respect to UCC searches ordered by Purchaser.
SECTION 7.5 ENVIRONMENTAL DUE DILIGENCE. Seller hereby grants to
Purchaser, and its counsel, accountants, consultants and other representatives,
such access to the premises located at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in Chicago (the
"SELLER FACILITY"), and to its personnel and records (including without
limitation for purposes of conducting visual site inspections and asbestos
surveys) as Purchaser may reasonably request, including for the purpose of
conducting an investigation of the (a) compliance of Seller and the Seller
Facility with applicable Environmental Laws, and (b) the exposure to, presence,
release, or any aspect of management, handling, or use of Materials of
Environmental Concern at any such facility ("ENVIRONMENTAL DUE DILIGENCE").
Seller shall provide to Purchaser copies of all (a) Permits, (b) reports or
results of all inspections, audits, assessments, and analytical data and (c)
such other information as Purchaser may reasonably request in the possession or
control of Seller regarding the Seller Facility and relating to (i) compliance
with applicable requirements of Environmental Laws or (ii) the exposure to,
presence, release, or any aspect of management, handling, or use of Materials of
Environmental Concern.
SECTION 7.6 FURTHER ASSURANCES. Seller, the Shareholders and Purchaser
shall execute and deliver to the other, at the Closing or thereafter, any other
instrument which may be requested by the other and which is reasonably
appropriate to perfect or evidence any of the sales, assignments, transfers or
conveyances contemplated by this Agreement or to transfer any Acquisition Assets
identified after the Closing or to obtain any consents or licenses necessary for
Purchaser to close the transaction contemplated by this Agreement or to operate
the Acquired Business in the manner operated by Seller prior to Closing.
SECTION 7.7 MAIL RECEIVED AFTER CLOSING. Following the Closing, Purchaser
may receive and open all mail addressed to BHS Consulting Corp. and, to the
extent that such mail and the contents thereof relate to the Acquired Business
or the Acquisition Assets, deal with the contents
18
thereof in its discretion. Purchaser shall notify Seller of (and provide Seller
copies of the relevant portions of) any mail that obliges Seller to take any
action or indicates that action may be taken against Seller. To the extent that
such mail and the contents thereof do not relate to the Acquired Business or the
Acquisition Assets, such mail and the contents thereof shall be promptly
forwarded to Seller at Seller's address for notices set forth in SECTION 12.4,
or at such other address as may be designated in writing by Seller.
SECTION 7.8 BILLS AND PAYMENTS RECEIVED AFTER CLOSING. Purchaser shall
promptly send Seller any bills or other notices that payment is due that
Purchaser receives after Closing related to obligations of Seller not assumed by
Purchaser under this Agreement, and Seller shall timely pay all such bills or
other debts that are uncontested on or before the date that such bills are due.
Seller shall promptly send Purchaser any bills or other notices that payment is
due that Seller receives after Closing related to obligations of Seller
expressly assumed by Purchaser under this Agreement, and Purchaser shall timely
pay such bills or other debts on or before the date that such bills are due.
Seller and Purchaser shall each promptly send to the other any payments received
by them after Closing that is an asset of the other.
SECTION 7.9 LOSS DUE TO CASUALTY. In the event of a Substantial Loss or
Damage (defined below) to any of the Acquisition Assets by fire or other
casualty prior to the Closing Date, Purchaser may, upon written notice to Seller
within 10 days of receipt of written notice of such event, terminate this
Agreement pursuant to ARTICLE X of this Agreement. In the event that Purchaser
does not elect to terminate, then this Agreement shall remain in full force and
effect, and the transaction hereby contemplated shall close in accordance with
the terms and conditions of this Agreement, except that Seller may elect either
to repair the property or to assign to Purchaser at Closing all of Seller's
rights and interest in and to any insurance proceeds which have been or are or
become payable to Seller as a result of such damage or loss, less reasonable
costs and attorneys fees of Seller in connection therewith plus the amount of
the deductible delivered to Purchaser in cash. "SUBSTANTIAL LOSS OR DAMAGE"
shall mean a loss or material damage of 25% or more of the Acquisition Assets or
material damage to the Acquisition Assets which results in the loss of the use
thereof for a period exceeding three months. In the event of a loss or damage
arising prior to the Closing Date that constitutes less than a Substantial Loss
or Damage by fire or other casualty, Purchaser shall not have the right to
terminate this Agreement pursuant to this SECTION 7.9; HOWEVER, Seller shall
assign to Purchaser at Closing all of Seller's rights and interests in and to
any insurance proceeds which have been or are or become payable to Seller as a
result of such damage or loss.
ARTICLE VIII
COVENANTS
SECTION 8.1 SELLER'S AND SHAREHOLDERS' COVENANTS. Seller and Shareholders,
jointly and severally, covenant and agree with Purchaser as follows:
(a) CONDUCT OF BUSINESS. Except as permitted hereunder or contemplated
hereby or as consented to in writing by Purchaser, through the Closing Date
Seller will (i) conduct the Acquired Business in the usual and ordinary course
thereof; (ii) communicate regularly with Purchaser and
19
keep Purchaser closely advised of any material developments relating to the
Acquired Business; (iii) permit Purchaser to have access at reasonable times to
the Seller's facilities and to review and copy the books and records of the
Acquired Business; (iv) except for the photocopy machines, maintain and preserve
the Acquisition Assets in customary repair, order and condition, reasonable wear
and tear and loss by fire and casualty (which loss shall be governed by SECTION
7.9 hereof) excepted; (v) use all commercially reasonable efforts to preserve
the Acquired Business intact, to retain the services of Seller's officers and
employees and to preserve Seller's relationships with its suppliers, customers,
all Governmental Authorities with which Seller has engaged in business related
to the Acquired Business, and others having business dealings with it with
respect to the Acquired Business, including but not limited to, paying suppliers
and vendors and other third parties in accordance with its usual business in a
timely fashion, and (vi) use its best efforts to cause all of the
representations and warranties in ARTICLE V hereof to continue to be true and
correct; (vii) continue to purchase supplies and similar items in the ordinary
course through the Closing Date; (viii) not make any new commitments with
respect to the Acquired Business in an amount greater than $10,000, without the
prior written consent of Purchaser which will not be unreasonably withheld; (ix)
not without the prior written consent of Purchaser, issue any shares, warrants
or convertible securities, grant any options, repurchase or redeem any of its
shares of capital stock, reclassify any of its outstanding stock, make any
distribution of or sell or dispose of Acquisition Assets outside the ordinary
course; or (x) not without the prior written consent of Purchaser, enter into
any transaction with respect to the Acquired Business not in the usual and
ordinary course of business.
(b) MAINTENANCE OF INSURANCE. Seller will maintain or cause to be
maintained the insurance policies or risk retention programs (or policies or
programs of substantially the same nature) of Seller in full force and effect at
all times until the Closing Date.
(c) INFORMATION AND ACCESS. At all times until the Closing, Seller will
afford representatives of Purchaser reasonable access during normal business
hours to its offices, personnel, equipment and records, for the purpose of
conducting an investigation of the Acquired Business and the Acquisition Assets.
Seller will furnish to Purchaser such additional financial and operating data
and other information of or concerning the Acquired Business or the Acquisition
Assets as Purchaser may reasonably request; PROVIDED, HOWEVER, that the
confidentiality of any data or information so acquired shall be maintained by
Purchaser and its representatives prior to Closing in accordance with the
undated Confidentiality Agreement between Seller and Purchaser attached hereto
as Exhibit 8.1(c) (the "CONFIDENTIALITY AGREEMENT").
(d) BEST EFFORTS. Seller will use its best efforts to obtain the
satisfaction of the conditions to Closing set forth in SECTION 9.1 hereof.
(e) PUBLIC ANNOUNCEMENTS AND DISCLOSURE OF COMPANY INFORMATION. Subject to
applicable law, at all times until the Closing, Seller will promptly advise, and
obtain the approval, which approval shall not be unreasonably withheld, of
Purchaser before (i) issuing, or permitting any of Seller's directors or
officers to issue, any press release with respect to this Agreement or the
transactions contemplated hereby; or (ii) disclosing or permitting any of
Seller's directors, officers, employees, representatives or agents to disclose
to any Person (other than Seller or Purchaser or their
20
respective directors, officers, employees, representatives or agents) nonpublic
information regarding Purchaser.
(f) OTHER OFFERS. Except in connection with the transactions contemplated
by this Agreement, from and after the date hereof and until the termination of
this Agreement pursuant to ARTICLE X, Seller shall not, and shall not permit any
of its officers, directors, employees, Affiliates, representatives or agents to,
directly or indirectly, (i) solicit, initiate or knowingly encourage any offer
or proposal for, or any indication of interest in, a merger or business
combination involving Seller or the acquisition of an equity interest in Seller,
or a substantial portion of the Acquisition Assets or the Acquired Business or
(ii) engage in negotiations with any Person concerning the Acquisition Assets or
the Acquired Business or disclose any nonpublic information relating to
Purchaser, or afford access to any Person to the properties, books or records of
Seller related to the Acquisition Assets or the Acquired Business. Seller shall
promptly notify and provide copies to Purchaser of any offer, proposal or
indication of interest received with respect to the Acquisition Asserts or the
Acquired Business, or any other communication with respect thereto received from
any third party.
(g) NOTIFICATION OF CERTAIN MATTERS. Seller shall give prompt notice to
Purchaser of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be likely to cause any representation or warranty
of Seller contained in this Agreement to be untrue or inaccurate in any material
respect at or prior to the Closing Date, and (ii) any material failure by Seller
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; PROVIDED, that the delivery of any notice
pursuant to this SECTION 8.1(G) shall not limit or otherwise affect the remedies
available hereunder to Purchaser.
SECTION 8.2 PURCHASER'S COVENANTS. Purchaser covenants and agrees with
Seller as follows:
(a) PUBLIC ANNOUNCEMENTS AND DISCLOSURE OF COMPANY INFORMATION. Subject to
applicable law, at all times until Closing, Purchaser will promptly advise, and
obtain the approval, which approval shall not be unreasonably withheld, of
Seller before (i) issuing, or permitting any of Purchaser's directors or
officers to issue, any press release with respect to this Agreement or the
transactions contemplated hereby or (ii) disclosing, or permitting any of
Purchaser's directors, officers, employees, representatives or agents to
disclose, to any Person (or than Seller or Purchaser or their respective
directors, officers, employees, representatives or agents) nonpublic information
regarding Seller.
(b) BEST EFFORTS. Purchaser will use its best efforts to cause the
representations and warranties contained in ARTICLE VI hereof to continue to be
true and correct through the Closing Date and to obtain the satisfaction of the
conditions to Closing set forth in SECTION 9.2 hereof.
(c) NOTIFICATION OF CERTAIN MATTERS. Purchaser shall give prompt written
notice to Seller of (i) the occurrence or nonoccurrence of any event, the
occurrence of which would be likely to cause any representation or warranty of
Purchaser to be untrue or inaccurate in any material respect at or
21
upon or prior to the Closing Date, and (ii) any material failure by Purchaser to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; PROVIDED, that the delivery of any notice pursuant
to this SECTION 8.2(C) shall not limit or otherwise affect the remedies
available hereunder to Seller.
ARTICLE IX
CONDITIONS TO CLOSING
SECTION 9.1 CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
Purchaser to consummate the transactions contemplated herein are subject, at the
option of Purchaser, to satisfaction or waiver of the following conditions:
(a) COMPLIANCE. Seller shall have complied in all material respects with
all of its covenants and agreements contained herein, and all of the
representations and warranties contained in ARTICLE V hereof shall be true and
correct in all material respects on the date hereof and as of the Closing Date.
(b) OFFICER'S CERTIFICATE. Purchaser shall have received a certificate
dated the Closing Date of an executive officer of Seller certifying as to the
matters specified in SECTION 9.1(A) hereof in the form attached hereto as
EXHIBIT 9.1(B).
(c) SELLER'S RESOLUTIONS. Seller shall deliver to Purchaser certified
copies of resolutions duly adopted by the board of directors of Seller and its
shareholders, authorizing and approving the execution and delivery of this
Agreement, including the exhibits and schedules hereto, and the consummation of
the transactions contemplated herein.
(d) CANCELLATION OF OPERATING CONTRACTS. The Interventions Contract shall
have been terminated at Closing without penalty to Seller, Interventions or
Purchaser. No other Contract shall have been canceled, amended or renewed at
reduced per diem levels or otherwise adversely affected prior to the Closing.
(e) TRANSFER DOCUMENTS. At Closing, Seller shall execute and/or deliver,
as applicable, to Purchaser the following:
(i) a ▇▇▇▇ of sale, general assignment and conveyance by Seller
transferring to Purchaser all of the tangible Acquisition Assets in the
form attached hereto as EXHIBIT 9.1(E)(I).
(ii) an assignment in the form attached hereto as EXHIBIT 9.1(E)(II)
of Seller's rights under all purchase orders and all other intangible
property included among the Acquisition Assets and of Seller's rights
under all other Contracts;
(iii) copies of all of the Contracts and of the Books and Records;
and
22
(iv) such other instruments of transfer and assignment in respect of
the Acquisition Assets as shall be consistent with the terms and
provisions of this Agreement and reasonably acceptable to Seller and
Purchaser.
(f) DUE DILIGENCE. Purchaser shall have completed, to its sole
satisfaction, its due diligence review of the Acquired Business and Acquisition
Assets.
(g) ABSENCE OF MATERIAL ADVERSE EFFECT. No Material Adverse Effect to the
detriment of Purchaser or default shall have occurred since the date hereof or
shall occur as a result of the consummation of the transactions contemplated by
this Agreement.
(h) ORDERS, ETC. No action, suit or proceeding shall have been commenced
or shall be pending or threatened, and no statute, rule, regulation or order
shall have been enacted, promulgated, issued or deemed applicable to the
Acquired Business, the Acquisition Assets or the transactions contemplated by
this Agreement, by any Governmental Authority or court that reasonably could be
expected to (i) materially impair Purchaser's ownership or operation (as
currently conducted) of all or a material portion of the Acquired Business or
the Acquisition Assets, or compel Purchaser to dispose of or hold separate all
or a material portion of Purchaser's or Seller's business or assets, as a result
of the transactions contemplated by this Agreement, or (ii) prohibit
consummation of the transactions contemplated by this Agreement.
(i) REMOVAL OF LIENS. Seller shall have caused any and all Liens on the
Acquisition Assets to be released and shall have provided Purchaser with
documentary evidence to such effect.
(j) CONSENTS. All consents and approvals required in connection with (i)
the execution, delivery and performance of this Agreement, and (ii) the
assignment of the Contracts and all other agreements necessary for Purchaser to
conduct the Acquired Business as it is currently being conducted by Seller,
including, without limitation, those consents listed on SCHEDULE 5.5 hereto,
shall have been obtained in form satisfactory to Purchaser.
(k) VERIFICATION BY INDEPENDENT AUDITOR. Purchaser, at its sole cost and
expense, shall have the right to have an independent public auditing firm verify
the accuracy of Seller's representations and warranties and satisfaction of
conditions to Closing which relate the financial condition of the Acquired
Business.
(l) UNIONS. The employees of Seller shall not be unionized, nor shall
there be any plans or other developments for unionization of Seller's employees.
(m) CERTAIN AGREEMENTS. The transactions contemplated by that certain
Asset Purchase Agreement by and between Purchaser, Interventions and IDDRS,
dated as of May 10, 1999 (the "INTERVENTIONS/IDDRS PURCHASE AGREEMENT"), shall
have closed.
(n) REAL ESTATE LEASE. The parties shall have entered into a real estate
lease upon terms mutually agreeable to the parties.
23
(o) CONSULTING AGREEMENTS. The parties shall have entered into consulting
and transition agreements in forms mutually agreeable to the parties.
(p) OPINIONS OF COUNSEL. Purchaser shall have received the opinion of
counsel to Seller in the form of EXHIBIT 9.1(P) attached hereto.
(q) NONCOMPETITION AGREEMENTS. The parties shall have executed and
delivered Noncompetition Agreements in the forms agreed to on the date of this
Agreement.
SECTION 9.2 CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of Seller
to consummate the transactions contemplated herein are subject, at the option of
Seller, to satisfaction of the following conditions:
(a) COMPLIANCE. Purchaser shall have complied with its covenants and
agreements contained herein, and the representations and warranties contained in
ARTICLE VI hereof shall be true and correct in all respects on the date hereof
and as of the Closing Date.
(b) PURCHASER'S RESOLUTION. Purchaser shall have delivered to Seller
certified copies of resolutions duly adopted by the board of directors of
Purchaser authorizing and approving the execution and delivery of the Agreement,
including the exhibits and articles attached hereto, and the consummation of the
transactions contemplated herein.
(c) OFFICER'S CERTIFICATE. Seller shall have received a certificate dated
the Closing Date of an executive officer of Purchaser certifying as to the
matters specified in SECTION 9.2(A) hereof in the form attached hereto as
EXHIBIT 9.2(C).
(d) ORDERS, ETC. No action, suit or proceeding shall have been commenced
or shall be pending or threatened, and no statute, rule, regulation or order
shall have been enacted, promulgated, issued or deemed applicable to the
Acquired Business, the Acquisition Assets or the transactions contemplated by
this Agreement, by any Governmental Authority or court that reasonably may be
expected to (i) prohibit Purchaser's ownership or operation of all or a material
portion of the Acquired Business or the Acquisition Assets, or compel Purchaser
to dispose of or hold separate all or a material portion of Seller's business or
assets, as a result of the transactions contemplated by this Agreement or (ii)
prohibit consummation of the transactions contemplated by this Agreement.
(e) OPINION OF COUNSEL. Seller shall have received the opinion of counsel
to Purchaser in the form of EXHIBIT 9.2(E) hereto.
(f) NONCOMPETITION AGREEMENTS. The parties shall have executed and
delivered Noncompetition Agreements in the forms agreed to on the date of this
Agreement.
(g) EMPLOYEE ACCESS AGREEMENT. Purchaser and Seller shall have executed
and delivered the Employee Access Agreement upon terms mutually agreeable to the
parties. ARTICLE X TERMINATION
24
SECTION 10.1 GROUNDS FOR TERMINATION. This Agreement may be terminated at
any time prior to the Closing Date:
(a) by the mutual written agreement of Seller and Purchaser;
(b) by Purchaser by written notice thereof to Seller (i) if any of the
conditions set forth in SECTION 9.1 hereof shall have become incapable of
fulfillment by or before the Closing Date, and shall not have been waived by
Purchaser or (ii) Seller commits a material breach of this Agreement which is
not cured with twenty (20) days following receipt of notice thereof from
Purchaser;
(c) by Seller by written notice thereof to Purchaser if (i) any of the
conditions set forth in SECTION 9.2 hereof shall have become incapable of
fulfillment by or before the Closing Date, and shall not have been waived by
Seller or (ii) Purchaser commits a material breach of this Agreement which is
not cured with twenty (20) days following receipt of notice thereof from Seller;
(d) by Purchaser, as set forth in SECTION 7.9 hereof;
(e) by Seller or Purchaser by written notice thereof to the other if the
transactions contemplated hereby shall not have been consummated by July 31,
1999, or such other date as Seller and Purchaser shall agree upon in writing;
PROVIDED, HOWEVER, if the Closing is delayed due to delays in (i) obtaining all
necessary governmental approvals, (ii) obtaining other contractual consents, if
any, (iii) satisfaction of other conditions beyond the control of Purchaser or
Seller or (iv) delays in closing of the transactions contemplated in the
Interventions/IDDRS Purchase Agreement, then the Closing Date will be extended
for such time as required to satisfy such conditions; provided, however, that
the Closing Date may not be extended beyond September 30, 1999.
SECTION 10.2 EFFECT OF TERMINATION. The following provisions shall apply
in the event of a termination of this Agreement:
(a) A termination of this Agreement shall not relieve any party from
liability for any breach of this Agreement, nor shall it affect any other rights
or obligations which accrued prior to the effective date of the termination or
which are expressly contemplated to survive a termination of this Agreement,
including but not limited to those matters set forth in SECTIONS 10.2, 12.1,
12.3, 12.4, 12.6 AND ARTICLE XI.
(b) The parties hereto acknowledge and agree that Purchaser, as a result
of the actual damages Purchaser would sustain by reason of such negligent or
willful failure of Seller or Shareholders to perform its or their obligations
hereunder, could not be made whole by monetary damages, and it is accordingly
agreed that Purchaser shall have the right to elect, in addition to any and all
other remedies at law or in equity, to enforce specific performance under this
Agreement and
25
Seller and Shareholders waive the defense in any such action for specific
performance that a remedy at law would be adequate.
ARTICLE XI
INDEMNIFICATION
SECTION 11.1 SELLER'S AND SHAREHOLDERS' INDEMNITY OBLIGATIONS. Subject to
the conditions and limitations set forth in this ARTICLE XI, Seller and each of
the Shareholders shall, jointly and severally, indemnify and hold harmless
Purchaser and Purchaser's officers, directors, employees and Affiliates (each a
"PURCHASER INDEMNIFIED PARTY") from and against any and all claims, actions,
causes of action, arbitrations, proceedings, losses, damages, remediations,
liabilities, strict liabilities, judgments, fines, penalties and expenses
(including, without limitation, reasonable attorneys' fees) (collectively, the
"INDEMNIFIED AMOUNTS") incurred by a Purchaser Indemnified Party or for which
Purchaser bears responsibility as a result of (a) any breach or
misrepresentation in any of the representations and warranties made by Seller
and/or the Shareholders in this Agreement or in any certificate or instrument
delivered in connection with this Agreement (other than the Noncompete
Agreements of Seller and each of the Shareholders), (b) any violation or breach
by Seller and/or the Shareholders of or default by Seller and/or the
Shareholders under the terms of this Agreement or under any certificate or
instrument delivered in connection with this Agreement (other than the
Noncompete Agreements of Seller and each of the Shareholders) or (c) any other
liability of Seller and the Shareholders (including but not limited to the
Excluded Liabilities) other than those liabilities expressly assumed by
Purchaser under SECTION 4.2 of this Agreement or as expressly provided in
SECTION 11.3. The liability of Seller and each Shareholder to Purchaser for any
breach by such party of such party's Noncompete Agreement shall be determined by
such party's respective Noncompete Agreement with Purchaser.
SECTION 11.2 PURCHASER'S INDEMNITY OBLIGATIONS. Subject to the conditions
and limitations set forth in this ARTICLE XI, Purchaser shall indemnify and hold
harmless Seller and Seller's officers, directors, employees and Affiliates (each
a "SELLER INDEMNIFIED PARTY") from and against any and all Indemnified Amounts
incurred by a Seller Indemnified Party or for which Seller bears responsibility
as a result of (a) any breach or misrepresentation in any of the representations
and warranties made by or on behalf of Purchaser in this Agreement or any
certificate or instrument delivered in connection with this Agreement (other
than the Noncompete Agreements of each Shareholder); (b) any violation or breach
by Purchaser of or default by Purchaser under the terms of this Agreement or any
certificate or instrument delivered in connection with this Agreement; (c) any
Assumed Liability (other than the Noncompete Agreements of each Shareholder); or
(d) any other liability of Purchaser.
SECTION 11.3 ENVIRONMENTAL LAWS AND CLAIMS. Nothing in SECTION 11.1 OR
SECTION 11.2 above shall otherwise require Seller or the Shareholders to
indemnify the Purchaser Indemnified Parties, or the Purchaser to indemnify
Seller, the Shareholders or a Seller Indemnified Party, for the status of
compliance under the Environmental Laws or for the presence, release, use, or
handling of, or exposure to, Materials of Environmental Concern at, in, on,
under, or emanating from any of the Seller's or Purchaser's assets or
facilities. Nothing in this Agreement, however, shall be construed
26
to constitute a waiver by Purchaser or any of the other Purchaser Indemnified
Parties, or Seller, any Shareholder or any of the other Seller Indemnified
Parties for any claims, rights, or remedies they may have or may acquire under
the Environmental Laws, common law, or otherwise with respect to the status of
compliance of the Seller's or Purchaser's assets or facilities under the
Environmental Laws or the presence, release, use, or handling of, or exposure
to, Materials of Environmental Concern at, in, on, under, or emanating from any
of the Seller's or Purchaser's assets or facilities, and Purchaser and the other
Purchaser Indemnified Parties and Seller, the Shareholders and the other Seller
Indemnified Parties expressly preserve and retain all such claims, rights, and
remedies.
SECTION 11.4 INDEMNIFICATION PROCEDURES. All claims for indemnification
under this Agreement shall be asserted and resolved as follows:
(a) A party claiming indemnification under this Agreement (an "INDEMNIFIED
PARTY") shall with reasonable promptness (i) notify the party from whom
indemnification is sought (the "INDEMNIFYING PARTY") of any third-party claim or
claims asserted against the Indemnified Party ("THIRD PARTY CLAIM") for which
indemnification is sought and (ii) transmit to the Indemnifying Party a copy of
all papers served with respect to such claim (if any) and a written notice
("CLAIM NOTICE") containing a description in reasonable detail of the nature of
the Third Party Claim, an estimate of the amount of damages attributable to the
Third Party Claim to the extent feasible (which estimate shall not be conclusive
of the final amount of such claim) and the basis of the Indemnified Party's
request for indemnification under this Agreement.
Within 30 days after receipt of any Claim Notice (the "ELECTION Period"),
the Indemnifying Party shall notify the Indemnified Party (i) whether the
Indemnifying Party disputes its potential liability to the Indemnified Party
with respect to such Third Party Claim and (ii) whether the Indemnifying Party
desires, at the sole cost and expense of the Indemnifying Party, to defend the
Indemnified Party against such Third Party Claim.
If the Indemnifying Party notifies the Indemnified Party within the
Election Period that the Indemnifying Party elects to assume the defense of the
Third Party Claim, then the Indemnifying Party shall have the right to defend,
at its sole cost and expense, such Third Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled at the discretion of the
Indemnifying Party in accordance with this SECTION 11.4(A). The Indemnifying
Party shall have full control of such defense and proceedings. Before the
Indemnifying Party notifies the Indemnified Party that the Indemnifying Party
elects to assume the defense of the Third Party Claim, the Indemnified Party is
hereby authorized, at the sole cost and expense of the Indemnifying Party, to
file, during the Election Period, any motion, answer or other pleadings that the
Indemnified Party shall reasonably deem necessary or appropriate to protect its
interests. If requested by the Indemnifying Party, the Indemnified Party agrees
to cooperate with the Indemnifying Party and its counsel in contesting any Third
Party Claim that the Indemnifying Party elects to contest, including, without
limitation, the making of any related counterclaim against the person asserting
the Third Party Claim or any cross-complaint against any person. Except as
otherwise provided herein, the Indemnified Party may participate in, but not
control, any defense or settlement of any Third Party claim controlled by the
Indemnifying Party
27
pursuant to this SECTION 11.4 and shall bear its own costs and expenses with
respect to such participation.
If the Indemnifying Party fails to notify the Indemnified Party within the
Election Period that the Indemnifying Party elects to defend the Indemnified
Party pursuant to the preceding paragraph, or if the Indemnifying Party elects
to defend the Indemnified Party but fails to prosecute or settle the Third Party
Claim as herein provided or if the Indemnified Party reasonably objects to such
election on the grounds that counsel for such Indemnifying Party cannot
represent both the Indemnified Party and the Indemnifying Parties because such
representation would be reasonably likely to result in a conflict of interest,
then the Indemnified Party shall have the right to defend, at the sole cost and
expense of the Indemnifying Party, the Third Party Claim by all appropriate
proceedings, which proceedings shall be promptly and vigorously prosecuted by
the Indemnified Party to a final conclusion or settled. The Indemnified Party
shall have full control of such defense and proceedings. The Indemnifying Party
may participate in, but not control, any defense or settlement controlled by the
Indemnified Party pursuant to this SECTION 11.4, and the Indemnifying Party
shall bear its own costs and expenses with respect to such participation.
The Indemnifying Party shall not settle or compromise any Third Party
Claim unless (i) the terms of such compromise or settlement require no more than
the payment of money (i.e., such compromise or settlement does not require the
Indemnified Party to admit any wrongdoing or take or refrain from taking any
action), (ii) the full amount of such monetary compromise or settlement will be
paid by the Indemnifying Party, and (iii) the Indemnified Party receives as part
of such settlement a legal, binding and enforceable unconditional satisfaction
and/or release, in form and substance reasonably satisfactory to it, providing
that such Third Party Claim and any claimed liability of the Indemnified Party
with respect thereto is being fully satisfied by reason of such compromise or
settlement and that the Indemnified Party is being released from any and all
obligations or liabilities it may have with respect thereto. The Indemnified
Party shall not settle or admit liability to any Third Party Claim without the
prior written consent of the Indemnifying Party unless (x) the Indemnifying
Party has disputed its potential liability to the Indemnified Party, and such
dispute either has not been resolved or has been resolved in favor of the
Indemnifying Party or (y) the Indemnifying Party has failed to respond to the
Indemnified Party's Claim Notice.
(b) In the event any Indemnified Party should have a claim against any
Indemnifying Party hereunder that does not involve a Third Party Claim, the
Indemnified Party shall transmit to the Indemnifying Party a written notice (the
"INDEMNITY NOTICE") describing in reasonable detail the nature of the claim, an
estimate of the amount of damages attributable to such claim to the extent
feasible (which estimate shall not be conclusive of the final amount of such
claim) and the basis of the Indemnified Party's request for indemnification
under this Agreement.
SECTION 11.5 DETERMINATION OF INDEMNIFIED AMOUNTS. The Indemnified Amounts
payable by an Indemnifying Party hereunder shall be determined (i) by the
written agreement of the parties, or (ii) by a final judgment or decree of any
court of competent jurisdiction, or (iii) by any other means agreed to in
writing by the parties. A judgment or decree of a court shall be deemed final
when the time for appeal, if any, shall have expired and no appeal shall have
been taken or when all
28
appeals taken have been fully determined. In calculating or determining the
Indemnified Amounts, such calculation or determination shall take into account
the actual receipt by the Indemnified Party of any amounts from any insurance
company or other third party.
SECTION 11.6 LIMITATION OF SELLER'S AND SHAREHOLDERS' LIABILITY.
(a) Notwithstanding anything to the contrary contained in ARTICLE XI, the
aggregate liability of Seller and the Shareholders for any event or occurrence
and for all events and occurrences in the aggregate giving rise to Seller and/or
the Shareholders being required to indemnify Purchaser Indemnified Parties
pursuant to (i) SECTIONS 11.1 (A) AND (B) of this Agreement shall be limited to
$1,500,000, and (ii) SECTION 11.1(C) of this Agreement shall be unlimited.
(b) Purchaser Indemnified Parties are entitled to indemnification pursuant
to ARTICLE XI under this Agreement only to the extent that the amount of any
Indemnified Amount, individually or in the aggregate, exceeds a deductible of
$50,000.
SECTION 11.7 LIMITATION OF PURCHASER'S LIABILITY.
(a) Notwithstanding anything to the contrary contained in ARTICLE XI, the
aggregate liability of Purchaser for any event or occurrence and for all events
and occurrences in the aggregate giving rise to Purchaser being required to
indemnify Seller Indemnified Parties pursuant to (I) SECTIONS 11.2(A), (B) AND
(C) of this Agreement shall be limited to $1,000,000, and (ii) SECTION 11.2(D)
of this Agreement shall be unlimited.
(b) Seller Indemnified Parties are entitled to indemnification pursuant to
SECTION 11.2 only to the extent that the amount of any Indemnified Amount,
individually or in the aggregate, exceeds a deductible of $50,000.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 COMMISSIONS. Each of the parties hereby represents and
warrants to the others that it has done nothing to create any liability for the
payment of any commission or compensation in the nature of a finder's fee or
similar fee to any broker or any other Person in connection with this Agreement
and the transactions contemplated hereby.
SECTION 12.2 SURVIVAL PERIOD. The representations and warranties set forth
in this Agreement and in any certificate delivered in connection herewith shall
be continuing and shall survive the Closing for a period of one year following
the Closing Date; PROVIDED, HOWEVER, that in the case of all representations and
warranties, there shall be no such termination with respect to any such
representation or warranty as to which a bona fide claim has been asserted by
written notice of such claim delivered to the party or parties making such
representation or warranty prior to the expiration of the survival period. The
covenants and agreements, including but not limited to indemnification
obligations, set forth in this Agreement and in any certificate or instrument
delivered
29
in connection herewith shall be continuing and survive Closing; PROVIDED,
HOWEVER, that the indemnification obligations of the parties hereto (i) set
forth in SECTIONS 11.1(A) and 11.2(A) with respect to a breach of a
representation or warranty shall terminate at the time such particular
representation or warranty shall terminate, and (ii) set forth in SECTIONS
11.1(B) and 11.2(B) shall terminate one year following the Closing Date. The
indemnification obligations set forth in SECTION 11.1(C) AND SECTIONS 11.2(C)
AND (D) shall survive the Closing indefinitely.
SECTION 12.3 EXPENSES. All costs and expenses incurred by Seller and the
Shareholders in connection with the negotiation, preparation and execution of
this Agreement and the transactions contemplated hereby, including its legal,
accounting, advisory, travel, finders and brokers and other professional fees
and expenses, shall be paid by Seller and the Shareholders. Purchaser shall bear
its expenses incurred in connection with the negotiation, preparation and
execution of this Agreement and the transactions contemplated hereby (as well as
in connection with negotiations with other potential purchasers), including its
legal, accounting, advisory, travel, finders and brokers and other professional
fees and expenses.
SECTION 12.4 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been received only if and when (i)
personally delivered to the addressee or (ii) on the third day after mailing, by
United States mail, first class, postage prepaid, by certified mail return
receipt requested, addressed in each case as follows (or to such other address
as may be specified by like notice):
If to Seller or the Shareholders, to:
BHS Consulting Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy (which shall not constitute notice) to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Jenner & Block
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: 847/▇▇▇-▇▇▇▇
30
If to Purchaser, to:
Cornell Corrections, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: 713/▇▇▇-▇▇▇▇
Facsimile: 713/623-2853
With a copy (which shall not constitute notice) to:
▇▇▇▇▇ Liddell & ▇▇▇▇ LLP
3400 Chase Tower
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: 713/▇▇▇-▇▇▇▇
Facsimile: 713/223-3717
SECTION 12.5 ENTIRE AGREEMENT. This Agreement, including all schedules and
exhibits hereto, which schedules or exhibits are incorporated herein by
reference and deemed to be a part of this Agreement, constitutes the entire
agreement of the parties with respect to the subject matter hereof, and may not
be modified, amended or terminated except by a written instrument specifically
referring to this Agreement signed by all the parties hereto. Notwithstanding
this SECTION 12.5, in the event the transactions contemplated herein are not
consummated, the Confidentiality Agreement shall continue in force and effect in
accordance with the terms and provisions set forth therein.
SECTION 12.6 GOVERNING LAW. This Agreement shall be governed, construed
and enforced in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of laws thereof.
SECTION 12.7 ASSIGNMENTS AND THIRD PARTIES. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. No party hereto
shall assign this Agreement or any part hereof without the prior written consent
of the other party; PROVIDED, HOWEVER, that it is understood and agreed that
Purchaser may assign all or any portion of its rights and delegate all or any
portion of its duties hereunder to an Affiliate of Purchaser, in which event the
assignee of Purchaser shall execute and deliver all documents, certificates and
other instruments to be executed and delivered by Purchaser at the Closing in
lieu of Purchaser, which documents, certificates and other instruments shall be
appropriately modified to conform to such assignee's organizational status. No
assignment shall release a party of any of its obligations under this Agreement.
31
SECTION 12.8 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any of the parties hereto. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
SECTION 12.9 AMENDMENTS; NO WAIVERS. Any provision of this Agreement may
be amended or waived prior to the Closing Date if, and only if, such amendment
or waiver is in writing and signed, in the case of an amendment, by all parties
hereto, or in the case of a waiver, by the party against whom the waiver is to
be effective. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 12.10 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement
shall entitle any Person other than the parties hereto or their respective
successors and assigns permitted hereby to any claim, cause of action, remedy or
right of any kind.
SECTION 12.11 HEADINGS; USE OF CERTAIN TERMS. The headings and table of
contents herein are for convenience only and shall have no significance in the
interpretation hereof. Unless the context shall otherwise require, the singular
shall include the plural and vice versa, and each pronoun in any gender shall
include all other genders.
SECTION 12.12 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed for all purposes to be an
original, but all of which together shall constitute one and the same agreement.
32
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first written above.
BHS CONSULTING CORP.
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇, President
THE SHAREHOLDERS:
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇, Individually
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇, Individually
CORNELL CORRECTIONS, INC.
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Acting Chief Financial Officer
Executive President
33
EXHIBIT 1.2
DEFINITIONS
AFFILIATE: with respect to any Person, means any Person directly or
indirectly controlling, controlled by or under common control with such Person.
A Person shall be deemed to control another Person if such Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of such other Person, whether through the ownership of
voting securities, by contract or otherwise.
BEST KNOWLEDGE OF SELLER: means, with respect to any matter in question,
actual knowledge of any of the directors or officers of Seller or Seller's
onsite management and knowledge that would have been disclosed through
reasonable diligence.
BEST KNOWLEDGE OF EACH SHAREHOLDER: means the actual knowledge of each
of the Shareholders and knowledge that would have been disclosed through
reasonable diligence.
BEST KNOWLEDGE OF PURCHASER: means, with respect to any matter in
question, actual knowledge of any of the directors or officers of Purchaser and
knowledge that would have been disclosed through reasonable diligence.
CERCLA: means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended from time to time.
CODE: means the Internal Revenue Code of 1986, as amended, or any
amending or superseding tax laws of the United States of America.
EEOC: means United States Equal Employment Opportunity Commission.
ENVIRONMENTAL CLAIM: means any claim; litigation; demand; action; cause of
action; suit; loss; cost, including, but not limited to, attorneys' fees,
diminution in value, expert's fees; damage; punitive damage; fine, penalty,
expense, liability, criminal liability, judgment, governmental or private
investigation and testing; notification of status of being potentially
responsible for clean-up of any facility or for being in violation or in
potential violation of any Environmental Law; proceeding; lien; personal injury
or death of any person; or property damage, whether threatened, sought, brought
or imposed, that is related to or that seeks to recover damages related to, or
seeks to impose liability regarding Seller or Purchaser (as the case may be) or
any of their respective subsidiaries or operations conducted by any of them for:
(i) improper use or treatment of wetlands, pinelands or other protected land or
wildlife; (ii) noise; (iii) radioactive materials (including naturally occurring
radioactive materials ["NORM"]); (iv) explosives; (v) pollution, contamination,
preservation, protection, decontamination, remediation or clean-up of the air,
surface water, groundwater, soil or protected lands; (vi) solid, gaseous or
liquid waste generation, handling, discharge, release, threatened release,
treatment, storage, disposal or transportation; (vii) exposure of persons or
property to Materials of Environmental Concern and the effects thereof; (viii)
the release, threatened release, generation, extraction, mining, beneficiating,
manufacture, processing,
1
distribution in commerce, use, transfer, transportation, treatment, storage,
disposal or remediation of Materials of Environmental Concern; (ix) injury to,
death of or threat to the health or safety of any person or persons caused
directly or indirectly by Materials of Environmental Concern; (x) destruction
caused directly or indirectly by Materials of Environmental Concern or the
release or threatened release of any Materials of Environmental Concern on any
property (whether real or personal); (xi) the implementation of spill prevention
and/or disaster plans relating to Materials of Environmental Concern; (xii)
community right-to-know and other disclosure laws; or (xiii) maintaining,
disclosing or reporting information to governmental authorities under any
Environmental Law. The term, "Environmental Claim" also includes, without
limitation, any damages incurred in testing for the need for remediation or for
breach or violation of any Environmental Laws; monitoring or responding to
efforts to require remediation and any claim based upon any asserted or actual
breach or violation of any Environmental Law.
ENVIRONMENTAL LAWS: means any and all laws, common law, statutes,
ordinances, rules, regulations, judgments, guidance documents, orders or other
official acts or determinations of any Governmental Authority relating to the
preservation or protection of the environment, human health or safety, a
community's right to know, or regulating or imposing liability or standards of
conduct concerning any Materials of Environmental Concern in any and all
jurisdictions, including, without limitation, (a) CERCLA, (b) RCRA, (c) the
Solid Waste Disposal Act, as amended, (d) the Hazardous and Solid Waste
Amendments Act of 1984, as amended, (e) the Clean Air Act, as amended, (f) the
Toxic Substances Control Act, as amended, (g) the Safe Drinking Water Act, as
amended, (h) the Federal Water Pollution Prevention and Control Act, as amended,
(i) the Occupational Safety and Health Act of 1970, as amended, (j) the
Hazardous Materials Transportation Act, as amended, (k) the Rivers and Harbors
Act of 1899, as amended, and (l) any rules and regulations promulgated pursuant
to any or all of (a) through (k) above. The terms "RELEASE"or "THREATENED
RELEASE" shall have the meanings specified in CERCLA, and the terms "SOLID
WASTE" and "DISPOSAL" (or "DISPOSED") shall have the meanings specified in RCRA;
PROVIDED, HOWEVER, that, to the extent the laws of any jurisdiction applicable
to Purchaser or Seller or any of their respective properties or assets establish
a meaning for "release," "solid waste" or "disposal" which is broader than that
specified in either CERCLA or RCRA, such broader meaning shall apply in such
jurisdiction.
EPA: means the United States Environmental Protection Agency and any
successor organization.
ERISA: means the Employee Retirement Income Security Act of 1974, as
amended.
GOVERNMENTAL AUTHORITY: means any nation or government, any state or
political subdivision thereof and any agency or entity exercising executive,
legislative, judicial, regulatory or administrative functions of, or
pertaining to, government.
KNOWLEDGE or KNOWLEDGE or KNOWN: an individual shall be deemed to have
"knowledge" of or to have "known" a particular fact or other matter if such
individual is actually aware of such fact or other matter. An Entity shall be
deemed to have "knowledge" of or to have "known" a particular fact or other
matter if any individual who is serving as a director or executive officer of
the Entity,
2
as the case may be, has knowledge of such fact or other matter.
LIEN: means any mortgage, pledge, hypothecation, security interest,
encumbrance, right of first refusal, option, lien, charge, condition,
restriction or burden of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, any lease in
the nature thereof and the filing of, or agreement to give, any financing
statement under the Uniform Commercial Code of any jurisdiction).
MATERIAL ADVERSE EFFECT: means any material adverse effect on the
business, financial condition, properties, prospects, net worth or results of
operations of the Acquired Business or the Acquisition Assets.
MATERIALS OF ENVIRONMENTAL CONCERN: means: (i) those substances included
within the statutory and/or regulatory definitions of "hazardous substance,"
"hazardous waste," "extremely hazardous substance," "regulated substance,"
"hazardous materials," or "toxic substances," under any Environmental Law; (ii)
any material, waste or substance which is or contains: (A) petroleum, oil or a
fraction thereof, (B) explosives, (C) radioactive materials (including naturally
occurring radioactive materials), or (D) solid wastes that post imminent and
substantial endangerment to health or the environment; and (iii) such other
substances, materials, or wastes that are or become classified or regulated as
hazardous or toxic under any applicable federal, state or local law or
regulation. To the extent that the laws or regulations of any applicable state
or local jurisdiction establish a meaning for any term defined herein through
reference to federal Environmental Laws which is broader than the meaning under
such federal Environmental Laws, such broader meaning shall apply.
OSHA: means the United States Occupational Safety and Health
Administration.
PERSON: means any individual, partnership, joint venture, corporation,
limited liability company, association, trust, unincorporated organization,
government or agency or subdivision thereof or any other entity.
PLAN: means an "employee benefit plan" (as defined in Section 3(3) of
ERISA) which is or has been established or maintained, or to which contributions
are or have been made, by Seller or by any trade or business, whether or not
incorporated, which, together with Seller, is under common control, as described
in Section 414(b) or (c) of the Code.
RCRA: means the Resources Conservation and Recovery Act of 1976, as
amended from time to time.
SUBSIDIARY OR SUBSIDIARIES: means, with respect to any specified Person, a
corporation, partnership, joint venture, trust, limited liability company,
unincorporated organization or other Person at least a majority of whose
securities having ordinary voting power for the election of its board of
directors or other similar managing body are, at the time as of which any
determination is being made, owned legally or beneficially by such Person or one
or more Subsidiaries thereof.
3
TAX RETURN: means any return, report, statement, information return or
other document (including any related or supporting information) filed or
required to be filed with any Governmental Authority in connection with the
determination, assessment or collection of any Taxes or the administration of
any laws, regulations or administrative requirements relating to any Taxes.
TAXES: means all federal, foreign, state, local or other net or gross
income, gross receipts, sales, use, transfer, real property gains or transfer,
school, ad valorem, property, value-added, franchise, production, severance,
windfall profit, withholding, payroll, employment, excise or similar taxes,
assessments, duties, fees, levies or other governmental charges, together with
any interest thereon, any penalties, additions to tax or additional amounts with
respect thereto and any interest in respect of such penalties, additions or
additional amounts.
4