ASSET PURCHASE AGREEMENT
by and among
ALLVEST CORPORATION,
ST. ▇▇▇▇ INVESTMENTS, INC.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and
CORNELL CORRECTIONS, INC.
Dated as of June 20, 1998
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS..................................................2
SECTION 1.1 Accounting Terms......................... 2
SECTION 1.2 Defined Terms............................ 2
ARTICLE 2 CLOSING......................................................2
SECTION 2.1 Closing................................. 2
ARTICLE 3 PURCHASE, SALE AND DELIVERY..................................2
SECTION 3.1 Acquisition Assets.........................2
SECTION 3.2 Excluded Assets............................5
SECTION 3.3 Purchase Price.............................6
SECTION 3.4 Allocation Reporting...................... 6
ARTICLE 4 LIABILITIES AND OBLIGATIONS..................................7
SECTION 4.1 Liabilities Not Assumed by Purchaser...... 7
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE
SHAREHOLDER..................................................8
SECTION 5.1 Organization; Qualification............... 9
SECTION 5.2 Authority; Enforceability................. 9
SECTION 5.3 Subsidiaries.............................. 9
SECTION 5.4 Conflicting Agreements and Other
Matters; Consents..........................9
SECTION 5.5 No Default; Compliance with Laws..........10
SECTION 5.6 Financial Statements......................11
SECTION 5.7 No Undisclosed Liabilities................11
SECTION 5.8 Absence of Certain Changes................11
SECTION 5.9 Contracts, Agreements, Plans and
Commitments...............................12
SECTION 5.10 Actions Pending..........................14
SECTION 5.11 Environmental............................14
SECTION 5.12 Insurance................................16
SECTION 5.13 Title....................................17
SECTION 5.14 Real Estate..............................17
SECTION 5.15 Supplies.................................18
SECTION 5.16 Employee Benefit Plans...................18
SECTION 5.17 Employees and Labor Matters..............19
SECTION 5.18 Intellectual Property Rights.............20
SECTION 5.19 Relationships............................20
SECTION 5.20 Certain Payments.........................21
SECTION 5.21 Books and Records........................21
SECTION 5.22 Condition and Sufficiency of Assets......21
ii
SECTION 5.23 Client Bank Accounts.....................21
SECTION 5.24 Studies, Etc.............................21
SECTION 5.25 Accounts Receivable......................22
SECTION 5.26 Taxes....................................22
SECTION 5.27 Disclosure...............................22
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PURCHASER.................23
SECTION 6.1 Corporate Existence.......................23
SECTION 6.2 Authority; No Conflicts...................23
SECTION 6.3 Binding Agreement.........................23
SECTION 6.4 Pending Litigation........................23
SECTION 6.5 Regulatory Approvals......................23
ARTICLE 7 CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES........23
SECTION 7.1 Employees.................................24
SECTION 7.2 Taxes.....................................25
SECTION 7.3 Consents..................................26
SECTION 7.4 Title.....................................26
SECTION 7.5 Surveys...................................27
SECTION 7.6 Environmental Due Diligence...............27
SECTION 7.7 Further Assurances........................28
SECTION 7.8 Mail Received After Closing...............28
SECTION 7.9 Bills and Payments Received
After Closing.............................28
SECTION 7.10 Loss Due to Condemnation.................29
SECTION 7.11 Loss Due to Casualty.....................29
SECTION 7.12 Notice of Environmental Claims...........29
SECTION 7.13 Schedules................................30
SECTION 7.14 HSR Act..................................30
SECTION 7.15 "Allvest" Name...........................30
ARTICLE 8 COVENANTS...................................................30
SECTION 8.1 Sellers' and Shareholder's Covenants......30
SECTION 8.2 Purchaser's Covenants.....................32
ARTICLE 9 CONDITIONS TO CLOSING.......................................33
SECTION 9.1 Conditions to Obligations of Purchaser....33
SECTION 9.2 Conditions to Obligations of Sellers38
ARTICLE 10 TERMINATION................................................39
SECTION 10.1 Grounds for Termination..................39
SECTION 10.2 Effect of Termination....................39
iii
ARTICLE 11 INDEMNIFICATION............................................40
SECTION 11.1 Sellers' and Shareholder's
Indemnity Obligations....................40
SECTION 11.2 Purchaser's Indemnity Obligations........41
SECTION 11.3 Indemnification Procedures...............41
SECTION 11.4 Determination of Indemnified Amounts.....43
SECTION 11.5 Escrow...................................43
SECTION 11.6 Limitation of Sellers' and
Shareholder's Liability..................43
SECTION 11.7 Limitation of Purchaser's
Liability................................44
ARTICLE 12 MISCELLANEOUS..............................................44
SECTION 12.1 Commissions..............................44
SECTION 12.2 Survival................................ 45
SECTION 12.3 Expenses.................................45
SECTION 12.4 Notices..................................45
SECTION 12.5 Entire Agreement.........................46
SECTION 12.6 Governing Law............................46
SECTION 12.7 Arbitration..............................46
SECTION 12.8 Assignments and Third Parties............47
SECTION 12.9 Severability.............................48
SECTION 12.10 Amendments; No Waivers..................48
SECTION 12.11 No Third Party Beneficiaries............48
SECTION 12.12 Headings; Use of Certain Terms..........48
SECTION 12.13 Counterparts............................48
iv
EXHIBITS
Exhibit 1.2 Definitions
Exhibit 9.1(t) Opinion of Sellers' Counsel
Exhibit 9.1(v) Right of First Refusal
Exhibit 9.1(w) Noncompetition Agreement
SCHEDULES
Schedule 3.1(a) Acquired Property
Schedule 3.1(d) Assumed Leases
Schedule 3.1(f) Motor Vehicles
Schedule 3.1(h) Contracts
Schedule 3.1(j) Permits
Schedule 5.3 Subsidiaries and Affiliates
Schedule 5.4 Conflicting Agreements and Other Matters; Consents
Schedule 5.5(a) No Default; Compliance with Laws and Regulations
Schedule 5.6 Financial Statements
Schedule 5.7 No Undisclosed Liabilities
Schedule 5.8 Absence of Certain Changes
Schedule 5.9 Contracts, Agreements, Plans and Commitments
Schedule 5.10 Actions Pending
Schedule 5.11 Environmental
Schedule 5.12 Insurance
Schedule 5.14 Real Estate
Schedule 5.16 Employee Benefit Plans
Schedule 5.17 Employees and Labor Matters
Schedule 5.18 Intellectual Property Rights
Schedule 5.19 Relationships
Schedule 5.22 Condition and Sufficiency of Assets
Schedule 5.23 Client Bank Accounts
v
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "AGREEMENT"), dated June __ 1998, is
by and among Allvest Corporation and St. ▇▇▇▇ Investments, Inc. (both of which
are Alaska corporations and are collectively referred to as "SELLERS"), ▇▇▇▇▇▇▇
▇▇▇▇▇▇ (the "SHAREHOLDER") and Cornell Corrections, Inc., a Delaware corporation
("PURCHASER").
WHEREAS, Sellers are in the business of providing and operating adult
pre-release correctional services and related facilities in Alaska and other
states; and Sellers are also in the business of operating animal control
services and facilities, community service patrols and other businesses in
Alaska;
WHEREAS, the Shareholder owns all of the issued and outstanding capital
stock of Sellers and certain of the Acquired Properties (together with related
Improvements and Appurtenances) and Motor Vehicles, as such terms are defined
below;
WHEREAS, on the terms and subject to the conditions set forth herein,
Purchaser wishes to purchase from Sellers and the Shareholder, and Sellers and
the Shareholder wish to sell, transfer, assign and deliver to Purchaser
substantially all of the assets and contract rights used by Sellers and the
Shareholder in connection with the operation of Sellers' and the Shareholder's
Alaska adult pre-release correctional services and related facilities, which
include specifically the following centers:
Cordova Center, Anchorage, Alaska;
Midtown Center, Anchorage, Alaska;
Parkview Center, Anchorage, Alaska;
Tundra Center, Bethel, Alaska;
Northstar Center, Fairbanks, Alaska;
and all of Sellers' interests in prospective adult pre-release correctional
services and related facilities (the foregoing facilities and related services
and Sellers' interests in prospective adult pre-release correctional services
and facilities are referred to in this Agreement as the "BUSINESS"); and
WHEREAS, the Sellers and the Shareholder 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:
ASSET PURCHASE AGREEMENT 1
ARTICLE 1
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 financial statements referred to in SECTION 5.6 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 2
CLOSING
SECTION 2.1 CLOSING. The closing of the purchase and sale provided for
herein (the "CLOSING") shall take place at the offices of First American Title
Company of Alaska, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, (the "CLOSING AGENT")
on or before August 14, 1998, or at such other place, time or date as may be
agreed upon by the parties hereto. Subject to the provisions of SECTION 10.1,
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 3
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, Sellers and the Shareholder shall sell,
transfer, convey, assign and deliver to Purchaser, and Purchaser shall acquire
and purchase from Sellers and the Shareholder, subject to SECTION 3.2 hereof,
all of the assets, properties and rights of Sellers and the Shareholder relating
to the Business, including, without limitation, all of Sellers' and the
Shareholder's right, title and interest in and to the following:
(a) the fee simple interest in and to the properties described on SCHEDULE
3.1(A) (the "ACQUIRED PROPERTY" or "ACQUIRED PROPERTIES");
(b) all buildings, structures, fixtures and other improvements located on
the Acquired Properties (the "IMPROVEMENTS");
ASSET PURCHASE AGREEMENT 2
(c) all right, title and interest of Sellers and the Shareholder in and to
(i) all easements, tenements, hereditaments, privileges and appurtenances in any
way belonging to the Acquired Properties and the Improvements, (ii) any land
lying in the bed of any highway, street, road, avenue or access way, open or
proposed, in front of or abutting or adjoining the Acquired Properties and the
Improvements, (iii) the use of all strips and rights of way, if any, abutting,
adjacent, contiguous to or adjoining the Acquired Properties and the
Improvements, and (iv) all other rights and appurtenances belonging or in any
way pertaining thereto including, without limitation, all water, wastewater and
other utility rights and capacities (the "APPURTENANCES");
(d) all right, title and interest in, to and under all real property
leases to which Sellers are a party as a tenant or lessee on the Closing Date
and relating to the Business including, without limitation, those listed on
SCHEDULE 3.1(D) hereto (the "ASSUMED LEASES");
(e) all of the machinery, equipment, trade fixtures, tools, furniture,
computers, appliances, implements, spare parts, supplies, leasehold
improvements, construction in progress and all other tangible personal property
owned by Sellers or the Shareholder, or of which Sellers or the Shareholder have
the current possession and use, on the Closing Date and relating to the
Business, including those located in the Sellers' corporate offices located in
the ▇▇▇▇▇▇ Street Office Building (as defined below) (collectively, the
"EQUIPMENT");
(f) all motor vehicles and rolling stock owned by Sellers or the
Shareholder on the Closing Date and relating to the Business, including, without
limitation, those listed on SCHEDULE 3.1(F) hereto (collectively, the "MOTOR
VEHICLES");
(g) all office supplies, kitchen supplies, laundry supplies, medical
supplies, spare parts, safety equipment, maintenance supplies, other supplies
used or consumed in the Business and other similar items which exist on the
Closing Date (collectively, the "SUPPLIES");
(h) all right, title and interest in, to and under all contracts
(including, without limitation, all of the fee-for-service, operating and other
contracts of Sellers), leases, agreements, equipment or other lease licenses,
government contract awards, management agreements and building service
agreements to which Sellers are a party on the Closing Date and relating to the
Business or by which any of the Acquisition Assets (as hereinafter defined) are
then bound including, without limitation, those listed on SCHEDULE 3.1(H) hereto
and the Assumed Leases (collectively, the "CONTRACTS");
(i) all goodwill and going concern value relating to the Business;
(j) all right, title and interest in all licenses, permits, applications,
registrations, exemptions, notices of intent, franchises, consents, waivers,
variances, authorizations,
ASSET PURCHASE AGREEMENT 3
approvals and orders issued by any federal, state, municipal or other
Governmental Authority (collectively, the "PERMITS") relating to the Acquisition
Assets or the Business, including, without limitation, those listed on SCHEDULE
3.1(J) hereto;
(k) all cash or cash equivalents representing fund accounts of Clients
("CLIENT BANK ACCOUNTS");
(l) any software, patents, patent applications, processes, shop rights,
formulas, brand names, trade secrets, servicemarks, trade names, trademarks,
copyrights, intellectual property, drawings, and any similar items and related
rights owned by or licensed to Sellers, together with any goodwill associated
therewith and all rights of action on account of past, present and future
unauthorized use or infringement thereof and relating to the Business, including
an irrevocable license to use the name "Allvest" in conjunction with Purchaser's
name or trade names;
(m) all rights under express or implied warranties from the suppliers of
Sellers with respect to the Acquisition Assets, to the extent they are
assignable;
(n) all books, records, papers and instruments of whatever nature and
wherever located that are in the possession or control of Sellers, that relate
to the Business or the Acquisition Assets or which are required or necessary in
order for Purchaser to conduct the Business from and after the Closing Date in
the manner in which it is presently being conducted, including, without
limitation, blueprints of the Improvements, if any, accounting and financial
records relating to the Contracts, maintenance records, environmental records,
analytical data and reports, correspondence with Governmental Authorities
relating to the Business, supplier lists and other supplier data relating to the
purchase of supplies, notices of claims or demands by third parties, and
confidential information relating to the Business;
(o) all personnel files and other materials relating to employees of
Sellers who are to be offered employment by Purchaser as contemplated by SECTION
7.1 hereof; subject, however, to obtaining any legally required consent of an
employee to the transfer of the employee's personnel file;
(p) all records of compliance and noncompliance with the laws,
regulations, ordinances and orders applicable to the Acquisition Assets or the
Business;
(q) all right, title and interest in, to and under all rights, privileges,
claims, causes of action, and options relating or pertaining to the Acquisition
Assets or the Business;
(r) subject to the exclusions set forth in SECTION 3.2 hereof, all other
or additional privileges, rights, interests, properties and assets of every kind
and description and wherever located that are used or intended for use in
connection with, or that are necessary to the continued conduct of, the Business
as presently conducted.
ASSET PURCHASE AGREEMENT 4
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, Sellers
are not selling and Purchaser is not purchasing pursuant to this Agreement any
of the following, all of which shall be retained by Sellers (collectively, the
"EXCLUDED ASSETS"):
(a) all of Sellers' interest in the animal control services contract and
related assets and facilities; community service patrol contract and related
assets and facilities; and any other business interest or asset of Sellers that
is unrelated to the Business;
(b) all of Sellers' interest in the adult pre-release correctional
services and facilities located outside of Alaska;
(c) all accounts receivable of Sellers arising from the Business and all
other rights of Sellers to payment for services associated with the Business
rendered prior to the Closing Date, whether or not they have been earned by
performance or have been written-off or reserved against as a bad debt or
doubtful account in any financial statements, (collectively, the "ACCOUNTS
RECEIVABLE");
(d) all prepaid items, deposits and other similar assets of Sellers which
exist at the Closing Date;
(e) all insurance policies relating to the Acquisition Assets, the
Business and any underlying property on which the Business is or has been
conducted and rights to make claims under any such current or prior insurance
policy;
(f) all cash of Sellers which exists at the Closing Date;
(g) Sellers' interest in real property known as ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ (the "▇▇▇▇▇▇ STREET OFFICE BUILDING");
(h) all employee benefit plans (as defined in ERISA) and all other similar
benefit plans, programs, arrangements or commitments (whether written of oral)
of Sellers; PROVIDED, HOWEVER, that Purchaser shall use its reasonable efforts
to make available to the employees of Sellers hired by Purchaser participation
in any employee benefit plan which Purchaser offers to its employees generally,
subject to the terms of such plan.
SECTION 3.3 PURCHASE PRICE. The aggregate consideration for the purchase
of the Acquisition Assets shall be $20,000,000 (the "PURCHASE PRICE") consisting
of and payable in accordance with the following:
ASSET PURCHASE AGREEMENT 5
(a) Prior to the execution of this Agreement, Purchaser has delivered to
Sellers the sum of $100,000, and contemporaneous with the execution of this
Agreement, Purchaser has delivered to Sellers the sum of $150,000, which amounts
collectively serve as an option fee (together with any interest thereon, the
"OPTION FEE"). The Option Fee shall be applied against the Purchase Price at
Closing. The refundability of the Option Fee shall be governed by the provisions
of SECTION 10.2 of this Agreement.
(b) Upon the terms and subject to the conditions hereof, at the Closing,
Purchaser shall pay $250,000 (the "ESCROWED PURCHASE PRICE") of the Purchase
Price to First National Bank of Anchorage (the "ESCROW AGENT"), to be held for
up to ninety (90) days by the Escrow Agent and disbursed by the Escrow Agent in
accordance with the terms and conditions of the Escrow Agreement, in a form
reasonably agreed to by the parties (the "ESCROW AGREEMENT"), to be executed by
Purchaser and Sellers at the Closing.
(c) At the Closing, creditors holding long-term indebtedness of Sellers
shall be paid in full by the Closing Agent, which payments shall be applied
against the Purchase Price. Sellers and the Shareholder shall by the Closing
Date or as soon thereafter as practical, and in any event no later than thirty
days after Closing, pay all of Sellers' and the Shareholder's trade accounts
payable, any Excluded Liabilities (as defined in SECTION 4.1 below) to the
extent identified at Closing and relating to the Business, and other liabilities
related to or arising from the operation of the Business. Sellers' and the
Shareholder's long-term indebtedness, trade accounts payable and other
liabilities related to or arising from the operation of the Business are
sometimes referred to herein as the "EXCLUDED DEBT."
(d) At the Closing, Sellers shall credit toward the Purchase Price an
amount equal to the accrued vacation pay assumed by Purchaser under SECTION
7.1(D).
(e) Upon the terms and subject to the conditions hereof, at the Closing
and in full satisfaction of the Purchase Price, Purchaser shall pay to Sellers
and the Shareholder an aggregate amount equal to the Purchase Price LESS (i) the
Option Fee, (ii) the Escrowed Purchase Price, (iii) the long-term indebtedness
paid by the Closing Agent pursuant to SECTION 3.3(C) above, and (iv) the assumed
accrued vacation pay pursuant to SECTION 3.3(D) above, by wire transfer to an
account designated in writing by Sellers.
SECTION 3.4 ALLOCATION REPORTING. Prior to the Closing Date the parties
shall reasonably agree in writing upon an allocation of the Purchase Price (and
any other items constituting consideration paid by Purchaser or received by
Sellers and the Shareholder in connection with the disposition of the
Acquisition Assets) among the Acquisition Assets; which allocations shall be
used by Purchaser and Sellers 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). Purchaser and Sellers shall not assert, in connection
with any audit or other proceeding with respect to Taxes,
ASSET PURCHASE AGREEMENT 6
any asset values or other items inconsistent with the allocations agreed upon
under this SECTION 3.4.
ARTICLE 4
LIABILITIES AND OBLIGATIONS
SECTION 4.1 LIABILITIES NOT ASSUMED BY PURCHASER. Except as otherwise
provided in SECTION 7.1(D), 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, Sellers or the
Shareholder whatsoever (and Sellers and the Shareholder will at all times
indemnify and hold Purchaser harmless from and against any claim therefore or
liability arising therefrom), 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 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
Sellers or the Shareholder 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 Sellers, and the costs and expenses of Sellers and the Shareholder
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 Sellers incurred in the course of Sellers' operations as of the
Closing Date, any indebtedness (whether short-term or long-term) for borrowed
money, together with all interest thereon, including but not limited to the
Excluded Debt;
(d) any commitments for which performance is required or liability arises
prior to the Closing Date pursuant to the Contracts (provided that the rights
thereunder have been duly and effectively assigned to Purchaser);
(e) any Taxes for which Sellers are 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 Sellers;
(g) any liabilities arising out of or in connection with periods or
activity prior to the Closing Date related to OSHA, EEOC, EPA or any other
Governmental Authority, or any violation of law;
ASSET PURCHASE AGREEMENT 7
(h) any liability or obligation (contingent or otherwise) of Sellers
arising out of any claim, litigation, protest or proceeding threatened or
pending on or before the Closing Date or any claim, litigation, protest or
proceeding threatened or initiated after the Closing Date to the extent based on
an act or omission of Sellers or any current or former officer, director,
employee, agent or representative of Sellers, or the operation of the Business
and/or Acquisition Assets occurring before the Closing Date, whether or not set
forth on SCHEDULE 5.10;
(i) any Environmental Claim and any claims, violations or alleged
violations of Environmental Law, or conditions that could give rise to or relate
to liability under Environmental Laws or similar legal requirements attributable
or relating to the Acquisition Assets (including, without limitation, the
operation thereof), the Business, the Sellers or the Shareholder, including any
liability (including without limitation strict liability) or obligation arising
under or relating to Environmental Laws with respect to the Business Property
arising after the Closing Date resulting from, caused by or related to any act
or omission of any third party or Sellers or any current or former officer,
director, employee, agent, representative, tenant or invitee of Sellers which
occurred on or prior to the Closing Date, or from the continuation of practices
or operations with respect to the Acquisition Assets or the Business Property,
that were occurring or in effect on or prior to the Closing Date;
(j) any liability arising out of or in connection with Sellers' defective
performance of any Contract or any express or implied warranty with respect to
performance of any Contract prior to the Closing Date;
(k) any liability or obligation 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 Sellers; and
(l) any contingent or unknown liability of Sellers and/or the Shareholder.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLERS
AND THE SHAREHOLDER
Sellers and the Shareholder, jointly and severally, represent, warrant and
agree to and with Purchaser as follows:
SECTION 5.1 ORGANIZATION; QUALIFICATION. Sellers are corporations duly
organized, validly existing and in good standing under the laws of the State of
Alaska. Sellers have heretofore delivered to Purchaser true, correct and
complete copies of their articles of incorporation and bylaws, each as amended
or restated through the date of this Agreement. Sellers have all requisite power
and authority to own and operate their assets and properties and to carry on
their business and the Business as it is now being conducted. Sellers are duly
ASSET PURCHASE AGREEMENT 8
licensed or qualified as foreign entities to do business and is in good standing
in all jurisdictions wherein the character of the properties owned or held by
them or the nature of the business transacted by them requires them to be so
licensed or qualified.
SECTION 5.2 AUTHORITY; ENFORCEABILITY. Sellers have all requisite
corporate power and authority to enter into this Agreement. All necessary action
on the part of Sellers has been taken to authorize the execution and delivery of
this Agreement, the performance of their obligations hereunder and the
consummation of the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Sellers and the Shareholder. This
Agreement constitutes, as of the date hereof, and this Agreement and all
documents and instruments required hereunder to be executed and delivered by
Sellers and the Shareholder at or prior to Closing will constitute, on the
Closing Date, legal, valid and binding obligations of Sellers and Shareholder
enforceable against Sellers and Shareholder in accordance with their terms,
subject to the effect of any applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting creditors' rights generally.
SECTION 5.3 SUBSIDIARIES. Except as set forth on SCHEDULE 5.3, Sellers do
not have any Subsidiaries, nor do Sellers or the Shareholder hold any equity
interest in or control (directly or indirectly, through the ownership of
securities, by contract, by proxy, alone or in combination with others, or
otherwise) any corporation, limited liability company, partnership, business
organization or other Person or otherwise have any Affiliates.
SECTION 5.4 CONFLICTING AGREEMENTS AND OTHER MATTERS; CONSENTS. Neither
Sellers nor the Shareholder are a party to any contract or agreement or subject
to any charter or other corporate restriction which materially and adversely
affects their business, property or financial condition as of the date hereof.
Except as set forth on SCHEDULE 5.4 hereto, the execution and delivery of this
Agreement 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 require any notice,
consent, authorization or approval under, the articles of incorporation or
bylaws of either Seller;
(b) violate or conflict with any provision of, or require any filing,
consent, authorization or approval under, any law or administrative regulation
or any judicial, administrative or arbitration order, award, judgment, writ,
injunction or decree applicable to or binding upon either Seller or the
Shareholder, or to which either Sellers' or the Shareholder's assets or
properties are subject; or
(c) conflict with, result in a material breach of, constitute a material
default under (whether with notice or the lapse of time or both), accelerate or
permit the acceleration of the performance required by, or require any consent,
authorization or approval under, (i) any mortgage, indenture, deed of trust,
loan or credit agreement or any other agreement or instrument evidencing
indebtedness for money borrowed to which either Seller or the
ASSET PURCHASE AGREEMENT 9
Shareholder is a party or by which either Seller or the Shareholder is bound or
to which either of Sellers' or the Shareholder's properties are subject or (ii)
any material lease, license, contract or other agreement or instrument to which
either Seller or the Shareholder is a party or by which either Seller or the
Shareholder is bound or to which either of Sellers' or the Shareholder's assets
or properties are subject.
SECTION 5.5 NO DEFAULT; COMPLIANCE WITH LAWS AND REGULATIONS.
(a) Except as set forth on SCHEDULE 5.5(A) and except where such default
would not have a Material Adverse Effect, neither Sellers nor the Shareholder
are 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 either Seller or the Shareholder is a
party or by which either of Sellers or the Shareholder or any of their
properties is 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 and the Assumed Leases.
(b) Except where such violation would not have a Material Adverse Effect,
neither of the Sellers or the Shareholder is in violation of any law,
regulation, order, judgment or decree of any federal or state court or
Governmental Authority applicable to their business or operation.
(c) Except where failure to hold a permit would not have a Material
Adverse Effect, Sellers and the Shareholder hold all Permits as are necessary to
carry on their business and the Business as currently conducted in compliance
with all applicable laws rules, regulations and decisions of Governmental
Authorities having jurisdiction over Sellers and the Shareholder, the Business
and the Acquisition Assets. Neither Sellers or the Shareholder are in violation
of any such Permit. All such Permits are in full force and effect, and no
written or oral notice of suspension, revocation or cancellation thereof has
been threatened, and Sellers and the Shareholder are fully authorized, subject
to the approval of the licensing agencies, to assign to Purchaser such Permits.
No approvals are necessary for the assignment of such Permits to Purchaser that
have not been obtained by Sellers and upon assignment such Permits will not
impose any restrictions, limitations, terms or conditions that were not in
effect prior to such assignment.
SECTION 5.6 FINANCIAL STATEMENTS. The financial statements (including any
related schedules and notes) attached as SCHEDULE 5.6 (the "FINANCIAL
STATEMENTS") are true, complete and correct, and fairly present the financial
position of Sellers as of their respective dates and the results of operations
of Sellers for the periods therein indicated, and were prepared in accordance
with generally accepted accounting principles, on a basis consistent with prior
years. Allvest Corporation's general ledger (the "General Ledger"), previously
provided to Purchaser, is true, complete and correct. Except for ordinary and
customary liabilities that have arisen in the ordinary course of business of
Sellers since the date of the Financial Statements, Sellers do not
ASSET PURCHASE AGREEMENT 10
have any liabilities or obligations of any nature (absolute, accrued, contingent
or otherwise) that are not reflected on the Financial Statements. Sellers shall
provide monthly financial statements for the months ending after April 1998 as
the same become available.
SECTION 5.7 NO UNDISCLOSED LIABILITIES. Except as set forth on SCHEDULE
5.7, there is no existing, contingent or threatened liability, obligation, Lien
or claim of any nature (absolute, accrued, contingent or otherwise) that relates
to the Business or the Acquisition Assets or has been asserted or threatened to
be asserted against Sellers or the Shareholder, other than liabilities arising
after the date of the Financial Statements in the ordinary course of business
consistent with past practice.
SECTION 5.8 ABSENCE OF CERTAIN CHANGES. Except as disclosed on SCHEDULE
5.8, since April 30, 1998, there has not been:
(a) any material adverse change in the business, financial condition,
properties, value or results of operations of the Business or the Acquisition
Assets;
(b) any material damage, destruction or loss suffered by Sellers, whether
covered by insurance or not;
(c) any sale, lease or other disposition of properties and assets of
Sellers related to the Business, other than those in the ordinary course of
business consistent with past practices;
(d) any merger or consolidation of Sellers with any other Person or any
acquisition by Sellers of the stock or business of another Person;
(e) any cancellation of debt by Sellers or waiver of any claim or right of
substantial value to Sellers;
(f) any borrowing, agreement to borrow funds or guaranty by Sellers or any
termination or amendment of any evidence of indebtedness, contract, agreement,
deed, mortgage, lease, license or other instrument to which either Seller is
bound or by which either Seller or any of the Acquisition Assets are 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
Sellers to the directors, officers or employees of Sellers, 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 Sellers outside of the ordinary course of business;
(h) any employment, consulting, severance or indemnification agreement
entered into or made by Sellers with any of their employees, or any collective
bargaining
ASSET PURCHASE AGREEMENT 11
agreement or other obligation to any labor organization incurred or entered into
by Sellers;
(i) the creation or imposition of any Lien, other than a Permitted
Encumbrance, on any of the Acquisition Assets;
(j) the making of any unpaid capital commitment in excess of $10,000 in
the aggregate related to the Business;
(k) any amendment to the articles of incorporation or bylaws of Sellers;
(l) any contract bid related to the Business for an amount in excess of
$10,000;
(m) any contract or commitment to do any of the foregoing; or
(n) any imposition of any new or additional restriction, limitation, term
or condition under any Permit or any Environmental Law.
SECTION 5.9 CONTRACTS, AGREEMENTS, PLANS AND COMMITMENTS. SCHEDULE 5.9
hereto sets forth a complete list of the following contracts, agreements, plans
and commitments relating to the Business or the Acquisition Assets to which
Sellers or the Shareholder are a party or by which Sellers or any of the
Acquisition Assets or Business Property is bound as of the date hereof:
(a) any contract, commitment or agreement that involves aggregate
expenditures by Sellers 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 Business that involves aggregate expenditures by Sellers of
more than $10,000;
(c) any indenture, loan agreement or note under which Sellers or the
Shareholder have outstanding indebtedness, obligations or liabilities for
borrowed money;
(d) any lease or sublease for the use or occupancy of real property,
including but not limited to the Assumed Leases;
(e) any agreement that restricts the right of Sellers 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 Sellers;
(g) any partnership, joint venture or construction and operation
agreement;
ASSET PURCHASE AGREEMENT 12
(h) any agreement of surety, guarantee or indemnification with respect to
which Sellers are the obligor, outside of the ordinary course of business;
(i) any contract that requires Sellers to pay for goods or services
substantially in excess of their estimated needs for such items or the fair
market value of such items;
(j) any contract, agreement, agreed order or consent agreement that
requires Sellers or the Shareholder to take any actions or incur expenses to
remedy non-compliance with any Environmental Law; and
(k) any other contract material to the Business.
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 Sellers and, to the best knowledge of
Sellers, the other parties thereto and (ii) are valid and in full force and
effect. Sellers have fulfilled all material obligations required of Sellers
under each such contract, agreement, plan or commitment to have been performed
by them prior to the date hereof, including timely paying all interest on their
debt, including but not limited to the Excluded Debt, as such interest has
become due and payable. Except as set forth on SCHEDULE 5.9, there are no
counterclaims or offsets under any of such contracts, agreements, plans and
commitments. The assignment of the Contracts to Purchaser in connection with the
transactions contemplated herein will vest in Purchaser the right to operate the
Business and Acquisition Assets under the terms of the Contracts and to use the
Acquisition Assets in the manner currently operated and used by Sellers.
All related party lease rental and general and administrative cost
allocations with respect to the Contracts are reasonable.
SECTION 5.10 ACTIONS PENDING. Except as set forth on SCHEDULE 5.10 hereto,
there is no action, claim, suit, protest, investigation or proceeding pending
or, to the best knowledge of Sellers, threatened against Sellers or the
Shareholder, the Acquisition Assets, the Business, the Business Property or
involving any properties or rights of Sellers or the Shareholder by or before
any court, arbitrator or Governmental Authority. There is no action, claim,
suit, investigation or proceeding pending or threatened against Sellers or the
Shareholder 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 or that reasonably may be expected to have a
Material Adverse Effect on Sellers or their assets or property. SCHEDULE 5.10
sets forth a summary description (including the cost to Sellers of each such
lawsuit (including any settlements or judgments paid by Sellers and attorneys'
fees incurred by Sellers) and the amount, if any, covered by insurance) of all
current and prior lawsuits (which were filed or resolved within the last three
years) by or against Sellers or any of Sellers' Affiliates.
ASSET PURCHASE AGREEMENT 13
SECTION 5.11 ENVIRONMENTAL. Except as set forth on SCHEDULE 5.11 and
without in any manner limiting any other representations and warranties set
forth in this Agreement:
(a) Neither Sellers, nor the Acquisition Assets, nor any Business
Property, is in violation of, or has violated, or has been or is in
non-compliance with, any Environmental Laws in connection with the ownership,
use, maintenance, operation of, or conduct of the Business or any Business
Property.
(b) Without in any manner limiting the generality of (a) above:
(i) Except in compliance with Environmental Laws (including, without
limitation, by obtaining necessary Permits), no Materials of Environmental
Concern have been used, generated, extracted, mined, beneficiated, manufactured,
stored, treated, or disposed of, or in any other way released (and no release is
threatened), on, under or about any Business Property or transferred or
transported to or from any Business Property, and no Materials of Environmental
Concern have been generated, manufactured, stored, treated or disposed of, or in
any other way released (and no release is threatened), on, under, about or from
any property adjacent to any Business Property;
(ii) Neither Sellers nor the Shareholder now, nor will they be in the
future, as a result of the operation or condition of the Business, the
Acquisition Assets, or any Business Property on or prior to the Closing Date,
subject to any: (a) contingent liability in connection with any release or
threatened release of any Materials of Environmental Concern into the
environment whether on or off any Business Property; (b) reclamation,
decontamination or Remediation requirements under Environmental Laws, or any
reporting requirements related thereto; or (c) consent order, compliance order
or administrative order relating to or issued under any Environmental Law;
(iii) There are no Environmental Claims known, pending or threatened
against Sellers, the Shareholder, the Acquisition Assets, or any of the Business
Properties;
(iv) Sellers and all of their current Business Properties have all Permits
necessary to comply with all Environmental Laws and have made all capital
improvements necessary for compliance with all Environmental Laws (including,
without limitation, for compliance with all Permits), and operation of Sellers'
Business and each Business Property is in compliance in all material respects
with all terms and conditions of such required Permits;
(v) There are no, nor to the best knowledge of Sellers have there ever
been any, storage tanks or solid waste management units (not exempt from permit
requirements) located on or under any Business Property of Sellers, and there
are
ASSET PURCHASE AGREEMENT 14
no Materials of Environmental Concern in, under or on any Business Property in
an amount exceeding naturally occurring background levels for such geographic
area or which would require reporting to any Governmental Authority or
Remediation to comply with the most stringent requirements of Environmental
Laws;
(vi) To the best knowledge of Sellers, none of the off-site locations
where Materials of Environmental Concern generated from any Business Property or
for which Sellers have arranged for treatment, storage, or disposal has been
nominated or identified as a facility requiring Remediation which is subject to
an existing or potential claim under Environmental Laws;
(vii) Neither the Sellers nor the Shareholder has been named as a
potentially responsible party under, and no Business Property has been nominated
or identified as a facility which is subject to an existing or potential claim
under CERCLA or similar Environmental Laws, and no Business Property is subject
to any claim or lien arising under Environmental Laws;
(viii) Neither the Sellers nor the Shareholder has received any notice of
any release or threatened release of Materials of Environmental Concern, or of
any violation of, noncompliance with, or remedial obligation under,
Environmental Laws or Permits, relating to the ownership, use, maintenance,
operation of the Business, the Acquisition Assets or any Business Property, nor
is there any basis for any of the foregoing, nor have Sellers voluntarily
undertaken Remediation or other decontamination or cleanup of any facility or
site or entered into any agreement for the payment of costs associated with such
activity;
(ix) Sellers are not aware of any requirement of any Environmental Laws
that will require future compliance costs on the part of Sellers in excess of
Ten Thousand Dollars ($10,000) above costs currently expended in the ordinary
course of business;
(x) Sellers have filed all notices, notices of intent, notifications,
financial security, waste management plans, waste generation reports, Form R and
chemical inventory reports, or other applications and documents which are
required to be obtained or filed by Sellers for the lawful operation of the
Business or the use or operation of any Business Property; and
(xi) No current Business Property (or equipment thereon) contains any
asbestos containing materials or polychlorintated biphenyls in any form nor any
wetland areas or other land subject to restricted development under
Environmental Laws.
ASSET PURCHASE AGREEMENT 15
(c) No improvements or alterations been made to any Business Property
without a Permit where one was required, nor is there any unfulfilled order
directive of any applicable Governmental Authority or casualty insurance company
that any work of investigation, Remediation, repair, maintenance or improvement
required to be performed on the Business Property;
(d) With regard to any Business Property, there is no unfulfilled
requirement that any environmental impact statement (or similar document) be
prepared by or filed with any Governmental Authority to evaluate its impact on
the environment; and
(e) There is no consent necessary or application required to be filed
under any Environmental Law to transfer the Acquisition Assets.
SECTION 5.12 INSURANCE. SCHEDULE 5.12 hereto sets forth a list of all
insurance policies owned by Sellers or the Shareholder by which Sellers, the
Shareholder or any of their properties or assets are covered against present
losses, all of which are now in full force and effect. No insurance has been
refused with respect to any operations, properties or assets of Sellers or the
Shareholder nor has coverage of any insurance been limited by any insurance
carrier that has carried, or received any application for, any such insurance
during the last three years. No insurance carrier has denied any claims made
against any of the policies listed on SCHEDULE 5.12 hereto.
SECTION 5.13 TITLE. Sellers and the Shareholder have good and marketable
title to all of the Acquisition Assets and, except as noted in the Financial
Statements, the Acquisition Assets are not subject to any Lien other than those
liens securing long-term indebtedness to be paid at Closing and Permitted
Encumbrances. Sellers have not received any written notice of any material
adverse claim that has not been satisfied with respect to their title to any
material Permit, right-of-way, easement or lease on or under which any of their
facilities are located. Sellers enjoy peaceful and undisturbed possession under
all material Permits or leases under which they are operating, and all such
Permits and leases are valid, subsisting and in full force and effect with
respect to the Sellers and to the knowledge of Sellers, with respect to the
other parties thereto.
SECTION 5.14 REAL ESTATE.
(a) SCHEDULE 5.14 hereto contains an accurate and complete list of all
real property owned in whole or in part by Sellers or the Shareholder as part of
or related to the Business (including but not limited to the Business Property),
and includes the name of the record title holder thereof and a list of all
indebtedness or other obligations secured by any Lien thereon. Sellers and the
Shareholder have good and marketable title in fee simple to all the real
property owned by them, free and clear of any Lien, except for Permitted
Encumbrances. None of the buildings, structures or appurtenances (or any
equipment therein) located on any such currently owned or operated real
property, nor the operation or maintenance thereof, violates in any respect any
restrictive covenant, or
ASSET PURCHASE AGREEMENT 16
encroaches on any property owned by others. No condemnation proceeding is
pending or, to the knowledge of Sellers, threatened which would preclude or
impair in any material respect the use of such real property by Sellers for the
purpose for which it is currently used.
(b) SCHEDULE 5.14 hereto sets forth a list and summary description
(including property location, parties and annual rental payments) of all leases,
subleases, management agreements and other agreements as part of or related to
the Business under which either of the Sellers is lessor or lessee of, or uses
or occupies or allows the use or occupancy of, any real property, including but
not limited to the Assumed Leases. All such leases, subleases and other
agreements are valid and subsisting and in full force and effect.
(c) The real and leased property listed on SCHEDULE 5.14 (i) has full and
free access to and from highways, streets and roads and there is no proceeding
pending or, to the knowledge of Sellers, threatened that could result in the
termination of or material limitations on such access (ii) is connected to and
serviced by utilities and public services all of which are adequate for the use
of the real property listed thereon as the Business is currently conducted, and
(iii) is zoned, platted and permitted for use in the manner in which it is
currently being used. Sellers have not experienced during the three years
preceding the date hereof any material interruption in the delivery of adequate
quantities of any utilities (including, without limitation, electricity, natural
gas, potable water, water for cooling or similar purposes and fuel oil) or other
public services (including, without limitation, sanitary and industrial sewer
service) required in the operation of the Business during such period and no
such material interruption is, to the knowledge of Sellers, threatened.
SECTION 5.15 SUPPLIES. The Supplies of Sellers are of a quantity and
quality that have been normal for Sellers in the ordinary course of business of
Sellers and are owned by Sellers free and clear of any Liens.
SECTION 5.16 EMPLOYEE BENEFIT PLANS.
(a) Each Plan and each Benefit Program (defined in SECTION 5.16(B)(IV)
below) is listed on SCHEDULE 5.16 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 have Sellers contributed to, or ever had
any obligation to contribute to, any multi-employer plan. Each Plan and Benefit
Program intended to be qualified under Section 401(a) of the Code is designated
as a tax-qualified plan on SCHEDULE 5.16 and is so qualified. No Plan or Benefit
Program provides for any retiree health benefits for any employees or dependents
of the Sellers 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,
ASSET PURCHASE AGREEMENT 17
other than routine claims for benefits, and there are no disputes or litigation
pending or, to the knowledge of Sellers, threatened, with respect to any such
Plans or Benefit Programs.
(b) Sellers have heretofore delivered to Purchaser true and correct copies
of the following, if any:
(i) each Plan and each Benefit Program listed on SCHEDULE 5.16, all
amendments thereto as of the date hereof and all current summary plan
descriptions provided to employees regarding the Plans and Benefit Programs;
(ii) each trust agreement and annuity contract (or any other funding
instruments) pertaining to any of the Plans or Benefit Programs, including all
amendments to such documents to the date hereof;
(iii) each management or employment contract or contract for personal
services and a complete description of any understanding or commitment between
Sellers and any officer, consultant, director, employee or independent
contractor of Sellers;
(iv) a complete description of each other plan, policy, contract, program,
commitment or arrangement providing for bonuses, deferred compensation,
retirement payments, profit sharing, incentive pay, commissions, hospitalization
or medical expenses or insurance or any other benefits for any officer, director
or employee of Sellers or members of their families (other than directors' and
officers' liability policies), whether or not insured (a "BENEFIT PROGRAM"); and
(c) Except as may be disclosed in SCHEDULE 5.17, neither Seller has any
contract, commitment or arrangement providing for bonuses, compensation,
commissions or other compensation to any consultant, employee, director or
independent contractor of Sellers.
(d) 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. Sellers have 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.
(e) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will result in any
contractual obligation of Sellers to make payments, including, without
limitation, severance, unemployment compensation, golden parachute (defined in
Section 280G of the Code) or other payments, or increase benefits under any Plan
or any Benefit Program.
SECTION 5.17 EMPLOYEES AND LABOR MATTERS.
ASSET PURCHASE AGREEMENT 18
(a) Attached as SCHEDULE 5.17 is a true and complete list (the "EMPLOYEE
SCHEDULE ") of all employees of Sellers listing the title or position held, base
salary or wage rate and any bonuses, commissions, profit sharing, Sellers'
vehicles, club memberships or other compensation or perquisites payable, all
employee benefits received by such employees and any other material terms of any
written agreement with Sellers. As of the date of this Agreement and as of the
Closing Date, Sellers have not entered into any agreement or agreements pursuant
to which the combined annual payroll of Sellers, including projected pay
increases, overtime and fringe benefit costs, required to operate the Business
(including all administrative and support personnel) would be greater than as
listed on the Employee Schedule. Set forth on SCHEDULE 5.17 is a detailed
description of all health, dental, life and disability insurance plans of
Sellers and a description of the cost per employee under each such plan for
individual coverage as well as for coverage of such employee's dependents.
(b) Except as set forth on SCHEDULE 5.17, Sellers are not a party to or
bound by any written employment agreements or commitments, other than on an
at-will basis. Sellers are in compliance with all applicable laws respecting the
employment and employment practices, terms and conditions of employment and
wages and hours of their employees and are not engaged in any unfair labor
practice. All employees of Sellers who work in the United States are lawfully
authorized to work in the United States according to federal immigration laws.
There is no labor strike or labor disturbance pending or, to the knowledge of
Sellers, threatened against Sellers with respect to the Business and, during the
past five years, Sellers have not experienced a work stoppage with respect to
the Business.
(c) Except as set forth on SCHEDULE 5.17, (i) Sellers are not a party to
or bound by the terms of any collective bargaining agreement or other union
contract applicable to any employee of Sellers and no such agreement or contract
has been requested by any employee or group of employees of Sellers, nor has
there been any discussion with respect thereto by management of Sellers with any
employees of Sellers, (ii) Sellers are 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 Sellers, or
(iii) there is not currently pending, with regard to any of their facilities,
any proceeding before the National Labor Relations Board, wherein any labor
organization is seeking representation of any employees of Sellers.
SECTION 5.18 INTELLECTUAL PROPERTY RIGHTS. Except as set forth on SCHEDULE
5.18, all patents, trademarks (whether registered or not), trade names, computer
software, copyrights and patent or know-how licenses (wherein Sellers are either
licensee or licensor) and any other intellectual property of Sellers (the
"INTELLECTUAL PROPERTY RIGHTS") are lawfully owned, possessed or used by
Sellers, as the case may be. No past due royalties or other payments subsequent
to the Closing Date are or will be required to be paid to any Person who is the
licensor under such
ASSET PURCHASE AGREEMENT 19
license agreements as they currently exist, and Sellers are 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. There is no existing or threatened infringement, misuse or
misappropriation by others of the Intellectual Property Rights; there is no
pending or threatened claim by Sellers against others for any such infringement,
misuse or misappropriation; and there is no pending judicial proceeding
involving any claim, and Sellers have not received any notice or claim of any
infringement, misuse or misappropriation by Sellers 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 5.19 RELATIONSHIPS. Except as set forth on SCHEDULE 5.19, the
Sellers have not received notice from any supplier or from any party to any
Contract involving more than $10,000 annually with Sellers (each a "CONTRACT
PARTY"), during the past two years that such supplier or Contract Party intends
to discontinue doing business with Sellers, and no supplier or Contract Party
during the past two years has indicated any intention (a) to terminate its
existing business relationship with Sellers or (b) not to continue its business
relationship with Sellers, whether as a result of the transactions contemplated
hereby or otherwise. Except as set forth on SCHEDULE 5.19, neither of the
Sellers have entered into any related party transaction (i.e. any transaction
with any Affiliate) during the past year. All related party transactions will be
terminated as of Closing. The consummation of the transactions contemplated in
this Agreement, including but not limited to assignment of the Contracts by
Sellers to Purchaser, will not affect Purchaser's rights to any previous grants
to, or contracts with Sellers.
SECTION 5.20 CERTAIN PAYMENTS. Neither Sellers nor any officer, director
or employee of Sellers has paid or received or caused to be paid or received,
directly or indirectly, in connection with the business of Sellers (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 unlawful
contribution to any domestic or foreign political party or candidate (other than
from personal funds of such officer, director or employee not reimbursed by
Sellers or as permitted by applicable law).
SECTION 5.21 BOOKS AND RECORDS. The corporate minute books, and other
corporate records of Sellers are correct in all material respects and the
signatures appearing on all documents contained therein are the true signatures
of the person purporting to have signed the same. All actions reflected in said
books and records were duly and validly taken in compliance with the laws of the
applicable jurisdiction. 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
business of Sellers have been prepared and maintained in accordance with good
business practices and, where applicable, in conformity with generally accepted
accounting principles and applicable laws and regulations. All such books and
records are located in the offices of Sellers.
SECTION 5.22 CONDITION AND SUFFICIENCY OF ASSETS. Except as set forth on
SCHEDULE 5.22, the Improvements and Equipment are structurally sound, are in
good operating condition
ASSET PURCHASE AGREEMENT 20
and repair (subject to normal wear and tear) and are adequate for the uses to
which they are being put, and Sellers are not aware that any of such
Improvements or Equipment is in need of maintenance or repairs except for
ordinary, routine maintenance and repairs that are not material in nature or
cost. Except as set forth on SCHEDULE 5.22, the Equipment and Motor Vehicles
reflected in SCHEDULE 3.1(F) (except any such tangible property disposed of or
acquired in the ordinary course of business) constitute all of the operating
assets held for use or used in connection with the Business, and are sufficient
for the continued conduct of the Business at the Closing in substantially the
same manner as conducted prior to the Closing.
SECTION 5.23 CLIENT BANK ACCOUNTS. SCHEDULE 5.23 lists each of the Client
Bank Accounts. All Client Bank Accounts will be properly reconciled on or prior
to Closing and at Closing will contain all deposits and monies owed to Clients
as of Closing.
SECTION 5.24 STUDIES, ETC. Sellers have provided to Purchaser all formal
studies, reports, plans, analyses or similar documents (including all drafts
thereof and whether prepared by Sellers or third parties at Sellers' request or
others) that are in Sellers' possession or control relating to Materials of
Environmental Concern and Environmental Laws or relating to the Business, any
Business Property or the Improvements.
SECTION 5.25 ACCOUNTS RECEIVABLE. All accounts receivable reflected on the
Financial Statements represent sales actually made in the ordinary course of
business and are collectible in the ordinary course of business, except as
reflected in any reserve for doubtful accounts, which has been determined in
accordance with generally accepted accounting principles and on a basis
consistent with prior years.
SECTION 5.26 TAXES.
(a) Sellers and the Shareholder have caused to be duly filed in a timely
manner with the appropriate Governmental Authorities all Tax Returns required to
be filed by or with respect to the Business and the Acquisition Assets and has
caused to be paid or deposited all Taxes (including estimated Taxes) required
with respect to the periods covered by such Tax Returns or by any taxing
authority. All Taxes required to be collected or withheld with respect to the
Business or the Acquisition Assets have been duly collected or withheld, and all
Taxes with respect to the Business and the Acquisition Assets required under
generally accepted accounting principles to be accrued on the financial
statements of Seller have been so accrued.
(b) No liens with respect to Taxes exist, and Sellers and the Shareholder
have no reason to expect that any lien 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 or with respect to the Business or the Acquisition
Assets. There are no outstanding agreements or waivers extending the
ASSET PURCHASE AGREEMENT 21
period for assessment or collection of any Taxes relating to the ownership or
operation of the Business or the Acquisition Assets.
(c) There is no pending action, proceeding or investigation, and, no
action, proceeding or investigation has been threatened by any Governmental
Authority, for assessment or collection of Taxes with respect to the 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
Business or the Acquisition Assets.
SECTION 5.27 DISCLOSURE. To the best knowledge of Sellers, there is no
fact known to Sellers that has specific application to the Business (other than
general economic or industry conditions) that would have a Material Adverse
Effect that has not been set forth in this Agreement or in the Schedules
attached hereto.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Sellers that:
SECTION 6.1 CORPORATE EXISTENCE. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified to transact business in all jurisdictions wherein
the nature of its business or ownership of its assets require such
qualification.
SECTION 6.2 AUTHORITY; 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, any provision of Purchaser's charter, bylaws,
any agreement or instrument to which Purchaser is a party or by which Purchaser
is bound or any law applicable to Purchaser. Prior to Closing, the execution,
delivery and performance of this Agreement and the transactions contemplated
hereby will 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 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.
ASSET PURCHASE AGREEMENT 22
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 the transactions contemplated hereby.
SECTION 6.5 REGULATORY APPROVALS. Except with respect to Purchaser's
applications for required licenses or permits and filings or approvals under the
HSR Act, no filings or other regulatory approvals are required to be filed or
obtained by Purchaser in connection with the execution, delivery and performance
by Purchaser of this Agreement prior to the consummation of the transactions
contemplated herein.
ARTICLE 7
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 Sellers. Sellers will not solicit, or endeavor to
solicit, after the Closing Date any employee or discourage any such person from
accepting such employment with Purchaser. Sellers have not made any
representations or promises, oral or written, to employees of Sellers 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 Sellers 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 employee of the Business who is hired by
Purchaser on or after the Closing Date solely to the extent that such costs,
obligations or liabilities relate directly to the period beginning with the
hiring of such employee by Purchaser and ending with such termination by
Purchaser. Purchaser makes no representation with respect to the comparability
of Purchaser's employee benefits to those offered by Sellers. Purchaser
specifically disclaims any obligation to remunerate employees of Sellers who,
following the Closing Date, will be employed by Purchaser, at levels comparable
to the aggregate remuneration provided to such employees while employed by
Sellers. Prior to the Closing Date, Sellers shall have taken all necessary
actions to comply with the Worker Adjustment and Retraining Notification Act
(the "WARN ACT") to the extent it is subject to the WARN Act, and Purchaser
shall not have any disclosure or announcement obligations or any other
responsibilities under the WARN Act as a result of the transactions contemplated
by this Agreement.
(c) Sellers shall take such actions as they deem appropriate to terminate,
modify, alter or amend the existing Plans or Benefit Programs with respect to
employees of the Business due to the transactions contemplated by this
Agreement. Purchaser does not
ASSET PURCHASE AGREEMENT 23
and shall not assume any of such Plans or Benefit Programs, including, without
limitation, any severance plans of Sellers.
(d) Sellers shall be solely responsible for and shall pay in full to all
of Sellers' employees all compensation, bonuses and other payments, and all sick
pay, vacation pay, and any other benefits otherwise payable under the Benefit
Programs, accrued to the Closing for which Sellers are obligated thereunder, and
Sellers shall satisfy all such obligations to such employees; provided, however,
in the case of employees who accept employment offered to them by Purchaser,
Purchaser shall credit to each employee the vacation (to the extent credited
against the Purchase Price pursuant to SECTION 3.3.(D)) accrued by the employee
through the Closing Date and Sellers shall credit toward the Purchase Price an
amount equal to the pay associated with the accrued vacation leave assumed by
Purchaser.
(e) Sellers will retain responsibility for, and continue to pay, all
hospital, medical, life insurance, disability, supplemental unemployment and all
other welfare plan expenses and benefits for each Sellers' employee hired by
Purchaser (and covered dependents) with respect to claims incurred by such
employee or their covered dependent prior to the Closing. Sellers will retain
responsibility for, and continue to pay, any life, health or other welfare
benefits payable to each former employee of Sellers who terminated employment
with Sellers (and their dependents) prior to the Closing in respect of claims
incurred on their behalf prior to the Closing. For purposes of this paragraph, a
claim is deemed incurred when the event that first gave rise to the claim
occurred, notwithstanding the fact that such benefits may be paid at a
subsequent date.
(f) Sellers are 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 their
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 Sellers with respect to any Plans or Benefit Programs; and no plan or other
program adopted or maintained by Purchaser after the Closing is or shall be
deemed to be a "successor plan", as such term is defined in ERISA or the Code,
of any such Plan or Benefit Program.
SECTION 7.2 TAXES.
(a) LIABILITY FOR TAXES. Sellers shall be liable for, and shall indemnify
and hold Purchaser and their Affiliates harmless from, (i) all Taxes that are
imposed on or incurred by Sellers, (ii) all Taxes that are imposed on or
incurred with respect to the Acquisition Assets or the Business for any taxable
period ending on or before the Closing Date, (iii) a
ASSET PURCHASE AGREEMENT 24
portion, determined as described below, of any Taxes that are imposed on or
incurred with respect to the Acquisition Assets or the Business for any taxable
period beginning prior to and ending after the Closing Date ("STRADDLE PERIOD")
which is allocable to the period ending on or before the Closing Date, but not
otherwise, (iv) any Taxes payable as a result of a breach by Sellers of any of
the representations set forth in Section 5.26 hereof, and (v) any attorneys'
fees or other costs incurred by Purchaser or its Affiliates in connection with
any payment from Sellers under this SECTION 7.2(A). The determination of the
portion of any Taxes imposed on or incurred with respect to the Acquisition
Assets or the Business for a Straddle Period which is allocable to the period
ending on or before the Closing Date shall be made, in the case of ad valorem,
property or similar Taxes, if any, which are not measured by or based upon
production, or franchise or capital Taxes which are not measured by or based
upon net income, by allocating such Taxes on a per diem basis, and, in the case
of all other Taxes, by assuming that the period ending on or before the Closing
Date constitutes a separate taxable period and by taking into account the actual
taxable events occurring during such period.
(b) TAX RETURNS. Sellers shall be responsible for the preparation and
filing of any Tax Return relating to the Acquisition Assets or the Business that
is originally due on or before the Closing Date. Purchaser shall be liable for
the preparation and filing of all other Tax Returns that relate to the
Acquisition Assets or the Business. Sellers shall be responsible for the
preparation and filing of any Tax Return relating to the Sellers and Purchaser
shall be responsible for the preparation and filing of any Tax Return relating
to the Purchaser corresponding to periods of time before and after the closing.
(c) RIGHT TO REFUNDS. If Sellers, on the one hand, or Purchaser, on the
other hand, receive 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.
(d) RECAPTURE AND TRANSFER TAXES. Notwithstanding any other provisions set
forth herein, Sellers shall be liable for any transfer and recapture taxes
incurred by Sellers and/or Purchaser relating to the sale by Sellers of the
Acquired Property and Improvements to Purchaser as contemplated in this
Agreement.
(e) OTHER TAXES. Except as expressly set forth in SECTION 7.2(D) above,
Sellers shall be liable for and pay, and shall indemnify and hold Purchaser
harmless from all transfer, sales, use, gross receipts, stamp, value added,
excise, or similar Taxes imposed on or relating to the sale or transfer of the
Acquisition Assets or the Business.
SECTION 7.3 CONSENTS. Sellers shall use best efforts to procure all
consents, novations, approvals or waivers in a form reasonably satisfactory to
Purchaser which must be obtained by Sellers 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 Sellers may have failed to obtain consents to the transfer.
ASSET PURCHASE AGREEMENT 25
SECTION 7.4 TITLE.
(a) Sellers and the Shareholder have caused First American Title Insurance
Company (the "TITLE COMPANY"), to furnish Purchaser a Commitment for Title
Insurance (the "COMMITMENT") from the Title Company addressed to Purchaser
covering (i) each Acquired Property and the Improvements and (ii) each Assumed
Lease requested by Purchaser, pursuant to which the Title Company shall commit
to issue to Purchaser an Owner's Policy of Title Insurance (the "TITLE POLICY"),
together with legible copies of all instruments described in the Commitment
evidencing defects in, exceptions or objections to or encumbrances upon title to
each Acquired Property and the Improvements. Seller shall bear all costs
associated with the Commitment and Title Policy.
(b) Sellers shall have provided Purchaser with a report of searches made
of the Uniform Commercial Code Records in jurisdictions determined by Purchaser
in the name of Sellers (the "UCC SEARCHES"), evidencing any Liens relating
thereto granted by Sellers. Purchaser shall bear all costs associated with the
UCC Searches.
(c) Purchaser shall have 15 business days following receipt of the later
of the Commitment provided for in this SECTION 7.4 and the Survey provided for
in SECTION 7.5 hereof to deliver to Sellers its written objections to any
matters reflected in the Commitment or the Survey (as defined below). Any such
matters which are not objected to by Purchaser within said 15 business days
shall all be considered Permitted Encumbrances. Sellers and the Shareholder
shall in good faith diligently work to have the title and survey exceptions
raised by Purchaser, other than the Permitted Encumbrances, cured or removed to
the reasonable satisfaction of Purchaser within 15 days after Purchaser notifies
Sellers in writing of such exceptions or objections. If Sellers and the
Shareholder fail to cure or satisfy such objections for any reason within such
time period, Purchaser may either (i) accept conveyance of title to the Acquired
Properties, the Improvements and the Assumed Leases subject to such uncured
matters and proceed with the Closing contemplated herein (in which event all
such matters shall be deemed Permitted Encumbrances), or (ii) give written
notice to Sellers electing to terminate this Agreement pursuant to ARTICLE 10
hereof.
SECTION 7.5 SURVEYS. At the option of the Purchaser, Sellers may cause
surveys (the "SURVEYS") of (i) each of the Acquired Properties, (ii) each of the
Improvements and (iii) each of the Properties which are the subject of Assumed
Leases as requested by Purchaser, to be made by a licensed surveyor. The Surveys
shall be acceptable to Purchaser and the Title Company and shall contain a
certification in favor of Purchaser and the Title Company that the Surveys are
correct and accurate and that the Properties are free of encroachments, except
as shown, the form and content of which certification shall be approved by the
Purchaser and the Title Company. Purchaser shall bear all costs associated with
the Surveys.
ASSET PURCHASE AGREEMENT 26
SECTION 7.6 ENVIRONMENTAL DUE DILIGENCE. Sellers and the Shareholder
hereby grant to Purchaser, and its counsel, accountants, consultants and other
representatives, such access to the Acquired Properties, Improvements, personnel
and records (including without limitation for purposes of conducting site
inspections, asbestos surveys, or sampling and analyses of soil, groundwater or
other media) as Purchaser may reasonably request, including for the purpose of
conducting an investigation of the (a) compliance of Sellers and the Shareholder
and any of their Business Properties with applicable Environmental Laws, and (b)
the exposure to, presence, release, or any aspect of management, handling, or
use of Materials of Environmental Concern at any such facility ("ENVIRONMENTAL
DUE DILIGENCE"). All costs associated with the Environmental Due Diligence shall
be paid by Purchaser; provided, however, if Closing does not occur, Sellers
shall cause, at their expense, (x) any investigation-derived waste generated or
created in connection with performance of the Environmental Due Diligence
(including without limitation, drill cuttings, purged or developed water, or
sample remnants) to be disposed in compliance with applicable Environmental
Laws, and (y) any ▇▇▇▇▇ or borings installed during the Environmental Due
Diligence to be plugged and abandoned. Sellers shall be responsible for
executing on their own behalf any and all manifests, shipping documents,
plugging and abandoning reports and similar documents in connection with their
obligations hereunder, and Sellers agree to indemnify and hold Purchaser
harmless from and against any and all claims, liabilities, damages and causes of
action arising out of Sellers' failure to fulfill the obligations under this
Section. Sellers and Shareholder 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 Sellers or the Shareholder regarding any
of Sellers' or the Shareholder's current or prior facilities or operations
associated with the Business 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 7.7 FURTHER ASSURANCES. Sellers, the Shareholder and Purchaser
shall execute and deliver to the other, at the Closing or thereafter, any other
instrument which may be requested by the other and which is reasonably
appropriate to perfect or evidence any of the sales, assignments, transfers or
conveyances contemplated by this Agreement or to transfer any Acquisition Assets
identified after the Closing or to obtain any consents or licenses necessary for
Purchaser to operate the Business in the manner operated by Sellers prior to
Closing.
SECTION 7.8 MAIL RECEIVED AFTER CLOSING. Following the Closing, Purchaser
may receive and open all mail addressed to Sellers and, to the extent that such
mail and the contents thereof relate to the Business or the Acquisition Assets,
deal with the contents thereof in its discretion. Purchaser shall notify Sellers
of (and provide Sellers' copies of the relevant portions of) any mail that
obliges Sellers to take any action or indicates that action may be taken against
Sellers. To the extent that such mail and the contents thereof do not relate to
the Business or the Acquisition Assets, such mail and the contents thereof shall
be promptly forwarded to Sellers at Sellers' address for notices set forth in
SECTION 12.4, or at such other address as may be designated in writing by
Sellers.
ASSET PURCHASE AGREEMENT 27
SECTION 7.9 BILLS AND PAYMENTS RECEIVED AFTER CLOSING. Purchaser shall
promptly send Sellers any bills or other notices that payment is due that
Purchaser receives after Closing related to obligations of Sellers not assumed
by Purchaser under this Agreement, and Sellers shall timely pay such bills or
other debts on or before the date that such bills are due. Sellers shall
promptly send Purchaser any bills or other notices that payment is due that
Sellers receive after Closing related to obligations of Sellers 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. Sellers and
Purchaser shall each promptly send to the other any payments received by them
after Closing that is an asset of the other.
SECTION 7.10 LOSS DUE TO CONDEMNATION. In the event of a condemnation
proceeding commenced on or before the Closing Date with respect to all or any
material portion of any of the Acquired Properties or the Improvements,
Purchaser may, upon written notice to Sellers given within 10 days of receipt of
written notice of such event, terminate this Agreement pursuant to ARTICLE 10 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 Sellers shall assign to Purchaser at Closing all of
Sellers' and the Shareholder's rights and interests in and to any condemnation
awards which have been paid or are or become payable to Sellers or the
Shareholder.
SECTION 7.11 LOSS DUE TO CASUALTY. In the event of a Substantial Loss or
Damage (defined below) to any of the Acquired Properties or the Improvements by
fire or other casualty prior to the Closing Date, Purchaser may, upon written
notice to Sellers within 10 days of receipt of written notice of such event,
terminate this Agreement pursuant to ARTICLE 10 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 Sellers
may elect, with the consent of Purchaser, such consent not to be unreasonably
withheld, to repair the damaged property or improvement prior to Closing. In the
event Sellers elect not to repair the property, Sellers and the Shareholder
shall assign to Purchaser at Closing all of Sellers' and the Shareholder's
rights and interests in and to any insurance proceeds which have been or are or
become payable to Sellers and the Shareholder as a result of such damage or
loss, less reasonable costs and attorneys fees of Sellers and Shareholder in
connection therewith plus the amount of the deductible delivered to Purchaser in
cash. "SUBSTANTIAL LOSS OR DAMAGE" shall mean a loss or damage of 10% or more of
the square footage of the Improvements or material damage to a particular
Acquired Property or Improvement which results in the loss of the use thereof
for a period exceeding six months. In the event of a loss or damage arising
prior to the Closing Date that constitutes less than a Substantial Loss or
Damage by fire or other casualty, Purchaser shall not have the right to
terminate this Agreement pursuant to this SECTION 7.11; HOWEVER, Sellers and
Shareholder shall assign to Purchaser at Closing all of Sellers' and
Shareholder's rights and interests in and to any insurance proceeds which have
been or are or become payable to Sellers or the Shareholder as a result of such
damage or loss.
ASSET PURCHASE AGREEMENT 28
SECTION 7.12 NOTICE OF ENVIRONMENTAL CLAIMS. Sellers shall give prompt
written notice to Purchaser of the commencement of any Environmental Claim, or
inspection by any Governmental Authority with responsibility for enforcing or
implementing any applicable Environmental Laws, and provide to Purchaser such
information as Purchaser may reasonably request regarding such Environmental
Claim, any developments in connection therewith, and, as applicable, Sellers'
anticipated or actual response thereto.
SECTION 7.13 SCHEDULES. A Schedule to this Agreement shall not be
considered deficient for an inadvertent failure to disclose certain information
required to be disclosed on such Schedule if the same information is disclosed
on another Schedule for the same purpose.
SECTION 7.14 HSR ACT. Sellers, the Shareholder and Purchaser shall make
all filings required of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, (the "HSR ACT"), and shall fully comply with the provisions of
the HSR Act, the rules and regulations promulgated thereunder and with all
requests for information from the Federal Trade Commission and the Department of
Justice. All information contained in such filings under the HSR Act shall be
accurate and complete and such filings will not include any incorrect statements
or omit to include any information necessary to make the statements therein not
misleading. The Sellers shall provide Purchaser with true and correct copies of
all filings made by Sellers and the Shareholder under the HSR Act. The Purchaser
shall pay the filing fee associated with the HSR Act filings.
SECTION 7.15 "ALLVEST" NAME. Sellers grant to Purchaser an irrevocable
license to use the name "Allvest" in conjunction with Purchaser's name or trade
names. Allvest Corporation need not change its corporate name and may continue
doing business under the name "Allvest," standing alone or in conjunction with
other trade names; provided that Allvest Corporation may not use Purchaser's
name or any of Purchaser's trade names.
SECTION 7.16 TRANSITION FACILITIES AND PERSONNEL. For a period of six
months after the Closing Date, (i) Purchaser shall be permitted to lease the
Sellers' corporate offices in the ▇▇▇▇▇▇ Street Office Building for a monthly
rental of $4,166, and (ii) Purchaser shall allow the former employees of the
Sellers hired by Purchaser to assist Sellers with Sellers' continuing operations
and businesses retained by Sellers, provided, that such assistance does not
materially interfere with such employees' duties on behalf of Purchaser and that
Sellers promptly reimburse Purchaser for out-of-pocket costs directly associated
with such assistance with the exception of salaries, wages and related benefits.
SECTION 7.17 DEPOSITS AND PREPAID RENT. Purchaser shall pay to Sellers at
Closing an amount equal to the sum of the security deposits, prepaid rent and
prorated rent under the Assumed Leases in such amounts as are confirmed by the
landlords in the estoppel certificates referred to in SECTION 9.1(L)(III).
ASSET PURCHASE AGREEMENT 29
ARTICLE 8
COVENANTS
SECTION 8.1 SELLERS' AND SHAREHOLDER'S COVENANTS. Sellers and Shareholder,
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
Sellers will (i) conduct the Business in the usual and ordinary course thereof,
including, without limitation, the making of proposals, quotations, bids and
solicitations, and the entering into of contracts for the purchase of products
and purchase and sale of services; (ii) communicate regularly with Purchaser and
keep Purchaser closely advised of any material developments relating to the
Business; (iii) permit Purchaser to have access at reasonable times to the
Sellers' facilities and to review and copy the books and records of the
Business; (iv) maintain and preserve the assets of Sellers in customary repair,
order and condition, reasonable wear and tear and loss by fire and casualty
(which loss shall be governed by SECTION 7.11 hereof) excepted, and proceed with
any improvements in progress at the Improvements associated with the Business;
(v) use all commercially reasonable efforts to preserve Sellers' business
organization intact, to retain the services of Sellers' officers and employees
and to preserve Sellers' relationships with their suppliers and all Governmental
Authorities with which Sellers have engaged in business related to the Business;
(vi) use their Best Efforts to cause all of the representations and warranties
in ARTICLE 5 hereof to continue to be true and correct; and (vii) continue to
purchase supplies and similar items in the ordinary course through the Closing
Date.
Sellers are currently developing business opportunities in Nome, Bethel
and Fairbanks that may generate additional contracted beds. Notwithstanding the
foregoing paragraph, Purchaser and Sellers desire that Sellers continue to
develop the business opportunities in Nome, Bethel and Fairbanks or any other
correctional business opportunities that arise in Alaska after the date of this
Agreement and prior to Closing. The rights of such business opportunities and
the product of the development of the opportunities, together with any related
contracts and other assets, shall pass to Purchaser as an Acquisition Asset
under this Agreement. At Closing, Purchaser agrees to reimburse Sellers for the
out-of-pocket direct project costs that Sellers reasonably incur in developing
these projects, up to a maximum of $75,000. Sellers agree to keep Purchaser
apprised upon the request of Purchaser, and in any event on at least a monthly
basis, of the status of such opportunities and their associated reimbursable
costs.
(b) MAINTENANCE OF INSURANCE. Sellers will (i) maintain or cause to be
maintained the insurance policies or risk retention programs (or policies or
programs of substantially the same nature) of Sellers in full force and effect
at all times until the Closing Date and (ii) assign to Purchaser rights accruing
under such policies, programs or coverage (including self-insurance or any
insurance reserves) from and after the Closing with respect to incidents
occurring prior to the Closing.
ASSET PURCHASE AGREEMENT 30
(c) INFORMATION AND ACCESS. At all times until the Closing, Sellers will
afford representatives of Purchaser access during normal business hours to their
offices, personnel, Improvements, Equipment and records, for the purpose of
conducting an investigation thereof, confirming the accuracy of Sellers'
representations and warranties, satisfying conditions to closing and preparing
to assume operational control of the Business. Sellers will furnish to Purchaser
such additional financial and operating data relating to the Business and other
information as Purchaser may reasonably request; PROVIDED, HOWEVER, that the
confidentiality of any data or information so acquired shall be maintained by
Purchaser and its representatives in accordance with SECTION 8.2(A) hereof.
(d) BEST EFFORTS. Sellers and the Shareholder will use their 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, Sellers will promptly advise,
and obtain the approval of, Purchaser before (i) issuing, or permitting any of
Sellers' directors, shareholders or officers to issue, any press release with
respect to this Agreement or the transactions contemplated hereby or (ii)
disclosing, or permitting any of Sellers' directors, officers, employees,
representatives or agents to disclose, to any Person (other than Sellers or
Purchaser or their respective directors, officers, shareholders, 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, Sellers shall not, and shall
not permit any of their 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 Sellers or the acquisition of an
equity interest in any portion of the assets of, the Business or the assets
subject to the Right of First Refusal referred to in SECTION 9.1(V), (ii) engage
in negotiations with or disclose any nonpublic information relating to Sellers
or Purchaser, or afford access to the properties, books or records of Sellers,
to any Person. Sellers shall promptly notify and provide copies to Purchaser of
any offer, proposal or indication of interest, or communication with respect
thereto, received from any third party.
(g) NOTIFICATION OF CERTAIN MATTERS. Sellers 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 such party 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 Sellers 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.
ASSET PURCHASE AGREEMENT 31
SECTION 8.2 PURCHASER'S COVENANTS. Purchaser covenants and agrees with
Sellers as follows:
(a) PUBLIC ANNOUNCEMENTS AND DISCLOSURE OF COMPANY INFORMATION. Purchaser
shall keep confidential any information regarding Sellers that is not otherwise
generally available to the public or has not been made available to the public
by persons other than Purchaser, its representatives, agents or employees,
except as is necessary in connection with the preparation of this Agreement and
the documents contemplated herein, arranging acceptable financing of this
transaction or as may be required by applicable law. If for any reason the
transaction contemplated herein is abandoned or terminated prior to being
consummated, Purchaser will return promptly all confidential or proprietary
information concerning Sellers previously disclosed to Purchaser, and will not
use or allow the use of any such information for any purpose, except as may be
required by law. Subject to applicable law, at all times until the closing,
Purchaser will promptly advise, and obtain the approval, which approval shall
not be unreasonably withheld, of Sellers before issuing, or permitting any of
Sellers' directors, officers to issue, any press release with respect to this
Agreement or the transactions contemplated hereby.
(b) BEST EFFORTS. Purchaser will use its best efforts to cause the
representations and warranties contained in ARTICLE 6 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.
ARTICLE 9
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. Sellers and the Shareholder shall have complied in all
material respects with all of their covenants and agreements contained herein,
and all of the representations and warranties contained in ARTICLE 5 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 Sellers certifying as to the
matters specified in SECTION 9.1(A) hereof in a form satisfactory to Purchaser.
(c) SELLERS' RESOLUTIONS. Sellers shall deliver to Purchaser certified
copies of resolutions duly adopted by the board of directors of Sellers and
their shareholders authorizing and approving the execution and delivery of this
Agreement, including the
ASSET PURCHASE AGREEMENT 32
exhibits and schedules hereto, and the consummation of the transactions
contemplated herein.
(d) NO ADVERSE CHANGE TO CONTRACTS. None of the Contracts shall have been
cancelled (or terminated and have failed to have been renewed) and no reduction
shall have occurred in, or amendment reducing, the aggregate number of beds or
the aggregate daily revenue or aggregate relative profitability (in excess of
$25,000 on an annual basis) under the Contracts since the execution of the
letter of intent between the parties dated May 13 and 14, 1998.
(e) TRANSFER DOCUMENTS. At Closing, Sellers and the Shareholder shall
execute and deliver to Purchaser such bills of sale and other instruments of
sale, transfer, conveyance, assignment and delivery covering the Acquisition
Assets or any part thereof, executed by Sellers and the Shareholder other
appropriate parties, as Purchaser may reasonably require to assure the full and
effective sale, transfer, conveyance, assignment and delivery to Purchaser of
the Acquisition Assets free and clear of any rights and claims of third parties
(other than Permitted Encumbrances) including, but not limited to, the
following:
(i) a general warranty deed in a form acceptable to Purchaser, duly
executed by Sellers and the Shareholder, or their duly authorized agent, duly
acknowledged and in form for recording, conveying to Purchaser good and
marketable fee simple title to each Acquired Property and the Improvements
thereon and all of Sellers' and the Shareholder's right, title and interest in
and to the Appurtenances related thereto free and clear of all liens,
encumbrances, covenants, conditions, restrictions, rights of way, easements, and
other matters effecting the title to the Acquired Property and the Improvements
thereon, except for the Permitted Encumbrances.
(ii) a general assignment in a form acceptable to Purchaser, duly executed
by Sellers, or their duly authorized agent, duly acknowledged and in form for
recording, conveying to Purchaser all of Sellers' right, title and interest in
and to each of the Assumed Leases, free and clear of all liens, encumbrances,
covenants, conditions, restrictions, rights-of-way, easements and other matters
affecting the title to the Assumed Leases, except for the Permitted
Encumbrances.
(iii) the standard form of Owner's Policy of Title Insurance issued by the
Title Company in the applicable jurisdiction insuring good and marketable fee
simple title to the Acquired Property and Improvements, subject only to the
Permitted Encumbrances with such endorsements and/or deletions thereto as are
set forth on EXHIBIT D thereto, or as otherwise acceptable to Purchaser.
(iv) the standard form of Leasehold Policy of Title Insurance issued by
the Title Company in the applicable jurisdiction insuring good and marketable
ASSET PURCHASE AGREEMENT 33
leasehold title to the Assumed Leases, subject only to the Permitted
Encumbrances with such endorsements and/or deletions thereto as are acceptable
to Purchaser.
(v) a ▇▇▇▇ of sale, general assignment and conveyance by Sellers
transferring to Purchaser good and marketable title to all of the Acquisition
Assets in a form satisfactory to Purchaser.
(vi) all documents in a form satisfactory to Purchaser required for the
assignment of Sellers' and the Shareholder's rights under all registrations,
Permits, certificates of occupancy (or similar proof of right of occupancy) and
licenses (to the extent permitted by law), equipment or motor vehicle leasing
agreements, motor vehicle and rolling stock titles, rights under sales and/or
purchase orders and of Sellers' rights under all other Contracts (including the
operating contracts of Sellers listed on SCHEDULE 3.1(H) hereto) constituting a
part of the Acquisition Assets.
(vii) originals of all of the Assumed Leases, contracts, agreements,
certificates of occupancy (or similar proof of right of occupancy), commitments,
books, records, files and other data that (x) are included in the Acquisition
Assets or (y) relate to or affect the Acquisition Assets and are reasonably
necessary for the continued conduct of the Business.
(viii) such other instruments of transfer and assignment in respect of the
Acquisition Assets as Purchaser shall reasonably require and as shall be
consistent with the terms and provisions of this Agreement.
(ix) Prior to the Closing Date, Sellers will take such reasonable steps as
may be requisite or appropriate so that no later than the close of Business on
the Closing Date, Purchaser will be in actual ownership and control of all of
the Acquisition Assets.
(f) ABSENCE OF MATERIAL ADVERSE EFFECT. No Material Adverse Effect shall
have occurred since the date hereof or shall occur as a result of the
consummation of the transactions contemplated by this Agreement.
(g) FACILITY PERMITS. To the extent required under applicable law,
Purchaser shall have obtained or received a transfer of all required permits or
licenses allowing Purchaser to operate the Business at the Acquired Property
under the requirements of any applicable Governmental Authority, or a letter
from the appropriate Governmental Authority satisfactory to Purchaser regarding
the issuance of such required permits to Purchaser subsequent to Closing.
ASSET PURCHASE AGREEMENT 34
(h) ENVIRONMENTAL REVIEW. At its option and expense, Purchaser shall have
completed such environmental review regarding such Business Property as
Purchaser deems relevant and Purchaser shall be satisfied, in its sole
discretion, with the environmental condition of all Business Property, and
including without limitation the Acquired Property.
(i) SURVEYS. Purchaser shall have received surveys of the Acquired
Property and Improvements showing only such matters as Purchaser may reasonably
approve during its review of the survey and such survey shall not have raised
any questions as to the accuracy of Sellers' representations and warranties in
SECTION 5.14 hereto.
(j) ORDERS, ETC. No action, suit or proceeding shall have been commenced
or shall be pending or threatened, and no statute, rule, regulation or order
shall have been enacted, promulgated, issued or deemed applicable to the
Business, the Acquisition Assets or the transactions contemplated by this
Agreement, by any Governmental Authority or court that reasonably could be
expected to (i) materially impair Purchaser's ownership or operation (as
currently conducted) of all or a material portion of the Business or the
Acquisition Assets, or compel Purchaser to dispose of or hold separate all or a
material portion of Purchaser's or Sellers' business or assets, as a result of
the transactions contemplated by this Agreement or (ii) prohibit consummation of
the transactions contemplated by this Agreement.
(k) REMOVAL OF LIENS. Sellers and the Shareholder shall have caused any
and all Liens on the Acquisition Assets, other than Permitted Encumbrances, to
be released and shall have provided Purchaser with documentary evidence to such
effect.
(l) ADDITIONAL REAL PROPERTY MATTERS.
(i) Purchaser shall have timely received the Title Commitment, the Survey,
and each of the items described in SECTION 7.4 hereof and any objections of
Purchaser thereto shall have been addressed or waived pursuant to such Section;
(ii) Except for taxes or assessments not yet due, there shall be no unpaid
ad valorem taxes or assessments levied or assessed against the Acquired Property
or Improvements for any year prior to the year in which Closing occurs. If the
Acquired Property or Improvements, or any part thereof, shall be or shall have
been affected by any such assessments for any period prior to Closing, which are
or may become payable in installments, then for the purposes of this Agreement
all the installments of any such assessment whether due or payable prior to or
after the date of Closing shall be paid and discharged by Sellers at the Closing
and Purchaser shall take title free of the lien of all the unpaid installments
of any such assessment;
ASSET PURCHASE AGREEMENT 35
(iii) Each Assumed Lease shall be in full force and effect without any
uncured default and Purchaser shall have received, at least five days prior to
closing, estoppel certificates with respect to the Assumed Leases in form
acceptable to Purchaser with respect to such matters and other matters requested
by Purchaser and duly executed by the landlords thereof and dated no earlier
than 15 days prior to Closing.
(m) CONSENTS. All consents and approvals required in connection with (i)
the execution, delivery and performance of this Agreement and (ii) the
assignment of the Contracts and all other agreements necessary for Purchaser to
conduct the Business as it is currently being conducted by Sellers, including,
without limitation, those consents listed on SCHEDULE 5.4 hereto, shall have
been obtained in form satisfactory to Purchaser.
(n) NO EFFECT ON CONTRACTS OR GRANTS. Purchaser shall have received
written evidence (together with consents and estoppel certificates) from
applicable Governmental Authorities and all other third parties that
consummation of the transactions contemplated in this Agreement, including but
not limited to assignment of the Contracts by Sellers to Purchaser, will not
cause a default under any of the Sellers' agreements or contracts.
(o) UNIONS. The employees of Sellers shall not be unionized, nor shall
there be any plans or other developments for unionization.
(p) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT. All required filings under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), shall have been made and all waiting periods with respect thereto shall
have expired or been terminated.
(q) CONTRACT RENEWALS. Any Contract which expires prior to the Closing
Date shall have been renewed on terms substantially the same as the expired
Contract. A renewed Contract shall be deemed to be substantially the same if
there has been no adverse change to the contract as defined in Section 9.1(d).
(r) BOARD APPROVAL. The board of directors of Purchaser shall have
approved this Agreement and the closing of the transactions contemplated herein.
(s) OFFICER AND DIRECTOR RELEASES. The officers and directors of Sellers
shall have delivered to Purchaser an instrument dated the Closing Date releasing
the Sellers from any and all claims of such officers and directors (except as to
accrued compensation prior to the Closing Date in accordance with the terms of
this Agreement).
(t) OPINIONS OF COUNSEL. Purchaser shall have received the opinions of
counsel to Sellers reasonably acceptable to Purchaser and its counsel as to the
matters set forth on, and in the form of, EXHIBIT 9.1(T) attached hereto.
ASSET PURCHASE AGREEMENT 36
(u) EMPLOYMENT AGREEMENT. Purchaser shall have entered into an employment
and noncompetition agreement with ▇▇▇▇▇ ▇▇▇▇▇▇▇ upon terms satisfactory to
Purchaser.
(v) RIGHT OF FIRST REFUSAL. Purchaser and the Shareholder shall have
executed and delivered a Right of First Refusal in the form of EXHIBIT 9.1(V)
attached hereto.
(w) NONCOMPETITION AGREEMENT. Purchaser and the Shareholder shall have
executed and delivered a Noncompetition Agreement in the form of EXHIBIT 9.1(W)
attached hereto.
(x) NOME LEASE. The lease option for the Nome facility shall have been
extended for an additional period of at least ninety (90) days.
(y) RELATED PARTY TRANSACTIONS. All transactions, contracts and agreements
relating to the Business or the Acquisition Assets between the Sellers or the
Shareholder and any of its or his Affiliates, including but not limited to those
described on SCHEDULE 5.19, shall have been terminated.
(z) PERMIT COMPLIANCE. The Acquired Properties and Improvements and other
Acquisition Assets shall be in full compliance with all Permits; provided,
however, that Purchaser will install sprinklers and smoke detectors in the
▇▇▇▇▇▇▇ facility after Closing.
SECTION 9.2 CONDITIONS TO OBLIGATIONS OF SELLERS. The obligations of
Sellers to consummate the transactions contemplated herein are subject, at the
option of Sellers, 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 6 hereof shall be true and correct in all material respects on the date
hereof and as of the Closing Date.
(b) OFFICER'S CERTIFICATE. Sellers shall have received a certificate dated
the Closing Date of an executive officer of Purchaser certifying as to the
matters specified in SECTION 9.2(A) hereof in a form satisfactory to Sellers.
(c) ORDERS, ETC. No action, suit or proceeding shall have been commenced
or shall be pending or, to the actual knowledge of the officers and directors of
Purchaser, threatened, and no statute, rule, regulation or order shall have been
enacted, promulgated, issued or deemed applicable to the Business, the
Acquisition Assets or the transactions contemplated by this Agreement, by any
Governmental Authority or court that reasonably may be expected to (i) prohibit
Purchaser's ownership or operation of all or a material portion of the Business
or the Acquisition Assets, or compel Purchaser to dispose of or hold separate
all or a material portion of Sellers' business or assets, as a result of the
ASSET PURCHASE AGREEMENT 37
transactions contemplated by this Agreement or (ii) prohibit consummation of the
transactions contemplated by this Agreement.
ARTICLE 10
TERMINATION
SECTION 10.1 GROUNDS FOR TERMINATION. This Agreement may be terminated at
any time prior to the Closing Date:
(a) by the mutual written agreement of Sellers and Purchaser;
(b) by Purchaser by written notice thereof to Sellers 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;
(c) by Sellers by written notice thereof to Purchaser if any of the
conditions set forth in SECTION 9.2 hereof shall have become incapable of
fulfillment by or before the Closing Date, and shall not have been waived by
Sellers;
(d) by Purchaser, as set forth in SECTIONS 7.4, 7.10 and 7.11 hereof;
(e) by Sellers or Purchaser by written notice thereof to the other if the
transactions contemplated hereby shall not have been consummated on or before
August 14, 1998, or such other date as Sellers and Purchaser shall agree upon in
writing; PROVIDED, HOWEVER, (i) if the Closing is delayed due to delays in
obtaining the consents or approvals contemplated by SECTION 9.1(M) or for any
other matter or condition beyond the reasonable control of Purchaser, the
Closing Date shall be extended to such period of time reasonably required to
satisfy the condition and (ii) if the Closing Date is delayed due to delays in
the satisfaction of any other of the conditions to Closing set forth in ARTICLE
9, the Closing Date shall be extended for no more than thirty (30) days.
SECTION 10.2 EFFECT OF TERMINATION. The following provisions shall apply
in the event of a termination of this Agreement:
(a) Subject to subsections (b) and (c) of this SECTION 10.2, if this
Agreement is terminated by Sellers or by Purchaser as permitted under SECTION
10.1 hereof, such termination shall be without liability to any party to this
Agreement or any stockholder, director, officer, employee, agent or
representative of such party; PROVIDED, that if this Agreement is terminated by
Purchaser as permitted by SECTION 10.1(D), or by SECTION 10.1(B) for failure of
any of the conditions to Closing set forth in SECTIONS 9.1 (with the exception
of SECTION 9.1(R). Sellers shall refund the Option Fee to Purchaser within three
business days after such termination of this Agreement;
ASSET PURCHASE AGREEMENT 38
(b) If this Agreement is terminated by Sellers under SECTION 10.1(E) or as
a result of the material breach by Purchaser of its obligations under this
Agreement, Purchaser shall forfeit the Option Fee to Sellers as full payment for
damages for such breach. The parties hereto acknowledge and agree that the
actual damages that Sellers might sustain by reason of such breach by Purchaser
to perform its obligations hereunder are uncertain and would be difficult, if
not impossible, to ascertain, and that the Option Fee would be reasonable
compensation for any such breach by Purchaser;
(c) If this Agreement is terminated by Purchaser as a result of the breach
by Sellers or Shareholder of their or his obligations under this Agreement,
Sellers shall promptly refund to Purchaser the Option Fee. 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
Sellers or Shareholder to perform their or his 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 Sellers
and Shareholder waive the defense in any such action for specific performance
that a remedy at law would be adequate; and
(d) The parties hereto hereby agree that the provisions of SECTIONS 10.2,
12.1, 12.3, 12.5 AND 12.7 and ARTICLE 11 hereof shall survive any termination of
this Agreement.
ARTICLE 11
INDEMNIFICATION
SECTION 11.1 SELLERS' AND SHAREHOLDER'S INDEMNITY OBLIGATIONS. Sellers and
Shareholder shall, jointly and severally, indemnify and hold harmless Purchaser
and Purchaser's officers, directors, stockholders, employees, agents,
representatives and Affiliates (each a "PURCHASER INDEMNIFIED PARTY") from and
against any and all claims (including without limitation, Environmental Claims),
actions, causes of action, arbitrations, proceedings, losses, damages,
remediations, liabilities, strict liabilities, judgments, fines, penalties and
expenses (including, without limitation, reasonable attorneys' fees)
(collectively, the "INDEMNIFIED AMOUNTS") incurred by a Purchaser Indemnified
Party or for which a Purchaser Indemnified Party bears responsibility as a
result of (a) any breach or misrepresentation in any of the representations and
warranties made by or on behalf of Sellers and/or the Shareholder in this
Agreement, including without limitation with respect to environmental matters,
or any certificate or instrument delivered in connection with this Agreement,
(b) any violation or breach by Sellers and/or the Shareholder of or default by
Sellers and/or the Shareholder under the terms of this Agreement or any
certificate or instrument delivered in connection with this Agreement, (c) any
act or omission by Sellers, the Shareholder or any officer, director, employee,
agent or representative of Sellers, occurring on or prior to the Closing Date
with respect to the Business or the Acquisition Assets (including but not
limited to all items listed on or improperly omitted from SCHEDULE 5.10, and any
claim by a third party, including employees and Inmates/Clients
ASSET PURCHASE AGREEMENT 39
arising out of or related to any act or omission by Sellers, the Shareholder or
any officer, director, employee, agent or representative of Sellers occurring on
or prior to the Closing Date with respect to the Business or Acquisition
Assets), (d) any Environmental Claim, or (e) the Excluded Liabilities and any
other liabilities or obligations of Sellers, the Shareholder or any officer,
director, employee, agent or representative of Sellers not expressly assumed by
Purchaser pursuant to this Agreement. For purposes of this SECTION 11.1,
Indemnified Amounts shall include without limitation those Indemnified Amounts
ARISING OUT OF THE STRICT LIABILITY OR NEGLIGENCE OF ANY PARTY, INCLUDING ANY
PURCHASER INDEMNIFIED PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR
CONCURRENT, ACTIVE OR PASSIVE.
SECTION 11.2 PURCHASER'S INDEMNITY OBLIGATIONS. Purchaser shall indemnify
and hold harmless Sellers and Sellers' officers, directors, employees, agents,
representatives and Affiliates (each a "SELLERS INDEMNIFIED PARTY") from and
against any and all Indemnified Amounts incurred by a Sellers Indemnified Party
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, (b) any
violation or breach by Purchaser of or default by Purchaser under the terms of
this Agreement or any certificate or instrument delivered in connection with
this Agreement, or (c) the operation of the Business after the Closing Date.
SECTION 11.3 INDEMNIFICATION PROCEDURES. All claims for indemnification
under this Agreement shall be asserted and resolved as follows:
(a) A party claiming indemnification under this Agreement (an "INDEMNIFIED
PARTY") shall with reasonable promptness (i) notify the party from whom
indemnification is sought (the "INDEMNIFYING PARTY") of any third-party claim or
claims asserted against the Indemnified Party ("THIRD PARTY CLAIM") for which
indemnification is sought and (ii) transmit to the Indemnifying Party a copy of
all papers served with respect to such claim (if any) and a written notice
("CLAIM NOTICE") containing a description in reasonable detail of the nature of
the Third Party Claim, an estimate of the amount of damages attributable to the
Third Party Claim to the extent feasible (which estimate shall not be conclusive
of the final amount of such claim) and the basis of the Indemnified Party's
request for indemnification under this Agreement.
Within 15 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
ASSET PURCHASE AGREEMENT 40
Party Claim by all appropriate proceedings, which proceedings shall be
prosecuted diligently by the Indemnifying Party to a final conclusion or settled
at the discretion of the Indemnifying Party in accordance with this SECTION
11.3(A). The Indemnifying Party shall have full control of such defense and
proceedings. The 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
pursuant to this SECTION 11.3 and shall bear its own costs and expenses with
respect to such participation.
If the Indemnifying Party fails to notify the Indemnified Party within the
Election Period that the Indemnifying Party elects to defend the Indemnified
Party pursuant to the preceding paragraph, or if the Indemnifying Party elects
to defend the Indemnified Party but fails to prosecute or settle the Third Party
Claim as herein provided or if the Indemnified Party reasonably objects to such
election on the grounds that counsel for such Indemnifying Party cannot
represent both the Indemnified Party and the Indemnifying Parties because such
representation would be reasonably likely to result in a conflict of interest,
then the Indemnified Party shall have the right to defend, at the sole cost and
expense of the Indemnifying Party, the Third Party Claim by all appropriate
proceedings, which proceedings shall be promptly and vigorously prosecuted by
the Indemnified Party to a final conclusion or settled. The Indemnified Party
shall have full control of such defense and proceedings. The Indemnifying Party
may participate in, but not control, any defense or settlement controlled by the
Indemnified Party pursuant to this SECTION 11.3, and the Indemnifying Party
shall bear its own costs and expenses with respect to such participation.
The Indemnifying Party shall not settle or compromise any Third Party Claim
unless (i) the terms of such compromise or settlement require no more than the
payment of money (i.e., such compromise or settlement does not require the
Indemnified Party to admit any wrongdoing or take or refrain from taking any
action), (ii) the full amount of such monetary compromise or settlement will be
paid by the Indemnifying Party, and (iii) the Indemnified Party receives as part
of such settlement a legal, binding and enforceable unconditional satisfaction
and/or release, in form and substance reasonably satisfactory to it, providing
that such Third Party Claim and any claimed 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
ASSET PURCHASE AGREEMENT 41
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 11.4 DETERMINATION OF INDEMNIFIED AMOUNTS. The Indemnified Amounts
payable by an Indemnifying Party hereunder shall be determined (i) by the
written agreement of the parties, (ii) by mediation, (iii) by binding
arbitration pursuant to SECTION 12.7 hereof, (iv) by a final judgment or decree
of any court of competent jurisdiction, or (v) by any other means agreed to in
writing by the parties. A judgment or decree of a court shall be deemed final
when the time for appeal, if any, shall have expired and no appeal shall have
been taken or when all appeals taken have been fully determined. In calculating
or determining the Indemnified Amounts, such calculation or determination shall
take into account the actual receipt of any amounts from any insurance company
or other third party.
SECTION 11.5 ESCROW. Sellers and Purchaser expressly acknowledge that the
indemnification obligations of Sellers and Purchaser and the payment of
Indemnified Amounts pursuant to this ARTICLE 11 shall not be limited to or by
the Escrowed Purchase Price or the terms of the Escrow Agreement.
SECTION 11.6 LIMITATION OF SELLERS' AND SHAREHOLDER'S LIABILITY.
(a) Notwithstanding anything to the contrary contained in ARTICLE 11, the
aggregate liability of Sellers for any event or occurrence giving rise to
Sellers being required to indemnify Purchaser Indemnified Parties pursuant to
(i) SECTIONS 11.1 (A) AND (B) of this Agreement shall be limited to the Purchase
Price, and (ii) SECTIONS 11.1(C), (D) AND (E) of this Agreement shall be
unlimited.
(b) Notwithstanding anything to the contrary contained in ARTICLE 11, the
aggregate liability of the Shareholder for any event or occurrence giving rise
to the Shareholder being required to indemnify Purchaser Indemnified Parties
pursuant to (i) SECTIONS 11.1(A) OR (B) of this Agreement shall be limited to
the amount of any of the Purchase Price directly or indirectly distributed or
paid to the Shareholder, including but not limited pursuant to any dividends,
salaries, bonuses or other compensation and the repayment of any loans, and (ii)
SECTIONS 11.1(C), (D) AND (E) of this Agreement shall be unlimited.
ASSET PURCHASE AGREEMENT 42
(c) 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 $25,000 and then
to the full amount of such Indemnified Amount.
SECTION 11.7 LIMITATION OF PURCHASER'S LIABILITY.
(a) Notwithstanding anything to the contrary contained in ARTICLE 11, the
aggregate liability of Purchaser for any event or occurrence giving rise to
Purchaser being required to indemnify Sellers Indemnified Parties pursuant to
SECTION 11.2 shall be limited to $4,000,000.
(b) Sellers 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 $25,000 and then to the full amount of
such Indemnified Amount.
ARTICLE 12
MISCELLANEOUS
SECTION 12.1 COMMISSIONS. Sellers represent and warrant that they have
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. Sellers shall indemnify and hold Purchaser harmless from and against any
and all claims for finders' fees, brokers' commissions or similar fees made by
any party as a result of this Agreement and the transactions contemplated
hereunder to the extent that any such commission or fee was incurred, or alleged
to have been incurred, by, through or under Sellers. Purchaser represents and
warrants that it has retained only SunTrust Equitable Securities Corporation as
a broker or finder and 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 Person other than SunTrust Equitable Securities Corporation
in connection with this Agreement and the transactions contemplated hereby.
Purchaser shall indemnify and hold Sellers harmless from and against any and all
claims for finders' fees, brokers' commissions or similar fees owing to SunTrust
Equitable Securities Corporation or otherwise made by any party as a result of
this Agreement and transactions contemplated hereunder to the extent that any
such commission was incurred, or alleged to have been incurred, by, through or
under Purchaser.
SECTION 12.2 SURVIVAL. The representations and warranties set forth in
this Agreement and in any certificate or instrument delivered in connection
herewith shall be continuing and shall survive the Closing for a period of two
years following the Closing Date; PROVIDED, HOWEVER, that in the case of all
representations and warranties, there shall be no such termination with respect
to any such representation or warranty as to which a bona fide claim has
ASSET PURCHASE AGREEMENT 43
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; PROVIDED, FURTHER, that the representations and warranties set forth in
SECTIONS 5.2, 5.11, 5.13 AND 5.20 hereof shall survive the Closing indefinitely
and SECTION 5.16 and SECTION 5.26 shall survive the Closing for the statutory
survival period. The covenants and agreements, including but not limited to
indemnification obligations, set forth in this Agreement and in any certificate
or instrument delivered in connection herewith shall be continuing and survive
Closing; PROVIDED, HOWEVER, that the indemnification obligations of the parties
hereto (i) set forth in SECTIONS 11.1(A) and 11.2(A) with respect to a breach of
a representation or warranty shall terminate at the time such particular
representation or warranty shall terminate, and (ii) set forth in SECTIONS
11.1(B) and 11.2(B) shall terminate three years following the Closing Date. The
indemnification obligations of Sellers and the Shareholder set forth in SECTIONS
11.1(C), (D) AND (E) shall survive the closing indefinitely.
SECTION 12.3 EXPENSES. Except as otherwise expressly provided herein, each
party shall bear its own respective expenses incurred 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.
SECTION 12.4 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been received only if and when (i)
personally delivered or (ii) on receipt after mailing, by United States mail,
first class, postage prepaid, by certified mail return receipt requested, or by
facsimile transmission to the respective parties, addressed in each case as
follows (or to such other address as may be specified by like notice):
If to Sellers or the Shareholder, to:
c/o ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: 907/▇▇▇-▇▇▇▇
Facsimile: 907/258-3229
If to Purchaser, to:
Cornell Corrections, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: 713/▇▇▇-▇▇▇▇
Facsimile: 713/623-2853
ASSET PURCHASE AGREEMENT 44
With a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ 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.
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 ARBITRATION.
(a) Any issue, controversy or claim arising out of or relating to this
Agreement or its alleged breach that cannot be resolved by mutual agreement
within 60 days' notice thereof shall be resolved exclusively by final and
binding arbitration in San Francisco, California in accordance with the
commercial arbitration rules of the American Arbitration Association ("AAA"),
and judgment on the award rendered by the arbitrator may be entered by any court
having jurisdiction thereof; PROVIDED, HOWEVER, that the parties shall have the
right to agree among themselves as to the amount of the claim
(b) The arbitrators shall be selected by mutual agreement of the parties,
if possible. If the parties fail to reach agreement upon appointment of
arbitrators within 15 days following receipt by one party of the other party's
notice of arbitration, each party shall select one arbitrator and the two
resulting arbitrators shall mutually agree on a third arbitrator from a list or
lists of proposed arbitrators submitted by AAA. The selection process shall be
that which is set forth in the AAA commercial arbitration rules then prevailing,
except that (i) the number of preemptory strikes shall not be limited and (ii)
if the parties' arbitrators fail to select an arbitrator from one or more lists,
AAA shall not have the power to make an appointment but, subject to SECTION
12.7(C) hereof, shall continue to submit additional lists until an arbitrator
has been selected. Initially, however, promptly following its receipt of a
request to submit a list of proposed arbitrators, AAA shall convene the parties'
arbitrators in person or by telephone and attempt to facilitate their selection
of the third arbitrator by agreement. If an arbitrator should die, withdraw or
ASSET PURCHASE AGREEMENT 45
otherwise become incapable of serving, replacement shall be selected and
appointed in the same manner as the initial third arbitrator.
(c) If the third (or successor) arbitrator has not been selected following
submission of three or more lists by AAA, either party may declare the existence
of an impasse by giving written notice to the other. In that event, the third
(or successor) arbitrator shall be selected in the following manner: Each party
shall designate three proposed arbitrators whose names appear on any of the
lists previously submitted by AAA. The parties shall then eliminate five of the
designated names by alternately striking one, and the person whose name remains
shall serve as arbitrator. If necessary, the party to make the first strike
shall be designated by lot.
(d) All aspects of the arbitration shall be confidential, and the parties
and arbitrators shall not disclose to others, or permit disclosure of, any
information related to the proceedings, including but not limited to discovery,
testimony and other evidence, briefs and the award.
(e) Upon the motion of either party, and for good cause shown, the
arbitrators, by majority vote, may make any order which justice requires to
protect a party from the disclosure of proprietary, privileged or confidential
business information, including orders (i) that depositions or hearings be
conducted with no one present except the lead attorney for the respective
parties and persons designated by a majority of the arbitrators, and (ii) that
depositions, exhibits, other documents filed with the arbitrators or transcripts
of the hearing be sealed and not disclosed except as specified by the
arbitrators.
SECTION 12.8 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;
PROVIDED, HOWEVER, Purchaser shall be released from its obligations under this
Agreement upon Purchaser's assignment of its rights and obligations under this
Agreement to an Affiliate of Purchaser.
SECTION 12.9 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any of the parties hereto. Upon such determination that
any
ASSET PURCHASE AGREEMENT 46
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible
SECTION 12.10 AMENDMENTS; NO WAIVERS. Any provision of this Agreement may
be amended or waived prior to the Closing Date if, and only if, such amendment
or waiver is in writing and signed, in the case of an amendment, by all parties
hereto, or in the case of a waiver, by the party against whom the waiver is to
be effective. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 12.11 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement
shall entitle any Person other than the parties hereto or their respective
successors and assigns permitted hereby to any claim, cause of action, remedy or
right of any kind.
SECTION 12.12 HEADINGS; USE OF CERTAIN TERMS. The headings and table of
contents herein are for convenience only and shall have no significance in the
interpretation hereof. Unless the context shall otherwise require, the singular
shall include the plural and vice versa, and each pronoun in any gender shall
include all other genders.
SECTION 12.13 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed for all purposes to be an
original, but all of which together shall constitute one and the same agreement.
ASSET PURCHASE AGREEMENT 47
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first written above.
ALLVEST CORPORATION
By:/s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: ILLEGIBLE
ST. ▇▇▇▇ INVESTMENTS, INC.
By:/s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title:President
/s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Individually
CORNELL CORRECTIONS, INC.
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
ASSET PURCHASE AGREEMENT 48
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,
and any natural Person who is an officer, director or partner of such Person and
any members of their immediate families living within the same household. 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 SELLERS: means, with respect to any matter in question,
knowledge of any of the directors or officers of Sellers or Sellers' onsite
management or knowledge that would have been disclosed through reasonable
diligence.
BUSINESS PROPERTY: means the Acquired Property, the Improvements, the real
property and improvements that are the subject of the Assumed Leases and any
other property (whether real or personal) which Sellers currently own, lease,
manage or operate in any manner associated with the Business or formerly owned,
leased, managed or operated in any manner.
CERCLA: means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended from time to time.
CLIENT: means any adult parolee, probationer or other resident, some of
whom may be homeless adults, utilizing the facilities operated as part of the
Business.
CODE: means the Internal Revenue Code of 1986, as amended, or any amending
or superseding tax laws of the United States of America.
DAMAGES: includes damages, losses (including, but not limited to, any
diminution in value), shortages, liabilities, payments, obligations, penalties,
claims, causes of action, litigation, demands, defenses, judgments, suits,
proceedings, costs, disbursements or expenses (including, without limitation,
fees, disbursements and expenses of attorneys, accountants and other
professional advisors and of expert witnesses and costs of investigation,
testing and preparation) of any kind or nature whatsoever.
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
1
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 Sellers or any of their subsidiaries, or the
Shareholder 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, 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 hazardous or solid waste, hazardous, toxic or other
regulated substances, elements, compounds, mixtures or materials in any and all
jurisdictions in which property of Sellers is located or the Business is
conducted or in which such Business at any time has been conducted, 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, and (m) any analogous or similar state or local laws or rules. 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 Sellers or any of their properties or assets
2
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 OF SELLERS: means, with respect to any matter in question,
actual knowledge of any of the directors or officers of Sellers or Sellers'
onsite management.
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 Sellers, the 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 Environmental Law. 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.
PERMITTED ENCUMBRANCES: means (a) materialmen's, mechanics', repairmen's,
employees', contractors', operators', tax and other similar liens or charges
arising in the ordinary course of business prior to the Closing Date (i) if they
relate to obligations that have not yet become due and payable or (ii) if their
validity is being contested in good faith by appropriate
3
actions; (b) minor defects and irregularities affecting title to the assets of
Sellers, but only if such defects and irregularities do not and will not impair
the operation, value, marketability or use of the asset affected by such defect
or irregularity; (c) rights reserved to or vested in any governmental body to
control or regulate any asset in any manner that does not materially impair the
value or use of such asset; and (d) encumbrances deemed to be Permitted
Encumbrances pursuant to SECTION 7.4(C) hereof.
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 Sellers or by any trade or business, whether or not
incorporated, which, together with Sellers, 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.
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
EXHIBIT 9.1(t)
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
DIRECT: 907 258.3225
▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
June 20, 1998
Cornell Corrections, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Gentlemen:
I have acted as special counsel to Allvest Corporation, an Alaska
corporation, St. ▇▇▇▇ Investments, Inc., an Alaska corporation (collectively
with Allvest Corporation, "Sellers"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Weimar"), in
connection with that certain Asset Purchase Agreement (the "Agreement") dated
June ___, 1998 by and among Sellers, Weimar and Cornell Corrections, Inc., a
Delaware corporation ("Purchaser"), and in connection with the transactions
contemplated thereby. This opinion is being delivered to you pursuant to Section
9.1(t) of the Agreement. Unless otherwise defined in this opinion, capitalized
terms used in this opinion shall have the meanings ascribed to them in the
Agreement.
In my capacity as special counsel to Sellers, I have reviewed the
Agreement, together with the Exhibits and Schedules thereto, and such other
records, documents, and instruments as in my judgment are necessary or
appropriate to enable us to render this opinion.
Based on the foregoing, subject to the qualifications, exceptions and
assumptions herein, and having due regard for such legal considerations as I
deem relevant, I am of the opinion that:
1. Sellers are corporations duly organized, validly existing and in good
standing under the laws of the State of Alaska. Sellers have all requisite power
and authority to own and operate their assets and properties and to carry on
their business and the Business as now being conducted. Sellers are duly
licensed or qualified as foreign entities to do business and are in good
standing in all jurisdictions wherein the character of the properties owned or
held by them or the nature of the business transacted by them requires them to
be so licensed or qualified.
2. Sellers have all requisite corporate power and authority to enter
into the Agreement. All necessary action on the part of Sellers has been taken
to authorize the execution and delivery of the Agreement, the performance of
their obligations thereunder and the consummation of the transactions
contemplated thereby. The Agreement has been duly and validly executed by
Sellers, and the Agreement and all documents and instruments required thereunder
to be executed and delivered by Sellers at or prior to Closing constitute the
legal, valid and binding obligations of Sellers enforceable against Sellers in
accordance with their terms.
Cornell Corrections, Inc.
June 20, 1998
Page 2
3. Weimar has all requisite power and authority to enter into the
Agreement. The Agreement has been duly and validly executed by Weimar, and the
Agreement and all documents and instruments required thereunder to be executed
and delivered by Weimar at or prior to Closing constitute the legal, valid and
binding obligations of Weimar enforceable against Weimar in accordance with
their terms.
4. The execution and delivery of the Agreement does not, the fulfillment
of or compliance with the terms and provisions thereof will not, and the
consummation of the transactions contemplated thereby will not (a) violate or
conflict with any provision of, or require any notice, consent, authorization or
approval under, the articles of incorporation or bylaws of either Seller; (b) to
my knowledge violate or conflict with any provision of, or require any filing,
consent, authorization or approval under, any law or administrative regulation
or any judicial, administrative or arbitration order, award, judgment, writ,
injunction or decree applicable to or binding upon either Seller or to which
either Seller's assets or properties are subject; or (c) to my knowledge, and
except as otherwise disclosed in the Agreement (including the Schedules
thereto), conflict with, result in a material breach of, constitute a material
default under (whether with notice or the lapse of time or both), accelerate or
permit the acceleration of the performance required by, or require any consent,
authorization or approval under, (i) any mortgage, indenture, deed of trust,
loan or credit agreement or any other agreement or instrument evidencing
indebtedness for money borrowed to which either Seller is a party or by which
either Seller is bound or to which either Seller's properties are subject or
(ii) any material lease, license, contract or other agreement or instrument to
which either Seller is a party or by which either Seller is bound or to which
either Seller's assets or properties are subject.
5. The instruments of conveyance, transfer and assignment to be
delivered by Sellers to Purchaser are in form legally sufficient to convey to
Purchaser all right, title and interest of Sellers in and to the Acquisition
Assets. Such instruments are in form sufficient for recordation or filing where
such is necessary in order to perfect such conveyance, transfer and assignment
of Sellers' interest as against third parties.
[Standard opinion qualifications, exceptions and assumptions to be
specified.]
This opinion is limited to federal law and the law of the State of
Alaska now in effect. No opinion is expressed as to any matter governed by the
laws of any other jurisdiction.
Very truly yours,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P C.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
EXHIBIT 9.1(v)
RIGHT OF FIRST REFUSAL AGREEMENT
This Right of First Refusal Agreement dated _________ __, 1998 ( this
"AGREEMENT"), is by and between Cornell Corrections, Inc., a Delaware
corporation ("PURCHASER"), Allvest Corporation, an Alaska corporation
("ALLVEST"), St. ▇▇▇▇ Investments, Inc., an Alaska corporation ("ST. ▇▇▇▇") ,
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("WEIMAR"). Allvest and St. ▇▇▇▇ are collectively referred
to herein as the "SELLERS."
WHEREAS, Purchaser has entered into an Asset Purchase Agreement with
Weimar, Allvest and St. ▇▇▇▇ dated as of June 20, 1998 (the "ASSET PURCHASE
AGREEMENT"); and
WHEREAS, Purchaser desires to purchase from the Sellers, and the Sellers
desire to sell to Purchaser, certain of Sellers' assets as more fully described
in the Asset Purchase Agreement; and
WHEREAS, the Sellers and Weimar currently own and may, subject to the
Noncompetition Agreement (as defined in Section 3.10 below), continue to develop
corrections-related business interests (together with those described on EXHIBIT
A hereto, collectively the "BUSINESS INTERESTS," and singularly a "BUSINESS
INTEREST") in the States of Washington, Idaho and Oregon; and
WHEREAS, Purchaser, the Sellers and Weimar agree that it is to their
mutual advantage that such Business Interests shall be offered for sale to
Purchaser before disposition of such Business Interests to any other person or
entity.
NOW, THEREFORE, in consideration of the mutual covenants and the promises
contained herein and the transactions contemplated by the Asset Purchase
Agreement, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
RIGHT OF FIRST REFUSAL
SECTION 1.1 The Sellers and Weimar acknowledge and agree that any
voluntary or involuntary sale, transfer or other alienation of any Business
Interest by the Sellers, Weimar or any of their Affiliates (as defined below),
other than as provided for in this Agreement, shall be a breach of the terms of
this Agreement and the Sellers and Weimar agree to advise any prospective
purchaser of any such Business Interest of the existence of this Agreement.
SECTION 1.2 If any of the Sellers or Weimar or any of their respective
Affiliates (an "OFFEROR") desires to sell, transfer (with or without
consideration) or otherwise alienate or dispose of any Business Interest
(regardless of whether such sale is in the form of a sale of assets or sale of
equity interests) to any third party that is not an Affiliate of the Sellers or
Weimar (a "THIRD PARTY"), Offeror shall first offer to sell to Purchaser
RIGHT OF FIRST REFUSAL 1 Version 2
all of
such Business Interest which Offeror desires to transfer. Such offer shall be
made by an irrevocable written offer to Purchaser to sell all of such Business
Interest which Offeror desires to transfer for 105% of the price offered to or
by such Third Party and on the same terms and conditions offered to the Third
Party (the "THIRD PARTY OFFER"), and in accordance with SECTION 1.3 hereof. Such
offer shall also contain a complete description of the transaction in which
Offeror proposes to transfer the Business Interest to such Third Party,
including the name of the proposed transferee and the consideration for and
other terms of the proposed transfer. Purchaser shall have 30 days after actual
receipt of such offer within which to advise Offeror whether or not Purchaser
will purchase such Business Interest. If Purchaser declines to purchase such
Business Interest in accordance with this Agreement, Offeror shall then have 180
days within which to sell or transfer such Business Interest to the Third Party
named in the offer made by Offeror to Purchaser, for no less of a price and upon
substantially the same terms described in such offer. If such transfer to such
Third Party does not occur within the 180-day period, the transfer of such
Business Interest shall remain subject to this Agreement.
SECTION 1.3 Any sale pursuant to ARTICLE 1 hereof shall take place at the
principal corporate office of Offerer no later than 30 days after Purchaser's
acceptance of Offeror's offer subject to receipt of all necessary consents and
approvals, and the conditions to closing contained in such Third Party Offer. At
the closing of such sale, Offeror shall sell, transfer and assign to Purchaser
all of Offeror's right, title and interest in and to the Business Interest
purchased by Purchaser, and Offeror shall execute and deliver to Purchaser such
deeds, bills of sale and other instruments of sale, transfer, conveyance,
assignment and delivery covering the Business Interest or any part thereof,
executed by Offeror or other appropriate parties, as Purchaser may reasonably
require to assure the full and effective sale, transfer, conveyance, assignment
and delivery to Purchaser of the Business Interest free and clear of any rights
and claims of third parties. Purchaser shall deliver to Offeror the full
consideration therefor specified in SECTION 1.2 hereof. Any transfer or similar
taxes involved in such sale shall be paid by Offeror, and Offeror shall provide
Purchaser with such evidence of Offeror's authority to sell hereunder and such
tax lien waivers and similar instruments as Purchaser may reasonably request.
SECTION 1.4 Any sale or transfer by any of the Sellers or Weimar or any of
the their Affiliates to any Affiliate of the Sellers or Weimar shall remain
subject to the terms of this Agreement and, as a condition to such sale or
transfer, such buyer or transferee shall expressly assume in writing and in form
satisfactory to Purchaser all obligations of Weimar and the Sellers under this
Agreement.
SECTION 1.5 "AFFILIATE" means, with respect to a specified person, (i) if
such person is an individual, any descendant or spouse of such individual and
any entity of which any such descendant or spouse is directly or indirectly the
beneficial owner of 50% or more of any class of equity security thereof or other
financial interest therein; and (ii) any person that directly, or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with the person specified. For purposes of this definition,
"CONTROL" (including "CONTROLLING", "CONTROLLED BY" and "UNDER COMMON CONTROL
WITH") means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a person, whether through
the ownership of voting securities, by contract or otherwise.
RIGHT OF FIRST REFUSAL 2 Version 2
ARTICLE 2
TERM
SECTION 2.1 The term of this Agreement shall be five (5) years, commencing
on the Closing Date of the Asset Purchase Agreement; provided, however, that
this Agreement shall be extended to the extent necessary with respect to any
Third Party Offers in effect on the date this Agreement would otherwise
terminate.
ARTICLE 3
MISCELLANEOUS
SECTION 3.1 SEVERABILITY. The unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
SECTION 3.2 WAIVERS. No delay or omission by Purchaser in exercising any
right of Purchaser under this Agreement shall operate as a waiver of that or any
other right. A waiver by Purchaser on any one occasion of any particular right
shall be effective only in that particular instance and shall not be construed
as a waiver of that or any other right on any other occasion.
SECTION 3.3 AMENDMENT OF THIS AGREEMENT. This Agreement may be amended
only by an amendment hereto in writing that is executed by Purchaser, the
Sellers and Weimar.
SECTION 3.4 HEADINGS FOR CONVENIENCE ONLY. The headings contained in this
Agreement are intended solely for the convenience of the parties to this
Agreement and shall not affect their rights.
SECTION 3.5 NOTICES. All notices and other communications required or
permitted to be delivered pursuant to any provision of this Agreement shall be
in writing and addressed as follows:
If to the Sellers or Weimar, to:
c/o ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: 907/▇▇▇-▇▇▇▇
Facsimile: 907/258-3229
If to Purchaser, to:
Cornell Corrections, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
RIGHT OF FIRST REFUSAL 3 Version 2
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: 713/▇▇▇-▇▇▇▇
Facsimile: 713/623-2853
With a copy (which shall not constitute notice) to:
Liddell, Sapp, Zivley, Hill & ▇▇▇▇▇▇, L.L.P.
3400 Chase Tower
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: 713/▇▇▇-▇▇▇▇
Facsimile: 713/223-3717
The address of either party set forth above may be changed by such
party by delivering notice of such change to the other party to this
Agreement. Any notice mailed shall be deemed to have been given and
received on the third business day following the day of deposit in
the United States mail.
SECTION 3.6 ASSIGNMENTS. The rights and obligations of the parties under
this Agreement may not be assigned, except that Purchaser may, at its option,
assign one or more of this rights or obligations under this Agreement to any of
its Affiliates or in connection with a transfer of all or substantially all of
the assets or stock of Purchaser or a merger or consolidation of Purchaser with
and into another corporation or other entity; provided, however, any such
assignment shall not relieve Purchaser of its obligations hereunder.
SECTION 3.7 REMEDIES. Purchaser, Weimar and the Sellers hereby agree that
if Weimar or the Sellers violates or threatens to violate any of the provisions
of this Agreement, it would be difficult to determine the entire cost, damage or
injury which Purchaser would sustain. Notwithstanding the above, Weimar and the
Sellers acknowledge that if they violate or threaten to violate any of the
provisions of this Agreement, Purchaser may have no adequate remedy at law. In
that event, Purchaser shall have the right, in addition to any other rights that
may be available to it, to obtain in any court of competent jurisdiction
injunctive relief to restrain any violation or threatened violation by Weimar
and the Sellers of any provision of this Agreement or to compel specific
performance by Weimar and the Sellers of one or more of their obligations under
this Agreement (any requirements for posting of bonds for injunction are hereby
expressly waived). The seeking or obtaining by Purchaser of such injunctive
relief shall not foreclose or in any way limit the right of the Purchaser to
obtain a money judgment against Weimar or the Sellers for any damage to the
Purchaser that may result from any breach by Weimar or the Sellers of any
provision of this Agreement.
SECTION 3.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (regardless of
the laws that might otherwise
RIGHT OF FIRST REFUSAL 4 Version 2
govern under applicable Delaware principles of conflicts of law) as to all
matters, including without limitation matters of validity, construction, effect,
performance and remedies.
SECTION 3.9 ARBITRATION. Subject to Section 3.7 above:
(a) Any issue, controversy or claim arising out of or relating to
this Agreement or its alleged breach that cannot be resolved by mutual
agreement within 60 days' notice thereof shall be resolved exclusively by
final and binding arbitration in San Francisco, California, in accordance
with the commercial arbitration rules of the American Arbitration
Association ("AAA"), and judgment on the award rendered by the arbitrator
may be entered by any court having jurisdiction thereof; PROVIDED,
HOWEVER, that the parties shall have the right to agree among themselves
as to the amount of the claim.
(b) The arbitrators shall be selected by mutual agreement of the
parties, if possible. If the parties fail to reach agreement upon
appointment of arbitrators within 15 days following receipt by one party
of the other party's notice of arbitration, each party shall select one
arbitrator and the two resulting arbitrators shall mutually agree on a
third arbitrator from a list or lists of proposed arbitrators submitted by
AAA. For purposes of this SECTION 3(H), Allvest and Weimar shall be
considered one party. The selection process shall be that which is set
forth in the AAA commercial arbitration rules then prevailing, except that
(i) the number of preemptory strikes shall not be limited and (ii) if the
parties' arbitrators fail to select an arbitrator from one or more lists,
AAA shall not have the power to make an appointment but, subject to
SECTION 3.9(C) hereof, shall continue to submit additional lists until an
arbitrator has been selected. Initially, however, promptly following its
receipt of a request to submit a list of proposed arbitrators, AAA shall
convene the parties' arbitrators in person or by telephone and attempt to
facilitate their selection of the third arbitrator by agreement. If an
arbitrator should die, withdraw or otherwise become incapable of serving,
replacement shall be selected and appointed in the same manner as the
initial third arbitrator.
(c) If the third (or successor) arbitrator has not been selected
following submission of three or more lists by AAA, either party may
declare the existence of an impasse by giving written notice to the other.
In that event, the third (or successor) arbitrator shall be selected in
the following manner: Each party shall designate three proposed
arbitrators whose names appear on any of the lists previously submitted by
AAA. The parties shall then eliminate five of the designated names by
alternately striking one, and the person whose name remains shall serve as
arbitrator. If necessary, the party to make the first strike shall be
designated by lot.
(d) All aspects of the arbitration shall be confidential, and the
parties and arbitrators shall not disclose to others, or permit disclosure
of, any information related to the proceedings, including but not limited
to discovery, testimony and other evidence, briefs and the award.
RIGHT OF FIRST REFUSAL 5 Version 2
(e) Upon the motion of either party, and for good cause shown, the
arbitrators, by majority vote, may make any order which justice requires
to protect a party from the disclosure of proprietary, privileged or
confidential business information, including orders (i) that depositions
or hearings be conducted with no one present except the lead attorney for
the respective parties and persons designated by a majority of the
arbitrators, and (ii) that depositions, exhibits, other documents filed
with the arbitrators or transcripts of the hearing be sealed and not
disclosed except as specified by the arbitrators.
SECTION 3.10 COVENANT NOT TO COMPETE. Notwithstanding any other provision
set forth herein, this Agreement shall not be construed to permit Weimar, the
Sellers or any of their Affiliates to engage in any lines of business restricted
by the Covenant Not to Compete Agreement dated of even date herewith among the
Sellers, Weimar and Purchaser (the "NONCOMPETE AGREEMENT"), and in the event of
any conflict between this Agreement and the Noncompete Agreement, the terms and
provisions of the Noncompete Agreement shall control.
RIGHT OF FIRST REFUSAL 6 Version 2
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
CORNELL CORRECTIONS, INC.
By:
Name:
Title:
ALLVEST CORPORATION
By:_________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Chairman
ST. ▇▇▇▇ INVESTMENTS, INC.
By:_________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Chairman
____________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
RIGHT OF FIRST REFUSAL 7 Version 2
EXHIBIT A
BUSINESS INTEREST
Allvest House North
RIGHT OF FIRST REFUSAL 8 Version 2
EXHIBIT 9.1(w)
COVENANT NOT TO COMPETE AGREEMENT
(SELLERS AND ▇▇▇▇▇▇▇ ▇▇▇▇▇▇)
This Covenant Not to Compete Agreement dated _________ __, 1998 ( this
"AGREEMENT"), is by and among Cornell Corrections, Inc., a Delaware
corporation ("PURCHASER"), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ("WEIMAR"), Allvest Corporation
("ALLVEST") and St. ▇▇▇▇ Investments, Inc. ("ST. ▇▇▇▇"). (Allvest and St.
▇▇▇▇ are collectively referred to herein as the "SELLERS.")
WHEREAS, Purchaser has entered into an Asset Purchase Agreement with
Weimar and the Sellers dated as of June 20, 1998 (the "ASSET PURCHASE
AGREEMENT"); and
WHEREAS, Purchaser desires to purchase from the Sellers, and the Sellers
desire to sell to Purchaser, certain of the Sellers' assets as more fully
described in the Asset Purchase Agreement; and
WHEREAS, Purchaser wishes to secure from the Sellers and Weimar their
agreement not to compete with Purchaser and not to disclose certain information
belonging to Purchaser in order that Purchaser can successfully operate the
business purchased pursuant to the Asset Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and the promises
contained herein and the transactions contemplated by the Asset Purchase
Agreement, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
ACKNOWLEDGMENTS AND AGREEMENTS BY THE SELLERS AND WEIMAR
The Sellers and Weimar hereby acknowledge and agree that:
(a) Purchaser would not have purchased the Sellers' assets pursuant
to the Asset Purchase Agreement if the Sellers and Weimar had not executed
and delivered this Agreement to Purchaser;
(b) The Sellers and Weimar, as the sole shareholder and as an
officer and director of the Sellers, have had access to information that
is confidential to Purchaser, that constitutes a valuable, special and
unique asset of Purchaser, and with respect to which Purchaser is entitled
to the protections afforded by this Agreement and to the remedies for
enforcement of this Agreement provided by law or in equity (including,
without limitation, those remedies the availability of which may be within
the discretion of the court or arbitrator that presides over any action
for enforcement of this Agreement is brought); and
COVENANT NOT TO COMPETE 1 Version 2
(c) In consideration of the sale by the Sellers to Purchaser of such
assets pursuant to the Asset Purchase Agreement, the Sellers received from
Purchaser substantial consideration, the receipt of which by the Sellers
will enable Weimar to fully support himself in financial independence in a
manner at least consistent with his past practices and without the
necessity of engaging in any business of a type conducted by the Sellers
or Purchaser.
ARTICLE 2
NON-COMPETITION COVENANT
SECTION 2.1 Beginning on the date hereof and extending for a period
thereafter of (x) ten (10) years with respect to the State of Alaska, and (y)
five (5) years with respect to the remainder of the United States other than
Washington, Idaho and Oregon (such periods of time being referred to herein as
the "COVENANT PERIOD"), the Sellers and Weimar agree that they will not, and
will cause each of their respective Affiliates not to, (directly or indirectly,
acting alone or as a member of a partnership, as a holder or owner of any
security, as an employee, agent, advisor, consultant to, representative, or in
any other capacity):
(a) carry on or be engaged or otherwise take part in (whether for
their own account or for the account of any other person, other than
Purchaser or its Affiliates), or render any service (whether for or
without compensation) to any person (other than Purchaser or its
Affiliates) who or which is directly or indirectly engaged in, any
Business (as defined below) in the State of Alaska or the remainder of the
United States other than Washington, Idaho or Oregon;
(b) share in the earnings of, or beneficially own or hold any
security issued by, or otherwise own or hold any interest in, any person
who or which is directly or indirectly engaged in any Business in the
State of Alaska or the remainder of the United States other than
Washington, Idaho or Oregon;
(c) request that any present, future or prospective customer or
supplier of Purchaser or any of its Affiliates curtail or cancel its
business, or refrain from doing business, with Purchaser or any of its
Affiliates; or
(d) directly or indirectly hire, or solicit the employment or
services of, or cause or attempt to cause to leave the employment or
service of Purchaser or its Affiliates, any person who or which is
employed by, or otherwise engaged to perform services for Purchaser or any
of its Affiliates (whether in the capacity of employee, consultant,
independent contractor or otherwise).
SECTION 2.2 Beginning on the date hereof and extending for a period of
five (5) years thereafter, the Sellers and Weimar agree that they will not, and
will cause each of their respective Affiliates not to, (directly or indirectly,
acting alone or as a member of a partnership, as a holder or owner of any
security, as an employee, agent, advisor, consultant to,
COVENANT NOT TO COMPETE 2 Version 2
representative, or in any other capacity) house (or provide housing or
Business-related services to) any offenders or other individuals from states
other than Washington, Idaho or Oregon in the States of Washington, Idaho or
Oregon.
SECTION 2.3 Without limiting the generality of the provisions of this
ARTICLE 2, Weimar, any Seller or any of their respective Affiliates shall be
deemed to be engaged in a particular business if such person (whether alone or
in association with one or more other persons) is an owner, proprietor, partner,
stockholder, officer, employee, independent contractor, director or joint
venturer of, or a consultant or lender to, or an investor in any manner in, any
person who or which is directly or indirectly engaged in such business.
SECTION 2.4 Notwithstanding any other provisions set forth in this
Agreement, the restrictions set forth in SECTIONS 2.1 (A) AND (B), shall not
restrict Weimar and the Sellers from completing and operating the Fort ▇▇▇▇▇▇
Prison Project.
SECTION 2.5 Weimar and the Sellers acknowledge and agree that the
limitations imposed by this non-competition covenant as to time, geographical
area, and scope of activity being restrained are reasonable and do not impose a
greater restraint than is necessary to protect the goodwill or other business
interests of Purchaser.
SECTION 2.6 "BUSINESS" means any corrections-related business, including
but not limited to those corrections-related businesses previously, currently or
proposed to be conducted by Purchaser, the Sellers or any of their Affiliates,
including but not limited to owning, operating, designing, developing and
constructing:
(a) adult secure institutional correctional and detention
facilities;
(b) adult and juvenile pre-release correctional facilities;
(c) juvenile correctional and detention facilities; or
(d) any business competitive with (i), (ii) or (iii) above.
SECTION 2.7 "AFFILIATE" means, with respect to a specified person, (i) any
entity of which such person is an executive officer, director, partner, trustee
or other fiduciary or is directly or indirectly the beneficial owner of 5% or
more of any class of equity security thereof or other financial interest
therein; (ii) if such person is an individual, any relative or spouse of such
individual, or any relative of such spouse (such relative being related to the
individual in question within the second degree) and any entity of which any
such relative, spouse, or relative of spouse is an executive officer, director,
partner, trustee or other fiduciary or is directly or indirectly the beneficial
owner of 5% or more of any class of equity security thereof or other financial
interest therein; (iii) if such person is an entity, any director, executive
officer, partner, trustee or other fiduciary or any direct or indirect
beneficial owner of 5% or more of any class of equity security of, or other
financial interest in, such entity; or (iv) any person that directly, or
COVENANT NOT TO COMPETE 3 Version 2
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with the person specified. For purposes of this definition,
"CONTROL" (including "CONTROLLING", "CONTROLLED BY" and "UNDER COMMON CONTROL
WITH") means the possession, direct or indirect, or the power to direct or cause
the direction of the management and policies of a person, whether through the
ownership of voting securities, by contract or otherwise.
ARTICLE 3
CONFIDENTIAL INFORMATION
During the Covenant Period and thereafter, Weimar and the Sellers shall
(and they shall cause their Affiliates to) hold in strict confidence, and shall
not disclose to any person (other than officers, directors, employees, agents
and consultants of Purchaser) any confidential information of Purchaser or its
Affiliates. For purposes of this ARTICLE 3, the term "CONFIDENTIAL INFORMATION"
shall include, without limitation, trade secrets, client and customer lists,
client or consultant contracts and the details thereof, pricing policies,
operational methods, marketing plans or strategies, business acquisition and
expansion plans, personnel acquisition plans and all other information
pertaining to the business of Purchaser or its Affiliates, whether previously
existing or pursuant to operation of the businesses purchased pursuant to the
Asset Purchase Agreement, that is not publicly available. Weimar and the Sellers
shall not (and they shall cause their Affiliates not to) use such confidential
information except for the sole benefit of Purchaser.
ARTICLE 4
REMEDIES
Purchaser, Weimar and the Sellers hereby agree that if Weimar or the
Sellers violate or threaten to violate any of the provisions of this Agreement,
it would be difficult to determine the entire cost, damage or injury which
Purchaser and its Affiliates would sustain. Notwithstanding the above, Weimar
and the Sellers acknowledge that if they violate or threaten to violate any of
the provisions of this Agreement, Purchaser may have no adequate remedy at law.
In that event, Purchaser shall have the right, in addition to any other rights
that may be available to it, to obtain in any court of competent jurisdiction
injunctive relief to restrain any violation or threatened violation by Weimar
and the Sellers of any provision of this Agreement or to compel specific
performance by Weimar and the Sellers of one or more of their obligations under
this Agreement (any requirements for posting of bonds for injunction are hereby
expressly waived). The seeking or obtaining by Purchaser of such injunctive
relief shall not foreclose or in any way limit the right of the Purchaser to
obtain a money judgment against Weimar or the Sellers for any damage to the
Purchaser that may result from any breach by Weimar or the Sellers of any
provision of this Agreement.
COVENANT NOT TO COMPETE 4 Version 2
ARTICLE 5
REFORMATION OF COVENANTS
SECTION 5.1 Weimar and the Sellers acknowledge that the covenants
contained in ARTICLES 2 AND 3 are reasonable in geographical and temporal scope
and in all other respects. If any court determines that any of such covenants,
or any part thereof, are unenforceable, then (a) the remainder of such covenants
shall not be affected by such determination and (b) those of such covenants that
are determined to be unenforceable because of the duration or scope thereof
shall be reformed by the court to reduce their duration or scope so as to render
the same enforceable against Weimar and the Sellers.
ARTICLE 6
MISCELLANEOUS
SECTION 6.1 SEVERABILITY. The unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
SECTION 6.2 WAIVERS. No delay or omission by Purchaser in exercising any
right of Purchaser under this Agreement shall operate as a waiver of that or any
other right. A waiver by Purchaser on any one occasion of any particular right
shall be effective only in that particular instance and shall not be construed
as a waiver of that or any other right on any other occasion.
SECTION 6.3 AMENDMENT OF THIS AGREEMENT. This Agreement may be amended
only by an amendment hereto in writing that is executed by Purchaser, Weimar and
the Sellers.
SECTION 6.4 HEADINGS FOR CONVENIENCE ONLY. The headings contained in this
Agreement are intended solely for the convenience of the parties to this
Agreement and shall not affect their rights.
SECTION 6.5 NOTICES. All notices and other communications required or
permitted to be delivered pursuant to any provision of this Agreement shall be
in writing and addressed as follows:
(a) If to the Sellers or Weimar, to:
c/o ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: 907/▇▇▇-▇▇▇▇
Facsimile: 907/258-3229
COVENANT NOT TO COMPETE 5 Version 2
(b) If to Purchaser, to:
Cornell Corrections, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: 713/▇▇▇-▇▇▇▇
Facsimile: 713/623-2853
With a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ Chase Tower
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: 713/▇▇▇-▇▇▇▇
Facsimile: 713/223-3717
The address of either party set forth above may be changed by such party
by delivering notice of such change to the other party to this Agreement. Any
notice mailed shall be deemed to have been given and received on the third
business day following the day of deposit in the United States mail.
SECTION 6.6 ASSIGNMENTS. The rights and obligations of the parties under
this Agreement may not be assigned, except that Purchaser may, at its option,
assign one or more of its rights or obligations under this Agreement to any of
its Affiliates or in connection with a transfer of all or substantially all of
the assets or stock of Purchaser or a merger or consolidation of Purchaser with
and into another corporation or other entity; provided, however, any such
assignment shall not relieve Purchaser of its obligations hereunder.
SECTION 6.7 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (regardless of
the laws that might otherwise govern under applicable Delaware principles of
conflicts of law) as to all matters, including without limitation matters of
validity, construction, effect, performance and remedies.
SECTION 6.8 ARBITRATION. Subject to ARTICLE 4 above:
(a) Any issue, controversy or claim arising out of or relating to
this Agreement or its alleged breach that cannot be resolved by mutual
agreement within 60 days' notice thereof shall be resolved exclusively by
final and binding arbitration in San Francisco, California in accordance
with the commercial arbitration rules of the American Arbitration
Association ("AAA"), and judgment on the award rendered by the arbitrator
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may be entered by any court having jurisdiction thereof; PROVIDED,
HOWEVER, that the parties shall have the right to agree among themselves
as to the amount of the claim.
(b) The arbitrators shall be selected by mutual agreement of the
parties, if possible. If the parties fail to reach agreement upon
appointment of arbitrators within 15 days following receipt by one party
of the other party's notice of arbitration, each party shall select one
arbitrator and the two resulting arbitrators shall mutually agree on a
third arbitrator from a list or lists of proposed arbitrators submitted by
AAA. The selection process shall be that which is set forth in the AAA
commercial arbitration rules then prevailing, except that (i) the number
of preemptory strikes shall not be limited and (ii) if the parties'
arbitrators fail to select an arbitrator from one or more lists, AAA shall
not have the power to make an appointment but, subject to (c) below, shall
continue to submit additional lists until an arbitrator has been selected.
Initially, however, promptly following its receipt of a request to submit
a list of proposed arbitrators, AAA shall convene the parties' arbitrators
in person or by telephone and attempt to facilitate their selection of the
third arbitrator by agreement. If an arbitrator should die, withdraw or
otherwise become incapable of serving, replacement shall be selected and
appointed in the same manner as the initial third arbitrator.
(c) If the third (or successor) arbitrator has not been selected
following submission of three or more lists by AAA, either party may
declare the existence of an impasse by giving written notice to the other.
In that event, the third (or successor) arbitrator shall be selected in
the following manner: Each party shall designate three proposed
arbitrators whose names appear on any of the lists previously submitted by
AAA. The parties shall then eliminate five of the designated names by
alternately striking one, and the person whose name remains shall serve as
arbitrator. If necessary, the party to make the first strike shall be
designated by lot.
(d) All aspects of the arbitration shall be confidential, and the
parties and arbitrators shall not disclose to others, or permit disclosure
of, any information related to the proceedings, including but not limited
to discovery, testimony and other evidence, briefs and the award.
(e) Upon the motion of either party, and for good cause shown, the
arbitrators, by majority vote, may make any order which justice requires
to protect a party from the disclosure of proprietary, privileged or
confidential business information, including orders (i) that depositions
or hearings be conducted with no one present except the lead attorney for
the respective parties and persons designated by a majority of the
arbitrators, and (ii) that depositions, exhibits, other documents filed
with the arbitrators or transcripts of the hearing be sealed and not
disclosed except as specified by the arbitrators.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
CORNELL CORRECTIONS, INC.
By:
Name:
Title:
____________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
ALLVEST CORPORATION
By:__________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Chairman
ST. ▇▇▇▇ INVESTMENTS, INC.
By:__________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Chairman
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