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Title: |
Asset Purchase Agreement |
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Entities: |
America Service Group Inc.; Bank of America, NA; King & Spalding LLP |
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Date: |
2001 |
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Size: |
Preview shows 34KB of 206KB total |
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Price: |
$48 |
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ID: |
#376380 |
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ASSET PURCHASE AGREEMENT
BETWEEN
PRISON HEALTH SERVICES, INC.,
CORRECTIONAL PHYSICIAN SERVICES, INC.,
KENAN UMAR,
AND
EMRE UMAR
DATED AS OF MARCH 29, 2000
{PAGE} 2
TABLE OF CONTENTS
(Not a part of the Agreement)
{TABLE}
{S} {C} {C}
1. PURCHASE AND SALE OF ASSETS ....................................................................... 1
1.1. Purchase And Sale Of Assets ....................................................................... 1
1.1.1. Leased Real Property ..................................................................... 2
1.1.2. Tangible Personal Property ............................................................... 2
1.1.3. Inventories And Supplies ................................................................. 2
1.1.4. Contract Rights .......................................................................... 2
1.1.5. Trade Name and other Intellectual Property ............................................... 2
1.1.6. Governmental Licenses, Permits and Approvals ............................................. 2
1.1.7. Computer Software ........................................................................ 3
1.1.8. Business Data ............................................................................ 3
1.1.9. Guaranties; Warranties; Indemnities ...................................................... 3
1.1.10. Surety, Payment and Performance Bonds .................................................... 3
1.1.11. Other Assets ............................................................................. 3
1.2. Excluded Assets ................................................................................... 3
1.2.1. Cash ..................................................................................... 3
1.2.2. Ordinary Course of Business Dispositions ................................................. 3
1.2.3. Nonassignable Permits .................................................................... 3
1.2.4. Rights Under This Agreement .............................................................. 3
1.2.5. Minute Books and Stock Ledger ............................................................ 3
1.2.6. Accounts Receivable ...................................................................... 4
1.2.7. Employee Benefit Plans ................................................................... 4
1.2.8. Excluded Contracts ....................................................................... 4
1.2.9. Vehicles ................................................................................. 4
1.2.10. Excess Pharmaceutical Inventory .......................................................... 4
1.2.11. Headquarters ............................................................................. 4
1.2.12. Other Excluded Assets .................................................................... 4
1.3. Conveyance ........................................................................................ 4
1.3. Conveyance ........................................................................................ 4
2. PURCHASE PRICE .................................................................................... 4
2.1. Purchase Price; Assumption of Liabilities ......................................................... 4
2.2. Initial Payment; Escrow ........................................................................... 5
2.3. Post-Closing Adjustment ........................................................................... 5
2.4. Method of Payment ................................................................................. 7
2.5. Allocation ........................................................................................ 7
3. ASSUMPTION OF LIABILITIES ......................................................................... 7
3.1. Assumed Liabilities ............................................................................... 7
{/TABLE}
{PAGE} 3
{TABLE}
{S} {C} {C}
3.2. Purchaser's Obligations ........................................................................... 7
3.4. Breach of Representations ......................................................................... 9
3.5. Insurance ......................................................................................... 9
3.6. Right of Enforcement and Settlement ............................................................... 9
4. REPRESENTATIONS AND WARRANTIES .................................................................... 9
4.1. Representations and Warranties of Seller .......................................................... 9
4.1.1. Corporate Organization ................................................................... 9
4.1.2. Authorization and Effect of Agreement .................................................... 9
4.1.3. No Restrictions Against Sale of the Assets ............................................... 10
4.1.4. Financial Information .................................................................... 10
4.1.5. No Material Adverse Change Relating to the Business ...................................... 10
4.1.6. Compliance with Laws ..................................................................... 11
4.1.7. Assets used in the Business .............................................................. 11
4.1.8. Assets other than Real Property .......................................................... 11
4.1.9. Real Property ............................................................................ 11
4.1.10. Insurance ................................................................................ 12
4.1.11. Intellectual Property .................................................................... 12
4.1.12. Litigation; Decrees ...................................................................... 13
4.1.13. Contract Rights .......................................................................... 13
4.1.14. Employee Contracts, Union Agreements and Benefit Plans ................................... 15
4.1.15. Labor Relations .......................................................................... 17
4.1.16. Personnel ................................................................................ 18
4.1.17. No Undisclosed Liabilities ............................................................... 18
4.1.18. Environmental Protection ................................................................. 18
4.1.19. Tax Matters .............................................................................. 19
4.1.20. Broker's and Finders' Fees ............................................................... 21
4.1.21. Permits .................................................................................. 21
4.1.22. Books and Records ........................................................................ 21
4.1.23. Shared Assets ............................................................................ 21
4.1.24. Major-Suppliers and Providers ............................................................ 21
4.1.25. Medicare and Medicaid .................................................................... 21
4.1.26. Solvency ................................................................................. 21
4.1.27. Untrue Statements and Omissions .......................................................... 22
4.2. Representations, Warranties And Certain Covenants of Purchaser .................................... 22
4.2.1. Corporate Organization ................................................................... 22
4.2.2. Authorization And Effect Of Agreement .................................................... 22
4.2.3. No Restrictions Against Purchase Of The Assets ........................................... 23
4.2.4. Untrue Statements and Omissions .......................................................... 23
5. PRE-CLOSING COVENANTS.............................................................................. 23
5.1. Press Releases .................................................................................... 23
5.2. Regulatory Filings ................................................................................ 23
5.3. Injunctions ....................................................................................... 23
{/TABLE}
ii
{PAGE} 4
{TABLE}
{S} {C} {C}
5.4. Investigation By Purchaser ........................................................................ 24
5.5. Confidential Nature of Information ................................................................ 24
5.6. Operation of the Business ......................................................................... 24
5.7. Purchaser's Supplemental Schedules ................................................................ 26
5.8. Seller's Supplemental Schedules ................................................................... 26
5.9. No Shop ........................................................................................... 26
5.10. Satisfaction Of Conditions ........................................................................ 26
6. CONDITIONS PRECEDENT TO THE CLOSING ............................................................... 27
6.1. Conditions Precedent To Obligations Of Purchaser .................................................. 27
6.1.1. No Misrepresentation Or Breach Of Covenants And Warranties ............................... 27
6.1.2. Transfer Documents ....................................................................... 27
6.1.3. No Legal Obstruction ..................................................................... 27
6.1.5. Opinion of Counsel For Seller ............................................................ 28
6.1.6. Consents Under Key Agreements ............................................................ 28
6.1.7. No Material Adverse Change ............................................................... 28
6.1.8. Termination Statements ................................................................... 28
6.1.9. Headquarters Sublease .................................................................... 28
6.1.10. Payments to Significant Vendors .......................................................... 28
6.1.11. Fairness Opinion ......................................................................... 28
6.1.12. Termination of Employment Agreement ...................................................... 28
6.1.13. Name Change .............................................................................. 29
6.1.14. Consulting and Non-Competition Agreements ................................................ 29
6.1.15. Financing ................................................................................ 29
6.1.16. Approval of Board of Directors ........................................................... 29
6.1.17. Insurance ................................................................................ 29
6.1.18. No Undisclosed Liabilities ............................................................... 29
6.1.19. Escrow Agreement ......................................................................... 29
6.2. Conditions Precedent To Obligations Of Seller ..................................................... 29
6.2.1. No Misrepresentation Or Breach Of Covenants And Warranties ............................... 29
6.2.2. Instruments Of Assumption ................................................................ 30
6.2.4. No Legal Obstruction ..................................................................... 30
6.2.5. Certificates ............................................................................. 30
6.2.6. Opinion of Counsel For Purchaser ......................................................... 30
6.2.7. Tradename License ........................................................................ 31
6.2.8. Escrow Agreement ......................................................................... 31
7. THE CLOSING ....................................................................................... 31
7.1. The Closing ....................................................................................... 31
7.3. Seller's Obligations ................................................. ............................ 31
7.3.1. Transfer Documents ....................................................................... 31
7.3.2. Receipts ................................................................................. 31
7.3.3. Escrow Agreement .......................................................................... 31
{/TABLE}
iii
{PAGE} 5
{TABLE}
{S} {C} {C}
7.3.4. Other .................................................................................... 31
7.4. Purchaser's Obligations ........................................................................... 31
7.4.1. Purchase Price ........................................................................... 31
7.4.2. Assumption Instruments ................................................................... 31
7.4.3. Escrow Agreement ......................................................................... 31
7.4.4. Other .................................................................................... 32
8. SURVIVAL AND INDEMNIFICATION ...................................................................... 32
8.1. Survival .......................................................................................... 32
8.1.1. Survival of Representations And Warranties ............................................... 32
8.1.2. Survival of Covenants .................................................................... 32
8.2. Limitations On Indemnification; Right of Offset ................................................... 32
8.2.1. With Respect To Certain Representations And Warranties ................................... 32
8.2.2. With Respect To Seller's Obligations ..................................................... 33
8.2.3. Right of Offset .......................................................................... 33
8.3. Indemnification ................................................................................... 33
8.3.1. Indemnification By Seller ................................................................ 33
8.3.2. Indemnification By Purchaser ............................................................. 34
8.3.3. Cumulative Rights ........................................................................ 34
8.3.4. Indemnity Payment; Indemnitee; Indemnifying Party ........................................ 34
8.4. Defense of Claims ................................................................................. 34
8.4.1. Third Party Claims ....................................................................... 34
8.4.2. Direct Claims ............................................................................ 36
8.4.3. Failure to Give Timely Notice ............................................................ 36
8.4.4. Subrogation .............................................................................. 36
8.4.5. Payment .................................................................................. 36
8.5. Indemnification in Case of Indemnitee Negligence .................................................. 36
9. OTHER POST-CLOSING COVENANTS ...................................................................... 36
9.1. Employees ......................................................................................... 36
9.1.1. Termination and Offers of Employment for Employees ....................................... 36
9.1.2. Seller's Post-Closing Operations ......................................................... 37
9.2. General Post-Closing Matters ...................................................................... 37
9.2.1. Post-Closing Notifications ............................................................... 37
9.2.2. Access ................................................................................... 37
9.2.3. Guarantees, Etc .......................................................................... 38
9.2.4. Rights of Endorsement .................................................................... 38
9.2.5. Apportionment and Adjustment ............................................................. 38
9.2.6. Payment of IBNR Invoices ................................................................. 38
9.3. Nonassignable Contracts ........................................................................... 39
9.3.1. Nonassignability ......................................................................... 39
9.3.2. Seller To Use Reasonable Efforts ......................................................... 39
9.3.3. If Waivers Or Consents Cannot Be Obtained ................................................ 39
9.3.4. Obligation of Purchaser To Perform ....................................................... 39
{/TABLE}
iv
{PAGE} 6
{TABLE}
{S} {C} {C}
9.4. Non-Competition ................................................................................... 40
9.5. Transfer Taxes .................................................................................... 40
9.6. Straddle Patients ................................................................................. 40
9.7. Support Services .................................................................................. 41
9.8. Audited Financial Statements ...................................................................... 41
9.9. Calculation NY Rebate ............................................................................. 42
10. TERMINATION ....................................................................................... 42
10.1. Termination ....................................................................................... 42
10.2. Expenses In The Event Of Termination .............................................................. 42
11. MISCELLANEOUS PROVISIONS .......................................................................... 42
11.1. Notices ........................................................................................... 42
11.2. Expenses .......................................................................................... 44
11.3. Successors And Assigns ............................................................................ 44
11.4. Waiver; Effect of Buyer's Investigation ........................................................... 44
11.5. Entire Agreement .................................................................................. 45
11.6. Amendments, Supplements, Etc. ..................................................................... 45
11.7. Rights Of The Parties ............................................................................. 45
11.8. Further Assurances ................................................................................ 45
11.9. Bulk Sales ........................................................................................ 45
11.10. Transfer .......................................................................................... 45
11.11. Governing Law ..................................................................................... 45
11.12. Execution In Counterparts ......................................................................... 46
11.14. Certain Interpretive Matters And Definitions ...................................................... 46
11.15. Cross-References .................................................................................. 46
11.16. Severability ...................................................................................... 46
11.17. Specific Performance .............................................................................. 46
11.18. Arbitration ....................................................................................... 47
{/TABLE}
v
{PAGE} 7
TABLE OF SCHEDULES
(Not a part of the Agreement)
{TABLE}
{S} {C}
Schedule 1.1.1 Leased Real Property
Schedule 1.1.2 Tangible Personal Property
Schedule 1.1.5 Intellectual Property Rights
Schedule 1.1.6 Permits
Schedule 1.17A Computer Software
Schedule 1.17B Additional Computer Software
Schedule 1.1.10 Performance Bonds
Schedule 1.2.3 Nonassignable Permits
Schedule 1.2.12 Other Excluded Assets
Schedule 2.3 Escrow Agreement
Schedule 2.5 Purchase Price Allocation
Schedule 4.1.3 Conflicts, Defaults, Violations
Schedule 4.1.5 Material Adverse Changes
Schedule 4.1.6 Material Violations of Law
Schedule 4.1.7 Additional Excluded Assets
Schedule 4.1.8 Certain Liens on Tangible Personal Property
Schedule 4.1.10 Insurance
Schedule 4.1.12 Material Litigation or Violation Of Decree
Schedule 4.1.13 Material Contracts
Schedule 4.1.14(a) Employee Plans/ERISA
Schedule 4.1.14(b) Non-Compliance with Employee Plans
Schedule 4.1.15 Labor Matters
Schedule 4.1.16 Personnel of the Business
Schedule 4.1.18(b) Environmental Matters
Schedule 4.1.19(c) Tax Matters
Schedule 4.1.21 Permits
Schedule 4.1.23 Shared Assets
Schedule 4.1.24 Major Suppliers and Customers
Schedule 4.2.3 Purchaser's Permits and Consents
Schedule 5.6(b) Pre-Closing Activities
Schedule 6.1.2 Transfer Documents
Schedule 6.1.5 Opinion of Counsel for Seller
Schedule 6.1.6 Key Agreements
Schedule 6.1.8 Required Termination Statements
Schedule 6.1.10 Payments to Significant Vendors
Schedule 6.1.14(a) Non-Competition Agreement for Dr. Kenan Umar
Schedule 6.1.14(b) Non-Competition Agreement for Mr. Emre Umar
Schedule 6.1.14(c) Consulting Agreement for Dr. Kenan Umar
Schedule 6.1.14(d) Consulting Agreement for Mr. Emre Umar
Schedule 6.2.2 Assumption Instruments
Schedule 6.2.6 Opinion of Counsel for Purchaser
Schedule 6.2.7 Tradename License Agreement
Schedule 9.1 List of Employees
Schedule 9.2.3 Seller Guarantees
{/TABLE}
vi
{PAGE} 8
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of the 29th day of March, 2000, between PRISON HEALTH SERVICES,
INC., a Delaware corporation ("Purchaser"); CORRECTIONAL PHYSICIAN SERVICES,
INC., a Pennsylvania corporation ("Seller"); KENAN UMAR, a resident of the
Commonwealth of Pennsylvania ("Dr. Umar"); and EMRE UMAR, a resident of the
Commonwealth of Pennsylvania ("Mr. Umar") (Dr. Umar and Mr. Umar and hereinafter
referred to collectively as the "Shareholders").
RECITALS
A. Seller presently conducts the business (the
"Business") of providing managed healthcare services (i) to the Pennsylvania
Department of Corrections with respect to inmates in the Eastern Region of
Pennsylvania pursuant to that certain Comprehensive Medical Services Agreement,
dated January 1, 1998, between Seller and the Commonwealth of Pennsylvania,
Department of Corrections, as amended (the "Pa Contract") and (ii) to the State
of New York, Department of Correctional Services pursuant to an undated Health
Services Agreement (#C160656) between Seller and the State of New York,
Department of Correctional Services effective as of June 1, 1998, as amended
(the "NY Contract").
B. On the date of this Agreement Seller conducts the
Business pursuant to the Pa Contract at the following facilities: Chester, Coal
Township, Dallas, Frackville, Graterford, Mahanoy, Retreat & Waymart. On the
date of this Agreement, Seller conducts the Business pursuant to the NY Contract
at the following facilities: Arthur Kill, Bayview, Beacon, Bedford Hills,
Downstate, Fishkill, Green Haven, Queensboro, Sing Sing, Taconic, Mid-Orange and
Otisville. The facilities named in this recital, together with any additional
facilities made a part of either the Pa Contract or the NY Contract between the
date of this Agreement and the Closing Date (as hereinafter defined) are
hereinafter referred to, collectively, as the "Sites."
C. Seller desires to sell and assign to Purchaser, and
Purchaser desires to purchase and assume from Seller, specified assets and
liabilities of the Business on the terms and subject to the conditions set forth
in this Agreement.
D. America Service Group Inc., a Delaware corporation
and the parent corporation of Purchaser ("ASG"), has guaranteed all obligations
of Purchaser pursuant to this Agreement.
E. The Shareholders own 100% of the issued and
outstanding shares of capital stock of Seller.
NOW, THEREFORE, the parties hereto agree as follows:
1. PURCHASE AND SALE OF ASSETS
1.1. Purchase And Sale Of Assets. On the terms and subject to the
conditions hereof, at the Closing (as hereinafter defined), Seller will sell,
transfer, convey, assign and deliver
{PAGE} 9
("Transfer") to Purchaser, and Purchaser will purchase and accept from Seller,
all of Seller's right, title and interest in and to the assets and properties
described in this Section 1.1 (the "Assets"):
1.1.1. Leased Real Property Subject to Section 9.3, the
rights and incidents of interest of Seller in and to the real property leases
listed on Schedule 1.1.1 and certain of Seller's rights in and to the real
property leased by Seller pursuant thereto, including all buildings, structures,
fixtures and improvements located thereon to the extent subject to such leases,
together with such additions thereto as shall have been made prior to the
Closing (the "Leased Real Property").
1.1.2. Tangible Personal Property. All furniture, fixtures,
office equipment, telecommunications equipment, medical equipment, and other
tangible personal property (other than Inventory (as hereinafter defined)),
excluding (i) the telephone switch and handsets and data processing equipment
located in the Headquarters (as hereinafter defined) and (ii) the data
processing equipment located at the Sites, held or owned by Seller as of the
Closing which is used primarily in the Business, including, without limitation,
those items of tangible personal property described on Schedule 1.1.2
(collectively, the "Tangible Personal Property").
1.1.3. Inventories And Supplies. All office and medical
supplies and pharmaceuticals held or owned by Seller or held on consignment as
of the Closing on hand at the Sites on the day prior to the Closing Date to the
extent not in excess of normal quantities (collectively, "Inventory");
1.1.4. Contract Rights. Subject to Section 9.3, certain
rights and incidents of interest of Seller as of the Closing in and to (i) all
leases pertaining to Leased Real Property; (ii) those Contracts which are
listed on Schedule 1.1.1 or 4.1.13 (unless indicated to the contrary
thereon), or are of a type which would have been listed on Schedule 4.1.13
except that they provide for payments in an amount less than the applicable
amount set forth in Section 4.1.13 (collectively, the "Assumed Contracts"); and
(iii) all prepaid expenses and security deposits with respect to the Business;
provided that contracts for insurance referred to in Section 3.5 shall not be
included in the Assets;
1.1.5. Trade Name and other Intellectual Property. All
right, title and interest of Seller in and to the name "Correctional Physician
Services" and all other trademarks, trade names, service marks, copyrights, any
applications and registrations therefor, proprietary rights, trade secrets
(including supplier and provider lists), personnel and provider databases,
know-how, manuals, processes, techniques and all rights related thereto and all
right, title and interest of Seller in and to the Seller's web site
(collectively, "Intellectual Property Rights") of Seller used primarily in the
Business or which have in the past been used in the Business and are now
dormant, including without limitation, those listed or described on
Schedule 1.1.5;
1.1.6. Governmental Licenses, Permits and Approvals. All
rights and incidents of interest in and to all transferable licenses, permits
and approvals ("Permits") issued to Seller by any Governmental Agency (as
hereinafter defined) relating primarily to the Business and in effect as of the
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