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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 24, 1996
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Commission file number 0-12410
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BI Incorporated
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(Exact name of registrant as specified in its charter)
Colorado 0-12410 84-0769926
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
6400 Lookout Road, Boulder, Colorado 80301
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 530-2911
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Item 2. Acquisition or Disposition of Assets
On October 10, 1996, the Company effected a purchase of 100% of the outstanding
stock of Community Corrections Corporation, (CCC), Justice Alternatives, Inc.
(JAI) and Tennessee Probation Services (TPS). The purchase price was 400,000
shares of restricted common stock of the Company and $3,000,000.
Item 7. Financial Statements, Proforma Financial Information and Exhibits
a. b. The following historical financial statements of CCC, JAI and TPS
and proforma financial information of the Companies will be filed
on Form 8 no later than December 24, 1996. Extension is required
in order to complete an audit of the companies for the year ended
March 31, 1996 and obtain the appropriate financial statements to
present proforma financial information.
Financial Statements to be filed no later than December 24, 1996:
Report of Independent Accountants
Combined Balance Sheet at March 31, 1996
Combined Statement of Operations and Retained Earnings for
the year ended March 31, 1996
Combined Statement of Cash Flows for the year ended
March 31, 1996
Notes to the Financial Statements
Proforma financial information to be filed no later than December 24,
1996
Condensed Combined Balance Sheet at June 30, 1996 (unaudited)
Condensed Combined Statement of Operations for the twelve
months ended June 30, 1996 (unaudited)
Explanatory Notes
c. Exhibits
2.1 Stock Purchase Agreement dated October 10, 1996
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Pursuant to the requirements of the Securities Exchange Act of 1934 the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BI Incorporated
Date 10/24/96 /s/ Jackie A. Chamberlin
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Jackie A. Chamberlin
Chief Financial Officer
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of October 10, 1996 (this
"Agreement"), by and among BI Incorporated, a Colorado corporation ("BI") and
all the shareholders (the "Shareholders") of Community Corrections Corporation,
a Georgia corporation ("CCC"), Justice Alternatives, Inc., a Georgia corporation
("JAI"), and Tennessee Probation Services, Inc., a Tennessee corporation
("TPS"), as listed on Schedule 1 to this Agreement.
WHEREAS, the Shareholders desire to sell, and BI desires to purchase,
all of the issued and outstanding capital stock (the "Shares") of CCC, JAI and
TPS (the "Corporations") for the consideration and on the terms set forth in
this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I
SALE AND TRANSFER OF SHARES; CLOSING
1.1. Sale and Purchase. Subject to the terms and conditions of this
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Agreement, at the Closing (as defined in Section 1.3), the Shareholders shall
sell and transfer the Shares to BI, and BI shall purchase the Shares from the
Shareholders.
1.2 Purchase Price. The aggregate purchase price (the "Purchase
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Price") for the Shares shall be (a) $3,000,000 (the "Cash Consideration") and
(b) 400,000 shares of common stock of BI (the "BI Stock"). The Cash
Consideration and BI Stock shall be paid to the Shareholders as set forth on
Schedule 1 to this Agreement.
1.3 Closing. Subject to Section 8.1, the closing of the purchase and
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sale of the Shares (the "Closing") shall take place at 10:00 a.m., M.D.T., on
October 10, 1996 (provided that the closing conditions set forth in Article VI
have been met or waived as provided in Article VI at or prior to the Closing),
at the offices of Ireland, Stapleton, Pryor & Pascoe, P.C., Suite 2600, 1675
Broadway, Denver, Colorado 80202, or on such other date, or at such other time
or place, as is agreed to in writing by BI and a majority of the Shareholders.
The date on which the Closing shall occur is referred to herein as the "Closing
Date."
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders, jointly and severally, represent and warrant to BI
that the statements contained in this Article III are true and correct, except
as set forth in the disclosure letter delivered to BI on or before the date of
this Agreement (the "Disclosure Letter"). The Disclosure Letter shall be
arranged in sections corresponding to the numbered and lettered sections
contained in this Article II and the disclosure in any section shall qualify
only the corresponding section in this Article II.
2.1 Organization of the Corporations. Each of the Corporations is a
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corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation, has all requisite corporate power to own,
lease and operate its property and to carry on its business as now being
conducted and as proposed to be conducted and is duly qualified or licensed to
do business and is in good standing as a foreign corporation in each
jurisdiction in which the failure to be so qualified or licensed would, in the
aggregate, have or result in a material adverse effect on the prospects,
business, assets (including intangible assets), properties, liabilities, results
of operations or condition (financial or otherwise) ("Material Adverse Effect")
of such Corporation. None of the Corporations directly or indirectly owns any
equity or similar interest in, or any interest convertible into or exchangeable
or exercisable for any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity.
2.2 Capital Structure.
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(a) The authorized capital stock of each Corporation is as set
forth in Section 2.2(a) of the Disclosure Letter.
(b) Except as set forth in Section 2.2(a) of the Disclosure
Letter, there are no equity securities of any class of or any security
exchangeable into or exercisable for such equity securities, issued, reserved
for issuance or outstanding. There are no options, warrants, calls, rights,
commitments or agreements of any character to which any Corporation is a party,
or by which any Corporation is bound, obligating any Corporation to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock of such Corporation or obligating such Corporation to grant or
enter into any such option, warrant, call, right, commitment or agreement. There
are no voting trusts, proxies or other agreements or understandings
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with respect to the shares of capital stock of any Corporation. There are no
obligations, contingent or otherwise, of any Corporation to repurchase, redeem
or otherwise acquire any shares of its capital stock or to provide funds to or
make any investment (in the form of a loan, capital contribution or otherwise)
in any other entity.
2.3 Authority; No Conflict; Required Filings and Consents.
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(a) Each of the Shareholders has all requisite power and
authority to enter into this Agreement and to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of each Shareholder. This
Agreement has been duly executed and delivered by each Shareholder and
constitutes a valid and binding obligation of each Shareholder, enforceable in
accordance with its terms.
(b) The execution and delivery of this Agreement by the
Shareholders does not, and the consummation of the transactions contemplated by
this Agreement will not, (i) conflict with, or result in any violation or breach
of any provision of the Articles of Incorporation (the "Articles of
Incorporation"), or the Bylaws (the "Bylaws"), of any Corporation, (ii) result
in any violation or breach of, or constitute (with or without notice or lapse of
time, or both) a default (or give rise to a right of termination, cancellation
or acceleration of any obligation or loss of any benefit) under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, lease,
contract or other agreement, instrument or obligation to which any Corporation
is a party or by which it or any of its properties or assets may be bound, or
(iii) conflict or violate any permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to any
Corporation or any of its properties or assets, except in the case of (ii) and
(iii) for any such violations, breaches, defaults, terminations, cancellations,
accelerations or conflicts which would not, in the aggregate, have a Material
Adverse Effect on such Corporation.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality ("Governmental
Entity"), is required by or with respect to any Corporation in connection with
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for such consents, approvals, orders,
authorizations, registrations, declarations
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and filings as may be required under applicable state securities laws.
2.4 Ownership. Each of the Shareholders is the beneficial owner of
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the Shares listed opposite his or her name on Schedule 1, has good and
marketable title to such shares free and clear of any encumbrance and has the
unconditional right to sell such shares to BI pursuant to the terms of this
Agreement.
2.5 Investment Intent. Each of the Shareholders acknowledges that BI
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is issuing the BI Stock pursuant to the terms of the this Agreement in reliance
upon the exemption afforded by Section 4(2) of the Securities Act of 1933, as
amended (the "Securities Act"), for transactions by an issuer not involving any
public offering. Each Shareholder (1) is acquiring such BI Stock for investment
and without any view toward distribution of any of such BI Stock to any other
person, (ii) will not sell or otherwise dispose of such BI Stock except in
compliance with the registration requirements or exemption provisions under the
Securities Act, (iii) before any sale or other disposition of any of such BI
Stock other than in a sale registered under the Securities Act, or pursuant to
Rule 144 under the Securities Act unless BI shall have been advised by counsel
that the sale does not meet the requirements of Rule 144 for the sale, will
deliver to BI an opinion of counsel, which counsel shall be reasonably
satisfactory to BI, to the effect that such registration is unnecessary, and
(iv) agrees and understands that the certificate representing such BI Stock
shall be affixed with an appropriate legend reflecting such restrictions.
2.6 Financial Statements.
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(a) The Shareholders have heretofore delivered or made available
to BI: (i) balance sheets of each Corporation as at March 31, 1995 and March 31,
1996, and statements of operations, cash flows and changes in common stock and
other stockholders' equity for each of the years then ended, the latter audited
by Price Waterhouse, independent certified public accountants whose audit
reports thereon are included therein; and (ii) an unaudited balance sheet as at
June 30, 1996 (the "Balance Sheets") and unaudited statements of operations for
the three month period then ended (collectively, the "Financial Statements").
(b) Each of the Financial Statements (including, in each case, any
related notes), complied, as of their respective dates, in all material respects
with all applicable accounting requirements with respect thereto, was prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods involved and fairly presented the
financial position of each Corporation as at the
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respective dates and the results of its operations and cash flows for the
periods indicated, except that the Balance Sheets and interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount.
2.7 No Undisclosed Liabilities. None of the Corporations has any
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liabilities or obligations (whether accrued, contingent, due or to become due or
whether or not required to be reflected in financial statements in accordance
with generally accepted accounting principles) other than (i) liabilities
reflected in the Balance Sheets or (ii) normal or recurring liabilities incurred
since the date of the Balance Sheets in the ordinary course of business
consistent with past practices.
2.8 Accounts Receivable. All accounts receivable of each Corporation,
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whether reflected in the Balance Sheets or otherwise, represent sales actually
made in the ordinary course of business, and are current and collectible net of
any reserves shown on the Balance Sheets (which reserves were calculated
consistent with past practices).
2.9 Absence of Certain Changes or Events. Since the date of the
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Balance Sheets, each Corporation has conducted its business only in the ordinary
course and in a manner consistent with past practices and, since such date,
there has not been: (1) any material adverse change in the prospects, business
assets (including intangible assets), properties, liabilities, results of
operations or condition (financial or otherwise) of such Corporation; or (ii)
any action or event that would have required the consent of BI pursuant to
Section 4.1 had such action or event occurred after the date of this Agreement.
2.10 Properties; Encumbrances. Each Corporation has good, valid and
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marketable title to, or a valid leasehold interest in, all the properties and
assets which it purports to own or lease (real, personal and mixed, tangible and
intangible), including, without limitation, all the properties and assets
reflected in the Balance Sheets (except for (a) personal property sold since the
date of the Balance Sheets in the ordinary course of business and consistent
with past practices, and (b) the real property located at 2306 Tudser Mill Road,
Conyers, Georgia (the "CCC Land") which shall be conveyed by CCC to the its
shareholders prior to the Closing). Prior to CCC's transfer of the CCC Land to
the shareholders of CCC, CCC had good, valid and marketable title to the CCC
Land free and clear of any encumbrance or claim. All properties and assets
reflected in the Balance Sheets are free and clear of all title defects or
objections, liens, claims, charges, security interests or other encumbrances of
any nature whatsoever, except for liens reflected on the Balance Sheets and
liens for current taxes not yet due.
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2.11 Bank Accounts. Section 2.11 of the Disclosure Letter sets forth
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the names and locations of all banks, trust companies, savings and loan
associations and other financial institutions at which each Corporation
maintains safe deposit boxes or accounts of any nature and the names of all
persons authorized to draw thereon, make withdrawals therefrom or have access
thereto.
2.12 Taxes.
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(a) Each Corporation has filed all federal, and all state,
local, foreign and provincial Tax Returns (as defined herein) required to have
been filed on or prior to the date hereof, or appropriate extensions therefor
have been properly obtained, and such Tax Returns are true, correct and
complete, except to the extent that any failure to be true, correct and complete
would not, individually or in the aggregate, have a Material Adverse Effect on
such Corporation.
(b) All Taxes (as defined herein) shown to be due on such Tax
Returns have been timely paid or such Taxes are being contested in good faith
and in a timely manner, and each Corporation has complied with all rules and
regulations relating to the withholding of Taxes, except to the extent that any
failure to comply with such rules and regulations would not, individually or in
the aggregate, have a Material Adverse Effect on such Corporation.
(c) For purposes of this Agreement: (i) "Taxes" means any
federal, state, local, foreign or provincial income, gross receipts, property,
sales, use, license, excise, franchise, employment, payroll, withholding,
alternative or added minimum, ad valorem, transfer or excise tax, or any other
tax, custom, duty, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or penalty, imposed by any
governmental entity; and (ii) "Tax Return" means any return, report or similar
statement (including any attached schedules) required to be filed with respect
to any Tax, including any information return, claim for refund, amended return
or declaration of estimated Tax.
2.13 Intellectual Property. Each Corporation owns, or has a valid
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license to use or otherwise possess legally enforceable rights to use, all
patents and applications for patents, trademarks, trade names, service marks,
copyrights, maskworks, schematics, technology, know-how, trade secrets, computer
software programs or applications and tangible or intangible proprietary
information or material that are necessary to conduct its business as currently
conducted.
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2.14 Contracts and Commitments. Section 2.14 of the Disclosure Letter
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contains a list of all material agreements, contracts, leases or other
commitments in effect to which each Corporation is a party, copies of each of
which have been delivered to or have been made available to BI prior to the date
of this Agreement. Except as set forth in Section 2.14 of the Disclosure Letter:
(a) All such agreements, contracts, leases and commitments are
in full force and effect and are valid, binding and enforceable in accordance
with their respective terms;
(b) No Corporation has any outstanding contracts with officers,
employees, agents, consultants, advisors, salespeople, sales representatives,
distributors or dealers that are not cancelable by it on notice of not longer
than 30 days and without liability, penalty or premium or that provide for the
payment of any bonus or commission based on sales or earnings;
(c) No Corporation has any employment agreement, or any other
agreement that contains any severance or termination pay liabilities or
obligations; and
(d) No Corporation is in default under or in violation of, nor
is there any basis for any valid claim of default under or in violation of, any
material agreement, contract, lease or commitment to which it is a party or by
which it is bound.
2.15 Customers and Suppliers. Sections 2.15(a) and (b) of the
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Disclosure Letter respectively set forth (a) the largest ten customers of each
Corporation in terms of sales during the fiscal year ended March 31, 1996,
showing the approximate total sales by to each such customer during such fiscal
year (and no other customer of any Corporation will account for more than 5% of
its sales during the current fiscal year); and (b) a list of the five largest
suppliers of each Corporation in terms of purchases during the fiscal year ended
March 31, 1996, showing the approximate total purchases from each supplier
during such fiscal year (and no other supplier of any Corporation will account
for more than 5% of its purchases during the current fiscal year). Since March
31, 1996, there has not been any material adverse change in the business
relationship of any Corporation with any customer or supplier named in Sections
2.15(a) and 2.15(b) of the Disclosure Letter.
2.16 Insurance. Section 2.16 of the Disclosure Letter contains an
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accurate and complete list of all policies of fire, liability, workers'
compensation and other forms of insurance, including, but not limited to, all
group insurance programs in effect for employees of each Corporation owned or
held by such
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Corporation. All such policies are in full force and effect, all premiums with
respect thereto covering all periods up to and including the date of the Closing
have been paid and no notice of cancellation or termination has been received
with respect to any such policy. Such policies (i) are sufficient for compliance
with all requirements of law and of all agreements to which each Corporation is
a party; (ii) are valid, outstanding and enforceable policies; (iii) provide
insurance coverage for the assets and operations of each Corporation in scope
and amount customary and reasonable for the business in which it is engaged;
(iv) will remain in full force and effect through the respective dates set forth
in Section 2.16 of the Disclosure Letter without the payment of additional
premiums; and (v) will not in any way be affected by or terminate or lapse by
reason of, the transactions contemplated by this Agreement. Since March 31,
1996, no Corporation has been refused any insurance with respect to its assets
or operations, nor has its coverage been limited, by any insurance carrier to
which it has applied for any such insurance or with which it has carried
insurance.
2.17 Labor Difficulties. None of the employees of any Corporation are
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represented by a union. Each Corporation (i) is in compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours and (ii) is not engaged in any
unfair labor practice.
2.18 Litigation. There is no action, suit or proceeding, claim,
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arbitration or investigation pending or, to the best knowledge of each
Shareholder, threatened against any Corporation which would have or result in a
Material Adverse Effect on such Corporation or impair the ability of the
Shareholders to consummate the transactions contemplated by this Agreement.
2.19 Employee Benefit Plans.
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(a) Section 2.19(a) of the Disclosure Letter sets forth all
employee benefit plans (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) and all bonus, stock option,
stock appreciation right, restricted stock, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other similar employee
benefit plans, and all unexpired employment or severance agreements, written or
otherwise, for the benefit of, or relating to, any current or former employee of
any Corporation or any trade or business (whether or not incorporated) which is
under common control with any Corporation (an "ERISA Affiliate") within the
meaning of section 414 of the Code (together, the "Employee Plans").
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(b) With respect to each Employee Plan, the Shareholders have made
available to BI a true and correct copy of (i) the most recent annual report
(Form 5500) filed with the IRS, (ii) such Employee Plan and the most recent
summary plan description thereof, (iii) each trust agreement and group annuity
contract, if any, relating to such Employee Plan and (iv) the most recent
actuarial report or valuation relating to an Employee Plan subject to Title IV
of ERISA.
(c) With respect to the Employee Plans, individually and in the
aggregate, no event has occurred, and to the best knowledge of each Shareholder,
there exists no condition or set of circumstances in connection with which any
Corporation could be subject to any liability that would have a Material Adverse
Effect on such Corporation under ERISA, the Code or any other applicable law
(including the law of contracts) and that is not properly accounted for on the
Balance Sheets.
(d) None of the Employee Plans is a "multiemployer pension plan," as
such term is defined in section 3(37) of ERISA.
(e) Each of the Employee Plans that is intended to be "qualified"
within the meaning of section 401(a) of the Code is so qualified.
2.20 Personnel.
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(a) Section 2.20(a) of the Disclosure Letter sets forth a true and
complete list of: (i) the names and current salaries of all directors and
elected and appointed officers of each Corporation, the number of shares of
capital stock of such Corporation, owned beneficially or of record, or both, by
each such person and the family relationships, if any, among such persons; and
(ii) the wage rates for nonsalaried and nonexecutive salaried employees of each
Corporation, by classification.
(b) Section 2.20(b) of the Disclosure Letter sets forth a
summary of each Corporation's policy concerning pay raises for officers and
other employees of such Corporation.
2.21 Compliance with Laws. Each Corporation has complied with, is not
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in violation of, and has not received any notices of violation with respect to,
any federal, state, local or foreign statute, law or regulation with respect to
the conduct of its business, or the ownership or operation of its business,
except for failures to comply or violations which would not in the aggregate
have or result in a Material Adverse Effect on such Corporation.
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2.22 Brokers and Finders. No broker, finder or investment banker is
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entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made by or on
behalf of the Shareholders.
2.23 Disclosure. No representations or warranties by the Shareholders
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in this Agreement and no statement contained in any document (including, without
limitation, the Financial Statements and the Disclosure Letter) or certificate
furnished or to be furnished by the Shareholders to BI or any of its
representatives pursuant to the provisions hereof, contains or will contain any
untrue statement of material fact or omits or will omit to state any material
fact necessary, in light of the circumstances under which it was made, in order
to make the statements herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BI
BI represents and warrants to each Shareholders as follows:
3.1 Organization of BI. BI is a corporation duly organized, validly
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existing and in good standing under the laws of the State of Colorado, has all
requisite corporate power to own, lease and operate its property and to carry on
its business as now being conducted, and is duly qualified or licensed to do
business and is in good standing as a foreign corporation in each jurisdiction
in which the failure to be so qualified or licensed would have or result in a
Material Adverse Effect on BI.
3.2 Authority; No Conflict; Required Filings and Consents.
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(a) BI has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of BI. This Agreement has been duly executed and
delivered by BI and constitutes the valid and binding obligation of BI,
enforceable in accordance with its terms.
(b) The execution and delivery of this Agreement by BI does not,
and the consummation of the transactions contemplated by this Agreement will
not, (i) conflict with, or result in any violation or breach of any provision of
the
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Articles of Incorporation, as amended, of BI or the Bylaws of BI, (ii) result in
any violation or breach of, or constitute (with or without notice or lapse of
time, or both) a default (or give rise to a right of termination, cancellation
or acceleration of any obligation or loss of any benefit) under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, lease,
contract or other agreement, instrument or obligation to which BI is a party or
by which BI or any of its properties or assets may be bound, or (iii) conflict
or violate any permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to BI or any of its
properties or assets, except in the case of (ii) and (iii) for any such
violations, breaches, defaults, terminations, cancellations, accelerations or
conflicts which would not, in the aggregate, have or result in a Material
Adverse Effect on BI or impair the ability of BI to consummate the transactions
contemplated by this Agreement.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity, is required
by or with respect to BI in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby, except
for (i) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable state securities
laws and (ii) such other consents, authorizations, filings, approvals and
registrations which, if not obtained or made, would not, in the aggregate, have
or result in a Material Adverse Effect on BI or impair the ability of BI to
consummate the transactions contemplated by this Agreement.
3.3 SEC Filings; Financial Statements.
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(a) BI has made available to the Shareholders all forms, reports and
documents filed by BI with the SEC since June 30, 1995 (collectively, the "BI
SEC Reports"). The BI SEC Reports (i) at the time filed, complied in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act, as the case may be, and (ii) did not at the time they were filed
(or if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing) contain any untrue statement of a material fact
or omit to state a material fact required to be stated in such BI SEC Reports or
necessary in order to make the statements in such BI SEC Reports, in the light
of the circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements (including, in
each case, any related notes) contained in the BI SEC Reports, including any BI
SEC Reports filed after the date of this Agreement until the Closing, complied,
as of their respective dates, in all material respects with all applicable
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accounting requirements and the published rules and regulations of the SEC with
respect thereto, was prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods involved and
fairly presented the consolidated financial position of BI and its subsidiaries
as at the respective dates and the consolidated results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount.
3.4 Brokers and Finders. No broker, finder or investment banker
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(other than Equitable Securities Corporation, whose fee will be paid by BI) is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made by or on
behalf of BI.
ARTICLE IV
CONDUCT OF BUSINESS
4.1 Covenants of the Shareholders. During the period from the date of
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this Agreement and continuing until the earlier of the termination of the
Agreement or the Effective Time, the Shareholders shall (except to the extent
that BI shall otherwise consent in writing), cause each Corporation to carry on
its business in the usual, regular and ordinary course in substantially the same
manner as previously conducted, to pay its debts and taxes when due subject to
good faith disputes over such debts or taxes, to pay or perform other
obligations when due, and, to the extent consistent with such business, use all
reasonable efforts consistent with past practices and policies to preserve
intact its present business organization, keep available the services of its
present officers and key employees and preserve its relationships with
customers, suppliers, distributors, licensors, licensees and others having
business dealings with it, to the end that its goodwill and ongoing businesses
shall be unimpaired at the Effective Time.
4.2 Cooperation. Subject to compliance with applicable law, from the
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date hereof until the Effective Time, (a) the Shareholders and BI shall confer
on a regular and frequent basis with one or more representatives of the other
party to report operational matters of materiality and the general status of
ongoing operations and (b) BI and the Shareholders shall promptly provide the
other party or its counsel with copies of all filings made by such party with
any Governmental Entity in connection with this Agreement and the transactions
contemplated hereby and thereby.
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ARTICLE V
ADDITIONAL AGREEMENTS
5.1 No Solicitation. The Shareholders shall not permit any
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Corporation, directly or indirectly, through any officer, director, employee,
representative or agent of any Corporation (and shall use reasonable efforts to
cause such officers, directors, employees, representatives and agents not to,
directly or indirectly), (i) solicit, initiate, facilitate or encourage any
inquiries or proposals that constitute, or could reasonably be expected to lead
to, a proposal or offer for a merger, consolidation, business combination, sale
of substantial assets, sale of shares of capital stock or similar transactions
involving any Corporation, other than the transactions contemplated by this
Agreement (any of the foregoing inquiries or proposals being referred to in this
Agreement as an "Acquisition Proposal"), (ii) engage in negotiations or
discussions concerning, or provide any non-public information to any person or
entity relating to, any Acquisition Proposal, or (iii) agree to, approve or
recommend any Acquisition Proposal.
5.2 Access to Information. Upon reasonable notice, during normal
---------------------
business hours during the period prior to the Effective Time, each Corporation
shall afford to the officers, directors, employees, accountants, counsel and
other representatives of BI, reasonable access to all its properties, plants,
personnel, books, contracts, commitments and records (other than privileged
documents) and all other information concerning its business, properties and
personnel as BI may reasonably request during such period. During such period,
BI will hold any such information which is non-public in confidence in
accordance with the Non-Disclosure Agreement dated March 30, 1996 (the "Non-
Disclosure Agreement"). No information or knowledge obtained in any
investigation pursuant to this Section 5.2 shall affect or be deemed to modify
any representation or warranty contained in this Agreement or the conditions to
the obligations or the parties to consummate the Closing. If, in any
investigation pursuant to this Section 5.2, BI obtains knowledge or information
that any Shareholder has breached any of its representations or warranties in
this Agreement, BI shall inform the Shareholders of such breach and the
Shareholders shall have whatever rights to cure such breach as are provided for
in this Agreement.
5.3 Public Disclosure. BI and the Shareholders shall consult with
-----------------
each other before issuing any press release or otherwise making any public
statement with respect to this Agreement and shall not issue any such press
release or make any
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such public statement prior to such consultation, except as may be required by
law.
5.4 Consents. Each of BI and the Shareholders shall use all
--------
reasonable best efforts to obtain all necessary consents, waivers and approvals
under any of each Corporation's material agreements, contracts, licenses, leases
or commitments in connection with the transactions contemplated by this
Agreement.
5.5 Options. On the Closing Date, BI shall, subject to grant by the
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BI board of directors, issue to the Shareholders options to purchase up to an
aggregate of 37,500 shares of BI Common Stock, divided among the Shareholders as
indicated on Schedule 2 to this Agreement. These options shall be granted
pursuant to BI's stock option plan in the form attached as Exhibit A to this
Agreement and shall vest and become exercisable as provided therein. The
exercise price of each such option shall be equal to the closing price of the BI
Common Stock as reported for the Nasdaq National Market on the date of this
Agreement.
5.6 Employment Agreements. On the Closing Date, BI shall enter into
---------------------
employment agreements with Richard Longfellow, Judith Longfellow, Eric
Longfellow, Christopher Longfellow and Bob Wojcieckowski in the forms attached
as Exhibits B, C, D, E and F, respectively.
5.7 Incentive Stock Option Program. Following the Closing, the key
------------------------------
members of CCC management listed on Schedule 3 to this Agreement shall be
entitled to participate in the BI employee incentive stock option program,
although actual grants shall remain subject to approval by the BI board of
directors. The amounts of the initial grants and the maximum allowable over a
three to five year period are listed on Schedule 3. The terms and conditions of
all such options shall conform with other options granted pursuant to such
program.
5.8 Additional Agreements; Reasonable Best Efforts. Subject to the
----------------------------------------------
terms and conditions of this Agreement, each of the parties agrees to use all
reasonable best efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement.
5.9 Maintain CCC. BI shall maintain the identity of CCC as a wholly-
------------
owned subsidiary of BI for a period of not less than two years following the
Closing.
ARTICLE VI
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<PAGE>
CONDITIONS OF CLOSING
6.1 Conditions to Obligations of BI. The obligations of BI to effect
-------------------------------
the Closing are subject to the satisfaction of each of the following conditions,
any of which may be waived in writing exclusively by BI:
(a) Representations and Warranties. The representations and
------------------------------
warranties of the Shareholders set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and (except to
the extent such representations and warranties speak as of an earlier date) as
of the Closing Date as though made on and as of the Closing Date, except for
changes contemplated by this Agreement. For purposes of this Section 6.1(a),
representations and warranties of the Shareholders shall be deemed true and
correct in all material respects if any breaches of such representations and
warranties do not, in the aggregate, have a "Material Adverse Effect on the
Corporations" (the preceding quote referred to herein as the "CCC Material
Adverse Effect Qualifier"); it being understood that a breach of any
representation or warranty that is already qualified by such CCC Material
Adverse Effect Qualifier, by itself, shall be deemed a failure to satisfy the
condition set forth in this Section 6.1(a).
(b) Performance of Obligations of the Shareholders. The
----------------------------------------------
Shareholders shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the Closing
Date.
(c) Opinion. The Shareholders shall have delivered to BI the
-------
opinion of Talley & Sharp, P.C., dated the Closing Date.
(d) Blue Sky Laws. BI shall have received all state securities
-------------
or "blue sky" permits and other authorizations necessary to issue the BI Stock
pursuant to this Agreement.
6.2 Conditions to Obligations of the Shareholders. The obligation of
---------------------------------------------
the Shareholders to effect the Closing is subject to the satisfaction of each of
the following conditions, any of which may be waived, in writing, exclusively by
the Shareholders:
(a) Representations and Warranties. The representations and
------------------------------
warranties of BI set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations speak as of an earlier date) as of the Closing Date as
though made on and as of the Closing Date, except for changes contemplated by
this Agreement. For purposes of this Section 6.2(a), representations and
warranties of BI shall be deemed true and correct in all material respects if
any breaches of such
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<PAGE>
representations and warranties do not, in the aggregate, have a "Material
Adverse Effect on BI" (the preceding quote referred to herein as the "BI
Material Adverse Effect Qualifier"); it being understood that a breach of any
representation or warranty that is already qualified by such BI Material Adverse
Effect Qualifier, by itself, shall be deemed a failure to satisfy the condition
set forth in this Section 6.2(a).
(b) Performance of Obligations of BI. BI shall have performed in
--------------------------------
all material respects all obligations required to be performed by them under
this Agreement at or prior to the Closing Date.
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
7.1 Survival.
--------
(a) The respective representations and warranties of the
Shareholders and BI contained in this Agreement shall survive the Closing for a
period of two years and shall terminate and be of no further force or effect as
of the date two years after the Effective Time.
(b) The respective covenants and agreements of the Shareholders and
BI contained in this Agreement shall survive the Closing and shall be fully
effective and enforceable for the periods therein indicated or where not
indicated, for two years.
(c) BI shall not be entitled to any indemnification under Section
7.2 with respect to any breach of a representation or warranty, covenant or
agreement after the termination thereof pursuant to Sections 7.1(a) or (b),
except for claims previously asserted pursuant to Section 7.3(a).
7.2 Indemnification by the Shareholders.
-----------------------------------
(a) The Shareholders shall, jointly and severally, indemnify BI and
its affiliates and their respective officers, directors, employees and agents
against and hold them harmless from any loss, liability, damage, demand, claim,
cost, suit, action or cause of action, judgment, award, assessment, interest,
penalty or expense, including, without limitation, reasonable expenses of
investigation and reasonable attorneys' and consultants' fees, but excluding any
loss to the extent of any insurance proceeds received by BI for such loss (any
of the foregoing being hereinafter referred to individually as a "Loss" and
collectively, as "Losses") suffered or incurred by any such indemnified person
for or on account of or arising from or in
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<PAGE>
connection with (i) any breach of any representation or warranty of the
Shareholders contained in this Agreement or (ii) any breach of any covenant or
agreement of the Shareholders contained in this Agreement.
(b) The indemnification obligation of the Shareholders with respect
to Losses pursuant to Section 7.2(a) shall not exceed $2,000,000.
7.3 Procedures Relating to Indemnification.
--------------------------------------
(a) An indemnified person under Section 7.2 (the "Indemnified
Party") shall give prompt written notice to an indemnifying party (the
"Indemnifying Party") of any Loss in respect of which such Indemnifying Party
has a duty to indemnify such Indemnified Party under Section 7.2 (a "Claim"),
specifying in reasonable detail the nature of the Loss for which indemnification
is sought, the section or sections of this Agreement to which the Claim relates
and the amount of the Loss involved (or, if not then determinable, a reasonable
good faith estimate of the amount of the Loss involved), except that any delay
or failure so to notify the Indemnifying Party shall only relieve the
Indemnifying Party of its obligations hereunder to the extent, if at all, that
it is prejudiced by reason of such delay or failure.
(b) If a Claim results from any claim, suit, action or cause of
action brought or asserted by a third party (a "Third Party Claim"), the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of all
expenses. The Indemnified Party shall have the right to employ separate counsel
in such Third Party Claim and participate in such defense thereof, but the fees
and expenses of such counsel shall be at the expense of the Indemnified Party.
If the Indemnifying Party fails to assume the defense of any Third Party Claim
within 10 days after notice thereof, the Indemnified Party shall have the right
to undertake the defense, compromise or settlement of such Third Party Claim for
the account of the Indemnifying Party, subject to the right of the Indemnifying
Party to assume the defense of such Third Party Claim with counsel reasonably
satisfactory to the Indemnified Party at any time prior to the compromise,
settlement or final determination thereof (except that the CCC Representative
shall not have the right to assume the defense of any Third Party Claim the
defense of which is not assumed within 10 days after notice thereof). Anything
in this Section 7.3 to the contrary notwithstanding, the Indemnifying Party
shall not, without the Indemnified Party's prior written consent, settle or
compromise any Third Party Claim or consent to the entry of any judgment with
respect to any Third Party Claim which would have an adverse effect on the
Indemnified
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<PAGE>
Party. The Indemnifying Party may, without the Indemnified Party's prior written
consent, compromise or settle any such Third Party Claim or consent to entry of
any judgment with respect to any Third Party Claim which requires solely money
damages paid by the Indemnifying Party, and which includes as an unconditional
term thereof the release by the claimant or the plaintiff of the Indemnified
Party from all liability in respect of such Third Party Claim.
(c) With respect to any Claim other than a Third Party Claim, the
Indemnifying Party shall have ten days from receipt of notice from the
Indemnified Party of such Claim within which to respond thereto. If the
Indemnified Party does not respond within such ten-day period, the Indemnifying
Party shall be deemed to have accepted responsibility to make payment and shall
have no further right to contest the validity of such Claim. If the Indemnifying
Party notifies the Indemnified Party within such ten-day period that it rejects
such Claim in whole or in part, the Indemnified Party shall be free to pursue
such remedies as may be available to the Indemnified Party under applicable law.
ARTICLE VIII
TERMINATION; FEES AND EXPENSES
8.11 Termination. This Agreement may be terminated at any time prior to
-----------
the Effective Time, by written notice by the terminating party to the other
party):
(a) by mutual written consent of BI and all the Shareholders;
(b) by either BI or the Shareholders if the Closing shall not have
been consummated by October 10, 1996 (provided that the right to terminate this
Agreement under this Section 8.1(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of or
resulted in the failure of the Closing to occur on or before such date);
(c) by either BI or the Shareholders if a court of competent
jurisdiction or other Governmental Entity shall have issued a nonappealable
final order, ruling or injunction or taken any other action, in each case having
the effect of permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement (provided that the party seeking to
terminate pursuant to this Section 8.1(c) shall have complied with its
obligations under Section 5.8 and used its reasonable
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<PAGE>
best efforts to have any such order, ruling, injunction or other action vacated
or lifted);
(d) by BI or the Shareholders, if there has been a breach of any
representation, warranty, covenant or agreement on the part of the other party
set forth in this Agreement, which breach shall not have been cured, in the case
of a representation or warranty, prior to the Closing (and which breach would
result in the condition to Closing in Sections 6.1(a) or 6.2(a), as the case may
be, not being satisfied as of the Closing) or, in the case of a covenant or
agreement, within 10 business days following receipt by the breaching party of
written notice of such breach from the other party;
8.2 Effect of Termination. In the event of termination of this Agreement
---------------------
as provided in Section 8.1, this Agreement shall immediately become void and
there shall be no liability or obligation on the part of BI or the Shareholders
or BI's officers, directors, stockholders or affiliates, except as set forth in
Section 8.3.
8.3 Fees and Expenses. All fees and expenses incurred in connection
-----------------
with this Agreement and the transactions contemplated hereby (including
attorneys' and accountants' fees) shall be paid by the party incurring such
expenses, whether or not the Closing is consummated.
ARTICLE IX
MISCELLANEOUS
9.1 Amendment. This Agreement may not be amended except by an
---------
instrument in writing signed on behalf of each of the parties hereto.
9.2 Extension; Waiver. At any time prior to the Effective Time, the
-----------------
parties hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto or (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
9.3 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be delivered personally or by next-day courier or telecopied
with confirmation of receipt to the parties at the addresses specified below (or
at such other
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<PAGE>
address for a party as shall be specified by like notice). Any such notice or
other communication shall be effective upon receipt, if personally delivered or
telecopied, or one day after delivery to a courier for next-day delivery.
(a) if to BI, to
BI Corporation
6400 Lookout Road
Boulder, Colorado 80301
Attention: Jackie Chamberlin
Telecopy: (303) 530-5349
with a copy to:
Ireland, Stapleton, Pryor & Pascoe, P.C. Suite 2600
1675 Broadway
Denver, CO 80202
Attention: John G. Lewis
Telecopy: (303) 623-2062
(b) if to the Shareholders, to
Community Corrections Corporation
P.O. Drawer 81265
Conyers, Georgia 30208
Attention: Richard E. Longfellow
Telecopy: (770) 483-1431
with a copy to:
Talley & Sharp, P.C.
883 Commerce Drive, Suite 2B
Conyers, Georgia 30207
Attention: Janice Sharp
Telecopy: (770) 483-4912
9.4 Interpretation. When a reference is made in this Agreement to
--------------
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation."
9.5 Counterparts. This Agreement may be executed in two or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
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<PAGE>
parties need not sign the same counterpart.
9.6 Entire Agreement; No Third Party Beneficiaries. This Agreement
----------------------------------------------
(including the documents and the instruments referred to herein, including the
Non-Disclosure Agreement) (a) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, and (b) except as provided in
Sections 7.2 and 7.3, is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
9.7 Governing Law. This Agreement shall be governed and construed in
-------------
accordance with the laws of the State of Georgia without regard to any
applicable conflicts of law.
9.8 Severability. In case any one or more of the provisions contained
------------
in this Agreement should be invalid, illegal or unenforceable in any respect
against a party hereto, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby and such invalidity, illegality or unenforceability shall only
apply as to such party in the specific jurisdiction where such judgment shall be
made.
9.9 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
9.10 Dispute Resolution. Any controversy or claim arising out of or
------------------
relating to this Agreement, or the breach thereof, shall be settled by
arbitration administered by the American Arbitration Association in accordance
with its commercial rules and judgment on the award rendered by the arbitrator
may be entered in any court having jurisdiction thereof. The place of
arbitration shall be Atlanta, Georgia.
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<PAGE>
IN WITNESS WHEREOF, BI and the Shareholders have executed this Agreement as
of the date first written above.
BI INCORPORATED
By: /s/ David J. Hunter
--------------------
David J. Hunter
President
THE SHAREHOLDERS:
/s/ Richard Longfellow
----------------------
Richard Longfellow
/s/ Judith Longfellow
----------------------
Judith Longfellow
/s/ Eric Longfellow
----------------------
Eric Longfellow
/s/ Christopher Longfellow
--------------------------
Christopher Longfellow
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