SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT ON FORM 8-K
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report, May 14, 1999
Commission File Number: 0-20307
AVALON COMMUNITY SERVICES, INC.
(Exact name of Registrant as
specified in its corporate charter)
Nevada 13-3592263
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(State of Incorporation) (I.R.S. Employer I.D. Number)
13401 Railway Drive, Oklahoma City, Oklahoma 73114
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(Address of Principal executive offices)
(405) 752-8802
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(Issuer's telephone number)
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ITEM 2. Acquisition of Assets
On April 30, 1999, Southern Corrections Systems, Inc., a wholly owned
subsidiary of Avalon Community Services Inc., acquired the management contract
on Adams Community Corrections Program Inc. (ACCP) from CSC, Inc. The management
contract provides for fees, overhead and direct expense reimbursement from ACCP.
As part of the transaction, Southern Corrections Systems was named as the sole
voting member of ACCP.
ACCP is a Colorado non-profit company specializing in Community Corrections
in Adams County, Colorado. ACCP operates three facilities, the Pheonix Center,
Loft House and Garland Center. The Pheonix Center is a 135 bed halfway house
located in Henderson, Colorado. The Loft House is a 35 bed halfway house located
in Denver, Colorado. The Garland Center is a new location in Northglen, Colorado
to provide day reporting services to non-residential offenders.
ITEM 7. Financial Statements and Exhibits
a. CSC, Inc. Purchase agreement between CSC, Inc. and Southern Corrections
Systems, Inc., dated April 30, 1999.
b. Omnibus Agreement between Southern Corrections Systems, Inc., the Board of
Directors of ACCP, ACCP and Ms. Ellen Czapran dated April 30, 1999.
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AVALON COMMUNITY SERVICES, INC. AND SUBSIDIARIES
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
Date: May 14, 1999 AVALON COMMUNITY SERVICES, INC.
By: /S/ Jerry Sunderland
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Jerry Sunderland, President
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CSC, INC., PURCHASE AGREEMENT
THIS AGREEMENT is made on the Effective Date between CSC, INC., a
Colorado corporation ("Seller"), and SOUTHERN CORRECTIONS SYSTEMS, INC., an
Oklahoma corporation (`"Buyer").
RECITALS:
The Seller owns certain Property and the Buyer desires to purchase said
Property, as defined below, in accordance with the terms of this Agreement.
AGREEMENTS:
In consideration of the mutual agreements herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Seller and the Buyer agree as follows:
1. Defined Terms.
1.1 Agreement. This CSC, Inc., Purchase Agreement as the same might
be amended from time to time with the written approval of the;
Buyer and the Seller.
1.2 Adams Community Corrections Programs, Inc. a Colorado nonprofit
corporation ("ACCP").
1.3 Assignment. An Assignment with general warranties of title in
substantially the form of Schedule "A" attached hereto to be duly
executed by the Seller and delivered to the Buyer at Closing.
1.4 Bill of Sale. A bill of sale with general warranties of title in
substantially the form of Schedule "B" hereto to be duly executed
by the Seller and delivered to the Buyer at Closing.
1.5 Earnest Money Deposit: The sum of $100,000 and the interest
thereon deposited by the Buyer with the Escrow Agent.
1.6 Escrow Agent. The Escrow Agent shall be the named Title
Company in the Omnibus Agreement.
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1.7 Lease(s). All agreements in the nature of leases, subleases,
rental contracts, licenses, permits, franchises, concessions and
other agreements relating to the operations of both a residential
community corrections facility and a non-residential day
treatment center, owned by Adams Community Corrections Programs,
Inc., and managed by the Seller.
1.8 Property. The term "Property" means all of Seller's rights, title
and interests to its personal property and assets, associated
with or used in the operation and management of both a
residential community corrections facility and a non-residential
day treatment center, owned by Adams Community Corrections
Programs, Inc., including without implied limitation: 1) the
facility management contract between Seller and Adams Community
Corrections Programs, Inc.; 2) all of the Seller's right title
and interest in all logos, designs, trade names, trademarks,
service marks, copyrights and any other related intellectual
property including the corporate name "CSC" and "CSC, Inc., " and
all goodwill associated with the names "CSC" and "CSC, Inc. ";
and 3) the whole or any portion or phase of any information,
design, process, procedure, formula, improvement, confidential
business or financial information, or other information relating
to its business which is of value.
2. Purchase Agreement. At closing, the Seller agrees to sell the Property
to the Buyer and the Buyer agrees to purchase the Property from the
Seller on the terms and subject to the conditions set forth in this
Agreement.
3. Purchase Price. The Purchase Price for the Property is TWO MILLION ONE
HUNDRED THOUSAND DOLLARS ($2,100,000.00). The Purchase Price will be
paid as follows:
3.1 Earnest Money Deposit. Within three (3) Business Days after the
date the Seller executes this Agreement, the Buyer agrees to
deliver the Earnest Money Deposit to the Escrow Agent to be
invested in interest bearing obligations of the United States of
America, held as earnest money and disbursed by the Escrow Agent
in accordance with the terms of this Agreement. The Seller and
the Buyer agree to execute and deliver such instructions as the
Escrow Agent might reasonably request from time to time to
delineate the Escrow Agent's obligations, rights and liabilities
with respect to the Earnest Money Deposit.
3.2 Balance at Closing. At Closing, the Earnest Money Deposit will be
paid by the Escrow Agent to the Seller and the Buyer shall pay
directly, or will cause the balance of the Purchase Price to be
paid to the Seller, in certified funds.
3.3 Purchase Price Allocation. The Buyer agrees that the Seller may
allocate the Purchase Price among the items comprising the
Property according to sound accounting practices and that such
allocation, on the written request of the Seller, will
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be incorporated into a supplemental instrument to be executed by
the parties at or after Closing.
3.4 No Change in Assets and Liabilities. The parties' obligations
under the terms of this Agreement are conditioned upon no
decrease in the total current assets nor increase in the total
current liabilities of ACCP of more than 2% at the Closing Date
as compared to ACCP's balance sheet as of December 31, 1998.
Provided, however, that if delays of subsequent appropriations
from governmental sources of payment cause a net decrease in the
total current assets or an increase in the total current
liabilities shown on the December 31, 1998, balance sheet, Buyer
will accept on the Closing Date a decrease in the net current
assets or increase in the total current liabilities of ACCP of up
to 3% caused by such governmental delays. Any decrease in net
current assets or increase in total current liabilities in excess
of that to be allowed in this Agreement, or in the Additional
Agreements, will give Buyer the option to reduce the Purchase
Price payable under the terms of this Agreement by the amount of
the variance in excess of that allowed by this provision; but the
Purchase Price will not be reduced by more than $25,000.
Provided, however, that if the variance allowed by this provision
exceeds $25,000, then Buyer shall have the option to validly
terminate its obligations under this Agreement and the Omnibus
Agreement.
4. Closing. The Buyer and the Seller agree that the purchase of the
Property will be consummated as follows:
4.1 Closing Date. The parties shall perform the sale, assignment and
transfer of the Property on the same Closing Date as the Omnibus
Agreement's Closing Date and at the same time.
4.2 Seller's Deliveries. At Closing the Seller will deliver or cause
to be delivered to the Buyer the following items:
4.2.1 Bill of Sale. The bill of Sale conveying to the Buyer the
tangible personal property described in Schedule "B"
hereto;
4.2.2 Assignment. The Assignment assigning to the buyer the
intangible Property; and
4.2.3 Additional Documents. Such additional documents as might
be reasonably requested by the Buyer to consummate the
sale, assignment and transfer of the Property to the
Buyer.
4.3 Buyer's Deliveries. At Closing the Buyer will deliver or cause to
be delivered to the Seller the following items:
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4.3.1 Purchase Price. The Purchase Price in accordance with the
terms of this Agreement;
4.3.2 Additional Documents. Such additional documents as the
Seller might reasonably request to consummate the sale of
the Property to the Buyer.
4.4 Costs. Each party hereto will pay their own costs and attorneys
fees incurred in the consummation of this Agreement.
5. Seller's Representations and Warranties. To induce the Buyer into this
Agreement, the Seller represents and warrants following matters are now
and on the Closing Date will be correct:
5.1 No Default. To the Knowledge of the Seller, the Seller is not in
default, and the execution and performance of this Agreement by
the Seller will not constitute a default, under any agreement,
order, writ injunction, decree or demand of any court or any
governmental authority which is binding on the Seller or the
Property.
5.2 Consents. No consent, approval or authorization by any person
other than the Seller is required in connection with the
execution or performance of this Agreement by the Seller.
5.3 Authority. The Seller is a Colorado corporation duly organized
and validly existing under the laws of the State of Colorado; the
Seller has adequate power, authority and legal right to own,
operate, manage, hold and sell the Property; the Seller is duly
authorized, qualified and licensed under all applicable laws,
regulations, ordinances or orders of public authorities to carry
on the Seller's business in the construction, ownership,
management, financing, operation and sale of the Property; the
Seller has adequate authority, power and legal right to enter
into and perform the provisions of this Agreement and in doing so
the Seller will not violate any law or the provisions of the
Seller's organizational documents; the persons executing and
performing this Agreement and the documents delivered pursuant to
this Agreement on behalf of the Seller have been duly authorized
to act for and bind the Seller as contemplated thereby.
5.4 Full Disclosure. Neither this Agreement nor any statement or
document referred to herein or any other information, report or
statement delivered to the Buyer by the Seller contains any
untrue statement or omits to state a material fact necessary to
make the statements herein or therein not misleading.
6. Buyers Representations and Warranties. To induce the Seller to enter
into this Agreement, the Buyer represents and warrants that the
following matters are now and on the Closing Date will be true and
correct:
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6.1 Authority. The Buyer is a corporation organized and validly
existing under the laws of the State of Oklahoma; the Buyer has
adequate authority, power and legal right to enter into and
perform the provisions of this Agreement and in doing so the
Buyer will not violate any law or the provisions of the Buyer's
articles of incorporation or other organizational documents; the
persons executing and performing this Agreement and the documents
delivered pursuant to this Agreement on behalf of the Buyer have
been duly authorized to act for and bind the Buyer as
contemplated thereby.
6.2 Acknowledgments and Inducements. Buyer acknowledges, represents
and warrants, that it is fully apprised of the nature of the
relationship between Seller and ACCP, a non-profit organization,
and further affirms that it has reviewed the Restated and Amended
Articles of Incorporation and Bylaws, as amended, of ACCP, in
addition to the Colorado Revised Nonprofit Corporation Act, and
that it is fully aware of the charitable, educational and/or
social service purposes for which ACCP exists and operates, that
Seller's relationship to ACCP is an important and integral aspect
of the fulfillment of those purposes, and Buyer represents and
warrants that at all times during which it is, in any way,
involved in the business and operation of ACCP through Seller, or
the transaction contemplated herein, that Buyer shall conduct
itself and its relations with ACCP in accordance with those
purposes and in no way take any action which would jeopardize
said purposes. As a further inducement to Seller to enter into
this Agreement, Buyer acknowledges that between the date of the
execution of this Agreement and the Closing Date, Seller shall
conduct a due diligence investigation for the purpose of, inter
alia, ensuring to the extent possible, that the transaction
contemplated herein, and the intentions of Buyer, are consistent
with the overall purpose and services of ACCP.
6.3 Commitment of Resources. Upon the consummation of this Agreement,
Buyer shall commit all necessary and appropriate resources,
financial and otherwise, necessary to fulfill the obligations of
Seller to ACCP, and necessary to assist ACCP in fulfilling its
obligations to Adams County, Colorado, the people of that
community, and the state of Colorado, and as further
consideration Buyer agrees to act in the best interests of ACCP.
7. Conditions to Obligation to Close. The obligations of Buyer to
consummate the transactions contemplated by this Agreement are subject
to satisfaction at Closing of the following conditions:
7.1 Representations and Agreements. All representations and
warranties of the parties set forth in this Agreement will be
true and correct when made and as of the Closing Date, and each
party will have fully performed all its covenants and agreements
set forth in this Agreement.
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7.2 Due Diligence. Buyer's obligations to perform under this
Agreement are conditional upon the completion of a due diligence
review of the Seller's books and records which is satisfactory to
the Buyer and to Buyer's finance source, Fleet Capital; and
Seller's obligations to perform under this Agreement are
conditional upon the completion of a due diligence review of the
Buyer's books and records which is satisfactory to the Seller.
7.3 Exclusive Services Agreement. Ellen Czapran will execute and
deliver to the Buyer the Exclusive Services Agreement.
8. Default and Remedies. If either the Buyer or the Seller fails to perform
such party's
obligation under thisAgreement(except as excused by the other party's
default), the party claiming default will make written demand for
performance. If the Seller fails to comply with such written demand
within ten (10) Business Days after receipt thereof, the Buyer will
have the option to waive such default, to demand specific performance,
to exercise any other remedy available at law or in equity or to
terminate this Agreement. Upon such termination, the Earnest Money
Deposit shall be immediately returned to the Buyer. If the Buyer fails
to comply with such written demand of the Seller within ten (10)
Business Days after receipt thereof, the Seller will have the option
to waive such default or to terminate this Agreement, whereupon the
Seller will be immediately paid the Earnest Money Deposit.
9. Miscellaneous. It is further agreed as follows:
9.1 Prior Agreements Superceded. This Agreement supersedes, in all
respects, all prior written or oral agreements between the
parties relating to the sale of the Property.
9.2 Amendment. Neither this Agreement nor any of the provisions
hereof can be changed, waived, discharged or terminated, except
by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is
sought.
9.3 Notices. Any notice, payment, demand or communication required or
permitted to be given by any provision of this Agreement will be
in writing and will be deemed to have been given when delivered
personally or by facsimile (with a confirming copy sent within
one (1) Business Day by any other means described in this
paragraph) to the party designated to receive such notice, or on
the date following the day sent by overnight courier or on the
third (3rd) Business Day after the same is sent by certified
mail, postage and charges prepaid, directed to the following
addresses or to such other or additional addresses as any party
might designate by written notice to the other parties:
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To the Buyer: Mr. Jerry Sunderland
Southern Corrections Systems, Inc.
13401 Railway Drive
Oklahoma City, Oklahoma 73114
Telephone: (405) 752-8802
Facsimile: (405) 752-8852
To the Seller: Mr. John P. Giduck, Attorney at Law
11990 Grant Street, Suite 550
Northglenn, CO 80233
Telephone: (303) 280-5066
Facsimile: (303) 280-5077
9.4 Attorneys' Fees. If any party institutes an action or proceeding
against the other relating to the provisions of this Agreement or
any default hereunder, the unsuccessful party to such action or
proceeding will reimburse the successful party therein for the
reasonable attorneys' fees, disbursements and litigation expenses
incurred by the successful party.
9.5 Governing Law. This Agreement is being executed, delivered and is
intended to be performed in Northglenn, County of Adams,
Colorado. This Agreement is to be construed according to the laws
of the State of Colorado.
9.6 Severabilitv. If any clause or provision of this Agreement is
held by a court having jurisdiction to be illegal or invalid or
unenforceable under any present or future law, the remainder of
this Agreement will not be affected thereby. It is the intention
of the parties that if any such provision is held to be illegal,
invalid or unenforceable, there will be added in lieu thereof a
provision as similar in terms to such provision as is possible
and be legal, valid and enforceable.
9.7 Binding Effect. This Agreement will inure to the benefit of and
bind the respective successors and permitted assigns of the Buyer
and the Seller.
9.8 Time. Buyer acknowledges that all negotiations, discussions and
processes, including but not limited to, its due diligence
investigation of Seller, leading up to this Agreement and the
transaction contemplated herein, have occurred in an expedited
fashion due solely to its request, which have resulted in time
being of the essence with regard to each provision of this
Agreement.
9.9 Captions. The captions in this Agreement are inserted for
convenience of reference and are not intended to define, describe
or limit the scope of any provision of this Agreement.
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9.10 Counterpart Execution. This Agreement may be executed in
counterparts, each of which will be deemed an original document,
but all of which will constitute a single document. This document
will not be binding on or constitute evidence of a contract
between the parties until such time as a counterpart of this
document has been executed by each party, a copy thereof
delivered to the other party to this Agreement and the Earnest
Money Deposit delivered to the Escrow Agent.
9.11 Approvals. When approval by any party is required in the
performance of any action contemplated by this Agreement, such
approval will not be unreasonably withheld, conditioned or
delayed. Unless provision is made for a specific period of time,
the period of time in which the right of approval will be
exercised will be ten (10) business Days after receipt of a
written notice requesting such approval. If the party whose
approval is requested neither approves nor disapproves a proposed
action within the applicable period, the party will be deemed to
have given approval of such action. If a party disapproves any
action proposed by the other party hereunder, such disapproval
will not be effective unless the reasons for such disapproval are
stated in writing and provided to the party proposing the action.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
"Seller"
CSC, INC.
By: _______________________________________
Title: _____________________________________
Date executed:
-----------------------------------
"Buyer"
SOUTHERN CORRECTIONS SYSTEMS, INC.
By: _______________________________________
Jerry Sunderland - President
Date executed:______________________________
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Schedule "A" to
CSC Inc. Purchase Agreement
KNOW ALL MEN BY THESE PRESENTS:
That CSC, INC., a Colorado Corporation ("Seller,'), for and in
consideration of the sum of TEN DOLLARS ($10. 00) and other good and valuable
consideration in hand paid by SOUTHERN CORRECTIONS SYSTEMS. INC., an Oklahoma
Corporation (the "Buyer"), whose mailing address is 13401 Railway Drive,
Oklahoma City, Oklahoma 73114, the receipt of which is hereby acknowledged, has
bargained and sold and by these presents does hereby grant, bargain, sell,
assign, transfer and deliver unto the Buyer all of the Seller's right, title and
interest in and to the following intangible personal property and warrants title
to the same:
All of Seller's rights, titles and interests associated with or used in
the operation and management of both a residential community corrections
facilities, and a non-residential day treatment center, owned by Adams
Community Corrections Programs, Inc., including without implied
limitation: 1) the facility management contract between Seller and Adams
Community Corrections Program, Inc., (a correct and complete of which is
set forth as Exhibit "A" attached as a part hereto; 2) all of the
Seller's right, title and interest in all logos, designs, trade names,
trademarks, service marks, copyrights and any other related intellectual
property including the corporate name "CSC" and "CSC, Inc.," and all
goodwill associated with the names "CSC" and "CSC. Inc."
TO HAVE AND TO HOLD the same unto the Buyer, its successors and assigns,
forever free, clear and discharged of all encumbrances of whatsoever nature.
Witness Whereof, the Seller has executed this Assignment this 30th day of
April, 1999.
CSC INC., a Colorado Corporation
By: ________________________________
Ellen Czapran, President
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Schedule "A" to
CSC Inc. Purchase Aqreement
State of Colorado )
) ss: Corporation Acknowledgment
County of Adams )
Before me, the undersigned, a Notary Public, in and for said County and
State on this 30th day of April, 1999, personally appeared ,
__________________________,President of CSC, Inc, to me known to be the
identical person who subscribed the name of the maker thereof to the foregoing
instrument as its President and acknowledged to me that she executed the same as
her free and voluntary act and deed and as the free and voluntary act and deed
of such corporation, for the uses and Purposes therein set forth
Given under my hand and seal of office the day and year last above written
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Notary Public
My Commission expires:
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ACCEPTANCE OF ASSIGNMENT
The Buyer hereby accepts the foregoing Assignment by the Seller and agrees
to be bound thereby. By accepting this Assignment, the Buyer hereby assumes and
agrees to perform all of the terms of all property assigned by this Assignment
which accrue after the date hereof. The Buyer further agrees to indemnify and
hold harmless the Seller against any claim, loss, cost, damage or expense,
including, without limitation, reasonable attorneys' fees and limitation
expenses, arising out of, or relating to the Buyer's failure to perform all
obligations of the Seller under the assigned property which accrue after the
date of this Assignment.
Witness Whereof, the Seller has executed this Assignment this 30th day of
April, 1999.
"Buyer"
SOUTHERN CORRECTIONS SYSTEMS, INC.
By: _____________________________
Jerry Sunderland - President
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Schedule "A" to
CSC Inc. Purchase Aqreement
ASSIGNMENT
Exhibit "A"
(Copy of the facility management contract between Seller and Adams Community
Corrections Program, Inc.)
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Schedule "B" to
CSC Inc. Purchase Agreement
BILL OF SALE
( Tangible Personal Property)
KNOW ALL MEN BY THESE PRESENTS:
THAT CSC INC., a Colorado corporation (the "Seller"), for and in
consideration of the sum of TEN DOLLARS ($10.00) and other good and valuable
consideration in hand paid by Southern Corrections Systems, Inc., an Oklahoma
corporation (the "Buyer), the receipt of which is hereby acknowledged, has
bargained and sold and by these present does hereby grant, bargain, sell,
assign, transfer and deliver unto the Buyer all of the Seller's right, title and
interest in and to the following tangible personal property and warrants title
to the same:
LIST PROPERTY HERE
TO HAVE AND TO HOLD the same unto the Buyer its successors and assigns,
forever free, clear and discharged of all encumbrances of whatsoever nature;
EXCEPTING ONLY the rights of tenants in possession. It is understood that the
Buyer has inspected the foregoing personal property and accepts the physical
condition of the same in an AS IS CONDITION, WITH ALL FAULTS, WITHOUT EXPRESS OR
IMPLIED WARRANTY AS TO FITNESS FOR ANY PARTICULAR USE.
IN WITNESS WHEREOF, the Seller has executed this instrument this
30th day of April, 1999.
CSC INC., a Colorado Corporation
By: _________________________________
- -------------------------------------------------------------------------------
State of Colorado )
) ss: Corporation Acknowledgment
County of Adams )
Before me, the undersigned, a Notary Public, in and for said County and
State on this 30th day of April, 1999 personally appeared,
______________________, President of CSC, Inc., to me known to be the identical
person who subscribed the name of the maker thereof to the foregoing instrument
as its President and acknowledged to me that she executed the same as her free
and voluntary act and deed and as the free and volunlary act and deed of such
corporation' for the uses and purposes therein set Forth.
Given under my hand and seal of office the day and year last above written
----------------------------------
Notary Public
My Commission expires:
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OMNIBUS AGREEMENT
THIS OMNIBUS AGREEMENT (hereinafter "Agreement") made this 30th day of
April, 1999, by and between, SOUTHERN CORRECTIONS SYSTEMS, INC. (hereinafter
"SCSI"); the BOARD OF DIRECTORS of Adams Community Corrections Program, Inc.
(hereinafter "Board"); ADAMS COMMUNITY CORRECTIONS PROGRAM, INC., a Colorado
nonprofit corporation, (hereinafter "ACCP") and MS. ELLEN K. CZAPRAN,
individually, (hereinafter "Czapran");
I. RECITALS
1.1 WHEREAS, the terms, conditions, and obligations of this Agreement are
conditioned upon the execution and fulfillment of obligations imposed by two (2)
additional agreements (hereinafter "Additional Agreements"), identified and
specifically incorporated herein, comprised of the Purchase Agreement by and
between SCSI and CSC, Inc. (hereinafter "CSC"), and an Exclusive Services
Agreement by and between SCSI and Czapran. Notwithstanding the previous
sentence, the terms and conditions of this Agreement are independent of all
other agreements; and,
1.2 WHEREAS, Czapran has recently suffered from an extreme medical
condition requiring the reduction of work hours, work-related stress, and
responsibilities in connection with her duties as president and executive
director of ACCP; and
1.3 FINALLY, as an inducement for the Board to enter into this Agreement,
SCSI agrees, represents, and warrants that it shall continue to operate ACCP in
accordance with the same charitable, educational and/or social service
principles under which it was created and has functioned, and in furtherance of
its community goals as defined by its Restated and Amended Articles of
Incorporation, its By-laws as amended, and Colorado law, and further affirms to
take no action which would jeopardizes these goals. Furthermore, SCSI agrees,
represents, and warrants that it will dedicate its efforts and resources,
including substantial financial resources, to the continued growth and operation
of ACCP and for the purpose of benefiting, aiding, and supporting the Adams
County community, and the people of the State of Colorado.
II. DEFINITIONS
2.1 Additional Agreements. Additional Agreements are comprised of the
Purchase Agreement by and between SCSI and CSC (hereinafter "CSC Purchase
Agreement"), and the Exclusive Service Agreement by and between Czapran, as
Consultant, and ACCP and SCSI (hereinafter "Service Agreement").
2.2 Approved Title Exceptions. The exceptions to marketable fee simple
title to the Real Property and marketable title to the Personal Property which
are approved in writing by SCSI from time to time.
2.3 Closing Date. The closing date shall be April 16, 1999.
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2.4 Effective Date. The date on which all parties hereto have duly executed
and delivered this Agreement.
2.5 Environmental Law(s). All laws, common law, statutes, ordinances, rules
regulations of any governmental authority relating to the preservation or
protection of the environment, human health or safety, or regulating or imposing
liability or standards of conduct concerning any hazardous or solid waste,
hazardous, toxic or other regulated substances including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended (42 U.S. C. ss.9601, et seq.,), the Resource Conservation and
Recovery Act of 1976 (42 U.S.C. ss.6901, et seq.), the Clean Water Act (33
U.S.C. ss. 466 et seq. ), the Safe Drinking Water Act (14 U.S.C. ss.1401-1450),
the Hazardous Materials Transportation Act (49 U.S.C. ss.1801 et seq.), and the
Toxic Substances Control Act (15 U.S.C. ss.2601-2629).
2.6 Environmental Report. The written report of a Phase I environmental
audit of the Real Property addressed to ACCP, SCSI and any other person
requested by SCSI prepared by environmental engineers selected by ACCP and
approved by SCSI dated no earlier than sixty (60) calendar days prior to the
Effective Date, or an existing report of a Phase I environmental audit prepared
by environmental engineers and approved by SCSI, such approval not to be
unreasonably withheld, dated no earlier than one (1) year prior to the Effective
Date.
2.7 Evidence of Authority. Such resolutions, certificates of good standing,
incumbency certificates and other writings evidencing the authority of ACCP,
CSC, the Board, SCSI, or the persons acting on behalf of any parties to this
Agreement or the Additional Agreements to conduct business, execute or perform
this Agreement or the Additional Agreements, as might be reasonably requested by
any of the parties to this Agreement.
2.8 Exception Document(s) The documents which create exceptions to the
coverage provided by or requirements for issuance of the Title Policy.
2.9 Hazardous Material(s). Those substances in the quantities included
within the definition of "hazardous substances," "hazardous materials," "toxic
substances" or solid waste" by any Environmental Law, such other substances,
materials and wastes in quantities which are or become regulated under any
Environmental Law hereafter enacted and any substance, material or waste which
is asbestos, polychlorinated biphenyl, flammable, explosive, radioactive or a
petroleum product.
2.10 Knowledge, Known. Facts or circumstances within the current actual
knowledge of the following persons: (a) any individual officer or director of
ACCP or CSC, (b) all officers and directors of any corporation managing all or
any part of the Property; and (c) the
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individuals who are on-site managers of the Property. The terms "Knowledge" and
"Known" are not intended to include constructive knowledge, imputed knowledge or
to require inquiry to obtain greater knowledge of a fact or circumstance known
to any person.
2.11 Property. The term "Property" shall include (a) the land described on
Schedule "A", the improvements and fixtures situated on such land, and all of
ACCP's interest in any street, highway, alley or other public way, whether open,
closed, proposed or hereafter vacated, adjoining such land, and all, privileges,
easements, licenses, rights-of-way, hereditaments and appurtenances to such
land, including, without implied limitation, all abutter's rights and title to
land underlying roadways adjacent to such land mineral interests not previously
reserved or conveyed of record; and (b) the tangible personal property used in
the operation of the residential community corrections operations and
non-residential community corrections programs of ACCP; and (c) any real
property leased by ACCP.
2.12 Real Property: The Real Property described on Schedule "A" to this
Agreement, including the improvements and fixtures situated on such land, and
all of ACCP's interest in any street, highway, alley or other public way,
whether open, closed, proposed or hereafter vacated, adjoining such land, and
all, privileges, easements, licenses, rights-of-way, hereditaments and
appurtenances to such land, including, without implied limitation, all abutter's
rights and title to land underlying roadways adjacent to such land, and mineral
interests not previously reserved or conveyed of record
2.13 Seller. The Board, ACCP, and Czapran.
2.14 Survey. A current survey of the Real Property prepared in accordance
with the ALTA/ACSM Minimum Standard Detail Requirements for Land Title Surveys
and certified to SCSI and ACCP by a registered land surveyor selected by SCSI
and approved by ACCP which is dated no earlier than the Effective Date. Any
prior surveys of the Real Property, updated as to be current no earlier than the
Effective Date, shall be acceptable.
2.15 Title Affidavit(s). One or more affidavits to be duly executed by ACCP
or SCSI under oath and delivered to the Title Company at Closing certifying such
matters as the Title Company might reasonably require as a condition precedent
to issuing the Title Policy.
2.16. Title Certificate. One or more certificates issued by the Title
Company reflecting all filings under the Uniform Commercial Code and all claims
pending in state or federal court against ACCP and all predecessors in ownership
of the Property.
2.17 Title Commitment. A written commitment obligating the Title Company to
issue the Title Policy on satisfaction of the requirements set forth in the
commitment.
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2.18 Title Company. Stewart Title Company.
2.19 Title Objections. SCSI's valid objections, if any, to the status of
title to the Real Property.
2.20 Title Policy. The ALTA Form B-1987 Owners Policy of Title Insurance to
be issued by the Title Company at Closing pursuant to the Title Commitment, in
such amount as SCSI reasonably may determine to be the fair market value of the
Real Property (including all improvements located thereon), insuring title to
such Real Property to be in ACCP as of the Closing (subject only to the Approved
Title Exceptions).
III. AGREEMENTS
3.1 Confidentiality. Each party agrees that any and all information
relating to the transactions between the parties, this Agreement, or the
Additional Agreements shall be kept strictly confidential, secret and privileged
and shall not be disclosed to any third party for any reason whatsoever until
after the completion of the closing.
3.2 Directors Assurances. Prior to closing, ACCP and the Board must provide
such reasonable assurances as are satisfactory to SCSI that the transfer of
director control of ACCP to nominees of SCSI or any other assignments and
transactions between ACCP and SCSI as contemplated in this Agreement and the
Additional Agreements will not adversely affect the contracts with and services
provided to any community corrections board(s), state agencies, and other
agencies and entities now served by ACCP.
3.3 Modification of Bylaws and Resignation of Board and Czapran. Prior to
the Closing Date, the Board agrees to take all actions necessary to modify and
amend the bylaws of ACCP to establish SCSI as a Voting Member of ACCP, with full
power to elect and remove directors of ACCP. On the Closing Date, the Board
agrees to elect one or more directors nominated by SCSI to the board of
directors of ACCP. Upon election of these directors, the Board agrees to
immediately tender their resignations to ACCP. At the Closing Date, Czapran
shall tender to ACCP her resignation as an officer of ACCP.
3.4 Indemnification of the Board. Within seven (7) days subsequent to the
Closing Date, SCSI agrees to indemnify and hold harmless ACCP's resigning
directors, Mr. Rick E. Mohnssen, Mr. Kelley Patton, John P. Giduck, Esq., and
Robert E. Allen, Esq., in addition to Ms. Ellen K. Czapran against any and all
disputes, claims, controversies, actions, losses, obligations, liabilities,
deficiencies, penalties, damages, costs, and expenses, without limitation,
whether actual or threatened, arising out of, or in connection with, their
duties as directors and/or president and executive director
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of ACCP and pertaining to the transfer of control of ACCP to SCSI. This
shall include, but not be limited to, any and all claims of breach of a duty of
loyalty to ACCP. Both SCSI and ACCP shall continue to indemnify the Board
against any and all claims of, inter alia, breach of fiduciary duty. In
addition, SCSI agrees to only retain and use legal counsel agreeable to the
indemnified party or parties for any and all actions taken pursuant to the
transactions contemplated in this Agreement and the Additional Agreements.
3.5 Termination. Each party agrees that the valid termination of the CSC
Purchase Agreement prior to closing, for any reason, will result in the valid
termination of any and all duties and obligations under the Additional
Agreements and those contained in this Agreement. Subsequent to the termination
of this Agreement, or any of the Additional Agreements, the parties agree that
all information concerning the other parties obtained during talks, discussion,
negotiations, or due diligence investigation shall remain strictly privileged
and confidential, and the parties further agree not to reveal this information,
by any means, to any third party.
3.6 No Change in Assets and Liabilities. The parties' obligations under the
terms of this Agreement and the Additional Agreements are conditioned upon no
decrease in the total current assets nor increase in the total current
liabilities of ACCP of more than 2% at the Closing Date as compared to ACCP's
balance sheet as of December 31, 1998. Provided, however, that if delays of
subsequent appropriations from governmental sources of payment cause a net
decrease in the total current assets or an increase in the total current
liabilities shown on the December 31, 1998, balance sheet, SCSI will accept on
the Closing Date a decrease in the net current assets or increase in the total
current liabilities of ACCP of up to 3% caused by such governmental delays. Any
decrease in net current assets or increase in total current liabilities in
excess of that to be allowed in this Agreement, or in the Additional Agreements,
will give SCSI the option to reduce the Purchase Price payable under the terms
of the CSC Purchase Agreement by the amount of the variance in excess of that
allowed by this provision; but the CSC Purchase Agreement's Purchase Price will
not be reduced by more than $25,000. Provided, however, that if the variance
allowed by this provision exceeds $25,000, then SCSI shall have the option to
validly terminate its obligations under this Agreement and the Additional
Agreements.
3.7 Balance Sheet. SCSI's obligations to perform under this Agreement and
the Additional Agreements are conditional upon there being no material adverse
changes in ACCP's December 31, 1998, balance sheet as compared to the ACCP's
balance sheet as of the Closing Date.
3.8 Licenses, certifications, use permits and zoning. On or before the date
of closing, ACCP or the Board must provide confirmation, in a form satisfactory
to SCSI, that all licenses, certifications, special or conditional use permits,
zoning and all other
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necessary governmental consents exist to allow ACCP to continue after the
Closing Date to operate both the residential community corrections facilities
and the non- residential day treatment reporting program on the property owned
or leased by ACCP and otherwise continue the operations of the residential and
non-residential community corrections programs of ACCP as they are presently
operated. With respect to the non-residential day treatment reporting program
presently operated at the LOFT House, the parties hereto agree that it may be
necessary for ACCP to enter into a lease of an alternate location. In the event
that an alternate location is leased on terms satisfactory to SCSI and ACCP,
ACCP or the Board must provide confirmation to SCSI that the alternate location
is properly licensed, permitted and zoned.
3.9 Physical Plant Inspections. SCSI shall have the right to complete
physical plant inspections of the Phoenix Center, the LOFT House, and all other
properties owned or leased by ACCP and CSC, Inc., which is satisfactory to SCSI.
3.10 LOFT House. ACCP will provide reasonable assurances to SCSI that
ACCP's lease of the LOFT House will not be adversely affected as a result of the
transactions between ACCP and SCSI. Additionally, ACCP warrants that it has
continued in its efforts to negotiate a purchase option price for the LOFT House
pursuant to the signed letter of intent dated February 2, 1999 between SCSI and
ACCP.
3.11 Service Contracts. The Board and Czapran warrant that they have
continued in their efforts to renew one year service contracts and replace such
contracts with five year contracts.
3.12 Other Agreements. As a condition precedent to SCSI's obligation to
perform under the CSC Purchase Agreement and this Agreement, simultaneously with
the closing under the terms of this Agreement, SCSI shall have received all
assignments and other performance due and owing to SCSI under the terms of the
CSC Purchase Agreement, and both that Agreement and the Exclusive Services
Agreement between SCSI and Czapran shall have been executed.
3.13 Property Information. The Seller agrees to deliver the following
information, certificates, instruments and documents to SCSI at the earliest
practicable date, but not later than the dates hereafter indicated:
3.13.1 Title Information. Within fifteen (15) days of the
Effective Date, the Seller agrees to deliver to SCSI (a)
the Title Commitment; (b) the Exception Documents; (c) the
Survey, and (d) the Title Certificates. No later than ten
(10) days prior to Closing, SCSI will provide the Title
Objections to the Seller and the Seller will have until
the Closing Date to satisfy the Title Objections. The
Seller agrees to use reasonable efforts to satisfy each
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requirement which is a condition precedent to issuance of
the Title Policy, to cure any other defect in title to the
Real Property which is discovered by SCSI, the Seller or
the Title Company subsequent to the effective date of the
Title Commitment and to satisfy all other Title Objections
provided that the Seller will not be required to incur any
cost to cure any Title Objection. At the Seller's option,
any Title Objection may be satisfied by the Seller
obtaining coverage by the Title Company indemnifying ACCP
against losses arising from the Title Objection. If the
Seller is unwilling or unable to satisfy any Title
Objection by the Closing Date and SCSI is unwilling to
waive satisfaction of such Title Objection, SCSI will have
the option to either: (a) extend the Closing Date by that
period of time which is reasonably required to enable SCSI
to satisfy all unresolved Title Objections at the Seller's
reasonable expense, and with prior written notice, and to
proceed to do so; or (b) terminate this Agreement and the
Additional Agreements by written notice to the Seller, in
which case the Earnest Money Deposit under the CSC
Purchase Agreement, including all interest thereon, will
be immediately returned to SCSI. Should a date five (5)
days prior to the Closing Date arrive with SCSI having
made no election under these circumstances, the objection
of SCSI shall be waived.
3.13.2 Environmental Information: No later than ten (10)
days prior to Closing, the Seller shall deliver the
Environmental Report to SCSI. It will be a
condition of SCSI's obligations under this
Agreement and the Additional Agreements that there
are no known Hazardous Materials in or under the
Real Property.
3.13.3 Other Information. No later than ten days prior to
Closing, all soil, geological environmental, engineering,
architectural and other tests and reports, all plans,
specifications and drawings; all reports prepared in
connection with any appraisal of the Real Property, all
service contracts regarding any personal property to be
conveyed to SCSI; all licenses, permits, authorizations,
approvals, certificates and similar items and all
certificates of occupancy and similar documents, any other
documents regarding the Property which SCSI might
reasonably request, and which Seller has in its possession
or can obtain with the exercise of due diligence prior to
closing.
3.14 Seller's Deliveries. At Closing the Seller will deliver or cause
to be delivered to SCSI or the Title Company the following items:
3.14.1 Title Policy. The Title Policy in the amount of the
fair market value of the Real Property reflecting a
"Date of Policy" subsequent to the Closing naming
ACCP as the "insured" containing only the Approved
Title Exceptions as exceptions to coverage and
providing such extended coverage endorsements as
are requested by SCSI; and
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3.14.2 Title Affidavits. Such Title Affidavits as are reasonably
requested, by the Title Company or SCSI;
3.14.3 Title Certificates. Title Certificates which show
no filings under the Uniform Commercial Code and no
pending action in state or federal court against
ACCP which affects the Property other than Approved
Title Exceptions,
3.14.4 Survey. The Survey shall not disclose any survey
defect or encroachment from or onto the Real
Property which has not been cured or insured over
prior to the Closing; and
3.14.5 Evidence of Authority;
3.14.6 Additional Documents. Such additional documents as
might be reasonably requested by SCSI or the Title
Company.
3.16 Costs. The Seller will pay the following costs: (a) the Seller's
attorneys' fees and expenses; (b) all abstracting, title
examination, premium and other charges for issuance of the Title
Commitment and the Title Policy, (c) one-half (1/2) of the
closing fees charged by the Title Company. SCSI will pay the
following costs: (d) SCSI's attorneys' fees and expenses; (e) one
half 1/22) of the closing fees charged by the Title Company.
3.17. Condemnation, Casualty. In the event of destruction of all or any
part of the Property prior to the Closing Date, it is agreed as
follows:
3.17.1 Minor Loss. If the value of the Property which is the
subject of the condemnation or insured casualty loss is
not more than twenty percent (20%) of the total aggregate
fair market value of the Property, which the parties
stipulate to be $ ______________, this Agreement will
continue, all condemnation or insurance proceeds
collectible by reason of such taking or damage will be
absolutely payable to SCSI, the Purchase Price under the
CSC Purchase Agreement will be reduced by any deductible
amount under any insurance claim and the sale of the
Property will be otherwise closed in accordance with this
Agreement.
3.17.2 Major Loss. If the value of the Property which is the
subject of the condemnation or casualty loss is equal to
or more than twenty percent (20%) of the aggregate fair
market value of the Property or the casualty loss is not
insured, SCSI and the Seller will have the mutual option
for ten (10) Business Days after receipt of written notice
of such taking or destruction to cancel this Agreement and
the Additional Agreements by service of written notice of
cancellation. On the exercise of such option, this
Agreement and the Additional Agreements will become null
and void, and the Earnest Money Deposit under
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the CSC Purchase Agreement will be returned to SCSI. If,
in such event, neither party affirmatively exercises the
option to cancel this Agreement and the Additional
Agreements, such option will lapse, SCSI will be entitled
to receive all condemnation or insurance proceeds
collectible by reason of such taking or destruction, the
Purchase Price under the CSC Purchase Agreement will be
reduced by any deductible amount under any insurance claim
and the sale of the Property will be otherwise closed in
accordance with this Agreement.
3.18 Due Diligence. SCSI's obligations to perform under this Agreement
are conditional upon the completion of a due diligence review of
ACCP's books and records which is reasonably satisfactory to SCSI
and to SCSI's financing source, Fleet Capital. The Seller's
obligations will be conditional upon the completion of a due
diligence review of SCSI's books and records which is reasonably
satisfactory to the Seller.
3.19 Health Insurance. SCSI agrees and covenants to continue to
provide Czapran with health and medical benefits, whose coverage
is not below that which Czapran presently receives through ACCP,
through either SCSI or ACCP for a period of one (1) year from the
Closing Date. SCSI agrees to pay up to $400.00 per month for
health and medical benefits to be provided to Czapran under the
terms of this section. The health and insurance benefits provided
to Czapran under this Section 3.19 shall also include Czapran's
husband and two children.
IV. SELLERS' REPRESENTATIONS AND WARRANTIES
4. Seller's Representations and Warranties. To induce SCSI to enter
into this Agreement and the Additional Agreements, the Seller
represents and warrants the following matters are now and on the
Closing Date will be correct:
4.1 No Default. To the Knowledge of the Seller, the Seller is
not in default and the execution and performance of this
Agreement by the Seller will not constitute a default
under any agreement, order, writ, injunction, decree or
demand of any court or any governmental authority, which
is binding on the Seller or the Property.
4.2 Consents. No consent, approval or authorization by any
person other than the Seller is required in connection
with the execution or performance of this Agreement or the
Additional Agreements by the Seller.
4.3 Authority ACCP is a nonprofit corporation duly organized
and validly existing under the laws of the State of
Colorado; ACCP has adequate power, authority and legal
right to own, operate, manage, and hold the Property; ACCP
is duly authorized, qualified and licensed under all
applicable laws, regulations, ordinances or orders of
public authorities to carry on ACCP's
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business in the construction, ownership, management,
financing, and operation of the Property; the Seller has
adequate authority, power and legal right to enter into
and perform the provisions of this Agreement and in doing
so the Seller will not violate any law or the provisions
of ACCP's or CSC's organizational documents; the persons
executing and performing this Agreement and the documents
delivered pursuant to this Agreement on behalf of the
Seller have been duly authorized to act for and bind the
Seller as contemplated thereby.
4.4 Permits: Licenses. To the Seller's Knowledge, all permits
and licenses required to own, maintain, manage and operate
the Property are in full force and effect, all the
requirements and conditions of such permits and licenses
have been duly complied with and no event has occurred
which, by notice or the passage of time or both, would
render ACCP or operation of the Property not in compliance
with such requirements and conditions.
4.5 Litigation. To the Seller's Knowledge, there is no pending
or threatened litigation which, if adversely determined,
might reasonably be anticipated to: (a) restrain the
consummation of any of the transactions described in this
Agreement; (b) have a material adverse effect on the value
or operation of the Property following the Closing; or (c)
result in an encumbrance on the Property.
4.6 Leases. To the Seller's Knowledge, there are no leases in
effect which affect the use of the subject Real Property.
4.7 Taxes. To the Knowledge of the Seller, all ad valorem,
business, occupation, sales, use and other taxes imposed
on the Property or the operation thereof which are due
prior to Closing have been paid in full and the Seller has
not received any notice that any such tax is unpaid.
4.8 Notices. The Seller has received no: (a) notice from any
insurance company or board of underwriters of any
uncorrected defects or inadequacies in the Property or the
operation thereof; (b) notice of any intent by a
governmental authority to exercise any right of eminent
domain; (c) notice of any special assessment of taxes; or
(d) notice of any claimed violation of law in connection
with the Property or the operation thereof.
4.9 Utilities. The Property is adequately served by all
necessary public utilities including, without implied
limitation, sewer, water, gas, electric and telephone
service and the Seller has no Knowledge of a condition
which might result in the termination of such service. All
public utility services are provided to the Property
through valid public or private rights-of-way.
4.10 Hazardous Materials. To the Knowledge of the Seller:
(a) no Hazardous Materials have been placed, held,
located, discharged, released, treated,
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allowed to escape from or disposed of on or under the
Property and no part of the Property contains any
Hazardous Materials or any underground storage tanks or
has ever been used as a dump site or storage for any
Hazardous Materials, and (b) any Hazardous Materials or
underground storage tanks previously located on the
Property have been removed and disposed of in accordance
with applicable Environmental Laws.
4.11 Real Property.
4.11.1 The Seller has good and marketable title
to the Property, free and clear of any
security interests, easements,
encroachments, covenants, or other claims or
restrictions, except for the Approved Title
Exceptions and except for taxes and special
assessments for the current year not yet due
and payable.
4.11.2 The legal description of the Real Property
contained in Schedule "A" describes such
parcel fully and adequately, the buildings
and improvements are located within the
boundary lines of the described parcels of
land, are not in violation of applicable
setback requirements, zoning laws, and
ordinances and do not encroach on any
easement which may burden the land, the land
does not serve any adjoining property for
any purpose inconsistent with the use of the
land, and the property is not located within
any flood plain or subject to any similar
type restriction for which any permits or
licenses necessary to the use thereof have
not been obtained.
4.11.3 The Real Property has received all approvals
of governmental authorities (including
licenses and permits) required in connection
with the ownership or operation thereof and
have been operated and maintained in
accordance with applicable laws, rules, and
regulations.
4.12 Material Defects. To the Knowledge of the Seller, there
are no material structural or mechanical defects in the
Property.
4.13 Personal Property. The buildings, machinery, equipment and
other tangible assets that ACCP owns or leases are free
from material defects, have been maintained in accordance
with normal industry practice, and are in good operating
condition and repair (subject to normal wear and tear).
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4.14 Full Disclosure. Neither this Agreement nor any statement
or document referred to herein or any other information,
report or statement delivered to SCSI by the Seller
contains any untrue statement or omits to state a material
fact necessary to make the statements herein or therein
not misleading, and which was responsive to any document
or information request of SCSI.
V. SCSI'S REPRESENTATIONS AND WARRANTIES
5. SCSI's Representations and Warranties. To induce the Seller to
enter into this Agreement SCSI represents and warrants that the
following matters are now and on the Closing Date will be true
and correct:
5.1 Authority. SCSI is a corporation organized and validly
existing under the laws of the State of Oklahoma; SCSI has
adequate authority, power and legal right to enter into
and perform the provisions of this Agreement and in doing
so SCSI will not violate any law or the provisions of
SCSI's articles of incorporation or other organizational
documents; the persons executing and performing this
Agreement and the documents delivered pursuant to the
Agreement on behalf of SCSI have been duly authorized to
act for and bind SCSI as contemplated thereby;
5.2 Full Disclosure. Neither this Agreement nor any statement
or document referred to herein or any other information,
report or statement delivered to the Seller by SCSI
contains any untrue statement or omits to state a material
fact necessary to make the statements herein or therein
not misleading.
5.3 Acknowledgments. Acknowledges that as an inducement to
Seller to enter into this Agreement, SCSI is aware of the
charitable, educational and/or social service purposes for
which ACCP exists, and SCSI represents and warrants that
at all times during which it is, in any way, involved in
the business and operations of ACCP, SCSI shall conduct
itself in its relations with ACCP according to those
purposes and in no way take any action which would
jeopardize said purposes. As part of the acknowledgment,
representation and warranty contained herein, SCSI further
affirms that it is familiar with the Restated and Amended
Articles of Incorporation and Bylaws of ACCP, in addition
to the Colorado Revised Nonprofit Corporation Act and will
act in accordance with the dictates of those documents and
laws. As a further inducement to Seller to enter into this
Agreement, SCSI acknowledges that between the Effective
Date of this Agreement and the Closing Date, Seller shall
conduct its due diligence investigation for the purpose
of, inter alia, ensuring, to the extent possible, that the
transaction contemplated herein, and the intentions of
SCSI, are in the best interests of ACCP.
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VI. FACILITATING ACTIONS
6. Facilitating Actions. The parties agree to take the following
actions to facilitate the Closing and the realization of the
benefits contemplated by this Agreement:
6.1 Approvals. The parties will use reasonable efforts to
obtain all necessary or desirable approvals of
governmental authorities and consents of all third persons
to expedite the Closing.
6.2 Representations, Warranties. The parties will refrain from
taking any action which would render any representation or
warranty contained in this Agreement inaccurate on the
Closing Date. Each party will promptly notify the other of
any occurrence which might reasonably be anticipated to
result in a material modification of a representation or
warranty made by such party.
6.3 Maintenance. The Seller will pay in full all business,
occupation, sales, use and other similar taxes imposed
with respect to the Property or the operation thereof
which become due prior to Closing, maintain the Property
in accordance with the Sellers past practices, and
continue to meet obligations pertaining to the Real
Property incurred by the Seller in the ordinary course of
business.
6.4 Material Change. Prior to the Closing Date, the Seller will not
without the written consent of SCSI: (a) make any material change
in the Property; (b)enter into any contract or make any
commitment relating to the Property; or (c) transfer or otherwise
dispose of any of the Property, or enter into any new lease.
6.5 Further Assurances. The Seller and SCSI will, whenever and as
often as reasonably requested to do so by the other party: (a)
execute, acknowledge and deliver or cause to be executed,
acknowledged and delivered such further conveyances, assignments,
confirmations, satisfactions, releases, approvals, consents,
certifications and other documents as might be reasonably
necessary, expedient or proper, in the opinion of the requesting
party, to complete the terms of this Agreement; and (b) to take
all other actions as are reasonably requested to carry out the
intent of this Agreement.
VII. MISCELLANEOUS
7. Miscellaneous. It is further agreed as follows:
7.1 Entire Agreement. This Agreement, together with the CSC Purchase
Agreement and the Exclusive Services Agreement, constitutes the
entire agreement between SCSI and
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the Seller relating to the sale of the Property. This Agreement
supersedes, in all respects, all prior written or oral agreements
between the parties relating to the sale of the Property and
there are no agreements, understandings, warranties or
representations between SCSI and the Seller except as set forth
herein.
7.2 Amendment. Neither this Agreement nor any of the provisions
hereof can be changed, waives, discharged or terminated, except
by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is
sought.
7.3 Notices. Any notice, payment, demand or communication required or
permitted to be given by any provision of this Agreement will be
in writing and will be deemed to have been given when delivered
personally or by facsimile (with a confirming copy sent within
one (1) Business Day by any other means described in this
paragraph) to the party designated to receive such notice, or on
the date following the day sent by overnight courier or on the
third (3rd) Business Day after the same is sent by certified
mail, postage and charges prepaid, directed to the following
addresses or to such other or additional addresses as any party
might designate by written notice to the other parties:
To SCSI: Mr. Jerry Sunderland
Southern Corrections Systems, Inc.
13401 Railway Drive
Oklahoma City, Oklahoma 73114
Telephone: (405) 752-8802
Facsimile: (404) 752-8852
To the Seller:Mr. John P. Giduck, Attorney at Law
11990 Grant Street, Suite 550
Northglenn, CO 80233
Telephone (303)280-5066
Facsimile (303) 280-5077
7.4 Attorneys' Fees. If any party institutes an action or proceeding
against the other relating to the provisions of this Agreement or
any default hereunder, the unsuccessful party to such action or
proceeding will reimburse the successful party therein for the
reasonable attorneys' fees, disbursements and litigation expenses
incurred by the successful party.
7.5 Governing Law. This Agreement is being executed, delivered and is
intended to be performed in Northglenn, County of Adams,
Colorado. This Agreement is to be construed according to the laws
of the State of Colorado.
7.6 Brokerage. Each party represents to the other that no broker,
finder or other person entitled to collect a brokerage or similar
fee has been employed in connection with the transactions
contemplated by this Agreement.
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7.7 Severability. If any clause or provision of this Agreement is
held by a court having jurisdiction to be illegal, invalid or
unenforceable under any present or future law, the remainder of
this Agreement will not be affected thereby. It is the intention
of the parties that if any such provision is held to be illegal,
invalid or unenforceable, there will be added in lieu thereof a
provision as similar in terms to such provision as is possible
and be legal, valid and enforceable.
7.8 Binding Effect. This Agreement will inure to the benefit of and
bind the respective successors and permitted assigns of SCSI and
the Seller.
7.9 Time. SCSI acknowledges that all negotiations, discussions and
processes, including but not limited to its due diligence
investigation of Seller, leading up this Agreement and the
transaction contemplated herein have occurred in an expedited
fashion due solely to its request, which have resulted in time
being of the essence with regard to each provision of this
Agreement.
7.10 Captions. The captions in this Agreement are inserted for
convenience of reference and are not intended to define, describe
or limit the scope of any provision of this Agreement.
7.11 Counterpart Execution. This Agreement may be executed in
counterparts, each of which will be deemed an original document,
but all of which will constitute a single document. This document
will not be binding on or constitute evidence of a contract
between the parties until such time as a counterpart of this
document has been executed by each party, a copy thereof
delivered to the other party to this Agreement.
8. The Parties agree, and SCSI accepts and acknowledges, that it is
entering into this Agreement, in addition to the CSC Purchase Agreement,
with no promises, representations, guaranties or warranties of success
of the continued management and operation of ACCP, continued ability to
secure or maintain contracts with Adams County, the Adams County
Community Corrections Board, or the state of Colorado, and that neither
this Agreement nor the CSC Purchase Agreement is in any way conditioned
on that success or the continuation of such contracts.
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<PAGE>
SOUTHERN COMMUNITY CORRECTIONS,
INC.
By:____________________________________
Jerry Sunderland, President
CZAPRAN
By:____________________________________
Ellen K. Czapran
BOARD OF DIRECTORS OF ACCP
By:____________________________________
Rick E. Mohnssen as Director
By:_____________________________________
Kelley R. Patton as Director
By:_____________________________________
Robert E. Allen as Director
By:_____________________________________
John P. Giduck as Director
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SCHEDULE "A"
A parcel of land located in the south half of the southwest quarter of the
southeast quarter of Section 30, Township 2 South, Range 67 West of the 6th
Principal Meridian, Adams County, Colorado being more particularly described as
follows:
Commencing at the southwest corner of said southeast quarter; thence South
89(degree) 41' 42" East, along the south line of said southeast quarter, a
distance of 585.29 feet to a point on the northwesterly right-of-way line of
Interstate 76; thence North 45(degree) 26' 49" East along said right-of-way, a
distance of 42.84 feet; to the true point of beginning; thence North 52(degree)
26' 29" West, a distance of 258.31 feet; thence North 37(degree) 33' 31" East, a
distance of 232.68 feet; thence South 89(degree) 39' 46" East, a distance of
348.72 feet, to a point on said northwesterly line of Interstate 76; thence
South 37(degree) 33' 31" West, along said right-of-way, a distance of 303.72
feet; thence continuing along said right-of-way South 45(degree) 26' 49" West, a
distance of 141.24 feet to the true point of beginning; said parcel contains
92,544 square feet, 2.1245 acres more or less, County of Adams, State of
Colorado.
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