Exhibit 2(g)
EXECUTION COPY
EQUITY PURCHASE AGREEMENT
This Equity Purchase Agreement (the "Agreement"), dated as of March 3,
1998, is entered into by and among Charter Behavioral Health Systems, Inc., a
Delaware corporation ("Charter Inc."), Crescent Operating, Inc., a Delaware
corporation ("Crescent Operating"), and, solely for purposes of Section 4.4
hereto, Magellan Health Services, Inc., a Delaware corporation ("Magellan").
WHEREAS, Charter Inc. owns 50% of the membership interests in Charter
Behavioral Health Systems, LLC ("CBHS"), which is operated pursuant to an
Amended and Restated Operating Agreement, dated as of June 16, 1997, among
Charter Inc., Crescent Operating and Magellan (the "Operating Agreement");
WHEREAS, Charter Inc. desires to sell, and Crescent Operating desires
to purchase, 100% of Charter Inc.'s membership interests in CBHS, including
without limitation all of Charter Inc.'s preferred interest or right to receive
preferred distributions (the "Charter LLC Interest").
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows.
ARTICLE I
PURCHASE AND SALE
1.1 Closing. Upon the terms and subject to the conditions hereof, the
closing (the "Closing") of the purchase and sale of the Charter LLC Interest as
set forth herein shall take place at the offices of Dow, Lohnes & Albertson,
PLLC, One Ravinia Drive, Suite 1600, Atlanta, Georgia 30346, on the business day
on which all of the conditions to the obligations of the parties hereunder have
been satisfied or waived or at such other time or place as the parties hereto
shall agree (the "Closing Date").
1.2 Consideration.
(a) Subject to the terms and conditions of this Agreement, and
in reliance upon the representations, warranties and agreements of the parties
contained herein, Charter Inc. hereby agrees to sell, assign, transfer and
convey to Crescent Operating, and Crescent Operating hereby agrees to purchase
from Charter Inc., all of the Charter LLC Interest, free and clear of all liens,
charges, pledges, security interests, encumbrances, restrictions, judgments and
claims of any kind or character whatsoever (collectively, "Encumbrances"). The
consideration for the purchase and sale of the Charter LLC Interest shall be
that number of
shares of common stock, par value $0.01 per share, of Crescent Operating (the
"Crescent Operating Shares") determined in accordance with the provisions of
Section 1.2(b) below.
(b) The number of Crescent Operating Shares to be issued to Charter
Inc. in consideration for its sale of the Charter LLC Interest (the "Purchased
Shares") shall equal: $30,000,000 divided by the average closing price for a
Crescent Operating Share, determined based on the average of the "Closing Price"
of Crescent Operating Shares for the 10 "Trading Days" preceding the Closing
Date, rounded up to the next whole number. The "Closing Price" for each such
Trading Day means the last reported sales price, regular way, on such day, or if
no such sale takes place on that day, the average of the reported closing bid
and asked prices on that day, regular way, in either case as reported on the
Nasdaq National Market. "Trading Day" means any day on which the Nasdaq National
Market is open for the transaction of business.
1.3 Deliveries.
(a) Delivery of the Charter LLC Interest shall be made by
Charter Inc. at the Closing by delivering to Crescent Operating instruments of
transfer sufficient to transfer title free and clear of all Encumbrances and
satisfactory to Crescent Operating in form and substance.
(b) Crescent Operating shall deliver a stock certificate or
certificates for the Purchased Shares in the name of Charter Inc. at the Closing
free and clear of all Encumbrances. The Purchased Shares shall be issued
pursuant to a registration statement on Form S-3 of Crescent Operating that has
been declared effective by the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act").
(c) Each of Charter Inc. and Crescent Operating shall deliver
all other documents, instruments and writings required to be delivered by either
of them at or prior to the Closing Date pursuant to this Agreement and such
other documents, instruments and writings relating to the transactions
contemplated hereby as either party or its counsel may reasonably request.
ARTICLE II
REPRESENTATIONS OF CHARTER INC.
Charter Inc. hereby represents and warrants to Crescent Operating as
follows:
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2.1 Organization.
(a) Charter Inc. is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority necessary to conduct its business as
now conducted.
(b) Attached hereto as Exhibit 2.1(b) are complete and correct
copies of the Certificate of Incorporation and By-Laws of Charter Inc.,
including all amendments thereto, as presently in effect.
(c) There are no dissolution, liquidation or revocation
proceedings pending with respect to Charter Inc.
(d) CBHS is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite limited liability company power and authority necessary to
conduct its business as now conducted.
2.2 Authorization. Charter Inc. has all requisite corporate power and
authority to execute and deliver this Agreement and, assuming approval of the
Board of Directors of each of Magellan and Charter Inc., to carry out the
transactions contemplated hereby. The Board of Directors of Magellan has
preliminarily approved the transactions contemplated herein and shall meet
within seven (7) days of the execution of this Agreement to consider final
approval of such transactions. Promptly thereafter, the Board of Directors of
Charter Inc. shall meet for the purpose of approving the transactions
contemplated herein. No other corporate or stockholder actions or proceedings on
the part of Charter Inc. are necessary to consummate the transactions
contemplated hereby and perform Charter Inc.'s obligations hereunder. This
Agreement has been duly and validly executed and delivered by Charter Inc. and,
assuming this Agreement is approved by the Board of Directors of each of
Magellan and Charter Inc. as provided above, and assuming it constitutes the
legal, valid and binding obligation of Crescent Operating, constitutes a legal,
valid and binding obligation of Charter Inc., enforceable against Charter Inc.
in accordance with its terms, except that: (a) such enforcement may be subject
to bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally; and (b) the
remedies of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses.
2.3 No Violation. Subject to receipt of the consents referenced in
Section 2.4 of this Agreement, neither the execution, delivery and performance
of this Agreement nor the consummation of the transactions contemplated hereby
will: (a) violate any provisions of the Certificate of Incorporation or By-Laws
of Charter Inc., (b) violate or constitute a default under any agreement to
which Charter Inc. is a party, or by which Charter Inc. is bound or to which any
of the assets or property of Charter Inc. is subject, or (c) violate any statute
or law or any judgment, decree, order, regulation or rule of any court or
governmental agency or body to which Charter Inc. is subject or to which any of
the assets or property of Charter Inc. is subject, except, in the case of clause
(b) or (c) of this Section 2.3, any such violations or
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defaults as would not, individually, or in the aggregate, materially impair the
ability of Charter Inc. to perform its obligations hereunder or prevent the
consummation of the transactions contemplated hereby.
2.4 Consents. Except (a) for the expiration or termination of any
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), (b) as set forth on Schedule 2.4 hereto,
and (c) as may be necessary as a result of any facts or circumstances related
solely to Crescent Operating, no consent, approval, authorization or order of,
or registration or filing with, any court or governmental agency or body
(domestic or foreign), or other third party under any agreement to which Charter
Inc. is a party, is required to be obtained by Charter Inc. in connection with
the execution, delivery or performance by Charter Inc. of this Agreement or the
consummation of the transactions contemplated hereby.
2.5 Compliance with Laws. (a) Except as disclosed to the Board of
Directors of CBHS in writing on the date hereof, the conduct of the business and
the operations of CBHS and Charter Advantage LLC, a Delaware limited liability
company ("Charter Advantage"), (i) have not violated or infringed, and do not
violate or infringe, in any material respect, and (ii) comply in all material
respects with, domestic (federal, state or local) or foreign laws, statutes,
ordinances, regulations, decrees or orders now in effect, and (b) Charter Inc.
has not received a notice with respect to CBHS or Charter Advantage of violation
of any such laws, statutes, ordinances, regulations, decrees or orders other
than violations which have been cured and as to which any related proceedings
before or involving any governmental authority have been finally resolved;
provided, however, that, with respect to CBHS, the foregoing representation and
warranty is made solely to the knowledge of Charter Inc. To the knowledge of
Charter Inc., no law, statute, ordinance, regulation, decree or order is
proposed to be adopted, the enforcement of which is likely to have a material
adverse affect on the business or operations or the value of the property or
assets of CBHS. Whenever a representation and warranty contained in this
Agreement is made to the "knowledge of Charter Inc." it shall mean all facts and
conditions which are actually known by those persons specified on Schedule 2.5
hereto.
2.6 Litigation. There are no claims, actions, suits, proceedings or
investigations pending, or, to the knowledge of Charter Inc., threatened or
anticipated, against Charter Inc. that would, individually, or in the aggregate,
materially impair the ability of Charter Inc. to perform its obligations
hereunder or prevent the consummation of the transactions contemplated hereby.
2.7 Broker's and Finder's Fees. Charter Inc. is not obligated to pay,
and has not retained, or entered into an agreement to retain, any broker or
finder or other person who is entitled to, any broker's or finder's fee or any
other commission or financial advisory fee based on any agreement or undertaking
made by Charter Inc. in connection with the transactions contemplated by this
Agreement.
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ARTICLE III
REPRESENTATIONS OF CRESCENT OPERATING
Crescent Operating hereby represents and warrants to Charter Inc. as follows:
3.1 Corporate Organization.
(a) Crescent Operating is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority necessary
to conduct its business as now conducted.
(b) Attached hereto as Exhibit 3.1(b) are complete and correct
copies of the Certificate of Incorporation and By-Laws of Crescent
Operating, including all amendments thereto, as presently in effect.
(c) The Purchased Shares, when issued and delivered at the
Closing in accordance with this Agreement, shall be validly issued,
fully paid and nonassessable, and free and clear of all Encumbrances.
The Purchased Shares shall be issued pursuant to a registration
statement on Form S-3 of Crescent Operating that has been declared
effective by the Commission under the Securities Act.
(d) The Crescent Operating Shares are currently (i) registered
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and (ii) traded on the Nasdaq National Market.
3.2 Authorization. Crescent Operating has all requisite corporate power
and authority to execute and deliver this Agreement and to carry out the
transactions contemplated hereby. The Executive Committee of the Board of
Directors of Crescent Operating has approved this Agreement and the transactions
contemplated hereby and has authorized the execution, delivery and performance
of this Agreement. No other corporate or stockholder actions or proceedings on
the part of Crescent Operating are necessary to consummate the transactions
contemplated hereby and perform Crescent Operating's obligations hereunder. This
Agreement has been duly and validly executed and delivered by Crescent Operating
and, assuming this Agreement constitutes the legal, valid and binding obligation
of Charter Inc., constitutes a legal, valid and binding obligation of Crescent
Operating, enforceable against Crescent Operating in accordance with its terms,
except that: (a) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally; and (b) the remedies of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses.
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3.3 No Violation. Subject to receipt of the consents referenced in
Section 3.4 of this Agreement, neither the execution, delivery and performance
of this Agreement nor the consummation of the transactions contemplated hereby
will: (a) violate any provisions of the Certificate of Incorporation or By-Laws
of Crescent Operating, (b) violate or constitute a default under any other
agreement to which Crescent Operating is a party, or by which Crescent Operating
is bound or to which any of the assets or property of Crescent Operating is
subject, or (c) violate any statute or law or any judgment, decree, order,
regulation or rule of any court or governmental agency or body to which Crescent
Operating is subject or to which any of the assets or property of Crescent
Operating is subject, except in the case of clause (b) or (c) of this Section
3.3, any such violations or defaults as would not, individually, or in the
aggregate, materially impair the ability of Crescent Operating to perform its
obligations hereunder or prevent the consummation of the transactions
contemplated hereby.
3.4 Consents. Except (a) for the expiration or termination of any
applicable waiting period under the HSR Act, (b) as set forth on Schedule 3.4
hereto, and (c) as may be necessary as a result of any facts or circumstances
related solely to Charter Inc., no consent, approval, authorization or order of,
or registration or filing with, any court or governmental agency or body
(domestic or foreign) or other third party is required to be obtained by
Crescent Operating in connection with the execution, delivery or performance by
Crescent Operating of this Agreement or the consummation of the transaction
contemplated hereby.
3.5 Compliance with Laws. (a) Except as disclosed to the Board of
Directors of CBHS in writing on the date hereof, the conduct of the business and
the operations of CBHS (i) have not violated or infringed, and do not violate or
infringe, in any material respect, and (ii) comply in all material respects
with, domestic (federal, state or local) or foreign laws, statutes, ordinances,
regulations, decrees or orders now in effect, and (b) Crescent Operating has not
received a notice with respect to CBHS of violation of any such laws, statutes,
ordinances, regulations, decrees or orders other than violations which have been
cured and as to which any related proceedings before or involving any
governmental authority have been finally resolved; provided, however, that the
foregoing representation and warranty is made solely to the knowledge of
Crescent Operating. To the knowledge of Crescent Operating, no law, statute,
ordinance, regulation, decree or order is proposed to be adopted, the
enforcement of which is likely to have a material adverse affect on the business
or operations or the value of the property or assets of CBHS. Whenever a
representation and warranty contained in this Agreement is made to the
"knowledge of Crescent Operating" it shall mean all facts and conditions which
are actually known by those persons specified on Schedule 3.5 hereto; provided,
however, that the provisions of this Section 3.5 are not intended to, and will
not, have an adverse affect on any rights or benefits that Crescent Real Estate
Equities Company or Crescent Real Estate Equities Limited Partnership may have
under any agreement to which either of them is a party.
3.6 Prior Representations and Warranties. To the knowledge of Crescent
Operating, none of the representations and warranties made by Magellan in the
Contribution
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Agreement, dated as of June 16, 1997, by and among Magellan, Crescent Operating
and CBHS, are untrue or inaccurate in any material respect.
3.7 Broker's and Finder's Fees. Crescent Operating is not obligated to
pay, and has not retained, or entered into any agreement to retain, any broker
or finder or other person who is entitled to, any broker's or finder's fee or
any other commission or financial advisory fee based on any agreement or
undertaking made by Crescent Operating in connection with the transactions
contemplated by this Agreement.
3.8 Restrictions on Transfer. Crescent Operating understands that the
Charter LLC Interest has not been registered under the Securities Act or the
securities laws of any state (collectively, "Securities Acts") and may not be
resold unless permitted under applicable exemptions contained in such Securities
Acts or upon satisfaction of the registration or qualification requirements of
such Securities Acts. Crescent Operating acknowledges that it must bear the
economic risk of its investment in the Charter LLC Interest for an indefinite
period of time since the Charter LLC Interest has not been registered or
qualified under such Securities Acts and, therefore, cannot be sold unless it is
subsequently registered or exemptions from registration or qualification are
available.
3.9 Qualification of Crescent Operating.
(a) Crescent Operating is acquiring the Charter LLC Interest
for investment purposes only, for its own account, not as nominee or agent for
any other person, firm or corporation, and not with a view to, or for resale in
connection with, a distribution or public offering thereof within the meaning of
such Securities Acts.
(b) Crescent Operating has knowledge and experience in
financial and business matters, is capable of evaluating the merits and risks of
its investment in the Charter LLC Interest, and is able to bear the economic
risks inherent in its investment in the Charter LLC Interest.
3.10 Commission Filings. Crescent Operating has filed all required
documents with the Commission since June 12, 1997 (the "Filings"). As of their
respective dates, the Filings complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and,
at the respective times they were filed, none of the Filings contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
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ARTICLE IV
COVENANTS AND AGREEMENTS
4.1 No Action to Render Representations and Warranties Untrue. Between
the date of this Agreement and the Closing Date:
(a) Charter Inc. and Crescent Operating, each as to CBHS,
shall use commercially reasonable best efforts consistent with good business
judgment to (i) preserve the present business organization of CBHS intact; (ii)
keep available the services of the present employees of CBHS; (iii) preserve the
present relationships of CBHS with entities or persons having business dealings
with CBHS; and (iv) generally operate the business of CBHS in the ordinary and
regular course consistent with the prior practices of CBHS;
(b) Charter Inc. and Crescent Operating, each as to CBHS,
shall cause CBHS to maintain its books and records in accordance with good
business practice, on a basis consistent with prior practice and in accordance
with generally accepted accounting principles, subject to normal year-end
adjustments; and
(c) Neither Charter Inc. nor Crescent Operating, as to either
itself or CBHS, shall willfully take any action or willfully fail to take any
action, in either case, which would result in any representation or warranty
being untrue in any material respect.
4.2 Filings and Consents. After the execution hereof, each of Charter
Inc. and Crescent Operating: (a) shall promptly prepare and make any required
filings with, and shall thereafter promptly make any required submissions to any
applicable governmental agency or authority; and (b) shall use its commercially
reasonable best efforts to obtain and to cooperate in obtaining any consent,
approval, authorization or order of, or in making any registration or filing
with, any governmental agency or body or other third party required in
connection with the execution, delivery or performance of this Agreement.
4.3 Certain Tax Matters.
(a) Each of Charter Inc. and Crescent Operating, to the extent
related to its ownership of interests in CBHS or its participation in CBHS as a
member prior to the Closing Date, (i) will each provide the other with such
assistance as may reasonably be requested by either of them in connection with
the assessment of taxes, any audit or other examination by any taxing authority,
any judicial or administrative proceedings relating to liability for taxes; (ii)
will each retain and provide the other with any records or information which may
be reasonably necessary to such assessment, audit or examination, proceeding or
determination; and (iii) will each provide the other with the final
determination of any such audit or examination, proceeding or determination that
affects any amount required to be
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shown on any return of the other for any period. The party requesting assistance
hereunder shall promptly reimburse the other for reasonable expenses incurred
for providing such assistance.
(b) Charter Inc. and Crescent Operating shall cooperate fully,
as and to the extent reasonably requested by the other party, in connection with
any audit, litigation or other proceeding with respect to taxes and with the
preparation of any tax returns to the extent related to its ownership of
interests in CBHS or its participation in CBHS as a member prior to the Closing
Date.
(c) Each of the parties hereto acknowledges that CBHS or its
successor intends to make an election (the "Election") pursuant to Section 754
of the Internal Revenue Code of 1986, as amended, to step up the basis of the
assets of CBHS as a result of the sale of the Charter LLC Interest and agrees to
cooperate with CBHS or its successor in making the Election by, among other
things, providing to CBHS such information as is reasonably necessary to enable
CBHS to determine the basis of its assets following the Election, provided that
none of the parties hereto shall be required to take any action in connection
with the Election that would adversely affect such party or its respective
rights and benefits under this Agreement. Within 30 days from the Closing Date,
the parties hereto shall use commercially reasonable best efforts to cause CBHS
to make the Election.
4.4 Termination of Operating Agreement. Immediately prior to and
effective as of the Closing, Charter Inc., Crescent Operating and Magellan shall
have terminated the Operating Agreement, and Charter Inc. and Magellan shall
have relinquished all of their respective rights under the Operating Agreement
as of the Closing Date.
4.5 Consent Decree. Crescent Operating agrees that, if required by the
Federal Trade Commission (the "FTC"), it will commit to the FTC to be bound by
the requirements of the Consent Order entered into in the case entitled, In the
Matter of Charter Medical Corporation, Docket No. C-3558, as modified by the
FTC's Order Reopening and Modifying Order dated January 29, 1996.
4.6 CBHS Restructuring. Each of the parties hereto acknowledges that
CBHS has indicated to it that CBHS anticipates converting from a limited
liability company to a corporation (the "Restructuring") prior to the Closing in
connection with the financing of the transactions contemplated by the Purchase
Agreement and agrees to reasonably cooperate with CBHS and to take any actions
that CBHS may reasonably request in order to implement the Restructuring,
provided that none of the parties hereto shall be required to take any action in
connection with the Restructuring that would adversely affect such party or its
respective rights and benefits under this Agreement. Within 30 days from the
date hereof, the parties hereto shall use commercially reasonable best efforts
to agree to the terms of the Restructuring.
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4.7 Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its commercially reasonable
best efforts to satisfy the conditions set forth in Article V hereof insofar as
such matters are within its control, and to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement.
ARTICLE V
CLOSING CONDITIONS
5.1 Conditions to Obligations of Crescent Operating. The obligation of
Crescent Operating to deliver the Purchased Shares at the Closing is subject to
satisfaction of the following conditions precedent, any or all of which may be
waived in writing by Crescent Operating at its sole discretion:
(a) The representations and warranties of Charter Inc.
contained herein shall be true and correct in all material respects at and as of
the Closing Date with the same effect as though such representations and
warranties were made at and as of the Closing Date, other than representations
and warranties that speak as of a specific date or time (which need only be true
and correct as of such date or time), and Charter Inc. shall furnish Crescent
Operating with an officer's certificate as to the foregoing;
(b) Charter Inc. shall have performed in all material respects
all of its obligations required by this Agreement to be performed by it on or
prior to the Closing, and Charter Inc. shall furnish Crescent Operating with an
officer's certificate as to the foregoing;
(c) As of the Closing Date, there shall be no effective
injunction, writ or preliminary restraining order or any order of any nature
issued by a court or governmental or regulatory agency of competent jurisdiction
to the effect that the transactions contemplated by this Agreement may not be
consummated, and there shall be no action, suit or proceeding pending, which is
brought by any governmental or regulatory agency, seeking to so enjoin the
transactions;
(d) The applicable waiting period under the HSR Act shall have
expired or been terminated;
(e) Crescent Operating shall have received all consents,
approvals, authorizations or orders required as set forth on Schedule 3.4;
(f) Crescent Operating shall have received an opinion from
Dow, Lohnes & Albertson, PLLC, counsel to Charter Inc., in form and substance
reasonably acceptable to Crescent Operating, dated as of the Closing Date,) as
to the due authorization, execution and delivery of this Agreement by, and as to
the enforceability of this Agreement against, Charter Inc., and as to the good
standing of Charter Inc.;
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(g) The conditions set forth in the Purchase Agreement, dated
as of the date hereof, by and between CBHS and Magellan with respect to the
purchase by CBHS of certain equity interests and assets of certain subsidiaries
of Magellan (the "Purchase Agreement"), and in any agreements referenced
therein, shall have been fulfilled or waived, and all transactions contemplated
by the Purchase Agreement and any such agreements shall have been consummated;
(h) Charter Inc. and Magellan shall have complied with the
provisions of Section 4.4 of this Agreement; and
(i) The following conditions (the "Shared Risk Conditions")
regarding the interim final rule to be recommended by the United States
Department of Health and Human Services Negotiated Rulemaking Committee (the
"Rulemaking Committee") on the Shared Risk Exception relating to the existing
statutory shared risk safe harbor, 42 U.S.C. ss. 1320a-7b(b)(3)(F) (the "Shared
Risk Exception"), shall have been satisfied: (i) the Shared Risk Exception shall
have become effective, as stated in the notice of publication, and (ii) the
Services Purchase Agreement to be entered into by and between Magellan and CBHS
(the "Services Purchase Agreement") either (A) shall have been executed in the
form agreed to by the parties as of the date hereof if the Shared Risk Exception
is the same as the text, other than nonsubstantive changes, of the statement
issued on January 22, 1998, by the Rulemaking Committee, or (B) shall have been
executed in a form that complies with the Shared Risk Exception and that would
not result in any material loss of the proposed benefits to be provided to
Crescent Operating, CBHS or Magellan thereunder if the Shared Risk Exception is
not the same as the text, other than nonsubstantive changes, of the statement
issued on January 22, 1998, by the Rulemaking Committee.
(j) Magellan shall have executed the Non Compete Agreement
attached as Schedule 5.1 (j).
5.2 Conditions to Obligations of Charter Inc. The obligation of Charter
Inc. to deliver the Charter LLC Interest at the Closing is subject to the
satisfaction of the following conditions precedent, any or all of which may be
waived in writing by Charter Inc. at its sole discretion:
(a) The representations and warranties of Crescent Operating
contained herein shall be true and correct in all material respects at and as of
the Closing Date with the same effect as though such representations and
warranties were made at and as of the Closing Date other than representations
and warranties that speak as of a specific date or time (which need only be true
and correct as of such date or time), and Crescent Operating shall furnish
Charter Inc. with an officer's certificate as to the foregoing;
(b) Crescent Operating shall have performed in all material
respects all of its obligations required by this Agreement to be performed by it
on or prior to the Closing, and Crescent Operating shall furnish Charter Inc.
with an officer's certificate as to the foregoing;
(c) As of the Closing Date, there shall be no effective
injunction, writ or preliminary restraining order or any order of any nature
issued by a court or governmental or regulatory agency of competent jurisdiction
to the effect that the transactions contemplated by this Agreement may not be
consummated, and there shall be no action, suit or proceeding
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pending, which is brought by any governmental or regulatory agency, seeking to
so enjoin the transactions;
(d) The applicable waiting period under the HSR Act shall have
expired or been terminated;
(e) The Board of Directors of each of Magellan and Charter
Inc. shall have approved the transactions contemplated herein pursuant to
Section 2.2;
(f) Charter Inc. shall have received all consents, approvals,
authorizations or orders required as set forth on Schedule 2.4;
(g) Charter Inc. shall have received an opinion from Shaw,
Pittman, Potts & Trowbridge, counsel to Crescent Operating, in form and
substance reasonably acceptable to Charter Inc., dated as of the Closing Date,
as to the due authorization, execution and delivery of this Agreement by, and as
to the enforceability of this Agreement against, Crescent Operating, and as to
the good standing of Crescent Operating;
(h) The conditions set forth in the Purchase Agreement, and in
any agreements referenced therein, shall have been fulfilled or waived, and all
transactions contemplated by the Purchase Agreement and any such agreements
shall have been consummated;
(i) Crescent Operating and Magellan shall have complied with
the provisions of Section 4.4 of this Agreement; and
(j) The Shared Risk Conditions shall have been satisfied.
5.3 Conditions to Obligations of Magellan. The obligation of Magellan
to perform its obligations under Section 4.4 of this Agreement is subject to the
satisfaction of the following conditions precedent, any or all of which may be
waived in writing by Magellan at its sole discretion:
(a) Crescent Operating and Charter Inc. each shall have
performed in all material respects all of its obligations required by this
Agreement to be performed by it on or prior to the Closing;
(b) As of the Closing Date, there shall be no effective
injunction, writ or preliminary restraining order or any order of any nature
issued by a court or governmental or regulatory agency of competent jurisdiction
to the effect that the transactions contemplated by this Agreement may not be
consummated, and there shall be no action, suit or proceeding pending, which is
brought by any governmental or regulatory agency, seeking to so enjoin the
transactions;
(c) The applicable waiting period under the HSR Act shall have
expired or been terminated;
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(d) Charter Inc. shall have received all consents, approvals,
authorizations or orders required as set forth on Schedule 2.4, and Crescent
Operating shall have received all consents, approvals, authorizations or orders
required as set forth on Schedule 3.4;
(e) The conditions set forth in the Purchase Agreement, and in
any agreements referenced therein, shall have been fulfilled or waived, and all
transactions contemplated by the Purchase Agreement and any such agreements
shall have been consummated;
(f) Crescent Operating and Charter Inc. shall have complied with the
provisions of Section 4.4 of this Agreement; and
(g) The Shared Risk Conditions shall have been satisfied.
(h) Crescent Operating shall have executed the Non Compete Agreement
attached as Scheulde 5.3(h).
ARTICLE VI
INDEMNIFICATION AND ASSUMPTION OF CERTAIN LIABILITIES
6.1 Indemnification for Breach of Representation or Warranty.
(a) After the Closing, Charter Inc. agrees to indemnify and
hold Crescent Operating harmless from any claims, liabilities, obligations,
losses, costs, expenses, penalties, fines, judgments and other damages,
including reasonably attorneys' fees and expenses (collectively "Damages"),
incurred by Crescent Operating as a result of (i) any breach by Charter Inc. of
any representation or warranty of Charter Inc. contained in Article II of this
Agreement; or (ii) a failure by Charter Inc. to perform in any material respect
any covenant or agreement required to be performed by it under this Agreement;
provided, however, that Charter Inc. shall have no liability to Crescent
Operating under this paragraph unless Crescent Operating shall have first
delivered to Charter Inc. a written claim to indemnification hereunder on or
before the date which is 18 months after the Closing Date, except as otherwise
provided in Section 8.1; provided, further, that Charter Inc. shall not be
liable for Damages in excess of an aggregate of $100,000,000 under this
Agreement, the Purchase Agreement[and the Joint Venture Purchase Agreement to be
entered into by Magellan and CBHS prior to the closing of the transactions
contemplated by the Purchase Agreement (the "Indemnification Cap").
(b) After the Closing, Crescent Operating agrees to indemnify
and hold Charter Inc. harmless from any Damages incurred by Charter Inc. as a
result of (i) any breach by Crescent Operating of any representation or warranty
of Crescent Operating contained in Article III of this Agreement; or (ii) a
failure by Crescent Operating to perform in any material respect a covenant or
agreement required to be performed by it under this Agreement; provided,
however, that Crescent Operating shall have no liability to Charter Inc. under
this paragraph unless Charter Inc. shall have first delivered to Crescent
Operating a written claim to indemnification hereunder on or before the date
which is 18 months after the Closing Date; provided, further, that Crescent
Operating shall not be liable for Damages in excess of the Indemnification Cap.
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(c) Subject to the provisions of Sections 6.1(a) and 6.1(b),
in the event of the occurrence of an event in which any party asserts a claim
for Damages, such party shall provide the indemnifying party with prompt notice
of such event and shall otherwise make available to the indemnifying party all
relevant information which is material to the claim and which is in the
possession of the indemnified party. If such event involves the claim of any
third party (a "Third-Party Claim"), the indemnified party shall have the right
to elect to join in the defense, settlement, adjustment or compromise of any
such Third-Party Claim, and to employ counsel to assist such indemnifying party
in connection with the handling of such claim, at the sole expense of the
indemnifying party, and no such claim shall be settled, adjusted or compromised,
or the defense thereof terminated, without the prior consent of the indemnifying
party unless and until the indemnifying party shall have failed, after the lapse
of a reasonable period of time, but in no event more than 30 days after written
notice to it of the
Third-Party Claim, to join in the defense, settlement, adjustment or compromise
of the same. An indemnified party's failure to give timely notice or to furnish
the indemnifying party with any relevant data and documents in connection with
any Third-Party Claim shall not constitute a defense (in part or in whole) to
any claim for indemnification by such party, except and only to the extent that
such failure shall result in any material prejudice to the indemnifying party.
If so desired by any indemnifying party, such party may elect, at such party's
sole expense, to assume control of the defense, settlement, adjustment or
compromise of any Third-Party Claim, with counsel reasonably acceptable to the
indemnified parties, insofar as such claim relates to the liability of the
indemnifying party, provided that such indemnifying party shall obtain the
consent of all indemnified parties before entering into any settlement,
adjustment or compromise of such claims, or ceasing to defend against such
claims, if as a result thereof, or pursuant thereto, there would be imposed on
an indemnified party any material liability or obligation not covered by the
indemnity obligations of the indemnifying parties under this Agreement
(including, without limitation, any injunctive relief or other remedy). In
connection with any Third-Party Claim, the indemnified party, or the
indemnifying party if it has assumed the defense of such claim pursuant to the
preceding sentence, shall diligently pursue the defense of such Third-Party
Claim.
(d) The amount of any and all Damages for which
indemnification is provided pursuant to this Article VI shall be net of any
amounts received by the indemnified party under insurance policies with respect
to such Damages (it being understood that any proceeds obtainable from a captive
insurance company of the indemnified party or any amounts which the indemnified
party self-insures shall not be so taken into account). In the event that any
claim for indemnification asserted under this Article VI is, or may be, the
subject of the insurance coverages of Charter Inc. and Crescent Operating, the
indemnified party agrees to promptly notify the applicable insurance carrier of
such claim and tender defense thereof to such carrier. If insurance coverage is
denied (in whole or in part), or if no resolution of an insurance claim shall
have occurred upon payment of the relevant indemnification obligation, the
indemnifying party shall be subrogated to the rights of the indemnified party
against such insurance carrier.
(e) The indemnification provided in this Article VI and the obligations
in Section 7.2 shall be the exclusive remedy of the parties for any breach of
this Agreement.
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ARTICLE VII
TERMINATION PRIOR TO CLOSING
7.1 Termination Prior to Closing. This Agreement may be terminated and
abandoned at any time prior to the Closing:
(a) by the mutual consent of Charter Inc. and Crescent
Operating; or
(b) by Charter Inc. or Crescent Operating, in the event the
Closing has not occurred by the date which is six months after the date of this
Agreement (the "Cut-Off Date"), unless failure of such consummation shall be due
to the failure of the party seeking to terminate this Agreement to comply in all
material respects with the agreements and covenants contained herein to be
performed by such party on or before the Cut-Off Date.
7.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 7.1 hereof, such termination shall be without
liability or obligation of either party (or any director, officer, employee, or
representative of such party) to the other party to this Agreement; provided
that if such termination shall result from the willful failure of either party
to fulfill a condition to the performance of the obligations of the other party
or to perform a covenant of this Agreement or from a breach by either party to
this Agreement, such party shall be fully liable for any and all Damages
incurred or suffered by the other party as a result of such failure or breach.
The provisions of Section 8.5 shall survive any termination hereof pursuant to
Section 7.1.
ARTICLE VIII
MISCELLANEOUS
8.1 Survival. The representations and warranties made by the parties in
this Agreement shall expire, and be terminated and extinguished, on the date
which is 18 months after the Closing Date, and thereafter neither Charter Inc.
nor Crescent Operating, nor any officer, director or principal thereof, shall
have any liability whatsoever with respect to any such representation or
warranty, except that the representations and warranties in Sections 2.1(a), (c)
and (d), 2.2, 3.1(a) and (c) and 3.2 shall survive without limitation, and that
the representations and warranties in Sections 2.5 and 2.6 shall survive until
the applicable statute of limitations period for any applicable claim. The
covenants and agreements of the parties contained herein shall survive the
Closing to the extent they relate to an agreement or obligation to be performed
after the Closing.
8.2 Notices. All notices, requests, instructions or documents hereunder
shall be in writing and delivered personally or by Federal Express, or sent by
telecopy, or sent by United States registered or certified mail, postage
prepaid, as follows:
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(i) if to Crescent Operating:
Jeffrey L. Stevens
Executive Vice President and Chief Operating Officer
Crescent Operating
306 West 7th Street, Suite 1025
Fort Worth, Texas 76102
Facsimile: (817) 339-1010
with a copy (which shall not constitute notice) to:
Sylvia M. Mahaffey, Esq.
Shaw Pittman Potts & Trowbridge
2300 N Street, N.W.
Washington, D.C. 20037
Facsimile: (202) 663-8007
if to Charter Inc. or Magellan:
(ii) David Hansen, Esq.
General Counsel
Magellan Health Services, Inc.
3414 Peachtree Road, N.E., Suite 1400
Atlanta, Georgia 30326
Facsimile: (404) 869-5660
with a copy (which shall not constitute notice) to:
J. Eric Dahlgren, Esq.
Dow, Lohnes & Albertson, PLLC
One Ravinia Drive, Suite 1600
Atlanta, Georgia 30346
Facsimile: (770) 901-8874
or such other address as any party may designate by written notice to the other
parties. Any notice, request, demand, waiver or other communication required or
permitted to be given under this Agreement will be deemed to have been duly
given only if delivered in person or by first class, prepaid, registered or
certified mail, or sent by courier or, if receipt is confirmed, by telecopier.
8.3 Entire Agreement. This Agreement, including the Exhibits and
Schedules hereto, constitutes the entire agreement between the parties hereto
with respect to the transactions contemplated herein, and no modification hereof
shall be effective unless in writing and signed by the party against which it is
sought to be enforced. This Agreement supersedes all prior understandings,
negotiations and agreements relating to the transactions contemplated herein.
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8.4 Successors and Assigns. The terms, covenants and conditions of this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns; provided, however, that neither
party may assign its rights and obligations under this Agreement without the
prior written consent of the other party, except that Charter Inc. may assign
this Agreement to any other wholly-owned subsidiary of Magellan provided that
Charter Inc. transfers its ownership interest of the Charter LLC Interest to
such wholly-owned subsidiary.
8.5 Expenses. Each of Charter Inc. and Crescent Operating shall bear
its own costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby.
8.6 Severability. If any provision of this Agreement shall be
determined by arbitration in accordance with Section 8.8 to be void and of no
effect, the provisions of this Agreement shall be deemed amended to delete or
modify, as necessary, the offending provision, and this Agreement as so amended
or modified shall not be rendered unenforceable or impaired but shall remain in
force to the fullest extent possible in keeping with the intention of the
parties hereto.
8.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, applicable in the case of
agreements made and to be performed entirely within such state, without regard
to such state's conflicts of laws rules.
8.8 Arbitration. The parties agree to resolve any dispute, controversy
or claim arising out of or relating to this Agreement, its interpretation or
performance (a "Controversy") in accordance with this Section 8.8.
(a) The parties agree to negotiate in good faith for up to 45
days after written notice by one party to the other party or parties to the
Controversy, in order to attempt to resolve such Controversy. In this regard,
each party agrees to involve its respective senior management in these
discussions if necessary.
(b) In the event that such Controversy is not resolved through
mutual discussions within such 45-day period of time, such dispute or
controversy may be submitted by any such party to, and if so submitted shall be
finally settled by, arbitration in accordance with the Commercial Arbitration
Rules (the "Rules") of the American Arbitration Association, and judgment upon
the award may be entered in any court where the arbitration takes place or any
court having jurisdiction. Any such arbitration shall take place in Atlanta,
Georgia, and there shall be one arbitrator. The parties shall attempt to agree
on the selection of the arbitrator within 60 days after receipt of the written
notice referred to in clause (a) above; if the parties agree, the agreed-upon
person shall be the arbitrator; if the parties cannot so agree, the arbitrator
shall be selected by the American Arbitration Association in accordance with the
Rules. The arbitrator may order specific performance or other equitable relief
or remedies, to the extent he or she deems it appropriate, in any situation in
which a
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court could so order. All costs of such arbitration, including the compensation
of the arbitrator (but not including the parties' attorneys', accountants' and
other professionals' fees, as to which each party shall pay its own) shall be
allocated 50% to Crescent Operating and 50% to Charter Inc. The decision of the
arbitrator shall be final and binding upon the parties, their successors and
assigns, and they shall comply with such decision in good faith, and each party
hereby submits itself to the jurisdiction of the courts of the place where the
arbitration is held, but only for the entry of judgment with respect to and to
enforce the decision of the arbitrator hereunder.
8.9 Headings. The headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
8.10 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which taken together shall
constitute one and same instrument.
8.11 Waiver. Any of the terms or conditions of this Agreement which may
be lawfully waived may be waived in writing at any time by the party which is
entitled to the benefits thereof. Any waiver of any of the provisions of this
Agreement by any party hereto shall be binding only if set forth in an
instrument in writing signed on behalf of such party. No failure to enforce any
provision of this Agreement shall be deemed to or shall constitute a waiver of
such provision and no waiver of any of the provisions of this Agreement shall be
deemed to or shall constitute a waiver of any other provision hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
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8.12 Variations of Pronouns; Definitions; Number; Gender. All pronouns
and all variations thereof shall be deemed to refer to the masculine, feminine
or neuter, singular or plural, as the identity of the person or persons may
require. Whenever used herein the singular number shall include the plural, the
plural shall include the singular, and the use of any gender shall include all
genders. "Person" shall mean an individual, firm, trust, association,
corporation, limited liability company, partnership, government (whether
federal, state, local or other political subdivision, or an agency or bureau of
any of them) or other entity.
IN WITNESS WHEREOF, this Equity Purchase Agreement has been duly
executed by the parties hereto as of the date first above written.
CHARTER BEHAVIORAL HEALTH
SYSTEMS, INC.
By: /s/HOWARD A. MCLURE
Name: Howard A. McLure
Title: Vice President
CRESCENT OPERATING, INC.
By: /s/JEFFREY L. STEVENS
Name: Jeffrey L. Stevens
Title: Executive Vice President and
Chief Operating Officer
MAGELLAN HEALTH SERVICES, INC.
Solely for purposes of Section 4.4 hereof:
By: /s/CRAIG L. MCKNIGHT
Name: Craig L. McKnight
Title: Executive Vice President and
Chief Execitive Officer
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